IP Posts

You’ll probably learn more from this clip than two years at Harvard Business School. From HBO’s The Wire:

(Video: The Wire)

I bet you didn’t know this is Obama’s favorite TV show.

Offer letters are short and easy to read, as far as legal documents go. But they contain some seemingly scary terms that are (1) ubiquitous in Silicon Valley and (2) usually “no big deal”.

We’re not saying that no one has ever gotten into a conflict or lawsuit over these terms—just that it isn’t common. The offer letters from the major Silicon Valley law firms are very consistent.

Here are the seemingly scary terms from an offer letter I got from Yokum Taku at Wilson Sonsini. As always, this is not legal advice.


“If you decide to join the Company, it will be recommended at the first meeting of the Company’s Board of Directors following your start date that the Company grant you an option to purchase X shares of the Company’s Common Stock at a price per share equal to the fair market value per share of the Common Stock on the date of grant, as determined by the Company’s Board of Directors.”

You don’t get your options until the board grants them at the next board meeting. But they should start vesting on your start date.

The strike price is equal to the fair market value as of the grant date (sometime after the next board meeting). But that probably won’t be higher than the FMV as of your first day of work.

“This option grant shall be subject to the terms and conditions of the Company’s Stock Option Plan and Stock Option Agreement.”

These are big documents that you’re agreeing to without seeing. If you’re concerned, request copies before you sign your employment offer.

We’ve never seen anyone negotiate exceptions to these documents. Just make sure the company doesn’t have a right to repurchase your vested stock.


“Moreover, you agree that, during the term of your employment with the Company, you will not engage in any other employment, occupation, consulting or other business activity directly related to the business in which the Company is now involved or becomes involved during the term of your employment, nor will you engage in any other activities that conflict with your obligations to the Company.”

The company isn’t forbidding you to work on your own business on the side.

Get a lawyer to advise you on what you need to do to own your side business. At a minimum, work on the side business on your own time and don’t use anything owned by the company.

IP Assignment

“As a condition of your employment, you are also required to sign and comply with an Invention Assignment Agreement (enclosed) which requires, among other provisions, the assignment of patent rights to any invention made during your employment at the Company.”

These Invention Assignment Agreements always seem too far-reaching but they’re rarely negotiated, especially if they’re coming from one of the major Silicon Valley law firms.

The Invention Assignment Agreement usually asks employees to carve out the IP they developed before joining the company by listing it in an exhibit. If you’ve developed a lot of IP that is relevant to the business, you might want to ask the company to list its IP instead of, or in addition to, yours.

At-Will Employment and Sundry Items

“You should be aware that your employment with the Company is for no specified period and constitutes at-will employment. As a result, you are free to resign at any time, for any reason or for no reason. Similarly, the Company is free to conclude its employment relationship with you at any time, with or without cause, and with or without notice.”

This is an offer letter, not a 5-year contract with the Chicago Bulls.

“You should note that the Company may modify job titles, salaries and benefits from time to time as it deems necessary.”

You have no job security.

“This offer of employment will terminate if it is not accepted, signed and returned by such-and-such date.”

This offer expires soon.

“This letter, along with any agreements relating to proprietary rights between you and the Company, set forth the terms of your employment with the Company and supersede any prior representations or agreements including, but not limited to, any representations made during your recruitment, interviews or pre-employment negotiations, whether written or oral.”

If it isn’t in this agreement, it isn’t happening, even if we told you it was.

Related: I have a job offer at a startup, am I getting a good deal? Part 1 and Part 2.

Unrelated: My new favorite show, Lil’ Bush:

(Video: Lil’ Bush White House Tour)