California's laws state that IP can only be contractually assigned to the employer if it is "related to the employer's business or [to the employer's] actual or demonstrably anticipated research or development." Google's position, when I was there, appeared to be that 1) any web app and 2) any app for any phone or tablet, was "related to ... actual or demonstrably anticipated R&D."
There's a lot Google could claim under California law, but that's almost certainly too broad an interpretation to make it through court unmodified.
Ignoring the PR problem, if they sued one of their engineers over, say, an iPhone racing game, a sane judge is going to make them work pretty damn hard to demonstrate that it has any relation to their business.
