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My role as the inventor of patent pend. system in new company started in partnership w market giant?

Recently I have been contacted by a company who is interested in taking on my invention for a new type of window blinds system and they want to start a new company for this. They are already a market giant in their field and want to expand. They have done the initial research and are now keen to get something formalized so we can get on with it. I have invented the system, patented it and made a great variety of working prototypes. I am a designer and not a seasoned business woman and I don't really know if I have much more to contribute with in a possible future company as the product it will be made into is highly specialized. They are the experts, they are going to finance all R&D, production and manufacturing costs, take charge of sales and customers. Basically everything. I'm not very interested in being a very active part of the company but I still want to be a part. I can contribute in the initial part of the development and with the design part. They are 3 people, covering roles like CEO, CBDO/project/sales manager and 'the guy with the money'. I'm not completely sure of the exact roles as we're still exploring possibilities. I am fine with them taking over the development, but i want our new company to license the use of my system (the IP will remain mine) as it can be used in many other, not-blinds related applications as well. Discussions about equity split and partner obligations are coming up. I don't really know how to approach it. Can you help?

16 Replies

Rob Gropper
2
0
Rob Gropper Entrepreneur
Director at PetHero, SPC - Member at Eastside Incubator - Principal at Tuxedo Technologies Group
this is one of the few situations where i would say 'hire an attorney'. A good IP attorney that has experience with transactional work (licensing, buy-outs, etc.) will be a good investment. I would also suggest get help vetting attorneys and learning how to manage attorneys.
Andrew Lockley
1
0
Andrew Lockley Advisor
Investor and strategy consultant
Easier just to license the idea to them. If they want Exclusivity, make it conditional on hitting targets
Larry Megugorac
1
0
Larry Megugorac Entrepreneur
Custom Components ⇨ Custom Parts ⇨ Assemblies
I agree with Rob about enlisting the services of an attorney. I would recommend a great Business as well as an IP attorney. I can also recommend one of each as I got to know them well in a BNI group in Northern California.
Stephen Campbell, PMP
1
0
Project Management Professional
I'm a PM at a the USPTO and would also recommend an IP attorney, ESPECIALLY if you're considering signing documents pertaining to your IP and/or equity ownership contingent upon licensing of the invention. Best money you'll spend - thank yourself later!
Dirk de Kok
1
0
Dirk de Kok Advisor
Founder and CTO Mobtest
Sounds like a combo of a license fee for using your IP and a normal salary for your extra work should do
Frederick Harris
0
0
Frederick Harris Entrepreneur
Founder at Cyber ID
Kia,
Forget about everything you are asking for from third parties, and consider not what you need but what you have done, without which no one would be "interested" in the first place. Ignore lawyers, patent attorneys, marketers, and, especially, would-be "partners". If you have a patent your innovation is public knowledge already. If your would-be partners (who presumably already know about your patented or patent-pending innovation),then you don't need them. Sit quietly and do nothing. The appropriate, meaning the "real", and current answer will come to you. Be patient. You will know it when you see it.
Regards,
Derick
Tom Bascom
1
0
Tom Bascom Entrepreneur
President, Founder LinkSpace, LLC
First of all, the fact that they approached you is a good sign. Despite the strong positions I recommend below, be positive and cooperative. These seem like people you want to work with. My thoughts, some redundant to above but with different spin:
1. Do get an experienced lawyer, but ask the money guy to pay his lawyers to draft the documents. That is the expensive part. You say the technology has multiple uses, so be careful, when granting them exclusivity, to define their reserved market.
2. Look at the organizing documents for the new company and understandthe relationship between the spinoff and the parent company.
3. Include terms for both the parent and your subsidiary in your license, see 2 above.
4. Address how the patents will be enforced if a competitor uses the technology. If you are granting exclusivity in the market, are you obligated to enforce the patent to assure exclusive use? Will the startup have the resources and the will to enforce the patent?
5. Regarding your role, since participation is important to you:
a. If the new company is built around your technology, you might ask for a seat on the board.
b. Negotiate an employment contract coincident with the license agreement. What do you want to do, where do you want to work and who do you report to.
c. If they believe inyour technology and the enforceability of your patent that should be reflected in their offer for theone time exclusivity paymentand royalty rates. Since they approached you, it appears they believe.

Joe Heaney
1
0
Joe Heaney Advisor
Guild Mentor
Kia, Couple clarifying questions: - you state that there are a "market giant" but only operate with 3 people? - is the product market ready? or additional development necessary? - do they want to buy the patent? - why do you want involvement in newco? - have you shopped this to anyone else? My 2 cents pending answers to the above questions: - license the patent to them for an ongoing royalty. You'll probably need to give them an exclusive license. Royalty amount depends on a number of factors, see above questions - license should contain a minimum or you get the rights back - is the marketing budget sufficient to drive the kind of numbers you expect to sell - at best you'll get a small sliver of equity if you join newco but will probably have to give up some royalty - understand the go-to-market timeline as it will determine how soon you begin your stream of royalties. If longer than you want try to negotiate an upfront payment. When you're working this type of deal everything is negotiable so figure out what you really want. Worst position for you is to give them an exclusive license then they "bury" it so it doesn't compete with current offerings. Full disclosure - I'm not a fan of lawyers as lawyers have a history of screwing-up good deals but make sure you use the services of a GOOD business attorney who understands licensing. Hope this helps, Joe Heaney
Justin Zastrow
1
0
Justin Zastrow Advisor
CEO at Smart Armor
Hi Kia, just wanted to chime in here short & sweet... I personally have several patents and currently license technology to other companies. Plain & simple:
Contact a few (of your own choice) different "IP & Licensing" attorneys. Go have a free hour session to describe your situation. Ask alot of questions and seek their personal advice. Hire the one you like best. Let them guide you, but ultimately tell them how you want the transaction to occur.

Liza Taylor
1
0
Liza Taylor Entrepreneur
Communication Specialist at Keyideas Infotech
If licensing your product is a priority, there is no better way than talking up to them directly. Don't discuss about your plan B. Start discussing about the licensing part of your product. If they are okay with your licensing criteria, start talking about Sales and Operation. This would help you to save your time and becoming more opened about your conversation. In fact, they would be happy with you because you are surfacing the most important part of your work.
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