Hi, I got this offer with strange terms inserted about IP up to 12 month after termination of the paid work. Can some one explain to me pros and cons of this ?
"All work produced hereunder, including, without limitation, all inventions, ideas, creations, designs, discoveries, developments, techniques, expressions, improvements, computer programs, specifications, operating instructions and all other documentation, data or other work product related to the Services provided by the Consultant under this Agreement (whether patentable or subject to copyright, or not), which are first conceived, made or otherwise originated or acquired or first actually constructively reduced to practice during the Term or within twelve (12) months following the expiration or termination of the Term, whether preliminary or final, and on whatever media rendered (collectively, the “Work Product”), shall be deemed work made for hire and made in the course of services rendered for the Company and shall be the sole and exclusive property of the Company."
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sort of seems reasonable that if someone has paid you to do some work for them then that work belongs to them. But I'm no lawyer
Seems purposefully or carelessly long sentence to confuse the issue and allow to possibly bring litigation for agreement creator for your future inventions after payment for work has stopped.
"All work produced hereunder, including, without limitation, " separates work for hire from work done up to 12 month later. " or within twelve (12) months following the expiration or termination of the Term "
Procter vs Proctor :)
what Hugh was saying is that if Steve's business concept is viable and at this pointy is obvious that Steve's ability to execute will not be then anyone can just make a similar enterprise with better team and win market from Steve. And Huge cautioned Steve not to undervalue people who are adding value to the business by paying them 10 times less in equity, that creating business engine - i.e. developers. On idea stage prior to huge investment into the company in the order of over $100,000, developer bring potential value of $500k and Steve as a business person ether $250k or negative $250k, i.e. $500k - $250k = startup valued is only $250k just because there is a developer that agreed to work there full time. So such developer on un-funded "idea only" stage that may have some research or informal relationships made, gets more or less 50% of the startup vested over 4 years daily or weekly, without any clif or 30 day clif at the most and for US he gets at least minimum wage or more.
-- Hugh was understandably furious at Steve's misunderstanding of how startups work and how they fail. Most likely Steve got ether inexperienced local developer which means he will not even get what he bargained for or get exactly what he is paying;
or if he outsourced it to a remote team then they don't care about equity because they know that it will fail anyway and just happy to get £5k and their foot in the door and potential to milk Steve.
Maybe Steve only needs very basic MVP or not even fully functional nor secure nor performent nor manageable. Just something to show to inexperienced investor and get next chunk of money.
Your best bet is to talk to a lawyer who specializes in contracts like this. I would be very careful with this because, interpreted broadly, it would mean that you are effectively unable to work in your field for a year.
The answer will vary depending in which country you are in. If you are in the US or UK then any work that you producewhilst under contract, or in the service of another party, will belong to that 3rd party, on the premise that what you developed or produced would not hve come into being unless they had paid you to develop it. Reading the statement above, it seems that it was not written by a lawyer though as they are covering all possible bases for the company, and it is not written in a way that would be accepatble in a court of law. That said, the "intent" is clear and that is all that is needed to be proved in a court of law. The 12 months after termination clause is somewhat irrelevant as any work you produce whislt in the employ of a 3rd party, will belong to that 3rd party in perpetuity, and in this regard the statement is rather contradictory (whcih is why I'm sure it wasn't written by a lawyer !). I believe that what they are trying to say is that any "related" invention, creation, etc conceived or produced in the 12 month period after your engagement with the company, would also belong to the company, but in reality this wiould be difficult to enforce unless a direct link could be proven between the work you did for that company and a subsequent creation or invention. Either way what you produce for a company whilst in their employ elongs to that company unless you have a written statement to the contrary. I have some colleagues at a well known software company in Seattle, that have such an exclusion and which has allowed them to go on to develop IP of their own (and patent it in their name) - often there is a leaseback clause in that agreement that allows the employer to "lease" the IP from them at nominal cost, whilst the IP itself remains with the individual(s). I see this as a more common arrnagement these days, and its what I recommend to my own customers now (as well as to my board colleagues who I share a board seat with on for a number of companies) , as it actually stimulates creativity and new ideas without the people who are developing that IP to feel that they are being beholden to an employer that will "unfairly" reap the benefits of their efforts. Arrangements here can be complex, including the ability of the employing company to have the right to "acquire" the IP at a percent below market value at some point in the future. In return the employing company will also foot the legal costs of IP protection etc. It's a win-win scenario in my view and if you are working in a very specialist or niche area such a clause as the one you mention may be deemed unreasonable in a court of law anyway. So if you think such a clause may infringe your rights or potential IP options then re-negotiate, but be very clear why you are doing this. if you have already developed IP in this sector then make sure that the IP and any potential spin-off from it is excluded from your contracted or employed work, so as not to infringe anything. This requires a little "footwork" but if they value your skills it shouldn't be an issue. They'll only be concerned about the work that you do for them and IP developed under that engagement. Bottom line is that I can see holes in the clause above and its both lengthy, wordy and in some cases could be seen as contradictory. If you are really concerned have a legal IP specialist take a look at this.
Steve, UK law works similarly to US law, so the simpler the contract is the better. You don't need a template (usually full of solicitor-speak). Instead make sure that whatever you write cannot be misinterpreted by a reader outside the deal. Write your own draft covering your concerns. Have someone not involved read it to tell you what they think it says and to ask questions about anything they find unclear. Make adjustments, and then send to your new partner. Contracts are mostly about clarity and intent. Leave nothing to interpretation and your contract should be solid. The idea behind contracts is to never need to rely on them because everything in it was so clear to begin with. They're just a record of the understanding.
to Hugh Proctor - what a very odd response: you have absolutely zero idea who I am working with or what we are building together. The relationship between the guy that I've referred to as just "a developer" is a lot more complex than I have stated.
Perhaps I should have made it clearer, but I was keeping it simple for the purposes of the thread so we can all keep to the point. Rather than go off on strange ramblings that appear to be attacking others without reason and without first asking intelligent questions in order to fully appreciate the picture.
When you say " As soon as you finish the MVP and release the product, don't worry about your employees; I'll copy it if the business has any value ". Are you stating that, if you were in my developer/cto's shoes you would copy it if you were him? Or is that a public threat from you, hugh proctor, that you are going to come and steal my idea if it is any good? Sorry I am sure it is the first, but the grammar doesn't make it clear so I would just like to clarify?
You have two options when hiring "design" services. You either purchase the end product, with no rights to the raw files or conceptual components, or you purchase full rights which gives you ownership of all intellectual property that resulted in the created thing. Whether it's an invention or a logo, these are two different kinds of purchases. The latter usually costs quite a bit more and is usually negotiated up-front before it has increased in value by being put into use. Although laws vary slightly, without an explicit contract to purchase full rights, it is presumed you are only purchasing the end result, not all the work that went into generating the end result. In this way, you cannot treat a design as a template that anyone other than the creator could manipulate in a later iteration. The method of doing something is what's proprietary and protected, not the output in this scenario. You couldn't ask someone to write you a software program and expect them to show you the code behind it unless you also pay for the rights to the code, not just the software. The designer, software engineer, or think tank has the right to reuse the structure of the work they did to generate output for you, unless you pay them (more) to make their work exclusive to you.
Well, if you sign the agreement, the company that hired you to do the work will own the IP. This is a fairly standard "Work For Hire" agreement clause. The default under patent and copyright laws is that IP developed by an independent contractor is owned by the Independent Contractor. The language may be a bit overreaching with regard to the 12 months following the expiration or termination of the Term. The pro is that you are being paid for the work. The con is that you may be transferring later developed Technology to the company without further compensation.I suggest that you engage an experienced IP counsel to advise you confidentially (not on a public website) and help you to negotiate the agreement.
seems very logical and reasonable. if u are doing work for hire then the work you do for which you get paid for you cannot claim IP on it as you got benefitted from it. Now since you worked not he product you have an advantage about know what features it lacking so they need to protect themselves Assume you are resourceful company you can put another team to work on enhancements of the original product in 3-6 months and then the money they spend on you goes down the drain. BTW why are you worried about enhancement and ip after work for hire is done. do you plan to continue working on it for any reason ?