Legal Question in Intellectual Property in Ohio

Protecting a Computer simulation

A colleague(X) who lives outside the US invited me to represent/invest in a new company to market a business simulation for university business students (call it GS)in the US and elsewhere.

GS was orignally developed in the mid 80's and trademarked(but not copyrighted) in the US under the name IP. X wrote the code for IP but IP is owned by a limited company(T inc) of which X owns 40% (but from which he has received no dividends or reports). IP unchanged still sells in the US as a DOS on disks product but does not work well hence their is plenty demand in the US for the new game(GS).

Since the 1980's X has sold IP in his country under an informal agreement with his partners at Tinc. Frustrated with IP's lack of software upgrades, X radically altered the software of IP several times(its now web based using Microsoft XP) and in 2002 changed its name to GS. X has tried to buy out his now retired partners but no luck,recently they have asked him to turn over all the software developed since the 80's so T inc can market it. I am a person of limited wealth but am afraid of losing my family's assets in a law suit if I invest in X's new company or represent him and GS. What is my risk here? Can I protect myself ? Help


Asked on 12/29/02, 1:44 pm

2 Answers from Attorneys
Steven Hill Steven A. Hill, Attorney at Law

Re: Protecting a Computer simulation

This is difficult to answer without additional information about the business relationship among you, X, and the new company. Along with that, we need to assess X's rights to make derivative works, and to assess even whether X was the author or joint author. That they did not get federal copyright registration does not mean that no copyrights exist. If X is the author or a joint author, he cannot be an infringer.

If you have not invested or otherwise participated in this, I suggest not doing so until the ownership rights are settled. If you have, and you had knowledge of the former company and events, you could possibly be considered a partner with X, unless the arrangement is defined in writing as something else and you followed those terms consistently. If X hid this information from you before getting your investment, then your liability could possibly be severed.

You may have some risk. At worst, with X out of the country, if you and X are declared partners and lose an infringement lawsuit, you may be the one from whom they try you collect.

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Answered on 12/29/02, 5:28 pm
Charu Narang

Re: Protecting a Computer simulation

At the very least, X owns 40% of the rights to GS, because even if X has to share the software with T Inc., he is 40% co-owner of the company. Copyright law gives an author of computer software the right to make derivative works. Depending on the nature of the assignment that transferred the original software to T Inc., T. Inc may or may not be entitled to the derivative work. You first need to look at the assignment transferring the original to determine the extent of the rights turned over to T Inc. Feel free to contact me if you'd like to discuss this further. Good luck.

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Answered on 12/30/02, 6:38 pm


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