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I am a software developer. I have a good idea and I'd like to create a startup. I am planning to invite one or two of my colleagues as co-founders.

I am concerned about the relationships with my current employeer. I work in a small web development company. The owner directly manages development.

1. Risks.

I have signed a standard non-disclosure agreement. As far as I remember ideas I have during the employment belong to employer. I am concerned that if my project ever becomes successful and I leave the company, my current boss can claim that the project is his.

I am not sure he would do it. He does NOT look like a monster.

The start-up project IS related to my current work. I am going to use similar techniques (display some kind of maps on the website). This could increase the risk.

But I would focus on completely different customers. My current employer works for local authorities and I would work for general public (freemium/advertising/mobile apps).

I am not going to copy any existing code. I can write code from scratch using different design patterns.

I do not know and will not use any trade secrets / patented solutions. I am just going to show some public data on online maps.

Of course, there are much bigger risks, e.g. marketing, but they are out of scope of my question.

2 How to minimise the risks.

A) Keep the project in secret.

B) Discuss the project with the employer now. Try to sign an agreement that he does not claim the ownership of the project /idea / code I will write.

3. Opportunities.

My current employer is writing a web service which will generate the maps I need for the project.

In fact the web service is being developed by me and a guy who I'd like to invite as a co-founder.

If the web service works well and if I can use it for project, it can save at least 50% of the development effort/time. This could speed-up the project and decrease risk we give up since we do not have enough time. Apparently we can re-write the code from scratch (in free time) but it would be a waste of time.

I wonder if I could ask my current employer that

  • I do project in my free time, and he does not claim it belongs to him
  • I will use his web service in my project
  • While I am using the web services, I will pay him e.g 20% of profit, if I get any profit.
  • I am free to stop using the web services and to write the code I need from scratch

Is it a good idea?

4. Notes

A) My boss wants to came up with a product for general public, but does not have the idea (and resources since we are busy on his current projects). I wonder if my proposal would irritate him since he wants to do a similar thing himself. I wonder if it increases the risk that he would claim my idea and project are his.

B) He wants to attract external developers who will use his web service and pay him subscription. In theory my project falls in this category and he should be glad, but ... see item A.

C) I think my work is important, and if I leave, our small company will experience difficulties. Employer should be interested in keeping me happy. If he allows me to do my project, it will increase chances I will stay with the company without salary increases :-)

But if my project will be successful and I leave to run it, the current employer might be angry. See point 1.

D) The point of non-disclosure agreement, as my boss explained to me, is to prevent ex-employee from becoming a competitor. I am not going to compete with him so I hope he will not use it against me.

Sorry for long explanation.

THE QUESTION

My options are

Option 1) Keep the project in secret and to write code from scratch.

Option 2) Discuss the project with the employer now. Try to sign an agreement that he does not claim the ownership of the project /idea / code I will write. Write code from scratch.

Option 3) Use the web service (and promise % of profit) as described in section 3.

What would be better? Any other ideas?

Many thanks

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Where are you and your employer located? – Henry the Hengineer Sep 18 '12 at 0:13
We are in London,UK – Mel Sep 19 '12 at 21:52

5 Answers

up vote 4 down vote

Option 1 should be completely out. It's bad for your relationship and will ultimately cost you more time, and potential legal issues.

Option 2 doesn't seem to give a reason for your employer to sign that agreement. He may anyway, but it's not really offering much incentive.

Option 3 seems like the most promising to me. It gives your employer a reason to support you. It also saves you time.

You mention "But if my project will be successful and I leave to run it, the current employer might be angry". If you become wildly successful, he'll make money as well without paying your salary.

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Thank you! "Option 1 should be completely out. It's bad for your relationship and will ultimately cost you more time, and potential legal issues." - could you clarify, please? – Mel Sep 11 '12 at 22:14
Option 3 can make you partners. You might want to consider him to be your partner on the project. That's the way I would go in this case. – mojsilo Dec 23 '12 at 18:02
up vote 3 down vote

While I don't have time to read everything you wrote, I believe I understand the gist of your concern. My thoughts:

  • Option 1 is a bad idea for both business and legal reasons - it has a high likelihood of generating an unfavorable outcome.
  • If you don't choose Option 1, then you don't need to choose between Options 2 and 3 on your own. You can have a conversation with your employer during which Options 2 and 3, and anything else the two of you may think of, can be discussed.

Disclaimer: This information does not constitute legal advice and does not establish an attorney-client relationship.

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Thank you, Dana! "Option 1 is a bad idea for both business and legal reasons - it has a high likelihood of generating an unfavorable outcome." - what kind of unfavorable outcome would you expect? – Mel Sep 11 '12 at 22:13
Assuming that existence of the project eventually comes to the employer's attention, the fact that it was kept secret will fuel additional suspicions, increasing the likelihood that there will be acrimonious correspondence, legal fees and perhaps litigation, without any appreciable upside outcome as compensation for the increased risk. – Dana Shultz Sep 12 '12 at 18:36
up vote 2 down vote

The state you live in also factor in this. Some states, such as California, have laws that favor employees in regards with moonlighting (even in cases when employer has an explicit moonlighting policy). Thus, your employer's moonlighting policy may not be enforceable/legal in some states.

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up vote 1 down vote

My opinion, and it is worth what you have paid for it, discuss it with your employer. There may be a choice that you have not thought of yet. Your employer may want to work with you, and lend resources for a cut of the profit. How much and for how long is to be negotiated.

A NDA is a concept of mutually assured destruction and the basis for a war of attrition. They typically hold very little weight with broad language that states things such as "any idea you have while working for them belongs to them." The basis of a NDA is that your employer most likely has bigger pockets than you do and can keep you in court until you are broke, if they see fit.

Mind you, I am not a lawyer. The man who married me is the general counsel for a global media company though and he and I have discussed them at length. I had him review a NDA that I had to sign years ago when I was an employee and not an employer. His opinion on the subject: "They are not worth the paper they are printed on, but they are an effective deterrent."

I think you should protect your IP as best you can, and then go discuss your idea in vague terms. Vague enough that he cannot steal it, specific enough to get him excited. Go in there just like you are pitching to VC's. If he values you and your initiative, he would be a fool to fire you. But you might want to prepare for that possibility also. :) You said he is not a monster. A smart businessman would never fire someone just because they have a complimentary idea.

For what it is worth, if one of my people came to me with an idea, and I thought it was a good one, I would be their first investor and biggest cheerleader. That does not mean he will be, I am just letting you know where I speak from.

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Thanks! Could you please clarify: "I think you should protect your IP as best you can". What do you mean? – Mel Sep 11 '12 at 20:47
Patents, copyright, etc. By protect it as best you can, always keep in mind that IP protection is only as good as your pockets are deep. Our legal system favors those with money to spend. A patent only protects you if you have the bank account to back up the necessary lawsuits. If you really need to litigate to protect yourself, you may need a benefactor to back you up, and they never do so without you giving up some percentage. – NeedAGeekIndy Sep 12 '12 at 3:28
The product is a website (and mobile apps) with some maps. I am not sure how I can copyright it. Patent is probably expensive. The only idea I have is provisional patent, but it only lasts 1 year. Is it a good idea? Any other ideas? – Mel Sep 19 '12 at 22:19
Honestly, that is beyond the scope of advice that anyone here would be qualified to give. If you feel strongly about the product and its ability to be marketed and monetized, you should have that discussion with a lawyer that specializes in IP. Protecting your IP is always a good idea. The history books are full of stories of people who were first to market, but did not do the full due dilligence and were quickly knocked down by someone else with deep pockets that takes their idea and runs with it. – NeedAGeekIndy Sep 21 '12 at 13:48
up vote 0 down vote

There is one other factor that others have not brought up, that is the concept of Intellectual Property, or IP. Even if you manage to go "around" your employer and do not use any of their code - or even their pc's, they can still claim partial "ownership" of your product because of what you likely may have learned about your "new" product from working for them.

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Thank you! What would you suggest to do to avoid this problem? – Mel Sep 19 '12 at 22:02

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