Beware of Invention Promotion Scams!
Do you want to save yourself $10,000? That is about how much you will be paying those "invention assistance companies" you see on TV. Be very careful when dealing with them and the promises they make. I have read a number of agreements offered by these companies to inventors and all of them have many terms that are not in favor of the inventor. Yet every year many inventors will hand over thousands of their hard earned money to these "invention assistance companies" and get very little as a result. So what should you be looking for when you approach one of these companies? I would say body armor, but seriously here are some pointers:
Because of the number of inventors being taken by invention assistance companies the US government has written 35 USC 297 to protect inventors. 35 USC 297 is nice but it is best to talk with an attorney first before signing the agreement.
35 USC 297 allows you to ask the invention promoter the following:
Finally an attorney has certain ethical duties owed to their inventors. An invention promotion company owes no such ethical duties. An attorney who breaches their ethical duties to a client may lose their license to practice law in their state and to represent inventors before the patent office. Those licenses are very hard to get and represents years of hard work in school.
There are many considerations to take into account when licensing your intellectual property. Adding to the complexity of the agreement is that each type of intellectual property, whether it be patents, trademarks, or copyrights, have different concerns and problems that you need to pay attention to. For example with trademarks you will want to pay attention as to how your mark will be treated by the licensee. How will they be displaying your mark? What sort of training will they provide their employees? However here are some general guidelines for you to consider when licensing your intellectual property.
Asked and Answered: Although you may own certain intellectual property (ie. software code) I do not recommend that you take matters into your own hands when a breaching party puts it into use.
Question: If I developed a website and was never paid, do I own the website code or does my client because the code is hosted on his server?
Facts: I am a freelance web developer who designed and coded a website which is hosted on my client's server and under his domain name. Several months after completing the website, I still have not been paid. The client claims that he will be able to pay me in about a month. I have access to the server, and wrote the code entirely myself. Do I have the right to take down the code, given that I wrote it and have not been paid? Does the code belong to me in the first place? And does it matter that the text "Copyright" was included on the footer of all the pages?
Answer: There are two areas of law that are raised by your facts. First are laws related to copyrights and second are laws related to contracts. I will apply the facts you have provided to each set of laws.
A copyright is automatically granted to the creator of certain original works of authorship. The “work” must be a substantial expression of an idea placed onto some tangible medium. The code you have written is substantial because the code required to support a website usually takes many pages when printed. The code you have written is also an expression of an idea because the website is the idea and to express the website you need commands to control the placement of images, text, buttons, and the such. Finally it is tangible because the software code is stored in files that can be copied or printed. Thus the author of software code has the right to exclude others from copying the code.
When is this right granted? It is granted to the programmer as soon as the work is completed. Moreover the code does not have to be labeled with a copyright notice for the right to be granted.
In summary, and only applying copyright law to the facts, the code is yours and you have the right to exclude others from copying it. You can exclude your client from copying the code so if you were to take down your code and your client restores the code from a backup that would be a copyright violation.
Recommendation: I would recommend that you first speak with a copyright attorney and provide him/her with all of the facts in this matter. I would think that the attorney would have you register your code with the US Copyright office as that will give you additional rights and protections and that you also place a copyright notice at the top of each file. At this time there does not seem to be a copyright violation as you, the owner of the copyright, copied your code to the server.
A contract is an agreement between two or more parties where there has been a “meeting of the minds” and each party has given something in exchange for a benefit. A “meeting of the minds” is a legal phrase that means all of the parties understand the agreement and its terms. Here you were to give your time and skill to create a website in return for money and your client was to give his/her money in return for a website. Since the “exchange” has not occurred when it was expected to occur we say that the contract has been breached. When a contract has been breached you can seek remedies. A contract for services, such as what you are performing here, does not have to be in writing to be enforceable.
In your facts you made no mention of a contract. I assume then that the contract was simple - you provide the code and your client provides the hardware and the money to pay you. A more complex contract would also transfer the copyright to the client by a license or outright assignment. Assuming a simple contract that does not include the transfer of your copyright to the client the copyright still belongs to you, the creator.
In summary the client has breached the contract by not paying you for your services. You can seek a court order for full payment of your services. You can also seek a court order to have the client remove your software code from their server.
Recommendation: Again, I would recommend that you first speak with a business attorney and provide him/her with all of the facts in this matter. I would think that the attorney would recommend that you use the small claims courts in your state if the amount of money you are seeking from your client is within the limits of small claims court. I would also think that the attorney would not recommend that you take down the website due to lack of payment without a court order. That could land you into trouble.
If you have a question you would like to have me answer feel free to submit the question on the Contact Me page.
Asked and Answered: A successful business is built on relationships between you and your suppliers and you and your buyers. Cutting corners can cause you to lose these relationships or get you into legal trouble.
Question: Is it against the law to buy a product, repackage it with my company's brand/product name and then sell it online and/or in stores?
Facts: I would like to buy in bulk products from a company, repackage the product using a different container with my company's brand and product name, and then resell it on my company's website as well as in stores. The product will not be changed in any way. Does this violate any laws?
Answered: Like many of the questions posted here by individuals such as yourself there is just not enough information to come to a conclusion. I will present you with some guidance so that you will understand some of the legal issues being raised here. However I would strongly recommend that you sit down with an “Intellectual Property” attorney and disclose in detail your plans. An ounce of prevention is worth a pound of cure they say and that applies here. Making the wrong decisions may impact your relationship with your supplier and your customers and cause harm to your business.
One area of law raise here is Trademarks. Many people think of logos that identify a company when considering trademarks. However that is just one a small part of the laws regarding trademarks. The Aspen outline on Intellectual Property describes trademarks as follows: “Trademarks permit consumers to identify the source of goods or services. The purpose of trademark law is to ensure that consumers are able to rely on marks in exercising their purchasing preferences by prohibiting competitors from using marks in a way that confuses consumers about the source, sponsorship, or affiliation of goods or services.”. Here you are presenting to the consumer a product as if you were the source product because you are repackaging the product with your company’s brand and product name. A consumer purchasing the product would not realize that the source of the product was your supplier and not you.
Another area of law raised here is Patents. A patent owner is granted by the Federal government the exclusive right to prevent others from infringing on the patent. A patent may be infringed by even selling a patent protected product without its owner permission.
There may be other areas of law raise by facts that you have not included here. In general I would recommend that not resell your supplier’s products in your own packaging unless you have obtained their written consent to do so. Speak with an Intellectual Property Attorney. They will be able to help you in drafting the agreement so that your rights are protected and your business will not be harmed by this practice.
Asked and Answered: So you have a great idea and you spent every spare minute outside of work creating and developing your idea. Is it yours? Read on for a discussion of this very important topic.
Question: Do I own ideas and research that I have put together off the clock?
Facts: I am presenting an idea for a new division for my company. I have countless presentations and financials that I have put together on my time. If my company decides it is not a route they want to go, do I still own the idea and research?
Answer: First look at any agreements you signed with your employer when you started. Most employer / employee agreement have a clause basically saying that all intellectual property (IP) you create, regardless if you are on the clock or not, belongs to the employer. If the IP you create outside of work is in a different field of work than what your employer is in you may have an argument in court to say that the IP belongs to you. However from your facts it seems that the IP is in the same field of work that your employer is in so their legal position is stronger than yours.
If there are no agreements between you and your employer then your legal position is stronger but it would still be weaker than your employer's legal position. The courts usually take the view that IP created by an employee belongs to the employer. Note that this view does not apply to independent contractors where the result is the opposite unless the independent contractor was hired specifically to create the invention. However from your facts you seem to be an employee.
In summary, considering you fact that the IP you created on your own time is in the same field of work as your company is in, it is likely that the IP you created belongs to your company.
I would recommend that if your ideas are rejected by your company that you ask your company to release those ideas to you. This may involve some negotiation and an agreement will have to be created. Contact an IP attorney to help you in this matter. The advantage of this approach is that it will reduce the risk of litigation later on if you do use the ideas. Another advantage is that the consideration you have to provide your company to release the ideas will be less than what you would have to pay later on if you do use the ideas and they were successful. An example of this is Facebook. If Mark Zuckerberg, founder of Facebook, got an agreement from the Winklevoss twins to release the idea to him I am sure he would have had to give them far less consideration than the millions he paid them after Facebook was successful.
Asked and Answered: When you start a business always, always, always get everything in writing with your partner. When rough times come, and they will, it will be the written agreement that will get you through it.
Question: If I want out of my business with my partner and we have no exiting contract, what are my options?
Facts: I went into business about a year ago and I want out and my partner is saying no. What are my options and can I take the stuff that I purchased in my name as a loan to the business until it was able to purchase it's own equipment and furniture?
Answer: All too often people enter into business with each other without establishing, in advance, what is to happen when certain events occur. It is so important to consult with an attorney when the business is forming to discuss situations such as this one. Your attorney will know what events can lead to hardship between partners and can put into place an agreement on how to deal with these events. Your story is an all too common occurrence.
Basically you will have to look at your leaving the business as a possible breach of contracts you may have between yourself and your partners. Note that you may have “implied” contracts between yourself and your partners along with “express” contracts, both in writing and oral. Implied contracts are contracts that are created from a party’s reasonable reliance on the other party’s words or actions. Then you will have to look at the harm you will be causing your partner by breaching those contracts. The more serious the harm the more your partner can sue to recover.
You only mentioned one possible contract in your fact pattern - “Can I take the stuff that I purchased in my name as a loan to the business until it was able to purchase it's own equipment and furniture?” This seems to be a valid contract as you gave money to the venture in return for an interest in the venture. Barring an agreement otherwise, money that is brought in by the partners determine their percent interest in the business. It is not considered a loan. For the equipment to have been a “loan” you will need to show the court that you and your partners agreed that your money was to be a loan that was to be repaid by the business and that your money was not an investment into the business. If this is a “loan” then, according to the terms of the contract, have to wait until the business profits so as to pay you back. If you take the equipment away then your partner can sue for damages or for an order from the court for you to return the equipment. If this is an investment then you will have to wait until the business has profits.
You can ask your lender to replace your name with the name of your partner. This is called a “Novation”. However all three parties, you, your lender, and your partner, will have to agree to this change.
My advice would be to consult with an attorney and bring to the consultation all agreements, both implied and express, between you and your partner. Then after the consultation talk with your partner and negotiate an exit strategy for you. No one wants to be in business with a disinterested partner but on the other hand your breach should not cause your partner any undo hardship.
Asked and Answered: Nondisclosure Agreements (NDA), are they effective? Even with a solid NDA in place there are no guarantees the other side will not run with your idea. Here I give some background info on NDAs.
Question: How do I insure a business conversation remains confidential?
Facts: I am looking to start a new business service in order to improve the idea I looking to talk to owners of small businesses. Is there some sort of agreement or form that can be used to insure everything that is discussed will remain confidential.
Answer: There exists a set agreements called "Nondisclosure Agreement" and "Nonuse Agreement". A search on the internet will turn up a number of hits on example agreements. Although I cannot endorse any of them and they would need to be modified to your specific needs they will provide you with a good starting point and an attorney can make any necessary final adjustments.
It is important to note that if a business could prove that your idea is ordinary, obvious, or that they were already in possession of it, they could argue that there was no agreement formed because they got nothing of value in exchange for their promise not to disclose. The reason for this is that the law of contracts holds that an enforcable bilateral contract is a contract where promises are exchanged for consideration. So basically you are promising to give valuable information to the business in exchange for their promise not to disclose or use it. If you do not give valuable information to the business then the business would be free to disclose it or use it.
A valuable idea is an idea that is novel. You can search the patent database at patents.google.com to see if your idea is novel. If your idea is indeed novel then a provisional patent application will do a better job of protecting your idea than a NDA would.
My advice is to do some research on the internet on these agreements and on your idea. Then meet with an attorney to draft an agreement that will be enforceable in court or help you file a provisional patent application to better protect your idea.
Asked and Answered: If you enter into a contract with another party you must adhere to the terms of the contract unless you have a legally recognizable excuse. However before claiming an excuse, get with an attorney. A single visit can save you mon
Question: What to do about a client who cancelled my payment and kept the work files that I created?
Facts: I build websites and had a client who was well pleased with my work until I was called away on an emergency; I left the state to deal with a death in my family for 10 days. I was approximately 2/3 completed with her project (for which we had a contract). She flipped out because I had to delay her project. I reassured her that I would complete it upon my return. However, she contacted her credit card company, claimed I didn't deliver what was promised, and without another word the money was removed from my bank account. She has the files I completed to date on the website, as well as the 4 domains that I paid for.
Analysis of Contract - Was it breached? Can an excuse be claimed? What is your liability?
When you enter into a valid contract with another party you are bound by the terms of the contract. If the terms call for completion by a certain date then you are obligated to complete the contract by that date. So assuming that a valid contract was formed then you breached the contract by failing to complete the contract by the agreed to date. There are some excuses that be claimed by the breaching party. Some examples are:
Waiver: If the other party relinquished a right to the contract it is called a waiver and will excuse you from performance. Here if the other party waived their right to the contract due date then you are “excused” from that obligation. According to your facts the other party did not make such a waiver.
Substantial Performance: This is a rather complex excuse but basically if the other party received substantially what they bargained for then you may be “excused” from performance. However being 2 / 3 complete does not constitute Substantial Performance.
Impossibility of Performance: This will act as an excuse if it becomes objectively impossible for anyone to perform a condition. An example would be if a contractor is nearly complete in construction of a building and through no fault of their own the building burns down. If nobody could complete the building on time then the contractor is excused. However this excuse will not apply because you could have completed the work on time.
There are a few other excuses but they clearly do not apply.
So in summary it seems as if you did in fact breach the contract and your breach is not excusable. The client has a right to recover their losses as a result of your breach. However your client has to prove those losses in order to recover and that may be difficult for them to do. If they cannot prove those losses then they are in a weak position to win in a lawsuit against you.
Remedy of Restitution - Does it apply? What can you recover?
Now let us turn our attention to the work you have performed for the client. In contract law there exists a remedy called “Restitution”. This is a remedy to prevent what we call “unjust enrichment”. From your facts it seems that your client kept items you produced even after she revoked her payment to you. Thus it seems that your client was “enriched” and that the “enrichment” was “unjust” because the client never paid for it. You have a right to demand that your client pay for those items.
Asked and Answered: Going into business with a friend? Don't be an idiot, get advice from an attorney and an agreement in writing. This question gets replayed time and time again. Do you want to be next?
Question: If my husband has the business license under his name but the ex-business partner has the fictitious business name under his name, who is liable if sued?
Facts: My husband started a business and needed some backing so he had a ” friend” partner with him for the backing. They transferred the fictitious name to his ”friends” but never the business license. That remains under my husbands name. And now the ” friend” doesn't find the business important enough to pour into so had stopped paying on the services to supply the clients who have already paid. Therefore, they are unable to use the service. So my question is who is liable if sued?
Answer: There are a few different issues in your facts, three of them are important. There are two contracts and we have to ask if they are valid and enforceable. If the contracts are valid then the non breaching party can seek a remedy from the breaching party. The other issue is the type of business that was formed here between your husband and his friend. The type of business formed will determine the limits of liability. First let us look at the type of business that was formed.
There are two types of business models that may be supported by the facts – partnership and LLC (Limited Liability Company). A LLC must be registered by the state and must follow certain rules and pay certain fees mandated by the state you are in. A partnership has no such requirement. However LLC, as the name implies, has an important advantage over partnership in that liability is limited. In a partnership liability is unlimited. If the business were an LLC then the client must limit their recovery to the assets of the business itself. However it seems from the facts that the business in question was a partnership. If the contract between the clients and the business are valid and the contract is breached the clients may seek recovery from both business and personal assets in order to recover their losses. So assuming the business is a partnership then at this point in the analysis both your husband, and his friend’s, business and personal assets are at risk.
There are two contracts in your facts. The first contract is between the clients and the business. If the business breaches the contracts then the clients may seek recovery from the business. If the business is a partnership then the clients may seek recovery from the personal assets of the partners themselves. From the facts it seems that both your husband and his friend have an ownership interest in the business. Therefore the clients may seek to recover their losses first from the business. If that does not satisfy their losses then they may seek recovery the personal assets of your husband, or his friend, or both.
Up to this point things are not going well for you but the second contract may offer some hope. The second contract is between your husband and his friend. The agreement was that the friend would provide money to the business and in return your husband would give his friend an ownership interest. If your husband held up his side of the bargain then so must his friend, otherwise his friend has breached the contract/agreement. If the friend now refuses to provide the money that was agreed to then your husband may sue his friend to enforce the agreement. That may provide the funds necessary so that the first contract is not breached.
Fictitious Business Name
Finally let me deal with the license/fictitious name issue. It does not matter who has the license or name. You have to look at who has the authority to make contracts with the client. We call this agency law. It seems from the facts that both your husband and his friend had the actual authority to enter into contracts with clients. That is all that matters here.
Asked and Answered: In the past business transactions were treated as "Caveat emptor", latin for buyer beware, transactions. It is no longer that way as buyers, especially under the UCC, have rights as well.
Question: Can a gold store make you pay back money after they buy your item and then later find out it's fake?
Facts: I had no clue that it was not genuine.
Answer: There are two areas of law that are applicable here - Common Law Contract Law and UCC Contract Law. If the gold was in such a form to make it unique than Common Law will apply, otherwise UCC will apply. The gold item is unique if it is the only one of its kind. Example would be a gold sculpture by a famous artist or a gold ring that had been in the family for many years. Those are one of a kind and cannot be replaced if lost. The facts here seem to indicate that the item is not unique. If that is the case then UCC law will apply. However I will analyze your question under both laws.
Common Law - Mutual Mistake
Mutual Mistake is a material misrepresentation of fact that goes to the essence of the contract. The facts do not indicate how you represented the gold item but if you told the gold store that the item was gold then you made a misrepresentation. If you stated to the store that the gold was the "best gold to be found in the state" then your statement is not of fact but what we call "puffing". However if you stated that the item was gold then it would be a fact. Here is suspect that you were not puffing but stating a fact to the store. Finally the fact went to the essence of the contract (your selling of the item to the store in exchange for money is considered a contract) because both you and the store believed the item to be valuable gold.
So in summary we have what is referred to as a mutual mistake. At common law there is no contract formed when both parties were mutually mistaken by the subject matter of the contract. Since no contract was formed the store has the right to request that you return the money.
UCC Law - Express Warranty
As discussed in the first paragraph I believe that UCC (Uniform Commercial Code) law is applicable here. Under UCC Law there exists a concept called "Express Warranty". An express warranty exists when the seller (you) makes a statement of fact, in writing or orally, about the goods being sold to the buyer. If you told the store that the item was gold then you have made an express warranty to the store that the item is indeed gold. If you told the store "I think this item is gold but I am not sure" then you have not made an express warranty that the item is gold. If you did make an express warranty to the store then the store can sue you to recover their loss.
Good Faith Sale
You stated that you believed the item to be gold. In legal terms we say that you acted in "good faith". However note that good faith does not "trump" an express warranty or a mutual mistake.
In conclusion, from the simple facts presented, it would seem to me that the gold store has the legal right to get back from you the money they paid for the "gold" item as long as they are willing to return the "gold" item to you.