Forums: Discussions for entrepreneurs and small business.

I was at my sons wrestling tourniment this weekend when I overheard a story. It seems that a company developed a software product that cought the eyes of Microsoft. It seems Microsoft was interested enough to aproach the company about license agreement. They ended up selling their company to Microsoft for a revenue share where the guys that developed the product would receive a 60% share of revenue for a period of time. After the deal was done Microsoft ended up giving away the product  for free which generated no revenue. Since I heard this second hand I do not know if it is true, but the story sure offers a valuable lesson.

John


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That`s one of the bad things about business in general and Microsoft in particular: no ethics.  The seller should have specified a guaranteed minimum else the deal is reversed etc...Good licensing attorney would have been helpful in this case.

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It doesn`t only happen in software. Plenty of stories abound regarding an author who`s written a fabulous book. It`s everywhere, people are reading it, word of mouth is fantastic.

A movie company comes along and offers to buy an "option" to make the book into a movie. They`ll pay $60,000 for that option, and the author has visions of sugarplums dancing through their head. So they do the deal, but don`t really read the contract or ponder the possibilities.

The movie company now owns the option to make or NOT make the movie. Maybe it gets put into script format, or maybe it falls into the archives, but the book never becomes a movie, regardless of who would later make it so.

Many options contracts, whether for movies or for inventions, have time limits. If the thing isn`t done within 1 year, for example, the option terminates, and the rights revert to the original holder. The software guys who sold to Microsoft may have either had a dull attorney or didn`t choose to have an attorney look over the contract.

Wow! If that particular case that John described is true, that`s really low.
Thanks for the warning. I`ll have to remember that.

Aleem


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