General Regulatory Provisions - Invention Development Services Contracts - Business & Professions - CA

Section § 22372

If you're paying for invention development services in California, your contract must be in writing, and you should get a copy when you sign it. If the invention developer plans to have more contracts in the future or provide services in phases, they must let you know in writing. They also need to give you a copy or a summary of these future contracts, including any costs, when you sign the first contract.

(a) Every contract for invention development services shall be in writing and shall be subject to the provisions of this chapter. A copy of the written contract shall be given to the customer at the time he signs the contract.

(b) If one or more subsequent contracts are contemplated by the invention developer in connection with an invention, or if the invention developer contemplates performance of services in connection with an invention in more than one phase with the performance of each phase covered in one or more subsequent contracts, the invention developer shall so state in a writing and shall supply to the customer such writing together with a copy of such contract or a written summary of the general terms of each and every such subsequent contract, including the amount of any fees or other consideration required from the customer, at the time the customer signs the first contract.

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Section § 22373

This California law gives both the invention developer and customer the right to cancel their contract for invention development services within seven days of signing, for any reason. To cancel, they need to provide written notice to the other party, either by mail or in person. If mailed, it should be postmarked by midnight on the seventh day. If delivered directly, it should be done within normal business hours on that same day. The developer must return any money and materials received from the customer within five business days of receiving the cancellation notice. All contracts must clearly state this cancellation right above the signature line.

(a) Notwithstanding any contractual provision to the contrary, the invention developer and the customer shall each have the right to cancel a contract for invention development services for any reason at any time within seven days of the date the invention developer and the customer sign the contract. Cancellation shall be effected by written notice mailed or delivered to the invention developer or the customer. If said notice is mailed, it must be postmarked by midnight of the last day of the cancellation period. If the notice is delivered, it must be delivered by the end of the invention developer’s normal business day. Within five business days after receipt of such notice of cancellation by the customer, the invention developer shall return to the customer, by mail, all moneys paid and all materials provided by the customer.

(b) The provisions of subdivision (a) shall apply to every contract executed between an invention developer and a customer. Each such contract shall contain the following statement in 10-point boldface type immediately above the place at which the customer signs the contract:

“The seven-day period during which you may cancel this contract for any reason by mailing or delivering written notice to the invention developer will expire on

(Last date to mail or deliver notice)

If you choose to mail your notice, it must be placed in the United States mail properly addressed first-class postage prepaid and postmarked before midnight of this date. If you choose to deliver your notice to the invention developer directly, it must be delivered to him by the end of his normal business day on this date. The invention developer also has the right to cancel this contract by notice similarly mailed or delivered.”

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Section § 22374

This law requires any contract for invention development services to have a noticeable cover sheet with a specific notice. It tells you that you can cancel the contract for any reason within seven days of signing, and the invention developer must return your money and materials within five business days if you do so. It also warns that trying to sell your idea before filing a patent may harm your patent rights and prevent protection in certain countries if disclosed publicly. Additionally, it's stated that invention developers can't give legal advice about your idea's patent, copyright, or trademark status, and this contract won't provide that type of protection.

Each and every contract for invention development services shall carry a distinctive and conspicuous cover sheet with the following notice (and no other) imprinted thereon in boldface type of not less than 10-point size:

“The following disclosures are required by law:

“You have the right to cancel this contract for any reason at any time within seven days from the date you and the invention developer sign the contract and you receive a fully executed copy of it. To exercise this option you need only mail or deliver to this invention developer written notice of your cancellation. The method and time for notification is set forth in this contract immediately above the place for your signature. Upon cancellation, the invention developer must return by mail, within five business days, all money paid and all materials provided by you.

“Your potential patent rights may be adversely affected by any attempt to commercialize your idea or invention before a patent application covering it is filed. Nonconfidential disclosures of your idea or invention may also trigger certain statutory deadlines for filing a patent application in the United States and would prevent you from obtaining valid patent rights in countries whose law provides that patent applications must be filed before there is a public disclosure.

“This contract between you and the invention developer is regulated by law. The invention developer is not qualified or permitted to advise you whether protection of your idea or invention is available under the patent, copyright or trademark laws of the United States or any other law. This contract does not provide any patent, copyright or trademark protection for your idea or invention. If your idea or invention is patentable, copyrightable or subject to trademark protection, or infringes an existing valid patent, copyright or trademark or a patent, copyright or trademark for which application has been made, your failure to inquire into these matters may affect your rights to your idea or invention.”

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Section § 22375

An invention developer can't take ownership of a customer's invention unless they're also agreeing to make the invention and do so when the manufacturing contract is signed. However, the invention developer is allowed to make a deal to receive a share of the profits from the invention's success.

No invention developer shall acquire any interest, partial or whole, in the title to the customer’s invention, unless the invention developer contracts to manufacture the invention and acquires such interest for such purpose at or about the time the contract for manufacture is executed. Nothing in this section shall be construed to prohibit an invention developer from contracting with a customer to receive a portion of any proceeds accruing to the customer as a result of performance of invention development services by the invention developer.

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Section § 22376

This law says that contracts for invention development services cannot make the customer sign any promissory notes that would prevent them from defending themselves or taking action against the invention developer if the note is transferred to someone else.

No contract for invention development services shall require or entail the execution of any note or series of notes by the customer which, when separately negotiated, will cut off as to third parties any right of action or defense which the customer may have against the invention developer.

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Section § 22377

This law section means that if an invention developer transfers their rights to someone else, the new person (or company) who receives those rights cannot ignore any problems or defenses the original customer had with the invention developer when the rights were transferred.

Any assignee of the invention developer’s rights is subject to all equities and defenses of the customer against the invention developer existing in favor of the customer at the time of the assignment.

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Section § 22378

If you hire someone to help develop your invention, they must send you a report every three months about what they've done for you so far. However, the first report doesn't have to come until six months after you signed the contract.

With respect to each and every contract for invention development services, the invention developer shall deliver to the customer, at the address specified in the contract at quarterly intervals throughout the term of the contract, a written statement of the services performed to date; provided, however, the first such statement need not be delivered until 180 days after the contract is executed.

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