What is a trade secret?

A trade secret is information that: (1) Provides competitive advantage, (2) Is not publicly available, (3) Is treated as confidential by the company. Examples: customer lists, pricing formulas, proprietary algorithms, manufacturing processes. Legal protection: You cannot disclose, and employer can sue if you do.

What is intellectual property (IP) assignment?

IP assignment means the company owns inventions, software, work product you create during employment. Your contract states: "Anything you invent belongs to the company." This is broader than trade secrets — it includes everything you create, even non-confidential work.

Are trade secret clauses enforceable?

Yes, for legitimate trade secrets. BUT: Information cannot be a trade secret if it is public, obvious, or independently developed. Courts scrutinize overly broad "trade secret" definitions that claim normal business information is confidential.

What does "work made for hire" mean?

Work made for hire: Anything you create as part of your job belongs to the company. This is standard and usually enforceable. Example: Code you write for your employer belongs to them. This is reasonable and normal.

Can my employer claim ownership of my side project?

Depends on contract. If IP assignment says "anything created during employment," yes. If it says "work created during work hours using company resources," no (side project). Negotiate carve-out: "Side projects unrelated to company business belong to employee."

What is the difference between invention assignment and non-compete?

Invention assignment: Company owns what you create. Non-compete: You cannot work for competitors. Different restrictions. Best practice for employee: Limit invention assignment to work-created items, not side projects.

What can I legally take when I leave a job?

You can take: (1) Your general knowledge and skills, (2) Public information, (3) Things you created before being hired, (4) Anything not protected as trade secret. You cannot take: Trade secrets, customer lists, proprietary code, non-public strategic information.

How is trade secret theft prosecuted?

Under Economic Espionage Act (federal) or state trade secret laws. Serious: If you steal trade secrets while employed, then use them at competitor, employer can sue for damages (often $millions) and criminal charges are possible.

How do I know if information is a trade secret?

Ask: (1) Is it confidential? (2) Is it non-public? (3) Does company take steps to protect it? (4) Would competitors want this information? (5) Did company invest in developing it? If yes to all: likely a trade secret.

April 24, 2026·11 min read·✓ Updated Apr 2026(quarterly reviews)·By WorkContractReview.com · AI-assisted analysis, human-edited

Trade Secrets vs IP Assignment: Understanding What Your Employer Owns

Many employment contracts claim ownership of "trade secrets" or "intellectual property" without clearly defining what those terms mean. Are your thoughts proprietary? Your code? Your client relationships? This guide explains the legal difference between trade secrets and IP assignment, what your employer can realistically claim, and what you can take with you when you leave.

Key Points in This Guide

1Legal definition of a trade secret
2What qualifies as intellectual property (IP)
3Difference between protecting vs owning information
4Common overreach in IP assignment clauses
5What you can legally take when you leave
6Employee-created vs company-created invention rules
7How trade secret protection actually works
8Negotiating IP assignment carve-outs

Many employment contracts claim ownership of "trade secrets" or "intellectual property" without clearly defining what those terms mean. Are your thoughts proprietary? Your code? Your client relationships? This guide explains the legal difference between trade secrets and ip assignment, what your employer can realistically claim, and what you can take with you when you leave.

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About this guide: This article is written and maintained by the WorkContractReview.com editorial team. Where statutes are cited (e.g. Cal. Bus. & Prof. Code §16600, C.R.S. §8-2-113), we link directly to the official legislative source. AI analysis on this site is powered by Claude claude-opus-4-6 by Anthropic. Content is for informational purposes only and does not constitute legal advice. See all cited sources →

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