Don Debelak’s new book, Turning Your Invention into Cash is now available on Amazon for $3.49 in the Kindle version, 8.95 for paperback. https://www.amazon.com/Turn-Your-Invention-into-Cash/dp/1796753734/ref=sr_1_1?keywords=debelak&qid=1583674131&sr=8-1 From the author of Entrepreneur Magazine’s Bringing Your Product to Market.}
Don Debelak offers affordable patent services. www.patentsbydondebelak.com
Getting a new product on the market requires many skills and inventors often benefit from teaming up with someone with complementary skills to launch their invention. But for partnership to work you need to outline your expectations in an agreement, even if it is a checklist, that you share with prospective members of your team. Some items you and your partner should discuss and document.
- Responsibilities. Explain clearly what each party is responsible for doing and what each party is financially committing to the project.
- Decision making. You should state that the final decision is yours, but that you will discuss each major decision with the parties and take into account their input.
- Ownership of the idea, or partnership arrangement. It may be too early to form a company, but you should state how much of the idea is owned by each member of the team. Include a statement here that each party’s ownership may change if additional members or investors are added onto the team.
- Patent ownership. The simplest way of doing this is starting a company or LLC and then assigning the patent to the company with each team member owning the percentage discussed in number three. All members of the team should agree to assign the patent to the company.
- Profit / revenue sharing. This should be along the line of percentage of ownership. But you should also discuss taking money out. You may need to take money out of the company, while your partners might want to completely reinvest any profits.
- Adjustment procedures. Agree that the percentage of ownership can change if a team member’s participation changes from the original agreement.
- Commitment levels. Be clear in what commitment level, in time and money, each member can expect from the other members.
- Product Review. The team should meet every quarter to review the project status and discuss how they will move forward in the next three months.
- Expected business model after product is launched. In many cases you might just license the idea in which case the ownership percentage will stay the same. Other times you might expect to go into business. If that is what happens be sure to discuss that people will be paid a salary, agreed to by the partners, based upon the time commitment to the company.
- Derivative products. You should state that the team is for just the one product, and its product improvements, and that any derivative products that might come out of the project belong to you. Or derivative products could belong to the team.
- Dispute resolution. You might want a clause that any disputes will be settled with arbitration. Most areas will have services that offer low cost arbitration or dispute resolution
This might seem like a lot of items to discuss before starting on a team partnership. But my experience is airing out the possibilities prior to starting keeps everyone’s expectations in line and helps focus the members on their responsibilities and commitments and the team’s eventual success.