Legal Question in Intellectual Property in California
We haven't filed the patent and we might break up...
My partner and I came up with a good idea months ago. We wrote down this idea in a notebook and each gave signature. Subsequently we formed a co-partnership company. I am in charge technical area and is working on a patent application (just started and not filed yet). My business partner is in charge of looking for funding, but he performed very poorly.
There's a chance that we might break up. I am thinking about finding a new partner and forming a new C-corporation. I will allow my current partner to have some shares in this new company, say 10%.
However, I worry about these issues:
1. My partner is not satisfied with 10%. He implied that he wants equal number of shares as I do (thought I have to work hard and he doesn't even need to work). I believe this demand is very unreasonable.
2. I haven't filed the patent yet. If I only write my name on the patent application, will there be any problem? I am the only one to write this patent (detail implementation of the idea), and my partner doesn't even understand engineering implementations.
3. The worst case: can my partner sue me for stealing idea from our co-partnership company?
Thank you very much.
3 Answers from Attorneys
Re: We haven't filed the patent and we might break up...
Your question is, unfortunately, not one that can be answered simply or clearly in a bulletin board posting. This is a situation where you need to consult with an attorney competent in patent law and partnership law. (Talking to a friend of a friend who is a general practitioner simply won't do in this case!)
Breaking up a partnership is akin to going through a divorce (in fact, marriage is a form of partnership). It will go much better if you get good legal advice and have someone to negotiate for you.
Re: We haven't filed the patent and we might break up...
If you and your partner are so mistrustful, out of agreement and critical of one another, you should be looking for how to go your separate ways rather than how to divide the future pie.
All partners of a general partnership have a so-called "fiduciary relationship" with one another. This implies a duty of loyalty, including a duty not to steal valuable ideas or business opportunities. A partner who breaches his fiduciary duty is liable to the partnership and other partner(s) for losses caused by the breach.
If you have a formal, written partnership agreement, the agreement will primarily control the rights and powers of the partners, the ownership percentages of each, and means by which a partner may withdraw and cause wind-up of the partnership. To the extent the agreement is vague, silent or non-existent on these matters, the California Uniform Partnership Act of 1994 will control. This is found in the Corporations Code, sections 16100 et seq.
The situation with your partner is very touchy. You may have short-changed yourself when you entered into the partnership, if it is 50-50. You may need legal assistance in unwinding the partnership in such a way that your partner doesn't force you (through lawsuit) to giving him a bigger chunk. Without seeing the documents, I couldn't speculate on how a suit would come out.
Re: We haven't filed the patent and we might break up...
Yes, your partner can sue you for stealing the idea. Under US patent law, both inventors have to be placed on a patent application, and the amount of each inventor's contribution to the idea is not relevant in determining co-inventorship. If your partner assisted in coming up with the idea that you want to patent, he must be listed as a co-inventor. Please contact me if you'd like to discuss this matter further. Thanks and good luck.
Related Questions & Answers
Looking for something else?
10,200 active attorneys ready to answer your legal questions today.
Featured Attorneys
Earn additional revenue and grow your business.
