Invention Assignment Agreements Under Labor Code 2870: Employer Guide
“Entirely on his or her own time” is the phrase that decides most California invention disputes. Under Labor Code section 2870, an employer can’t claim an invention the employee developed on personal time without company equipment, supplies, facilities, or trade secrets, unless the invention relates to the employer’s business or results from the employee’s work. A company that wants to keep what its employees invent needs an assignment clause that stays inside those limits. It also needs the written notice the statute requires.
What does section 2870 allow an employer to claim?
Most inventions connected to the job. The statute says an assignment provision “shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information.” The exceptions bring the employer’s rights back. The carve-out doesn’t protect inventions that “Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer,” or that “Result from any work performed by the employee for the employer.”
That leaves an employer with a strong position over anything built on company time or with company resources, and over anything in its line of business. The employee’s protected zone is a side project, developed off the clock and off company systems, in a field the company isn’t in and isn’t demonstrably planning to enter.
Overreaching has a consequence. A clause that “purports to require an employee to assign an invention otherwise excluded” is, under section 2870(b), “against the public policy of this state and is unenforceable.” Section 2871 adds that “No employer shall require a provision made void and unenforceable by Section 2870 as a condition of employment or continued employment.”
How have courts read the business-relationship exception?
Broadly, in the employer’s favor. In Cubic Corp. v. Marty (1986) 185 Cal.App.3d 438, an engineer argued that his employer could claim an invention only if it resulted from his assigned work. The Court of Appeal rejected that reading, explaining that “section 2870 permits enforcement of employer assignment agreements for inventions which relate to the ‘actual’ or ‘demonstrably anticipated’ business of the employer or which resulted from work performed by the employee for the employer.”
The court read the two exceptions as alternatives. It noted that “The Legislature used the disjunctive ‘or’” and that the employee’s interpretation “would render part of the statute surplusage.” Either a connection to the business or a connection to the employee’s work is enough. The court affirmed a judgment awarding the patent to the employer.
The statutory phrase “demonstrably anticipated” is where evidence matters. An employer claiming an invention outside its current products should be able to show plans, budgets, or research records showing it was moving into the field when the employee conceived the invention. A product roadmap written after the dispute began won’t carry that burden.
What notice does the employer have to give?
Written notice, at signing. Section 2872 provides that when an agreement requires assignment of inventions, “the employer must also, at the time the agreement is made, provide a written notification to the employee that the agreement does not apply to an invention which qualifies fully under the provisions of Section 2870.”
The usual practice is to reprint section 2870 as an exhibit to the agreement and reference it in the assignment clause. A company that has used several versions of its invention agreement over the years should check each one. An agreement without the notice invites an argument that the clause can’t be enforced as written, and it hands the employee an easy point in front of a judge.
Who has the burden of proof?
The employee claiming the exemption. The same section says that “In any suit or action arising thereunder, the burden of proof shall be on the employee claiming the benefits of its provisions.” The Cubic court restated the rule: “The employee bears the burden of establishing his invention comes within Labor Code section 2870.”
That burden is a real advantage. An employee who used a work laptop, a company cloud account, or a coworker’s input will have trouble proving under section 2870 that the invention was developed “entirely” on personal time without employer resources. The company’s own records, including device logs, repository commits, and calendar entries, often answer the question.
Can an employer claim inventions made after employment ends?
Usually not. In Whitewater West Industries v. Alleshouse (Fed. Cir. 2020) 981 F.3d 1045, an employment agreement required a former employee to assign inventions he conceived after leaving. The Federal Circuit, applying California law, said “we hold that the assignment provision is void under California law.”
The court relied on Business and Professions Code section 16600, which provides that “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” It noted that under the clause, “No trade-secret or other confidential information need have been used to conceive the invention or reduce it to practice for the assignment provision to apply. The obligation is unlimited in time and geography.”
The court also rejected the argument that section 2870 authorizes such clauses: “We conclude that § 2870(a) does not clearly cover agreements requiring assignments of post-employment inventions.” Whitewater is a federal decision interpreting California law, so it isn’t binding on California state courts, but later Federal Circuit decisions have followed it. A holdover clause reaching inventions conceived after employment ends is a weak tool in California.
The safer route for post-employment protection is trade secret law. If a former employee builds a competing invention using the company’s confidential information, the claim is for misappropriation, not contract assignment.
How do invention ownership disputes compare?
| Situation | Likely owner | What decides it |
|---|---|---|
| Invention made on company time or equipment | Employer | Timekeeping, device logs, and repository records |
| Off-hours invention in the employer’s line of business | Employer | Product lines and documented research plans at conception |
| Off-hours side project unrelated to the business, no company resources | Employee | Employee’s proof under § 2870, with the burden on the employee |
| Invention conceived after employment ended | Usually the former employee | § 16600 and the timing of conception |
| Agreement missing the § 2872 notice | Disputed | Agreement version, signing date, and any later notice |
What should a company do once an invention ownership dispute starts?
These disputes are decided by dates and records. Secure both before the other side does.
- Preserve every version of the invention agreement the employee signed, the § 2872 notice, the employee’s devices and accounts, source code repositories, lab notebooks, and emails or messages about the invention.
- Calendar any deadline in the complaint, cease-and-desist letter, or patent office proceeding, and check for an arbitration agreement and insurance with notice requirements.
- Identify the managers and coworkers who knew about the project, and avoid any action against the employee that could look like retaliation while the dispute is open.
- Pull the records that fix the dates of conception and reduction to practice, along with the company’s product plans and research budgets for the same period.
- Talk to a lawyer before sending a demand, filing a patent application, or offering anything to resolve the dispute.
Companies looking for defense counsel for California technology employers can review the firm’s practice page.
Invention agreement questions from California employers
Can we require new hires to list prior inventions?
Yes, and it’s good practice. A schedule of prior inventions signed at hiring separates what the employee brought in from what was developed on the job. Under section 2871, employers may also require confidential disclosure of inventions made during employment, so the company can review whether they’re covered.
Does section 2870 apply to copyrights and software?
The statute speaks of inventions, and courts apply it to patentable work. Software and other copyrightable work created within the scope of employment usually belongs to the employer under federal copyright law’s work-for-hire rules. An agreement should address both. Work outside the scope of employment raises the same questions about own-time development and business relationship.
What if an employee refuses to sign an invention agreement?
An employer may make a lawful agreement a condition of employment. It may not condition employment on a clause that reaches beyond the statute. Section 2871 bars requiring a provision “made void and unenforceable by Section 2870” as a condition of employment. Review the clause first, then decide.
Should we update an older agreement?
Yes, if it lacks the § 2872 notice or reaches inventions conceived after employment ends. New hires can sign the revised form at onboarding. For current employees, have counsel review how the change is presented and supported, and more so if a dispute with that employee is already underway, so the timing isn’t framed as an admission.
If an invention ownership dispute reaches your company
If your company has received a lawsuit, demand letter, or cease-and-desist from a current or former employee claiming ownership of an invention, the agreement’s wording, the § 2872 notice, and the records showing when and how the invention was developed usually decide how much of the claim is real. Rosenberger + Kawabata represents employers defending employment lawsuits and claims through its business litigation practice, including disputes over invention assignment agreements. Contact Rosenberger + Kawabata online for a confidential consultation, or call (310) 894-6921.
Sources
The statutes are Labor Code section 2870, section 2871, section 2872, and Business and Professions Code section 16600. The decisions are Cubic Corp. v. Marty (1986) 185 Cal.App.3d 438, a published decision of the California Court of Appeal, and Whitewater West Industries v. Alleshouse (Fed. Cir. 2020) 981 F.3d 1045, a published decision of the United States Court of Appeals for the Federal Circuit.
This post is general information about California employment law as of November 7, 2026. It is not legal advice, and reading it does not create an attorney-client relationship. Employment statutes, regulations, and court decisions change often, and the outcome of any claim depends on its facts. Past results do not guarantee future outcomes.