Ownership of Intellectual Property designed by me

[eeleigh]

What is the name of your state (only U.S. law)? California

I am an electronic engineer who was approached a few months ago by an individual who first wanted an obsolete product design redesigned, then he approached me about a new and much larger project. I was supposed to receive a per unit royalty on the first small product, then was promised an agreement for ongoing compensation and stock ownership in his new company for the much larger product design. He asked me to write up a draft of what the agreement should cover which I did (and he agreed to the terms, etc. I set forth), and he was to forward that to his lawyer to be turned into a legitimate legal document. To date, I have over 550 hours of work in on the projects, but he has put nothing in writing or compensated me in any way, nor has he formed the new corporation which I was to own stock in. I have learned his lawyer has cut him off for non-payment, and the rest of his plans seem to be falling apart due to non-payment of bills and mismanagement in general. I have no interest in his trademarks or stealing his customers, etc. All I am wondering is if I still "own" the work I have done so far. It could be used for unrelated products. Any thoughts that anyone might have would be most welcome. Thanks Much!

 

[quincy]

What is the name of your state (only U.S. law)? California

I am an electronic engineer who was approached a few months ago by an individual who first wanted an obsolete product design redesigned, then he approached me about a new and much larger project. I was supposed to receive a per unit royalty on the first small product, then was promised an agreement for ongoing compensation and stock ownership in his new company for the much larger product design. He asked me to write up a draft of what the agreement should cover which I did (and he agreed to the terms, etc. I set forth), and he was to forward that to his lawyer to be turned into a legitimate legal document. To date, I have over 550 hours of work in on the projects, but he has put nothing in writing or compensated me in any way, nor has he formed the new corporation which I was to own stock in. I have learned his lawyer has cut him off for non-payment, and the rest of his plans seem to be falling apart due to non-payment of bills and mismanagement in general. I have no interest in his trademarks or stealing his customers, etc. All I am wondering is if I still "own" the work I have done so far. It could be used for unrelated products. Any thoughts that anyone might have would be most welcome. Thanks Much!

I am a little unclear about what it is you are working on and under what conditions.

Is the individual who approached you about working on the project your employer?

 

[eeleigh]

Reply to questions

Hi Quincy,

Thanks so much for your reply... to answer your questions, the sort of products are after market add on items for autos, consumer products basically. The fellow who approached me sells products through car dealers generally. He is not technical himself, nor does he have and technical staff employed, so he was referred to me as a consultant or contract/freelance designer. I have my own company and do this full time. I am not an employee of any company associated with this person. Also, I have not taken a cent in compensation for the work. My work entails taking a concept which has no specific implementation strategy or technology in mind (i.e. can you build me a box that does this or that...), and defining a specific technology, architecture, then designing out the hardware and software to actually build the product. Hope this answers your questions.

Thanks Again,
Leigh

 

[quincy]

Hi Quincy,

Thanks so much for your reply... to answer your questions, the sort of products are after market add on items for autos, consumer products basically. The fellow who approached me sells products through car dealers generally. He is not technical himself, nor does he have and technical staff employed, so he was referred to me as a consultant or contract/freelance designer. I have my own company and do this full time. I am not an employee of any company associated with this person. Also, I have not taken a cent in compensation for the work. My work entails taking a concept which has no specific implementation strategy or technology in mind (i.e. can you build me a box that does this or that...), and defining a specific technology, architecture, then designing out the hardware and software to actually build the product. Hope this answers your questions.

Thanks Again,
Leigh

It appears, based on what you have said and absent any written and signed agreement, that you own the work you completed and all rights in this work.

Is the guy questioning your ownership?

 

[eeleigh]

Questioning Ownership reply

Hi Quincy,

Thanks again for the input. He is not officially or legally questioning this. He has just made random comments to people about how myself and others (who I don't even work with) are all out to steal his ideas. I should add that this person is making all sorts of accusations about nearly everyone he has come in contact with, to the point where his credibility is fading fast, and his emotional state is in question.

Leigh

 

[eeleigh]

More info

By the way, we signed a letter of understanding, but that very simply said we intend to pursue a relationship which would take the the form of his new corporation and an agreement between our companies. It gave no specifics, made no promises and was an "at will" letter. Also, I never signed a non-competition agreement or any other agreements.

 

[LdiJ]

By the way, we signed a letter of understanding, but that very simply said we intend to pursue a relationship which would take the the form of his new corporation and an agreement between our companies. It gave no specifics, made no promises and was an "at will" letter. Also, I never signed a non-competition agreement or any other agreements.

Again, absent any formal agreement any work that you have done is your own. He could possibly make a case (although it seems potentially slim) for royalties from you based on ideas he put forth that contributed to your work, but as far as claiming ownership to your work that seems far fetched based on what you have explained here. You might want to have an attorney review your "letter of understanding" to be certain, but again, based on what you have described here I cannot see him being able to claim any ownership of your work.

 

[quincy]

By the way, we signed a letter of understanding, but that very simply said we intend to pursue a relationship which would take the the form of his new corporation and an agreement between our companies. It gave no specifics, made no promises and was an "at will" letter. Also, I never signed a non-competition agreement or any other agreements.

The letter of understanding would need to be reviewed as would the agreement that was drafted but not finalized but, from what you have said so far about the contents of the one agreement and the failure of either of you to sign the other agreement, it still does not sound like the ownership of the works or the rights in them has changed from you (the creator/inventor) to the other guy whose ideas spawned the works created. It is a bit fuzzier to me now, though, if your "company" might be the owner and not you. Are you your own company?

Also fuzzy: Who owns or owned the products that had the "add-ons" added onto? If the fellow provided you with products to work on, that would throw into question ownership of the resulting work.

But, without a non-disclosure agreement in place to protect an idea, ideas are free for anyone to use and develop. The fact that your work resulted from his ideas should not be a problem. Without a work-for-hire agreement or other signed and written agreement relating to the work, and without a clear employer-employee relationship, and without any compensation received by you for the work completed, I do not see that the fellow has a claim he can pursue against you for what you have developed. He might, again, however, have some claim to any products he supplied for you to work on.

You can have the whole situation personally reviewed by an attorney in your area for a better idea of who owns what. Without the particulars and without knowing the specifics of what agreements were and were not made, it is hard to say anything for sure.

Good luck.

 

[eeleigh]

Thanks

Thanks again for your kind time and your thoughts. I feel better.

 

[eeleigh]

Letter of understanding

Yes, again the letter of understanding was very brief and does not in any way discuss rights, just says we planned to pursue a relationship. Also, the letter of understanding can be cancelled at will without reason by either party, so I will send a certified letter stating I am opting to cancel.

 

[eeleigh]

contents of letter of understanding

FYI, here was the letter...


Memorandum of Understanding

Between

(Partner1)
xxx
and
yyy
(Partner2)

This Memorandum of Understanding (MOU) sets for the terms and understanding between the (partner1) and the (partner2) to engage in a business collaboration where one company (partner1) will own and sell electronic products primarily for the automobile industry and the other (partner2) will provide product design and support services to the first company for a percentage of the first company’s revenue estimated to be 20% to 25%, to be finalized upon completion of corporate documents. It is assumed that payments will be regular corp to corp unless otherwise advised by counsel or accountants.

Background
Partners have come together and determined that there is a sound basis for a mutually beneficial and profitable line of business to be created.


Purpose
The purpose of this memorandum is to solidify and agree to the relationship until all required corporate work is completed.

The above goals will be accomplished by undertaking the following activities:
(List and describe the activities that are planned for the partnership and who will do what)

Reporting
(partner1) shall be the primary administrator of this agreement and evaluate its ongoing effectiveness.



Funding
(partner1) plans to fund the ongoing work at a monthly amount of $xxx for xx months. The the completion of this phase, the financial agreement will be as specified in the introductory paragraph above, unless agreed otherwise.

Duration
This MOU is at-will and may be modified by mutual consent of authorized officials from (xxx and yyy). This MOU shall become effective upon signature by the authorized officials from the (xxx and Leigh yyy) and will remain in effect until modified or terminated by any one of the partners by mutual consent. In the absence of mutual agreement by the authorized officials from (list partners) this MOU shall end on (end date of partnership).

Contact Information

 

[quincy]

FYI, here was the letter...


Memorandum of Understanding

Between

(Partner1)
A
and
B
(Partner2)

This Memorandum of Understanding (MOU) sets for the terms and understanding between the (partner1) and the (partner2) to engage in a business collaboration where one company (partner1) will own and sell electronic products primarily for the automobile industry and the other (partner2) will provide product design and support services to the first company for a percentage of the first company’s revenue estimated to be 20% to 25%, to be finalized upon completion of corporate documents. It is assumed that payments will be regular corp to corp unless otherwise advised by counsel or accountants.

Background
Partners have come together and determined that there is a sound basis for a mutually beneficial and profitable line of business to be created.


Purpose
The purpose of this memorandum is to solidify and agree to the relationship until all required corporate work is completed.

The above goals will be accomplished by undertaking the following activities:
(List and describe the activities that are planned for the partnership and who will do what)

Reporting
(partner1) shall be the primary administrator of this agreement and evaluate its ongoing effectiveness.



Funding
(partner1) plans to fund the ongoing work at a monthly amount of $xxx for xx months. The the completion of this phase, the financial agreement will be as specified in the introductory paragraph above, unless agreed otherwise.

Duration
This MOU is at-will and may be modified by mutual consent of authorized officials from (A and B). This MOU shall become effective upon signature by the authorized officials from the (A and B) and will remain in effect until modified or terminated by any one of the partners by mutual consent. In the absence of mutual agreement by the authorized officials from (list partners) this MOU shall end on (end date of partnership).

Contact Information

Could you please edit your post to remove the real names. You can substitute the letters A and B (as I have above). Thanks.

Analyzing agreements and contracts is outside the scope of this forum. For those who are attorneys on this forum, it would be unethical to do so and for those who not attorneys on this forum, it would be practicing law without a license.

That said, MOUs are not meant to be legally binding contracts. You should still have it and the drafted (but not signed) agreement reviewed by an attorney in your area, however, along with all facts of your relationship with the fellow with whom you intended to go into business.

 

[eeleigh]

corrections

Oh, so sorry... my bad. I have removed the names and re-saved. Thanks!

 

[quincy]

Oh, so sorry... my bad. I have removed the names and re-saved. Thanks!

Thank you for editing your post, eeleigh.

Sending a certified letter to the guy, formally cancelling your intent to formalize the MOU, sounds like a smart idea. This fellow might not be the best of all people to have as a business partner.

It is too bad you were not compensated for all of the hours you worked on the project, though.

Good luck.