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One of my subcontractors, a web developer, was attending a business meeting with me and my client @ my client's office. There were other people in attendance....some of my web team and some of my client's team. My subcontractor blurted out an idea that he could do that could improve my client's business. My client has now informed me that he is wanting to pay for my subcontractor's time in developing the product and then take 100% ownership of the product and keep all residual profits moving forward. This was news to me b/c myself and my subcontractor who thought of the idea thought this would be a partnership. Who has ownership of this idea/product (the subcontractor already has developed a working model of it)?
Optional Information: Country relating to Question: United States Already Tried: Talking....to everyone.
How do you pay this subcontractor (W-2 or 1099-Misc)?
This employee just started with me this year and is a 1099.
Legally, an employee cannot be paid on a 1099-Misc. An employee is subject to the employer's control as to both the ultimate work product and the manner and means by which it is accomplished. An independent contractor is only required to produce an end product. The employer cannot control how that end product is accomplished.From the intellectual property perspective, an employee's work product is the property of the employer. An independent contractor's work product is the property of the contractor, unless there is a written agreement under which a work is specially commissioned and agreed to be a "work made for hire." So, if this person is 1099 worker, then at this moment, the intellectual property is his/hers and no one else's -- because you cannot specially commission in advance to own something that the worker has just conceived.Hope this helps. NOTICE: My goal here is to entertain while educating the public about the law. I hope my answer is useful and informative to you. During our conversation, the website may ask you to rate my answer. If you rate my answer lower than the middle rating, then the website retains your entire payment, and I receive nothing. It is entirely your choice as to how you rate my answer. However, because your payment to me is in the nature of a donation/gift, rather than as compensation for any services rendered, you are entitled to know how your rating affects the final distribution of your donation. If you need to contact me again, please put my user id at the beginning of your question ("To Socrateaser"), and the system will send me an alert. Please Click the following link for IMPORTANT LEGAL INFORMATION. Thanks and best wishes!
That's what I thought. The initial idea was mentioned by my sub at a dinner meeting. Throughout that meeting, my client and I contributed ideas on how to expand the initial idea. Do those secondary contributions provide any ownership rights to either myself or my client? Or, is sole ownership maintained by my sub contractor? My client feels that since it was "his" meeting and we are "his"representatives that any ideas generated in that environment are also his property. Not true? Furthermore, my client has an extensive sales network that will enable a quick launch of the product and I have the team that can develop the product. The words "game changer" were thrown out a few times so I feel my client will find a way to develop this idea or a version of this with another development company if my sub and I require an ownership percentage. Can my client legally develop the exact idea? If not, can he tweak it just enough so that it is "different" and escape legal action? How can my sub and I protect ourselves from this? My sub has already begun work on prelimary platform development for this on his own. His intentions are to meet this weekend to negotiate contracts and percentages. Does his prelim work confirm complete ownership? No cash, proposals, contracts, etc have changed hands.
First, no one can own a pure idea, unless they keep it secret from all others and disclose it only to persons who have signed a nondisclosure/confidentiality agreement (NDA). A unique and nonobvious process, utility, nonfunctional design, or invention can be patented -- but, until it is actually patented, it's free for anyone to develop, and if it is disclosed in public, then it can no longer sustain a patent registration.The fixed expression of a creative work can be copyright registered. But, this is not an "idea" (inchoate concept). The copyright is the expression of the idea, and it must be artistic to sustain a copyright. The above represents the only legal means of maintaining control over an idea or its expression. So, while you and/or your client can say that the concept is a partnership, in truth there is none, until you first determine whether or not the idea is susceptible to a patent, or someone actually renders an expression of the idea into a fixed form (writes it down, creates a webpage or software application, etc.). Once you determine that the idea can be protected, then the question is whether or not your meeting and/or other joint activities represent "an association of two or more persons to carry on a business for profit." That is the legal definition of a partnership. It's actually fairly strict. You and at least one other person or legal entity must intend to carry on some sort of business activity for the purposes of making a profit. Simply having a business meeting doesn't necessarily prove the intent to associate to create a partnership. Based on what you've described thus far, I can think of ways to argue that there was or is an intent to form a partnership, I doubt that there would be much traction in court. Things seem far to informal to me at this point to hold you all to a partnership agreement.Which means that at this point, whomever develops this idea first and gets it to market or obtains a patent, wins all the marbles. Hope this helps. NOTICE: My goal here is to entertain while educating the public about the law. I hope my answer is useful and informative to you. During our conversation, the website may ask you to rate my answer. If you rate my answer lower than the middle rating, then the website retains your entire payment, and I receive nothing. It is entirely your choice as to how you rate my answer. However, because your payment to me is in the nature of a donation/gift, rather than as compensation for any services rendered, you are entitled to know how your rating affects the final distribution of your donation. If you need to contact me again, please put my user id at the beginning of your question ("To Socrateaser"), and the system will send me an alert. Please Click the following link for IMPORTANT LEGAL INFORMATION. Thanks and best wishes!
Experience: Retired (mostly)
You're right that there is no partnership agreement on paper. My client hires me to produce photos and develop websites and applications for his clients. He pays my company per project. This new idea was discussed by everyone at the table. My client's intent is to name this product and brand it as a new and separate entity, for profit, and he intends tap into his existing network to sell it. He wants to simply pay my company to develop the idea (that my sub created) and then take full ownership of the product. As I mentioned, my sub has already put together a bare bones working model of the product on a web page and has emailed me and my client regarding our process to development, outlining the multiple and potential phases of development to full launch. On a conference call b/w myself, my sub and my client we all verbally agreed to keep this solely b/w us and talked about the potential for the success of this product outside of my client's established network. We all agreed with that potential and agreed to mutual secrecy. Does any of this additional info lead you to believe we have established the groundwork to a partnership or at least established the intent to move forward together (sharing profits) with development of a potentially profitable new entity? Given the above, does my client have the right to take this concept and run with it without us?
In a pure academic setting, where the facts of a hypothetical can be stated as true, regardless of the difficulty of proving the facts in court, my answer here would be that you appear to have created an enforceable partnership agreement concerning the concept, because there was apparently an agreement to share profits. However, without some written memorandum to confirm the agreement, and given the rather disappointing predisposition of human nature to "lie like a dog," in court, I don't know how you would go about proving that the partnership agreement occurred, in the event that the other "partners" decide to falsely testify that no such agreement ever took place. BotXXXXX XXXXXne, you have an agreement based on your recitation of fact -- but unless you can get something in writing from at least your sub, confirming the agreement and declaring that the client also agreed to share profits, I don't see how you could enforce your agreement in court -- if everyone else's recollection suddenly fails to coincide with your own.Hope this helps. NOTICE: My goal here is to entertain while educating the public about the law. I hope my answer is useful and informative to you. During our conversation, the website may ask you to rate my answer. If you rate my answer lower than the middle rating, then the website retains your entire payment, and I receive nothing. It is entirely your choice as to how you rate my answer. However, because your payment to me is in the nature of a donation/gift, rather than as compensation for any services rendered, you are entitled to know how your rating affects the final distribution of your donation. If you need to contact me again, please put my user id at the beginning of your question ("To Socrateaser"), and the system will send me an alert. Please Click the following link for IMPORTANT LEGAL INFORMATION. Thanks and best wishes!
Profit sharing and partnership has not been discussed by all parties. As the idea has taken shape over the last 2 days, my sub and I have been operating under the assumption that this is a mutual venture b/w 3 parties, especially after the enthusiastic roundtables, my sub's diligent work developing a prototype and the verbal "NDA" b/w the 3 parties. My client on the other hand thinks it is solely his and said to me briefly in a separate phone conversation that he has no interest in partnering with my sub. I'm assuming after that comment that he has no interest in partnering with my company on this either although he didn't say that specifically. I highly doubt my sub has any interest in developing this product for a project-based fee and then relinquishing all rights to it moving forward. My plan is to invest in the development (i.e. pay my sub for some of his time, pay for the collateral design and sales material, manage the overall project development, host the product on my server, etc). My sub and I are ready to sit down this weekend with my client to negotiate terms moving forward. I'm almost positive that my client will not cooperate with negotiations. He will want sole ownership once it's developed. If I take a strong stance I could also lose future projects from my client which make up a substantial percentage of my income (this is my biggest client). I'm willing to take that stand if I'm on solid legal ground.
At this point, to the extent that a prototype exists, it belongs to your sub along, because he/she created it. To the extent that he is willing to agree that the work is jointly owned, then you have a partnership agreement with your sub and joint ownership of the work product. If the client decides to start over from scratch, then you can't stop him/her from doing so, unless there is some unique and nonobvious process, utility, invention, nonfunctional design, that can be patented, then you can patent that creative work and that would prevent the client from moving forward without you, unless the client completely avoids using the patented work(s). Similarly, if the client duplicates the appearance of the prototype, then by registering a copyright, you could protect that activity from infringement. But, if the client simply chooses to move forward without using any of your ideas except for the raw concept, itself, then he/she is free to do so, and you will have to live with the fact that you may have a competitor.Hope this helps. NOTICE: My goal here is to entertain while educating the public about the law. I hope my answer is useful and informative to you. During our conversation, the website may ask you to rate my answer. If you rate my answer lower than the middle rating, then the website retains your entire payment, and I receive nothing. It is entirely your choice as to how you rate my answer. However, because your payment to me is in the nature of a donation/gift, rather than as compensation for any services rendered, you are entitled to know how your rating affects the final distribution of your donation. If you need to contact me again, please put my user id at the beginning of your question ("To Socrateaser"), and the system will send me an alert. Please Click the following link for IMPORTANT LEGAL INFORMATION. Thanks and best wishes!