Why would you agree to such an unequal arrangement? If that is true, the entire output of your brain is literally owned by a corporation.

(You probably have a "own time/own materials" exception if you're in California or if they are non-pathological in their employment agreements.)

Because the entire input to my brain is owned by me, once it's recombined with all the stuff that's already there. And that input is significantly higher than it would be if I were contracting or working for a small startup. There is value in working in a really big pond, with some of the best in the world, on a variety of projects that are all pushing the cutting edge of what's possible in their fields. If I ever leave Google, I'll have this toolbox of techniques that'll make me much more effective than the other folks in the startup melting pot. Think of it as a very practical grad school education where they pay me a bunch of money and I get hands-on experience instead of boring classwork.

I do have a "own time/own materials/not along the lines of business" exception, but the problem is that Google is in so many lines of business that that could be construed to apply to everything.

It would be cool if any in Lob could answer how they deal with these kind of situations, cause I guess they have already experienced some of them.

I think if the project is contributed to open source and is independent of what both company does then this can work out.