Legal Question in Intellectual Property in California

We would like to require customers of a certain product of ours to use a third party advertising network (which we will have setup an exclusive revenue share deal.). Our plan is to use a third party until we have enough people using the product and enough advertising inventory to justify starting our own ad network. We have had discussions with a third party advertising network but they would like an exclusivity deal. However don't want them knowing that we are eventually going to launch our own ad network as this could prevent them from agreeing to a deal as we could become an eventual competitor. Would we need to advise them that we want to use their network whilst we build our own and if not, can you foresee any issues if we use their network and then launch our own once the revenue-share deal has expired? Would there be any confidentiality/competition/IP issues?


Asked on 11/23/11, 4:44 pm

1 Answer from Attorneys
George Shers Law Offices of Georges H. Shers

If you are selling a physical product, I doubt you legally can require your customers to use who you have selected for advertising. Once they have bought the product they have full ownership. If you make it a package deal that along with buying the product they get the advertising at a certain price, you could do that but then the price of your product would increase so that people might not buy it.

you plan on defrauding the advertising company. You will gain experience and their trade secrets while partners and then take all of that and jump ship. Would you ever work with a company who did that to you? Depending on how valuable the loss of revenue from you would be, you are buying yourself a law suit if you carry out your plan. Why not tell them you want to buy their advertising skills for a certain time with an option by you to renew and a referral fees form those who use their ads because of your sales to them.

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Answered on 11/24/11, 8:55 pm


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