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Congratulations on your innovation. I do hope that the software is a success.
Regarding legal issues, there are several that arise (remember, these are areas where I see potential legal problems, none may actually exist, and I do not have the familiarity with these individuals or policies).
The first is the actual ownership of the software.
Hi William, thanks. What are the specific ones that may arise?
That makes sense. Should I obtain an IP lawyer to work through the copyright and trademark etc?
In most cases, professors and faculty members are required to sign contracts with their universities which gives the university ownership over the faculty's intellectual property.
Yes, in this case I checked with the University and they state that I retain the intellectual property for any software I create
That is a good first start.
If you are planning on using the University's resources to produce your software, through a subscription plan or otherwise, you need to determine what the legal "consideration" is on both sides - meaning what the duties and obligations are for both parties. These should be in writing.
The other thing that can be an issue for you is that you say your plan was approved by your Department. I do not know your university, some colleges run differently than others, but many of these types of business contracts must be made through the University level not the department level.
That makes sense.
So the main issue is that it needs to be in writing on what the mutual responsibilities are
Will there be an issue regarding how the revenue is accounted for?
That is probably the best way to ensure that both of you have a mutual understanding of what each is taking on (it really isn't fair to either one of you to have a deal that you don't get what you thought you agreed upon).
I am certain that there will be an issue over money. Part of your contract "rights and obligations" is going to need to discuss who is responsible for paying these distribution costs and subscription fees (it costs money and takes time to deal with the receipt of payment, and determining who is responsible for this up front is important - are you going to be compensated for your future work as bugs show up?), plus how much money and in what percentages is to stay in your research fund?
It may be worth keeping in mind the chance of a loss. Software production is generally fairly "safe" you usually just lose your time and already invested money, you do not usually end up incurring more liability, but it may be worth considering who is responsible in the event of a loss or liability.
All these points are very helpful.
It seems like there are generally no problems if there is a written agreement (legal document) between the university and me on the responsibilities and revenue percentages.
No, these are all things you can work out with the University. The trick is to think about the "what ifs" - "what if we don't get revenue for the first year?" - do I get paid, does the University pay for additional advertising, does the program get shut down, does nothing happen and we keep going forward? "what if we make amazing profits" - do I get paid a bonus, do I get an operating budget to increase the business (does the University want to be partners in operating a business?) ... etc.
Ok - and this may be more of an accounting question but will the University need to file taxes on the potential revenue?
Yes. The University will be taxed on any income that is attributed to it.
It is difficult for me to see how in a regular business the profits are reported but in this scenario all proceeds simply go back to an account.
Ok, so it makes sense that it is not simply the department but the University/College that I have an agreement with
Your relationship with the University would be a business contract. The net between the two of you should show the income and taxable profits for tax purposes as well as tax allocations between the two of you (if you are receiving any payments).
Great. This helps. Are there any other issues that you can think of?
(You may also want to follow up on the IP law issue and consider applying for a software patent or trademark - the USTPO has helpful information and forms that can assist you in starting this process - you can hire an attorney to assist you, but it is not absolutely required, and many people successfully prosecute their own patents).
Yes, that is something I intend to do
Regarding the business contract, would a regular business law lawyer be a person with the right expertise to help me?
Yes, a traditional business law attorney would be very helpful. (
IP attorneys tend to focus on the intellectual property law issues, but I believe your case has a lot of issues dealing with contractual relations and obligations that need to be sorted out - you will probably end up speaking with some legal counsel for the University at some point depending on the scope of your project).
Thank you for your help. Are there any final points I should take note of?
Watch very carefully what you are giving up, and what you are getting back in exchange (you mentioned them dedicating money to a specific research project - are there any protections that the money will go there, can you control where the money is spent, fund a chair, etc.?)
I understand. I will have those issues in writing and should be given full control of the funds for research etc.
Thank you for your help Bill. I appreciate your excellent service
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