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  1. #1
    Join Date
    Sep 2009
    Location
    Alberta
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    37

    Default Legalities of selling products to other companies

    Hey guys, Im curious what you guys think of this idea.

    I'm considering the possibility of marketing some of my projects to other companies that I do business with.

    For example I'm developing a mechanism to open, sort and stack certain chemical containers when they are mixing chemicals to service a gas well.
    All the design work, fabrication and testing is done by my shop however the company that this device is for is paying for the prototype costs.
    They have merely given me the concept of the device and the parameters with which they expect the device to operate in.

    Is it legal for me to try to sell the finished product to other companies?
    Is there intellectual or other copyrights protecting the original client from me doing this?
    If so, how do I go about obtaining legal rights over the products that I build and develop?
    Do you guys think there is an ethical issue with me marketing a developed product to other companies?

  2. #2
    Join Date
    Sep 2005
    Location
    Salem ,Ohio
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    3,895

    Cool

    Thats a tough one but i would say no you cant sell them. The company i work for shut down one of my ideas real quick reminding me of the paper i signed when i started there that "everything" in my head is owned by them 24/7 Boy i hope they don't want some of their thoughts back
    I even tried to sell a tool idea to a company who's parts we used and they sent me a nasty letter that pretty much ends if anything here is not clear to call them back. I still have a copy of it hanging in my shop. Just my .02...Bob
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  3. #3
    Join Date
    Nov 2007
    Location
    Saskatoon, Sask, Canada
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    1,270

    Default

    I'd have to agree with Bob on this one.
    Especially since they're paying you for the prototype.
    But I'm a welder not a lawyer, with a project like that it might pay to get some legal advice before you worry too much about it.
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  4. #4
    Join Date
    Sep 2009
    Location
    Alberta
    Posts
    37

    Default

    Thanks for your replies, its been a concern for me as I started considering the opportunity this product is presenting. Especially since they are paying for the prototyping of the device.

    However I just remembered a case in which the reverse happened to me. Where I designed a system of storage to attach on a piece of equipment. With my drawn plans (which i never charged for ) in their records and a initial product delivered to them, they proceeded to have their own 'fab shop' copy it for all their new units.

    I was also asked once to bid against the designer of another piece of storage device in order to retrofit all the units located in my area, I was provided with the drawings of his design and a price to beat/match.

    This is kind of telling me that they at least consider the very idea of anything built for them 'theirs'.

    The thing is, I've never signed any contract with them stating anything about ownership rights for products or ideas conceaved via our relationship.

    I'm almost tempted to draft up some sort of contract for this very reason, because I would rather they NOT own some of my ideas, especially the ones that I do not charge design time for.

    There are other simpler ideas I've come up with that could possibly be used by others in any industry, a more efficient tire chain wrench for instance. Would you say that even a simple device such as a specialty wrench should be kept proprietary to the original requesting party even though all they provided me was a concept to work from?

    Thanks again guys.

  5. #5
    Join Date
    Nov 2005
    Posts
    130

    Default

    Before you decide either way have your attorney review your agreement.

  6. #6
    Join Date
    Dec 2009
    Location
    Custer Park, Illinois
    Posts
    92

    Default

    Could you just talk with your client about your idea of marketing the product?

    I've worked on design projects that I couldn't tell people what I was working on. Plant manager, master engineer, head designer and designer were the only ones who knew what the project was in the beginning. Even had 3M computer monitors that only allowed the screen to be seen from directly in front of it. I was told in no uncertain that if I told anyone I would be fired immediately.

    I also had a design "stolen" from another company I worked for. Designed and fabbed a machine for them. To me it wasn't a nuclear rocket or anything but they were all oohs and ahhs. Few months later their central engineering brought in a machine almost identical that was fabbed by one of their "preferred vendors". They came in and reverse engineered the one I built.

    Thing is, if they would have just asked I would have provided them all the drawings and material lists and saved them all the trouble. Pretty sure some engineer went to a big meeting and claimed all the design credit for himself. Even that I didn't care about since I'd been paid for the original design. Wasn't a big deal to me but they, for some reason, thought they had to do it back door.

    Was it legal? Who knows. I avoid lawyers at all costs whenever possible. But most times you can keep the lawyers hungry if you just talk with somebody.

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  7. #7
    Join Date
    May 2009
    Location
    Muskogee Oklahoma
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    245

    Default

    The way I see it, if you came up with the design, fabricated it yourself and the only thing that they had to do with it was coming up with the original concept of it, it's your baby. Put a patent on it before you turn it over to them. They might be paying you but they are paying you for DELIVERY of the final product, not the DEVELOPMENT of that product. That would be like one of us calling up Miller and saying that we want a device that fuses wire together that will allow us to run wire through a feeder continuously when changing spools. Even if we paid for one in advance, they designed it so they own the rights to it. But like I said, this is just the way I see it.

  8. #8
    Join Date
    Apr 2009
    Posts
    21

    Default

    If you have not signed a contract stating that the product you manufacture is their property, you are legally able to sell it to others. By doing so, you may endanger the original relationship and you may not want to risk that.

    In the future you may want to apply for provisional patent on items/tools you produce. You would also be wise to have a standard contract that states you own the manufacturing rights to any products developed during the contract period.

  9. #9
    Join Date
    Nov 2008
    Location
    Colorado Springs
    Posts
    276

    Default Prototype - yours or theirs

    My business is based on Prototyping for companies, big and small.

    The contract/PO/agreement... whatever you have from them is binding.
    If they are paying for and will retain all engineering docs/prints and so forth.
    It's theirs. Also a Non Disclosure Agreement, your done.

    If they are not explicitly paying for the engineering just the product, you have a "chance" to claim it for yourself and sell it.

    Always best to take everything to a contracts lawyer, donate to his bank account and make sure. Make him sign a confidentiality and Non Disclosure Agreement before you show him anything.

    If you need a copy of a standard NDA for your files or any of you for that matter, PM me and I will send you a copy in pdf format.

    good luck.
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  10. #10
    Join Date
    Sep 2006
    Posts
    303

    Default

    Quote Originally Posted by aametalmaster View Post
    Thats a tough one but i would say no you cant sell them. The company i work for shut down one of my ideas real quick reminding me of the paper i signed when i started there that "everything" in my head is owned by them 24/7 Boy i hope they don't want some of their thoughts back
    I even tried to sell a tool idea to a company who's parts we used and they sent me a nasty letter that pretty much ends if anything here is not clear to call them back. I still have a copy of it hanging in my shop. Just my .02...Bob
    I haven't had a job that stopped the hiring process when I crossed that out and initialed it. My position was it was a deal breaker. We weren't going there.

    As for the original question, the work was done at the request of another company and they're paying for the prototype work. They own it unless they give you a waiver to produce and market the product. If on the other hand they had presented a problem and then you had developed and produced a solution on your nickel then it's yours to market and produce.

    Just my two cents.

    Of course I'm a nut on intellectual property. I was just given a letter of allowance and have paid the fees for publishing and awarding a patent. I should have the patent in hand within a couple of months at the most.

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