Legal Question in Intellectual Property in California
Stopping IP theft on a very limited budget
I did some consulting for a friend of the family�s company. During this time, over lunch I had discussed another (completely unrealted) idea that I was working on with him . He�d mentioned the prospect of using his connections to get funding to start a new company producing my idea, he made no additions to the actual idea.
Eventually he found an investor and he offered me 0.13% of the company and a salary of ~50% market rate in exchange for full data rights and me as a full time employee.
I spoke to other people in the industry who consistently gave me the same valuations. He rejected this amount (~10% ownership in exchange for providing ALL the intellectual property for the new company.) I offered to license the IP to him, again at what I was informed to be a fair price. ($600,000 annually, he is getting $10 mil in funding)
I am a starving student so all I could afford was a provisional patent to protect myself, which I�ve applied for. And within the next year I plan to apply for a proper patent.
In the meantime he is going ahead with the investors and already has two US military departments signed up as customers (I don�t see how you can sell something you don�t own).
Is there anything I can do to protect myself?
2 Answers from Attorneys
Re: Stopping IP theft on a very limited budget
No, legally no one can profit from something they do not legitimately own period. However, you should DEFINITELY consult with an attorney ASAP to provide more facts regarding this idea and whether or not one or both of you may have ownership claims to it over your casual lunch conversation. Do not delay on this if you truly feel entitlement here. If you would like a free consultation, contact us directly today.
Re: Stopping IP theft on a very limited budget
California law provides only relatively weak protection for ideas that are disclosed. There is no federal protection at all, outside the patent and copyright laws, and a provisional application for a patent is only as good as the ensuing (within 12 months) patent application.
Under state law, you might be able to assert a claim for misappropriation of a trade secret, if your idea was taken from you, and you can prove it in court, under circumstances where the taker at least impliedly promised to compensate you fairly if you disclosed the idea. If you just voluntarily blabbed out your idea, making a totally voluntary disclosure, you probably can't call your idea a trade secret and there would be no ground for suit.
Your subsequent communications with the usurper could be valuable evidence that there was a real business deal intended at the time of disclosure and you weren't just bragging or making a gift of your thoughts. The testimony (supporting you) of anyone who was present at that lunch would be helpful.
In summary, you may have a good case under the California Uniform Trade Secrets Act if you can prove that you were proposing a business deal of some kind before or at the same time you described your idea, but if the possibility of a business relationship was an afterthought once the secret was revealed, you probably cannot show the required element of misappropriation.
Please feel free to contact me with more facts for some further e-mail discussion of the law as it might apply to those facts.
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