Forums: Discussions for entrepreneurs and small business.

Rich and Jeff,

I know you guys have been here before. I am developing an idea for a new product to market. I have been working with a industrial designer for almost a year now. I am in the process of modifying the prototype before running the first ones. Does a designer or engineer that someone works with have any rights to one`s patent or royalties when assisting in developing the product? Are there any documents that should be signed to keep ones designer from trying to claim rights to the idea? Any thoughts from the Startupnation?

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Allan Thorne President Rock Solid Innovations LLC RockSolidInnov@sbcglobal.net www.RockSolidInnovations.com 408-786-6958

Hi Allan - Maybe!!  Do you have an agreement with the designer now?  What their scope of work is, how much they are getting paid, etc.

What you need is a "work for hire" statement to be incorporated into a new agreement or have your existing agreement amended to include that.

Basically the work for hire statement says exactly that - they promise to do all of the work described in the agreement for x dollars and upon full payment they have no rights in or to your product and that you own 100% of any and all rights in your product, etc.  You can go on to say that that any patents, trademarks, etc. will be in your name and that they agree that they also don`t have any ownership or other rights to the trademark or patent as well.

You should also include some sort of statement that they will never pursue any claim against you and some sort of indemnification that should they try, they will pay any and all of your legal expenses and so on.

If you have spent over a year working on this and I presume several thousands of dollars or more, it would be best to hire a competent attorney that is familiar with work for hire situations to prepare the necessary legal documents with the correct wording.

Spending an extra thousand or two now, can save you a lot of money and grief later.

Good luck!!

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Offices2share.com® operates a Web site that focuses exclusively on short-term, ready-to-use office space nationwide, featuring thousands of offices in hundreds of American cities.

first things first, allan! the "jeff" responding above is one of our great community members but is NOT jeff sloan, my brother and co-founder and co-head coach at StartupNation. don`t want there to be any confusion!

now, to your question: it`s perfectly fine to have someone help with product development and engineering. there are definitely things to be careful about though.

1. when an engineer creates something novel related to your invention, any improvement or change in functionality that diverges from or even builds on existing claims in a patent or patent application you currently have, that is "new art" and must legally be named as "inventor" or "co-inventor". if he/she is an inventor and you don`t include him/her on the patent it can invalidate the patent.
2. you absolutely should have confidentiality agreements signed, non-compete agreements signed (when applicable), and a contract with the engineer that stipulates compensation, requirements and rights (such as... ownership of all improvements and work product conducted while under contract are owned by you and not the contracted engineer", etc., etc.)
3. one creative strategy to consider is having the engineer be compensated with a portion of any revenues (royalties, in the case of licensing the invention) you generate. that way, their future opportunity has a lot of upside instead being limited to simply the hour fees for the work. this also aligns your interests with them... brings out their inner entrepreneur and best efforts in many cases.

hope this helps!

rich

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Rich Sloan , Co-Founder, Chief Startupologist, StartupNation

Thanks guys,

You gave me some great ideas and were very helpful. I have NDA`s signed by those I have been working with, including my engineer. This community is a great place to go for ideas. Thanks Startupnation.

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Allan Thorne President Rock Solid Innovations LLC RockSolidInnov@sbcglobal.net www.RockSolidInnovations.com 408-786-6958

 

Great responses, Rich and Jeff, I only have one comment.  If you are having design work done where there is a possibility of inventorship or authorship, I recommend a consulting agreement.  Most consulting agreements include assignment language, which is what you need to make sure your co-inventor (in the case of patents) or co-author (in the case of copyrighted material) assigns their interest back to you. 

Why is this important?  Each inventor, absent an assignment or agreement otherwise, has an undivided interest in the whole patent. Yes, they can run off and license, assign their rights, or start manufacturing and not account to you for profits.  Under copyright, the co-author has to account for profits to another co-author. 

Before you file your patent application, make sure your designer executes an assignment to you or your company. 

 

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Mitchell M. Musial, Esq. Principal Mitchell M. Musial II, PLLC Intellectual Property & Business Law (P) 248-672-2000 (F) 248-363-9404 email: MMusial@MMMPLLC.COM

excellent contribution, mitchell!

rich

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Rich Sloan , Co-Founder, Chief Startupologist, StartupNation