Chapter Title: INVENTION SERVICESSection: 325A.01
Text:
325A.01 Definitions.
Subdivision 1. As used in sections 325A.01 to 325A.10, the
following terms shall have the meanings given:
Subd. 2. "Contract for invention development services"
includes a contract by which an invention developer undertakes
to develop or promote an invention for a customer.
Subd. 3. "Customer" means any natural person who is
solicited by, inquires about, seeks the services of or enters
into a contract with an invention developer for invention
development services.
Subd. 4. "Invention" includes a process, machine,
manufacture, composition of matter, improvement upon the
foregoing, or a concept.
Subd. 5. "Invention developer" means any person, firm,
corporation or association and the agents, employees or
representatives of the person, firm, corporation or association
which develops or promotes or offers to develop or promote an
invention of a customer in order that the customer's invention
may be patented, licensed or sold for manufacture or
manufactured in large quantities, except the term does not
include:
(1) a partnership or corporation when all of its partners,
stockholders or members are licensed by a state or the United
States to render legal advice concerning patents and trademarks,
or a person so licensed,
(2) a department or agency of the federal, state or local
government,
(3) a charitable, scientific, educational, religious or
other organization registered under Minnesota Statutes, section
309.52 or described in section 170 (b) (1) (A) of the Internal
Revenue Code of 1954, as amended and in effect on January 1,
1977,
(4) a person, firm, corporation, association or other
entity that does not charge a fee for invention development
services, or
(5) any person, firm, corporation, association or other
entity whose gross receipts from contracts for invention
development services do not exceed ten percent of its gross
receipts from all sources during the fiscal year preceding the
year in which any contract for invention development services is
signed.
For the purposes of this subdivision, "fee" shall include
any payment made by the customer to the entity, including
reimbursements for expenditures made or costs incurred by such
entity, but shall not include a payment made from a portion of
the income received by a customer by virtue of invention
development services performed by the entity.
Subd. 6. "Invention development services" includes acts
required or promised to be performed, or actually performed by
an invention developer for a customer.
Subd. 7. "Business day" means any day other than a
Saturday, Sunday or holiday as defined in section 645.44,
subdivision 5.
HIST: 1977 c 288 s 1
325A.02 Notice to customers.
Subdivision 1. Every contract for invention development
services shall be in writing and shall be subject to the
provisions of sections 325A.01 to 325A.10. A copy of each fully
executed, written contract shall be given to the customer at the
time the customer signs the contract.
Subd. 2. If one or more 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 contracts, the
invention developer shall so state in a written statement and
shall supply to the customer the written statement together with
a copy of each contract or a written summary of the general
terms of each contract, including the total cost or
consideration required from the customer, before the customer
signs the first contract.
HIST: 1977 c 288 s 2; 1986 c 444
325A.03 Right of cancellation.
Subdivision 1. Notwithstanding any contractual provision
to the contrary, the customer shall have the unconditional right
to cancel a contract for invention development services for any
reason at any time before midnight of the third business day
following the date the invention developer and the customer sign
the contract and the customer receives a fully executed copy of
it. Written notice of cancellation may be delivered personally
or by mail. If given by mail, the notice is effective upon
deposit in a mailbox, properly addressed and postage prepaid.
Notice of cancellation need not take a particular form and is
sufficient if it indicates, by any form of written expression,
the intention of the customer not to be bound by the contract.
Within ten business days after receipt of the notice of
cancellation, the invention developer shall deliver to the
customer, personally or by mail, all moneys paid, any note or
other evidence of indebtedness and all materials provided by the
customer.
Subd. 2. Every contract for invention development services
shall contain the following statement in 10-point boldface type
immediately above the place where the customer signs the
contract:
"The three business 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 addressed to (Name of
Invention Developer), at (Address of Invention Developer's Place
of Business) with first class postage prepaid before midnight of
this date. If you choose to personally deliver your notice to
the invention developer, it must be delivered by the end of the
developer's normal business day on this date."
325A.04 Mandatory contract form.
Subdivision 1. A contract for invention development
services shall set forth the information required in this
section in at least 10-point type or equivalent size if
handwritten.
Subd. 2. The following disclosure statement shall be in
boldface type and shall be located conspicuously on a cover
sheet that contains no other writing:
"The following disclosures are required by law and are
expressly made a part of this contract: You have the right to
cancel this contract for any reason at any time within three
business 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 personally 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 or
personal delivery, within ten business days after receipt of the
cancellation notice, all money paid and all materials provided
either by you or by another party in your behalf.
An invention developer who is also a lawyer may give you
legal advice concerning patent, copyright, or trademark law or
advise you of whether your idea or invention may be patentable
or may be protected under the patent, copyright, or trademark
laws of the United States or any other law. An invention
developer who is not a lawyer may not give you legal advice on
these subjects.
No patent, copyright or trademark protection will be
acquired for you by the invention developer or by this
contract. Your failure to inquire into the law governing
patent, copyright or trademark matters may jeopardize your
rights in your idea or invention both in the United States and
in foreign countries. Your failure to identify and investigate
existing patents, trademarks or registered copyrights may place
you in jeopardy of infringing the copyrights, patent or
trademark rights of other persons if you proceed to make, use,
distribute or sell your idea or invention."
Subd. 3. The contract shall describe fully and in detail
the acts or services that the invention developer contracts to
perform for the customer.
Subd. 4. The contract shall state whether the invention
developer contracts to construct one or more prototypes, models
or devices embodying the customer's invention, the number of
such prototypes to be constructed and whether the invention
developer contracts to sell or distribute such prototypes,
models or devices.
Subd. 5. If an oral or written estimate of customer
earnings is made, the contract shall state the estimate and the
data upon which it is based.
Subd. 6. In a single statement the contract shall set
forth both (1) the total number of customers who have contracted
with the invention developer, except that the number need not
reflect those customers who have contracted within the last 30
days, and (2) the number of customers who have received, by
virtue of the invention developer's performance of invention
development services, an amount of money in excess of the amount
of money paid by such customers to the invention developer
pursuant to a contract for invention development services.
Subd. 7. The contract shall state the expected date of
completion of the invention development services.
Subd. 8. The contract shall state whether and the extent
to which it effectuates or makes possible the purchase by the
invention developer of an interest in the title to the
customer's invention.
Subd. 9. The contract shall explain that the invention
developer is required to maintain all records and correspondence
relating to performance of the invention development services
for that customer for a period not less than three years after
expiration of the term of the contract for invention development
services.
Subd. 10. The contract shall state that the records and
correspondence required to be maintained pursuant to section
325A.08 will be made available to the customer or the customer's
representative for review and copying at the customer's expense
on the invention developer's premises during normal business
hours upon seven days' written notice, the time period to begin
from the date the notice is placed in the United States mail
properly addressed and first class postage prepaid.
Subd. 11. The contract shall state the name of the person
or firm contracting to perform the invention development
services, all names under which said person or firm is doing or
has done business as an invention developer during the previous
ten years, the names of all parent and subsidiary companies to
the firm and the names of all companies that have a contractual
obligation to the firm to perform invention development services.
Subd. 12. The contract shall state the invention
developer's principal business address and the name and address
of its agent in this state authorized to receive service of
process in this state.
325A.05 Disclosures made prior to contract.
Subdivision 1. In either the first written communication
from the invention developer to a specific customer or at the
first personal meeting between the invention developer and a
customer, the invention developer shall make a written
disclosure to the customer of the information required in this
section.
Subd. 2. The disclosure shall state the median fee charged
to all of the invention developers' customers who have signed
contracts with the developer in the preceding six months,
excluding customers who have signed in the preceding 30 days.
Subd. 3. The disclosure shall include a single statement
setting forth (1) the total number of customers who have
contracted with the invention developer, except that the number
need not reflect those customers who have contracted within the
preceding 30 days, and (2) the number of customers who have
received by virtue of the invention developer's performance of
invention development services an amount of money in excess of
the amount of money paid by those customers to the invention
developer pursuant to a contract for invention development
services.
Subd. 4. The disclosure shall contain the following
statement:
"An invention developer who is also a lawyer may give you
legal advice concerning patent, copyright, or trademark law or
to advise you of whether your idea or invention may be
patentable or may be protected under the patent, copyright, or
trademark laws of the United States or any other law. An
invention developer who is not a lawyer may not give you legal
advice on these subjects.
No patent, copyright or trademark protection will be
acquired for you by the invention developer. Your failure to
inquire into the law governing patent, copyright or trademark
matters may jeopardize your rights in your idea or invention,
both in the United States and in foreign countries. Your
failure to identify and investigate existing patents, trademarks
or registered copyrights may place you in jeopardy of infringing
the copyrights, patent or trademark rights of other persons if
you proceed to make, use, distribute or sell your idea or
invention."
325A.06 Financial requirements.
Subdivision 1. Every invention developer rendering or
offering to render invention development services in this state
shall maintain a bond issued by a surety admitted to do business
in this state, and equal to either ten percent of the invention
developer's gross income from the invention development business
in this state during the invention developer's preceding fiscal
year, or $25,000, whichever is larger. A copy of the bond shall
be approved by the attorney general and filed with the secretary
of state before the invention developer renders or offers to
render invention development services in this state. The
invention developer shall have 90 days after the end of each
fiscal year within which to change the bond as may be necessary
to conform to the requirements of this subdivision.
Subd. 2. The bond required by subdivision 1 shall be in
favor of the state of Minnesota for the benefit of any person
who, after entering into a contract for invention development
services with an invention developer, is damaged by fraud or
dishonesty of the invention developer in performance of the
contract, by the insolvency or the cessation of business by the
invention developer or by the intentional violation of sections
325A.01 to 325A.10 by the invention developer. Any person
claiming against the bond may maintain an action at law against
the invention developer and the surety company.
The aggregate liability of the surety company to all
persons for all breaches of conditions of the bond shall in no
event exceed the amount of the bond.
Subd. 3. In lieu of the bond required by subdivision 1 the
invention developer may deposit with the state treasurer a cash
deposit in the like amount. The state treasurer shall not
refund a deposit until 60 days after either the invention
developer has ceased doing business in the state or a bond has
been filed which complies with subdivisions 1 and 2.
325A.07 Restriction on use of negotiable instruments.
In connection with a contract for invention development
services, the invention developer shall not take from a customer
a negotiable instrument other than a check as evidence of the
obligation of the customer. A holder is not a holder in due
course if the holder takes a negotiable instrument taken from a
customer in violation of this section.
325A.08 Records.
Every invention developer shall maintain all records and
correspondence relating to performance of each invention
development contract for a period of not less than three years
after expiration of the term of the contract.
325A.09 Remedies and enforcement.
Subdivision 1. The provisions of sections 325A.01 to
325A.10 are not exclusive and do not relieve the parties or the
contract from compliance with all other applicable provisions of
law.
Subd. 2. Any contract for invention development services
that does not comply with the applicable provisions of sections
325A.01 to 325A.10 shall be unenforceable against the customer
as contrary to public policy, provided that no contract shall be
unenforceable if the invention developer proves that
noncompliance was unintentional and resulted from a bona fide
error in spite of reasonable procedures adopted to avoid any
such errors, and if the invention developer makes an appropriate
correction.
Subd. 3. Any contract for invention development services
entered into by a customer with an invention developer who has
used any fraud, false pretense, false promise,
misrepresentation, misleading statement or deceptive practice in
respect to that customer with the intent that the customer rely
thereon, whether or not the customer was in fact misled,
deceived or damaged, shall be unenforceable against the customer.
Subd. 4. Any waiver by the customer of the provisions of
sections 325A.01 to 325A.10 shall be deemed contrary to public
policy and shall be void and unenforceable.
Subd. 5. Any person who has been injured by a violation of
sections 325A.01 to 325A.10 by an invention developer, by any
false or fraudulent statement, representation or omission of
material fact by an invention developer or by failure of an
invention developer to make all the disclosures required by
sections 325A.01 to 325A.10 may bring a civil action against the
invention developer for the damages sustained together with
costs and disbursements, including reasonable attorney's fees.
The court in its discretion may increase the award of damages to
an amount not to exceed three times the damages sustained or
$2,500, whichever is greater.
Subd. 6. Failure to make the disclosures required by
section 325A.05 shall render any contract subsequently entered
into between the customer and the invention developer voidable
by the customer.
Subd. 7. In addition to the penalties provided in
subdivisions 1 to 6, any invention developer who is found to
have violated sections 325A.01 to 325A.10 shall be deemed in
violation of section 325F.69, subdivision 1, and the provisions
of section 8.31 shall apply.