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WORLD PATENT RIGHTS |
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World Patent Rights Contract With Start-Up Developing & Promoting Electronic Invention
Introductory Note -This agreement is written with the actual start-up company that takes control over the inventions. The start-up company is a party that should know how to develop and promote electronic inventions. -This agreement is provided to you the electronic researcher in our effort to be open and above board, without compromising confidentiality issues pertaining to the inventions. Under normal circumstances most other companies might not show this prospective contract to their Researchers, since they would not be involved in all aspects of the invention.
Draft Contract This agreement is between _____________________________, the Licensee and World Patent Rights, the Licensor. The essence of our agreement: The Licensor only provides the Licensee several related patent pending inventions and creative ideas, the Licensee takes it from there. The Licensee controls how the inventions are developed and profited from. The Licensee develops the inventions into prototype form to a point they can be commercially manufactured or relicensed, and makes any improvements to the original patent application in the process. The Licensee controls the venture capital raising stages; then how the inventions are manufactured, or to whom and how they may re-license one or more of the inventions. The Licensee is free from paying money to the Licensor for the rights until profits are earned. The group of related inventions have a total of 800,000 shares for the family of inventions. Shares are in the patent pending rights of the inventions. The Licensee can receive 20% of the shares, with other shares devoted to those assisting the Licensee. Details follow. Confidentiality: -Licensee can publicly disclose the patent pending inventions attached to this agreement, or invention improvements it generates from a mutually agreed upon time. However Licensee is free to disclose to the public any inventions Licensee has discovered. -Licensee shall keep all non publicly disclosed business matters confidential including: Identities and locations of Partners in different countries, such as the names of the inventors other than Licensee; Locations outside Fairfield where Licensor does business; The building operations at California Business Center. -Licensor needs to keep competitors at bay on as many fronts as possible, by limiting information competitors may gain about different aspects of Licensor’s business. Competitors can put the pieces together to conduct damage such as: better identifying the location and sourcing of invention development, and related matters. Licensor has had an unpleasant history with competitors doing all they can to gain access into sensitive areas. Ethics: -Promoting the inventions, the Licensee will within reason, generally act in the interest of all shareholders. -Licensee will disclose information that can materially effect parties investing money and or time into the inventions’ project. -Licensee’s work experience, any criminal records, and any known conflicts of interest (like having a relationship with a competitor of Licensor’s) are attached to this agreement. The Inventions: -Inventions defined: The inventions involve different aspects, which can create different products, or versions of the same general product. -The licensing applies to the invention’s "claims" (unique aspects of the invention). -The Licensee has the freedom to decide which variations of the inventions will receive most of their attention. -The description of the invention attached to this agreement is owned by the 800,000 shares. Any "claims" or inventions related to the enclosed inventions, and which the Licensee provides, and elects to seek patent rights for become part of the property rights owned by the 800,000 stock shares. -Any additional information possibly provided by Licensor relating to the invention but not made part of this agreement is not part of the stock shares. Licensor is working on other electronic inventions. Work Spaces: -California Business Center is located at 1652 West Texas St, Fairfield, California. Any Licensee’s use of the executive suite office space or office services is a separate arrangement from this agreement. -Locations of any other places in which the inventions may be researched shall only be disclosed if there is a practical need. General Financial Terms: -The Licensee and the venture capitalists determine when and how to produce or reticence the inventions. -Licensee is free from having to submit payment to Licensor for licensing rights or other payments at the signing of this agreement, except for a payment of US$1. -The ultimate party who produces the invention pays royalties directly to both the Licensee and Licensor on a quarterly or monthly basis, as determined and verified by the Licensee. Licensee is responsible for making payments to all other shareholders. -The Licensee, its Partners and Venture Capitalists are responsible for any and all expenses and liabilities they elect to incur. Licensor is only responsible for those expenses it incurs. Royalty: -Licensee negotiates the royalty. Royalty is the share of the wholesale price revenue received. -The total minimum royalty Licensee can agree to is 5% of the wholesale price for the life of the invention. -Stock holders receive royalty payments prorated according to their share of ownership in the 800,000 shares. For example annual royalties of ten million dollars a year, equates to each stock holder getting $12.50 per year for each stock they have options on, or own. There will be a deduction made for any costs including: legal, accounting, overhead, etc. All stock holders receive annual confidential financial reports. -Royalties shall be paid quarterly to all stock holders. Should annual royalties be less than US$500,000 in any calendar year, then royalty payments are to be paid once annually. -Licensee is encouraged to obtain Venture Capital so they can manufacture the inventions. The 5% royalty applies if Licensee manufactures the invention. Classes of Stock. How the 800,000 shares are allocated by: type of stock shares, for whom the stocks are designated, and overall portion of all shares. Shown is the degree of the Licensor’s flexibility in negotiating the number of shares in each class of stock, prior to the signing of this agreement. -Class 1 Stock For Developer’s Partners: 2.5% Very negotiable. -Class 2 Stock For Developer: 8.0% Negotiable. -Class 3 Stock For Assignment By Licensor: 2.5% Not negotiable. -Class 4 Stock For Venture Capitalist: 60.0% Possibly negotiable. -Class 5 Stock For Licensor: 25.0% Not negotiable. -Class 6 Stock For Charity: 2.0% Negotiable. Class 1 Stock For Developer’s Partners: These additional shares are set aside for Licensee’s Partners who help develop the invention. Licensee controls who gets these additional shares along with what conditions may apply. No voting rights. Class 2 Stock For Developer: The Licensee has options on their portion of shares from the date this contract is signed. Licensee may assign a portion of these shares to venture capitalists or Licensee’s Partners who help develop the inventions. These shares have voting rights. Class 3 Stock For Assignment By Licensor: Licensor assigns the shares to any parties it solely selects. The role of the recipients may be kept confidential. The recipients may or may not contribute to the invention development. No voting rights. Class 4 Stock For Venture Capitalists: These shares are set aside for raising venture capital. Should this class of shares be sold for under the minimum benchmark price to Venture Capitalist(s), the Licensee and Licensor must mutually agree who will receive these shares. These shares have voting rights. -The minimum benchmark price is $5.00 per share. Any unsold shares of this class of stock, can be purchased by Licensor for $1.00 per share, unless a higher bidder deposits funds in escrow within 30 calendar days, of whenever Licensor elects to exercise this option. Class 5 Stock For Licensor: These shares are set aside for Licensor. Licensor may assign a portion of these shares to Venture Capitalists if Licensee also assigns a portion of their Class 1 stocks to Venture Capitalists. Though assign ability of Licensee’s shares is not confidential, it is suggested Licensee not actively broach the subject to Venture Capitalists. No voting rights. Class 6 Stock For Charity: These shares are set aside for charitable purposes to benefit cultural foundations and or artistically gifted individuals from one or more of the following regions: India, Pakistan, Bangladesh, East Asia, North & South America, Europe. Licensor determines how funds are distributed. No voting rights. Selling Stock Shares: -Shares in Venture Capital, and Licensor class stocks can be sold at any time and price. -Other shares unless otherwise specified can only be sold after the invention has generated a minimum of US$1,000,000.00 from Venture Capitalists. Then no more than 25% of any share of those shareholders holding over 10,000 shares can be sold in any 90 day period. Details on Shares: -The party that controls the distribution of any class of shares can place additional restrictions over the underlying restrictions enclosed herein if no conflict is created against the underlying restrictions. -Class 4 stocks (originally owned by licensor), and class 3 stocks (only if purchased by Licensor) are without voting rights. -The Licensee decides which of those shares transferred to venture capitalists, are assigned voting rights. -All shares with voting rights have equal power to vote. -All parties receiving shares including any additional Licensees, associates, or employees the main Licensee may select are considered by Licensor as being venture capitalists. -Shares are another term for stake in the inventions. Shares represents the portion of profits earned from the inventions. -Terms Defined: "Stocks" are based on a share of future prospective profits from world-wide sales, plus patent and possible voting rights. -Licensor owns a zero percentage of any company Licensee owns or may form pertaining to the inventions. Licensee elects to set up their company in whatever manner they desire as long as it doesn’t conflict with its agreement with Licensor. -If the terms for the contract are met, profit sharing applies for all profits during the life of the patent in which the invention may be awarded. Upon Cash Infusion From Venture Capitalist(s): -The chief individual from the Developer is the first person needing to be guaranteed a salary if there are sufficient funds, and if this individual so desires. The chief developer’s annual salary shall be US$200,000.00. Their salary shall increase 100% each January 1st, and continue until at least February 1, 2005. Their salary shall be no greater than 50% of the total cash infusion over any corresponding 12 months. -Only the Developer has the option of selling up to 30% of their shares to Venture Capitalists at any time and price after the invention has received a minimum aggregate of US$200,000 working capital. -All money or equivalent, to obtain the Venture Capital class of shares are to be invested in the invention’s development. -Developer shall seriously attempt to obtain and maintain reasonable salaries for the Developer’s Partners who obtained Class 2 Stock shares from the Developer. Special consideration is to be given to those who have been with the project from the onset.
EXCLUSIVE WORLD-WIDE LICENSE Licensee has the exclusive world-wide territory for the inventions. Each request for an extension shall include a copy of the Licensee’s pertinent findings discovered or created pertaining to the inventions. If feasible the findings shall be in printed and digitized format on 3 ½" disks. Each request shall be sent via registered mail, or courier showing proof of delivery. First 30 Days For Exclusive License: Licensee's initial extendable exclusive world-wide exclusivity applies for 30 days from the mutual signing of this contract. First Extension: Licensee is automatically granted the 30 day extension upon Licensee's letter, seeking an extension, mailed to Licensor. Second Extension: Licensee is automatically granted the next 30 day extension for the inventions when: 1] A rough or finalized business plan of at least two pages for the development of the inventions has been submitted. 2] A preliminary rough patent application has been completed. Third Extension: Licensee is automatically granted the next 30 day extension for the inventions when: 1] A completed business plan of at least fifteen pages for the development of the inventions has been submitted. 2] A rough completed patent application has been completed. Filing of improvement patent applications is the Licensee’s responsibility (a $75 US provisional application suffices). Fourth Extension: Licensee receives a 60 day extension after obtaining a signed letter from a venture capitalist irrevocably promising enough money to file a PCT patent application. Adequate monies are defined as 20% over the estimated filing charges from the patent attorney or agent. Fifth Extension: -Licensee receives an additional 12 months when a completed English language PCT patent application has been submitted by a patent attorney from any country. The PCT patent application is acceptable by the PCT initially in English, and can include all countries. The minimum countries are: 1] English language application countries: USA, EPO (European Patent Office), Canada, South Africa, Singapore, India, Australia, New Zealand. 2] Spanish: Mexico, Argentina, Chile. 3] Russian: Russia, Ukraine. 4] Chinese: China, Hong Kong, Taiwan. 5] Japan. 6] South Korea. -The filing fees ticking off multiple countries on the patent application is probably minimal. A bulk of the fee is filing the application. Quite some time may be available before additional expenditures are required for concluding the patent filing process (such as translations) in the selected countries. -Licensor has the option to buy back full licensing rights for US$1 to all countries the Licensee is not processing the PCT application. Licensor is given as much notice time as possible for those countries Licensee will not select, but at minimum 30 days. Licensor will pay the increased incremental processing costs, and if possible through the same patent attorney or agent Licensee selected to process the application for the primary minimum countries. Development of Prototypes: -Prototypes are of great importance. The Developer must also be working on the development of the invention prototype according to the stages and time-line that is attached as an appendix. It is the Developer’s responsibility to propose in written format what specifications shall be met within each stage. Each stage is simply measured in number of days from signing this agreement. Licensor shall be extremely reasonable in giving Licensee additional time to meet the deadlines in developing the prototype if all other conditions have been met within reason by the Developer. Subsequent Annual Extensions: -A 12 month extension occurs when royalties and or venture capital is at least only US$50,000 from the original signing of this agreement. -Extensions continue for each 12 month period from the previous deadline, if revenues from royalties and or cash from venture capital is at least only US$50,000 during the previous 12 months, and continues to double each following 12 month period. The extensions continue for the life of this agreement if these revenues are at least US$800,000 over any 24 month period. Additional Extensions: They might be granted at the sole discretion of Licensor even if a criteria has not been met. Should Termination Occur: -If by chance Licensee does not meet the targets, they promise to turn over all material they received and created about the invention. Kindly include all the negative and positive aspects about the project. It is distinctly possible that another party may work on the invention, get success and contact the Licensee, allowing the original Licensee to write a new contract with the new Licensee. Licensor hopes to provide the original Licensee with another invention if Licensee truly worked hard in getting results. -Venture Capitalists: It becomes the responsibility of the Venture Capitalists to continue development of the invention development. Should the Developer cease working on the invention, then their shares are transferred to the Venture Capitalists, in a prorated fashion according to the number of shares purchased with cash by the Venture Capitalist(s). -Partners working for Developer: They may continue to work on the invention at the discretion of the Venture Capitalists. Those Partners selected by the Developer and wishing to continue assisting with the inventions retain their share of the invention if their work responsibilities continue in a similar fashion from before the termination of the Developer. The Developer’s Partners and Venture Capitalist(s) must be very reasonable in the duties the Venture Capitalist assigns to the Partner’s, and the duties the Partner’s agree to carry out. Licensee shall continue to respond to all patent office communication in a timely manner, otherwise they shall immediately turn over all documents and the patent application to Licensor, should Licensee be abandoning the inventions and their rights to any profits there from. It is hoped sales exceed the minimum. Extensions may also be granted if deadlines are missed, if agreed to by both parties. Licensee must notify Licensor within one week if they abandon the inventions, so Licensor can promote the technology with minimal loss of time.
Disclaimers, Responsibility Responsibility: -Licensee controls their company, venture capital, and how they develop and promote the inventions. -Licensee has or will have further educated themselves on the business of new product development. For example, they shall surf the web for information; and read "Patent It Yourself" available from Nolo Press in Berkeley, California at 510 549-1976. -Licensor is not expected to monitor, or approve of Licensee’s actions, even for those actions conducted by Licensee and conveyed to Licensor. -Licensee will within reason attempt to do their best in promoting the invention. Non Liability: -The Licensee and Licensor don’t hold each other liable for each other’s actions within the frame work of California law, nor the invention’s success. -The Licensor is not liable for any advice omitted from the book "Patent It Yourself" by Pressman from Nolo Press. To order call 510 549-1976 (San Francisco Bay Area). -Licensor has researched the invention, however the Licensee must without fail verify the inventions’ viability via: Patent searches; Communicating with a patent attorney; Market research; Web links to patent rights and patent marketing related web sites; etc. Licensee is also obligated to have a licensed patent attorney or agent prosecute the licensed patent applications. -Licensee’s primary role within this contract is providing ideas. Any suggestions provided by Licensor, and or its affiliates are strictly ideas that the Licensee must explore for viability before adoption. The goal is to brainstorm for ideas on inventions, product design, finance, patentability, marketability, risks, creative business strategies, trends and generalizations purposely simplified, parties to contact, and effective business procedures, etc. -Licensor does not endorse any third party that might be referred to Licensee. It is Licensee’s responsibility to conduct all full background checks. -Steven C. Kays is the only party authorized to represent Licensor, and is not personally responsible for Licensor. -Licensor’s maximum responsibility for any loses incurred by Licensor, under circumstances not covered in this agreement, and caused by Licensor’s lawful conduct is the cash price paid for the stocks at the time this contract was signed, or $200, whichever is greater. Friendly Notes Of Caution: -We want the Licensor to succeed, but not squash their ambition with extensive warnings. -There are U.S. Security Exchange Commission (SEC) laws pertaining to getting venture capital. -The inventions are patent pending, and may not be patentable or viable products. The Licensee and Licensor understand that any new business venture may have high risks including this endeavor. -Before communicating with anyone about an invention, make certain to have the desired level of patent rights protection. Patent pending inventions may or may not result in a patent. Be careful even if many parties in the market place give much value to patent pending rights, with the hope that it will become a viable patent. -Be cautious of organizations promising to help develop and market inventions for an up front fee without guaranteed results. Remember The Attorneys: -The Licensee is advised to work with their attorney. -Each deal is different and requires a different contract. Working with attorneys is expensive. Hence it is up to the Licensee to contact their attorney to make needed revisions to this agreement. It is strongly requested that the Licensee ask their attorney to write a very fair contract requiring little response time from Licensor. Contracts that are worded too favorably on the side of the Licensee will be returned unless the Licensee wishes to make a $5,000 earnest money payment covering Licensor’s legal and handling costs. The $5,000 is not requested if the contract signing can be done quickly, fairly and smoothly; or if this contract is used. -No contract can be worded perfectly. Poor wording in the contract is only a problem if its parties can’t resolve their differences. One might elect to save start-up costs and leave any alterations to the contract at a later time, using this as a fair base of our understanding. Licensor’s desire is to get along with Licensees in a fair manner and focus on making money rather than get bogged down in legal manners to the benefit of attorneys. -Detailed contracts will need to be written up pertaining to certain matters including the stock shares after more work has been conducted in developing the inventions. -Licensee and Licensor are authorized to investigate each other on the information contained in this agreement. -This contract is written under the laws in the jurisdiction of San Francisco, California, USA. -Should there be a disagreement, both sides shall try to rectify the situation. The next resort shall be non binding arbitration shall first be handled through the American Arbitration Association in San Francisco. All legal costs shall be borne by the loosing party.
Should any part of this agreement become null and void, the remaining valid portions of the contract shall continue in full force. Time is of the essence in this agreement. The Licensor grants to the Licensee under the patent applications, the patents that issue thereon and ideas for the life of this agreement an exclusive license to make, use, sell, offer for sale and import products and/or methods described and/or claimed therein and to grant to others for the life of this agreement a sub-license to make, use, sell, offer for sale and import products and/or methods described and/or claimed therein. The Licensor makes no warranty against infringement. There is no grant to Licensee to information contained in footnotes. The Licensee agrees to grant to other Licensees or the Licensor, non exclusive sub-licenses under patents, patent applications and ideas which overlap with patents, patent applications or ideas of the other Licensees in exchange for corresponding non exclusive sub-licenses from the other Licensees. The sub-licenses shall only include the technology in the overlap. Licensor receives no share of royalties from technology in the overlap. During the life of this agreement, the Licensee agrees to file and prosecute patent applications on all patentable inventions made by the Licensee or owned by the Licensee relating to the included patent applications or ideas for the benefit of the shareholders. Licensee also agrees to file and prosecute patent applications on all inventions conceived by Licensee during the term of this agreement for the benefit of the shareholders. During the life of this agreement the Licensee shall have an exclusive license with a right to sub-license all of Licensee’s inventions, patent applications and patents. Upon any termination of the agreement, the inventions, patent applications and patents shall be assigned to the shareholders on a pro rata basis. Kindly attach a copy of your resume covering your work experience along with a list of references. Please remember to initial each page of this contract and your resume. We look forward to hopefully developing a profitable and friendly business relationship. Co President’s Full Name: _______________________________________ Company Name: ___________________________________________________ Street Address: __________________________________________________ Tel - Day: (___) ___________. Tel - Evening: (___) _____________ E-Mail:_____________________________ Fax: (____) ________________ Licensee Company President’s Signature:__________________________ Date: __________ World Patent Right’s Representative's Signature: ________________ Date: __________ Representative: Steven Kays Street Address: California Business Center, 1652 West Texas Street, Fairfield, California 94533 U.S.A. Tel: 707 435-0500 Fax: 707 434-8400 (C) World Patent Rights 2001 |