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IP ownership with no-pay job

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  • IP ownership with no-pay job

    Hi,
    I'm an electrical engineering living in Austin, TX. Last January, I went to work for a "friend" who needed help with failing tech company. At the time, he assured me that he had found a customer for the company and just needed some help. The company had received angel financing, which was used to fund the previous, failed business plan. So the company had no cash and no income. I agreed to join in exchange for a 10% stake, vesting over a period of time. I agreed to defer regular pay since he was confident that the no-cash situation wouldn't persist. Over the following 8 months, I invested a lot of time and effort in an attempt to develop a business plan, technology, etc, needed to win that deal (which fell through) and later, attempt to secure financing. During this time, I was the lead inventor of three ideas that we planned to patent to increase the value of the company to investors. As it became increasingly evident that the CEO's initial optimism was unfounded, and the paid employees were let go, I negotiated for a higher stake in the company - 33%. The CEO agreed to this, which led to me investing an additional ~6 weeks of time and effort. During the early days of my "employment" the company's part-time Attorney advised our CEO that I could not legally work for no pay, so they gave me a few minimum wage checks (until that ran out, too).

    Finally, after it became clear that we would not be funded, I decided to get another job. At this time, the CEO said that he would focus on marketing the patents, and that I would be entitled to a 33% stake in any returns. 6 weeks had passed and I hadn't heard anything so I gave him a call - he said that the original Angel investors were retaining him to file the patents and that they have contracted with a CA-based patent marketing company to find a buyer. But.. he also informed me that the investors preferred stock and liquidation preference will entitle them to the first $XMillion of any proceeds. It is expected that the proceeds will not exceed the liquidation preference. Also, they weren't even planning to include me as an inventor of the patent (though I think that they will do this now).

    My opinion is that they are essentially stealing my work and have offered essentially no compensation. They negotiated in bad faith when they didn't disclose the investors' liquidation preference, especially in the context of an all-equity compensation package. Any opinions of whether I have recourse? TIA for any help.

  • #2
    Re: IP ownership with no-pay job

    He may wish to settle with you if you push the point. If not you certainly could file suit and argue to claim the value you should be paid for.

    WLD attorneys could negotiate for you or file suit if need be--

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