Ideas within a business get ugly...

California.

So here's the situation:

There are three people, 'A', 'B' and 'C'. 'A' and 'B' have been in a business (1)together for years. Person 'C' was hired as an employee for business 1, which is retail. While working for business '1', 'A' and 'B' realized that 'C' excelled in design and designed print ads and website for 1. 'A' and 'B' come to 'C' one day with idea of starting a project to make a product and sell through existing business '1'.

'B' and 'C' work closely together for the next 6+ months, C designing everything, and B investing and producing. In this time, 'C' and 'B' turn this small project into a seperate entity, business '2'.

Idea turns to invention, invention gets an image, market sucks image and invention up-- things are going well. In this time 'C' and 'B' even get other retail stores to pick up invention. So now, after idea turns to invention and ~6 months pass, 'A' sees that '2' is doing well and wants to stake his claim.

'A' claims that he is entitled to partnership with company solely because he came up with the name. 'A' also claims that it is illegal not to include him due to the fact that idea originated with 'B', and therefore is essentially property of business '1'.

So now,

Partner A is disgruntled and threatens legal action if not included into partnership for '2'.

Partner B would prefer to (a.a) avoid legal action considering he's already in a successful business '1' with 'A' and (b.b) fears legal action due to the fact that '2' was started with money and credit from '1'. (do note that after initial funding, '2' paid back all debt and now works on its' own cash flow)

Partner C does not want partner 'A' involved with '2' because (c.c) 'A's is not needed, is not bringing anything to the table so-to-speak, (d.d) does not feel it fair after hundreds of hours spent creating original works and building image for '2', now that it is successful, should someone try to ride 'B' and 'C's wave and (e.e) 'A's sole focus is greed and has no interest in integrity, philosophy or future of '2'.


So that's it. My biggest question is, is partner A really in a position to just walk in a stake claim here? Would partners' B and C be better off just cutting losses, calling it quits and walking away? Does Partner B and C have any legal ground to ignore/fight A?

Thanks in advance. Let me know what you think...

This sounds much more like a question for the crack math team.

[divgradcurl]

So that's it. My biggest question is, is partner A really in a position to just walk in a stake claim here? Would partners' B and C be better off just cutting losses, calling it quits and walking away? Does Partner B and C have any legal ground to ignore/fight A?

This post with all of the A's and 1's is really hard to understand completely. However, from what I gather, it looks like C did some of the intitial creative work while an employee of A+B. If that's the case, then A may very well have a claim, maybe not to be included as a partner in the second company, but maybe for a part ownership of the product created (in part) while C was an employee.

You need to be talking with a lawyer who can review all of the actual facts.

Possibly, except that B+C did all the work, A has done nothing. And, C is not getting any sort of payment for the work besides the fact that he can tell people it's his. When a bank account was created early on, B+C signed an agreement, with a bank as a witness, that the company was owned by B and C.

I think you're right though, this situation is pretty complex and I think I need to actually see a lawyer. What kind of lawyer should I see though? What should I look for?

[divgradcurl]

Possibly, except that B+C did all the work, A has done nothing. And, C is not getting any sort of payment for the work besides the fact that he can tell people it's his.

None of that is really relevant if C was an employee of A and B; if C was an employee of A+B, then it is likely that anything C developed while an employee belongs to A+B, and not C at all.

Look for a lawyer who has experience in setting up partnerships and corporations, preferably one with some experience in IP as well, although the partnership\corporate experience is likely more important in your case.

CAUTION: Neophyte about to weigh in with an opinion!!!

It seems to me that C was not working for A&B but rather, was working for 1. As such the tangible rights to whatever C (or A&B for that matter) created while working for 1 should belong to 1 and be shared by 1’s owners (i.e., A&B). In other words, 2 may owe 1 some licensing fees or some such which A would, by virtue of her ownership in 1, be entitled to.

Does that make sense?