Company claiming ownership of AI-assisted code I wrote on personal time with personal subscriptions

I'm a senior software developer at a mid-size SaaS company in San Francisco. Over the past 6 months I used GitHub Copilot and Claude Code extensively — both for my work projects and for a personal side project I've been building on evenings and weekends.

Here's where it gets messy: my company recently updated their IP policy and is now claiming that ALL code I wrote with AI assistance — including my personal side project — is company intellectual property. Their argument is:

1. The company's codebase was used as "training context" by the AI tools (since Copilot and Claude see open files)
2. Therefore any AI output is a "derivative work" of company IP
3. Since I used the same AI tools for both work and personal projects, there's "commingling"

My counterargument:

• I used my personal GitHub Copilot subscription ($19/mo) and my personal Claude Pro subscription
• I worked on my side project exclusively on my personal laptop at home, after hours
• My side project is in a completely different domain (fitness tracking app) than my employer's product (B2B analytics)
• I never shared company code with the AI tools while working on my personal project

They've sent me a formal letter demanding I assign all rights to the side project to the company and cease development. Before I respond, I need to understand my legal position. This is in California.

IP attorney here specializing in technology and employment IP disputes. This is becoming one of the most common issues I see since AI coding tools went mainstream. Let me break down the legal framework.

Work-for-hire doctrine: Under copyright law (17 U.S.C. 101), works created by an employee within the scope of employment are "works made for hire" and the employer owns the copyright from inception. The key question is whether your side project was created "within the scope of employment." Generally, work done on personal time, on personal equipment, unrelated to your job duties, is NOT within the scope of employment.

PIIA/Invention Assignment: The more relevant document is your PIIA (Proprietary Information and Inventions Assignment agreement) or whatever invention assignment clause is in your employment contract. You need to read yours very carefully. Common clauses:

• "Related to" clauses: Assigns inventions "related to the company's current or anticipated business" — this is the most common and most problematic
• "Developed using" clauses: Assigns inventions "developed using company resources, equipment, or proprietary information"
• "During employment" clauses: Assigns ALL inventions created during the employment period (these are rare and often unenforceable)

California Labor Code 2870: This is your strongest protection. California law prohibits employers from requiring assignment of inventions that (a) are developed entirely on the employee's own time, (b) without using company equipment/supplies/trade secrets, and (c) do not relate to the employer's business or anticipated business. If your side project meets all three criteria — and based on what you've described, it likely does — your employer cannot claim it under California law, regardless of what your PIIA says.

The "AI derivative work" argument is legally novel and, in my opinion, weak. The AI tools generate new code based on statistical patterns — they don't copy-paste your employer's code into your personal project. No court has held that using the same AI tool on different projects creates a derivative work relationship.

Get a lawyer. Do not respond to their letter without counsel.

Had a very similar dispute at my previous company in Portland. I was using Copilot for both work and a personal open-source project. Company's legal team sent me almost the exact same letter.

Here's how we resolved it:

• I hired an employment attorney ($3,500 total for the whole thing)
• My attorney sent a response letter citing Oregon's invention assignment statute (ORS 653.295, similar to CA Labor Code 2870)
• We agreed to a technical review where an independent third party compared my personal project's codebase against the company codebase to verify no proprietary code was copied or derived
• The review confirmed zero overlap (different language, different architecture, different everything)
• Company backed down and I got a written release confirming the personal project was mine

Total time from letter to resolution: about 6 weeks. The key was having an attorney respond formally — it changed the tone from "we own everything you create" to "let's actually analyze the facts."

One thing I learned: after this experience, I now maintain a strict separation. Separate machine, separate accounts, separate AI subscriptions, and I document when and where I work on personal projects (timestamped git commits on personal GitHub from my home IP). Build your paper trail.

I want to push back slightly on the optimism here. I'm in-house counsel at a tech company (not OP's company) and I can tell you that most employment agreements have extremely broad assignment clauses.

The typical PIIA language I see says something like: "Employee assigns to Company all right, title, and interest in any invention, improvement, or work of authorship that relates to the Company's actual or anticipated business, research, or development, or that results from any work performed by Employee for the Company."

That "anticipated business" language is very broad. If OP's company is a B2B analytics SaaS, they could argue that a fitness tracking app "relates to anticipated business" if the company has ever discussed expanding into health/wellness analytics, or if the app uses data analytics techniques similar to the company's core technology.

California Labor Code 2870 is strong protection, but it's not absolute. The employer can still argue that the side project "relates to" their business even if it's in a different domain. The question is whether a court would agree — and that depends on how similar the underlying technology is.

Also — and this is important — even if OP ultimately prevails on the IP ownership question, the process of fighting it can be expensive and time-consuming. Sometimes the practical answer is to negotiate a release rather than litigate the principle. I've seen these disputes cost both sides $50K+ in legal fees.

OP, read your actual PIIA carefully and share it with your attorney. The specific language matters enormously.

One angle nobody's mentioned yet: the actual Terms of Service for these AI coding tools regarding output ownership.

GitHub Copilot: GitHub's ToS explicitly state that "suggestions" (code completions) are provided to the user, and GitHub does not claim ownership of the output. The user (or their organization, depending on the subscription) retains rights. For personal subscriptions, the individual retains rights. For business subscriptions, the organization's existing IP policies apply.

Claude / Anthropic: Anthropic's Terms of Service state: "As between you and Anthropic, and to the extent permitted by applicable law, you own all Outputs." For Claude Pro (personal subscription), "you" is the individual subscriber, not the employer.

This is actually relevant to OP's case. Since OP used personal subscriptions:

• Under the Copilot ToS, OP (not the employer) is the user who retains rights to the AI-generated suggestions
• Under the Anthropic ToS, OP owns the Claude Code outputs from their personal subscription
• The employer has no contractual relationship with either AI provider for OP's personal subscriptions

Now, the employer can still argue that their PIIA/employment agreement supersedes the AI tool ToS for employment-related work. But for the personal side project, done on personal time with personal subscriptions, the AI provider ToS support OP's position that the outputs are OP's property.

This area of law is evolving fast. The Copyright Office has issued guidance that purely AI-generated works may not be copyrightable, but code written by a human with AI assistance almost certainly is. The question of who owns it comes down to employment agreements and the specific facts.