In need of advice!

[Electron]

Hello,

I am an inventor which will be patent pending as of April,26, 2008 at the uspto. I have been working on an invention for 4 years now and I still have another two to three years to go. I currently own a technological company with a partner (lets call him jack) for twelve years now. We recently teamed up with a third partner (lets call him frank) the latter partner being a lawyer. The patent has been on the provisinal stage since April- 2007. The filing for a non provisional the patent (registration the actual patent) and the registration for the PCT will come to a total cost of approximately 24K.

I as the inventor feel that I have put in most of the work for the invention, but don't mind sharing the patent rights equally between my 3 partners. I believe in the old American slogan, that

*unity makes the force*

We are soon ready to draw up the shareholders agreement stating the amount of shares to each partners, right of veto, individual tasks and so forth. As for the shot gun clause, we have agreed that if any party wants out of the business, he can simply sell his shares to the remaing partners however upon 1st refusal of this offer the leaving party has the right to sell his shares to an outside party resulting in a new partner to the company. In summary, two parners are not allowed to buy one parner out, but one partner can decide to leave and sell his shares.

My question is, as an inventor, is there anything else I should worry about and according to all you inventors is this a good deal!

All feedback mostly appreciated.
Robert

[Electron]

Also,

One more thing that most inventors would not be very happy about that will be stipulated in my shareholders agreement with my partners, is that if ever I leave *the inventor*, I am obliged to leave the technology (invention) and source code in the company and can't use it to further persue other projects with this technology and source code.

Again, does all this appear to be fair to you... All feedback appreciated

robert

[Kevin Lee]

As for the shot gun clause, we have agreed that if any party wants out of the business, he can simply sell his shares to the remaing partners however upon 1st refusal of this offer the leaving party has the right to sell his shares to an outside party resulting in a new partner to the company.

Hi Robert,

It's great to have you here!

With respect to your question, you may want to include a clause that would allow you and your remaining partner to have some sort of say or control over who the leaving partner can sell his/her share to. For instance, if a partner wanted to leave or suddenly died, but you didn't get along with his/her spouse (and he/she was the beneficiary), would you really want to work with someone you disliked? Probably not

[Electron]

Thanks Kevin for your reply!

Its just that I find it sort of difficult that if ever I want out, I must leave the technology behind and I am unable to continue other products using the patented technology. After all, I did invent it didn't I?

Now, I know that the management side is just as important as the R&D, but lets face it, if I (the inventor) has invested 10000 unpaid personal hours in developing all this technology, all the good management in the world would be worth nothing without my innitial invested effort which went into the product!

I sort of feel a little trapped!

Thankyou for your warm greeting and hope to chat with you again!

PS thanks for the tip about the clause that would depict really not wanting to work with someone I dislike.

with regards
Robert

[Kevin Lee]

Thanks Kevin for your reply!

Its just that I find it sort of difficult that if ever I want out, I must leave the technology behind and I am unable to continue other products using the patented technology. After all, I did invent it didn't I?

Now, I know that the management side is just as important as the R&D, but lets face it, if I (the inventor) has invested 10000 unpaid personal hours in developing all this technology, all the good management in the world would be worth nothing without my innitial invested effort which went into the product!

I sort of feel a little trapped!

Thankyou for your warm greeting and hope to chat with you again!

PS thanks for the tip about the clause that would depict really not wanting to work with someone I dislike.

with regards
Robert

No problem Robert!

Just another thought...

In your "Assignment of Inventions" (or IP Assignment?) contract, you should ensure that the member who leaves can't join a competitor or share your trade secrets with others and waives his/her moral rights to restrain or claim damages for any distortion, mutilation or other modification of the Technology or any part thereof whatsoever, the right to be associated with the Technology and the right to restrain use or reproduction of the Technology in any context and in connection with any product or service.

And if you're feeling trapped, perhaps you guys can include a clause that grants the person who leaves a non-exclusive license to re-use or re-sell the "technology" for personal or commercial use so long as such re-use or resale is not, directly or indirectly to a competitor. For greater certainty, the person who leaves may not re-use or re-sell the invention, client list or intellectual property.

For example, let's say you created the coding for the greatest online business networking website, but you decided to leave your partners. Then you should still be allowed to use that same coding and alter it to start up an online dating website or whatever. Know what I mean?

Hope this helps!

[Electron]

Thankyou for your advice Kevin!

I really appreciate your input buddy!

Robert

[bmueller47]

Hi Robert,

You said say Frank is a lawyer. How well do you know him/her? I just think, if you don't know him/her very well, there is a possibility he would draft the contract for his own beneft.

Would it be better to contact an independent lawyer? Just a thought.


Regards

Beat

"Unlock People's Potentialsl!"

[Electron]

Hello Beat!

I appreciate your concern.

I have known for aprroximately 12 years and he is a good fellow. He is a man of principle and I do trust him, Im just thinking ahead.... thats all!

Thanks for you feedback my freind!

Regards
Robert

[Kevin Lee]

Thankyou for your advice Kevin!

I really appreciate your input buddy!

Robert

Hi Robert,

Glad I could help I know what you're going through because I went through a similar situation when my former business partner (also my best friend) wanted to leave our company and sell me his shares.

With that being said, I would still side with Beat's suggestion to have a third party lawyer to draft your legal documents so that in the rare event that a dispute arises, no one can point the finger at the "lawyer" partner and accuse him of foul play. Legal jargon on partnership agreements can be a bit difficult to interpret for us regular folks, so I say it's worth paying the extra money to have an outside party handle it.

While I'm sure your lawyer friend is a trustworthy person and man of principle, people can change when times get tough and money is being lost.

By the way, can I ask why you decided to share your idea and partner with 2 other people? Was it just for additional capital?

[Electron]

Hi Kevin,

I currently own a technological business with my partner for twelve years now, and I figure that my partner and I can't really do it all, so we thought of a third partner.

But I will be honest with you, I feel since I am the inventor, I should have the option of holding onto the technology in the event that l leave the company.

Afterall, it is me that has been cracking my brain to get the invention done. So I am basically bringing in a lion's share of effort and money and I think that I deserve a Lion's share of equity or atleast some special clauses that would benefit me in terms of preserving the invention rights for any future use in the event I wish to leave the company. But no, Frank wants me to leave the technology behind!

I think I will refuse Frank and continue with my current partner.

In any case I believe that the invention is the back bone of any business, and yes marketing and sales are important, but if you don't have a product on the shelf, what are you going to sell or market about!

The product I am making cannot be done without significant funding, so its because of me that this invention will be possible.

You know, its hard to give up your baby. In my case, if I accept Frank's offer to do the shareholder's agreement the way he wants, all needs to happen is if I ever don't get along with Frank or a new partner in the future, I either need to stay in term oil days in and days out, or I sell my shares and loose my invention.

Consider this,

the question is, can Frank ever, and I mean ever! do this product without me. And the answer is no. But can I ever make this product a reality, the answer is yes. So which would you choose?

The only thing is that I am giving up a smart man for the greed of my invention. This really makes me depressed because if I keep up with this fobia, I will never get a real corporate team strong enough to go world wide.

I just don't know how all these other companies around the world do it? I mean greed is an international thing isn't it? So how do they overcome it?
I would need an inventor that has gone down this road and can give me some words of wisdom in making this decision.

Nice chit chating again with you Kevin.

Depressed inventor, Robert

[Electron]

One more thing Kevin, you say that if I am feeling trapped,

"perhaps you guys can include a clause that grants the person who leaves a non-exclusive license to re-use or re-sell the "technology" for personal or commercial use so long as such re-use or resale is not, directly or indirectly to a competitor. For greater certainty, the person who leaves may not re-use or re-sell the invention, client list or intellectual property. Okay, so then I can turn around and team up with someone thats got serious cash, a silent partner of Samsun perhaps, is that fair to my partners?" Although this is a good idea, I think this is quite hard to police...!

And also, you say,

"For example, let's say you created the coding for the greatest online business networking website, but you decided to leave your partners. Then you should still be allowed to use that same coding and alter it to start up an online dating website or whatever. Know what I mean? "

After all I have gone through, I shouldn't have to go through more complications, getting technology to work is hard enough! My partners should understand this.

And also as you suggested a very good idea to have veto power in terms of accepting a new partner that bought out the shares of an old partner is nice, however this won't fly because, if one wihes to sell his shares and the company doesn't have the cash to liquify him the selling party will be forced to sell his shares to a new partner. At this point what if I never want to accept the new partner, this would put the situation in a stand still. In other words I have the right to veto any new partners!

Anyways I am looking high and low for a solution to this one, but I think I won't go with a third partner at this point.

Later Kevin!

With regards
Robert

[Kevin Lee]

Hi Kevin,

I currently own a technological business with my partner for twelve years now, and I figure that my partner and I can't really do it all, so we thought of a third partner.

But I will be honest with you, I feel since I am the inventor, I should have the option of holding onto the technology in the event that l leave the company.

Afterall, it is me that has been cracking my brain to get the invention done. So I am basically bringing in a lion's share of effort and money and I think that I deserve a Lion's share of equity or atleast some special clauses that would benefit me in terms of preserving the invention rights for any future use in the event I wish to leave the company. But no, Frank wants me to leave the technology behind!

I think I will refuse Frank and continue with my current partner.

Hi Robert,

Then perhaps what you need instead of another partner are angel investors or venture capitalists to help fund your invention. That way, you wouldn't have to share your "baby" with another person. Moreover, if you need more people to handle the workload, you might want to consider hiring some college interns since they're inexpensive (i.e. free labour) and often come equipped with enthusiasm and a new outlook on how things should work.

In any case I believe that the invention is the back bone of any business, and yes marketing and sales are important, but if you don't have a product on the shelf, what are you going to sell or market about!

The product I am making cannot be done without significant funding, so its because of me that this invention will be possible.

You know, its hard to give up your baby. In my case, if I accept Frank's offer to do the shareholder's agreement the way he wants, all needs to happen is if I ever don't get along with Frank or a new partner in the future, I either need to stay in term oil days in and days out, or I sell my shares and loose my invention.

I'd have to disagree with you that an invention is the back bone of any business because you can have a useless product like a common rock from the park and sell it for millions with the proper marketing. See the profile I found on the founder of "The Pet Rock", Gary Dahl:
http://www.evancarmichael.com/Forums/vi ... .php?t=846

However, you can have the greatest invention and product in the world and if no one knows about it or you don't market it properly, then you won't make a cent.

Besides, in "The Art of the Start", Guy Kawasaki says "Patents do not make a business defensible...Would we try to enforce the patent? The answers are, respectively, no, no, and no...unless you have the time (years) and money (millions) to go to court" (page 130).

Consider this,

the question is, can Frank ever, and I mean ever! do this product without me. And the answer is no. But can I ever make this product a reality, the answer is yes. So which would you choose?

The only thing is that I am giving up a smart man for the greed of my invention. This really makes me depressed because if I keep up with this fobia, I will never get a real corporate team strong enough to go world wide.

I just don't know how all these other companies around the world do it? I mean greed is an international thing isn't it? So how do they overcome it?
I would need an inventor that has gone down this road and can give me some words of wisdom in making this decision.

Nice chit chating again with you Kevin.

Depressed inventor, Robert

To answer your question, the other companies around the world succeed because they're more interested in building a business, creating value, and making the world a better place rather than focusing on the founder's pride.

Besides, no entrepreneur will live forever so should an entrepreneur only let go of his/her business when he/she dies?

Let's say Inventor 123 created a successful company named after himself and he suddenly got into a car accident the next day and died. Inventor 123's wife and son (who might've even been named "Inventor 123 Jr.") may not even want to carry on with the family business so then what? Will Inventor 123's company fail without him or will the other partners continue on?

Look at Steve Jobs, he’s the founder of Apple and even he got fired from his own company at one time. Everyone is replaceable.

[Kevin Lee]

You know, its hard to give up your baby. In my case, if I accept Frank's offer to do the shareholder's agreement the way he wants, all needs to happen is if I ever don't get along with Frank or a new partner in the future, I either need to stay in term oil days in and days out, or I sell my shares and loose my invention.

Consider this,

the question is, can Frank ever, and I mean ever! do this product without me. And the answer is no. But can I ever make this product a reality, the answer is yes. So which would you choose?

The only thing is that I am giving up a smart man for the greed of my invention. This really makes me depressed because if I keep up with this fobia, I will never get a real corporate team strong enough to go world wide.

While the creator of SpongeBob SquarePants may not have invented a technological product, he did invent one of the most popular cartoon characters of all time.

In the Toronto Sun article "SpongeBob phenom will dry up: Creator", it says "The SpongeBob SquarePants phenomenon will not last, according to its creator Stephen Hillenburg. 'The Simpsons are a miracle and nothing else will ever match that,' Hillenburg told the Sun in a Los Angeles interview. 'SpongeBob could never last that long.' Nor could Hillenburg survive doing it he says. 'I would want to move on'...As for the TV shows, Hillenburg says 'I'm not contracted to do any shows. It's really up to Nickelodeon. They own the property and its up to them whether they make more shows or not. Legally, Nickelodeon could continue the shows without him, Hillenburg says" (Friday, November 19, 2004).

If Hillenburg had never partnered up (and sold his rights) with Nickelodeon we may never have known of his SpongeBob character, nor would he have made any money.

Hillenburg is no less of an inventor than you are Robert, so you shouldn't feel bad if you have to let your "baby" go if it means helping your business move forward.

[litekepr]

I scanned all the exchanges and am working on some helpful thoughts, but I missed a couple of things --

1 - Why are you bringing in the third person?
2 - What will they contribute to your organization?
3 - You are the inventor - but what do the others bring to the group.
4 - Why are you thinking of equal partnership with each person?

I think that's it for the moment, but I might think of something else One important thing I want to mention in case I forget later - no matter how close you are to potential business partners, get everything in writing and its always good to have any complicated agreement reviewed by an independent person to protect your interests. Especially with an attorney in the mix - I would have the agreement reviewed by someone who is looking out for YOUR interest.

Shri

[OmnivoreInk]

If I can stick in my oar here...

I too think that it's necessary for an "independent" lawyer to take a look at the contracts to make sure that everyone is getting exactly what they think they are getting out of this partnership.

If a contract is written ambiguously, and there is a dispute - then the lawyers will make a fortune off you as you try to settle your differences. Since your partner is a lawyer, he'll have an advantage there...

Not knowing what your invention is... I assume you have some kind of clause should your customers be injured in any way, that you are not responsible for it? If it's some kind of application for example, that, if it crashes, will cause people to lose important files...these days they'll sue as soon as look at you to recoup their money, and get more out of it.

You might find this article of interest:

Is Facebook Built on Stolen Code? Court to Decide: http://www.marketingpilgrim.com/2007/07 ... ecide.html

This is what happens when partners fall out, or the "inventor" takes his code elsewhere...

I think an intellectual property lawyer needs to be brought into this.







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