San Lorenzo, CA asked in Business Law, Employment Law, Intellectual Property and Contracts for California

Q: How can I reclaim my intellectual property from a Corporation using it for unjust enrichment?

I am a co-founder of a California C Corporation startup, and I discovered that the company tricked me into working for free without any signed documents or issuance of shares. My business attorney informed me that I should have been paid under California law. The company is ignoring multiple letters from my attorney regarding wage violations and unjust use of my intellectual property. There was no IP assignment or employment contract, and they are using my work product for unjust enrichment. I want to find a strategy to retain my intellectual property and prevent its sale without incurring high legal costs. Given the circumstances, is there an aspect of employment law that could assist me in reclaiming my IP and stopping them from benefiting from it unjustly? Or is this just destined to be a very expensive IP case, even when there are no patents or copyrights involved, but rather work-for-hire know-how and some trade secrets I've used over the last 20 years?

3 Lawyer Answers

A: To get what you need, there is no easy employment law solution. You have several business litigation claims and they likely will be complex, time-consuming and expensive. Good luck to you.

Pavel Kolmogorov
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A: Based on the circumstances described, your situation touches on both employment law and intellectual property (IP) principles.

California law requires employers to pay wages for work performed. If you were tricked into working without pay, you may have a claim under the California Labor Code. For example, Labor Code sections 204, 223, 510, 1182.12, and 1194 require employers to pay wages, including overtime and minimum wages, and authorize civil actions for unpaid wages.

The California Uniform Trade Secrets Act (CUTSA) provides a framework for addressing the misappropriation of trade secrets. Under CUTSA, "misappropriation" includes the acquisition, disclosure, or use of a trade secret without consent by someone who used improper means to acquire it or knew or had reason to know that the trade secret was acquired by improper means. If your work product qualifies as a trade secret, you may seek injunctive relief to prevent its use or disclosure.

James L. Arrasmith
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Answered

A: You have a valid claim under California employment law, which may significantly strengthen your position regarding your intellectual property. California law presumes that, in the absence of an explicit IP assignment or clear employment agreement, the intellectual property you've developed independently remains yours. Your strongest argument may be to assert that you were never properly compensated or employed, undermining any claims the corporation might have to your work under "work-for-hire" doctrines.

Focusing on wage and labor violations may offer you leverage without necessarily entering into an expensive intellectual property litigation. By proving wage theft and unjust enrichment, you might pressure the corporation into negotiating a settlement where your IP rights are explicitly recognized and returned to you. Because they are actively using your intellectual property without authorization or compensation, you can also request injunctive relief from a California court to prevent further misuse or potential sale.

You should discuss with your attorney the possibility of filing claims under California's unfair competition laws (Business and Professions Code §17200), which broadly prohibits unjust enrichment and unlawful practices, potentially offering a cost-effective path forward. Gathering clear documentation of your prior use and creation of this IP, along with evidence showing the company's improper use, will greatly improve your negotiating strength. Given the practical expense of litigation, your best route may be leveraging these employment and business practice claims to pressure the company into resolving your situation favorably without engaging in protracted intellectual property litigation.

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