Labor Code 2870: Invention Assignment Agreements and Side Projects in California

Last updated: November 2026. Reviewed by Pavel Kolmogorov, California business litigation attorney (State Bar No. 321018).

Labor Code section 2870 is the California statute that limits what an employer can take under an invention assignment agreement. An app you built entirely on your own time, without your employer's equipment, supplies, facilities, or trade secrets, stays yours unless it relates to the employer's business or research, or results from work you did for the employer. The employee carries the burden of proving it. Kolmogorov Law, P.C. handles these ownership disputes for employers and founders in Orange County, Los Angeles, and across California.

Call (909) 235-6116 or contact us online to discuss who owns an invention, an app, or code created during employment.

What Labor Code section 2870 says

Many technology and engineering employers ask new hires to sign an agreement assigning inventions to the company. California allows that, within limits. A clause requiring an employee to assign rights in an invention does not apply to one the employee developed entirely on personal time, without the employer's equipment, supplies, facilities, or trade secret information. (Lab. Code, § 2870, subd. (a).) To the extent a clause reaches further, it is against public policy and unenforceable. (Lab. Code, § 2870, subd. (b).)

Each word of that test gets argued in litigation. "Entirely" means what it says. One evening of testing on a company server can put the protection in doubt.

The two exceptions that decide most cases

Even an invention built at the kitchen table on a personal laptop can belong to the employer under the agreement. Two exceptions do the work.

The first covers an invention that relates, at the time of conception or reduction to practice, to the employer's business or to its actual or demonstrably anticipated research or development. The second covers an invention that results from any work the employee performed for the employer. (Lab. Code, § 2870, subd. (a)(1), (2).)

The Court of Appeal has read the two as independent. An employer may enforce the assignment for an invention that relates to its business or its actual or demonstrably anticipated research or development, or for one that resulted from the employee's work. Either is enough. (Cubic Corp. v. Marty (1986) 185 Cal.App.3d 438, 452.)

Most of my time on these files goes to the first exception. How wide is the employer's business? A large company with many product lines and a documented research plan has a wide field. A twelve-person firm with one product has a narrow one.

If you are the employee or founder with a side project

Three situations come up again and again.

An accountant at a freight company writes a meal-planning app at home. Nothing about it touches freight, the employer's systems, or her job duties. That project should be hers.

A data engineer at a payments company spends weekends building a fraud-scoring tool. He never opens his work laptop. The tool still relates to his employer's business, so the assignment clause probably captures it.

A product designer builds a booking tool for salons, unrelated to her employer, but stores the prototype in the company's cloud account. Her use of employer resources puts the "entirely" requirement at risk.

If you plan to leave and start a company, sort this out before you raise money. Investors will ask who owns the code, and so will a partner in a later co-founder dispute. Keep dated records of when you worked, on which devices, and with which accounts.

If you are the employer

An invention assignment clause is worth having, and it has to be drafted to the statute.

Give the notice. An employer whose agreement contains an assignment provision must also tell the employee in writing, when the agreement is made, that it does not apply to an invention that qualifies fully under section 2870. (Lab. Code, § 2872.) Careful agreements quote or attach the statute.

Do not overreach. An employer may not require an unenforceable assignment provision as a condition of employment or continued employment. (Lab. Code, § 2871.) That section also preserves the employer's right to require confidential disclosure of all inventions made during employment, and to run a review process for the ownership questions that follow.

Use the disclosure process. A periodic invention disclosure surfaces side projects early, and it fits with our departing employee checklist.

Clauses that reach inventions conceived after the job ends carry a separate risk. At least one federal appellate court applying California law has refused to enforce a broad clause of that kind, treating it as an unlawful restraint on the former employee's profession. Our non-compete page explains that rule.

Who has to prove what

The statute puts the burden of proof on the employee who claims its benefits. (Lab. Code, § 2872.) That allocation shapes the case. In practice the employee should be ready to show personal time, no employer resources, no relation to the employer's business or research, and no connection to assigned work. A gap on any one of them can be enough for the employer.

The evidence tends to be forensic: commit histories, device logs, cloud account records, and the employer's own product plans from the months in question. When the side project also drew on confidential company information, the dispute can become a trade secret case as well.

Many of these disputes end with a letter and a short written acknowledgment of who owns what. Those that do not are usually pleaded as breach of contract and declaratory relief, often with a claim for breach of a confidentiality agreement, in the Orange County or Los Angeles Superior Court.

Copyright follows a separate rule

An app is an invention, and it is also code. Code is protected by copyright, and initial copyright ownership is set by federal law, not by section 2870. Under federal law, a work prepared by an employee within the scope of his or her employment is a work made for hire. (17 U.S.C. § 101.) The employer is treated as the author and owns the copyright unless a signed writing says otherwise. (17 U.S.C. § 201(b).)

So two questions get asked about the same project. Was the code written within the scope of the job? Does the assignment agreement, as limited by section 2870, cover the underlying invention? The answers can differ. Our page on copyright ownership and work made for hire covers the copyright side, including contractors.

One limit on what we do: the firm litigates ownership disputes and does not prosecute patents.

What to bring to the first meeting

Bring the offer letter, the invention assignment agreement, and any section 2870 notice. Add a timeline of when the project was conceived, built, and first shown to anyone. Records of the devices, accounts, and repositories used are the core proof. Include any demand letter about ownership.

Frequently asked questions

I built an app on nights and weekends with my own laptop. Does my employer own it under my invention assignment agreement?

Not if it qualifies under California Labor Code section 2870. You must have developed it entirely on your own time, without the employer's equipment, supplies, facilities, or trade secrets. It also must not relate to the employer's business or its actual or demonstrably anticipated research or development, or result from your work for the employer. You carry the burden of proof.

We discovered that a senior engineer built a competing product at home while on our payroll. Does the company own it?

Often yes, if he signed an invention assignment agreement. California Labor Code section 2870 protects only inventions that do not relate to the employer's business or its actual or demonstrably anticipated research. A competing product usually relates to the business. The company should also check whether confidential information was used.

What is Labor Code 2870?

It is the California statute that limits employee invention assignment agreements. An employer cannot claim an invention the employee developed entirely on personal time without employer equipment, supplies, facilities, or trade secret information. Two exceptions apply: inventions related to the employer's business or research, and inventions resulting from the employee's work.

Is an invention assignment agreement enforceable in California?

Yes, within the limits of Labor Code sections 2870 through 2872. The agreement is generally enforceable for inventions made on company time, with company resources, related to the company's business or research, or resulting from the employee's work. Under section 2870 it is unenforceable to the extent it reaches inventions the California statute protects. A clause reaching inventions made after the job ends may fail separately, as a restraint on the former employee's profession.

Does Labor Code 2870 apply to independent contractors?

The California statute speaks of employment agreements and employees. A contractor's ownership of an invention or code usually turns on the contract and on federal patent and copyright rules. Under the Copyright Act, commissioned work is a work made for hire only in listed categories and only with a signed writing.

Talk to a California trade secret and IP ownership attorney

If you are an employee or founder facing an ownership claim, or an employer deciding whether to assert one, call (909) 235-6116 or contact us online. Kolmogorov Law, P.C. is located at 327 Magnet, Irvine, CA 92618, and represents clients in Orange County, Los Angeles, and throughout California.

This page provides general information about California and federal law and is not legal advice. Outcomes depend on the agreement, the facts about how the invention was made, and the court.