Background
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I've been working with a "startup" company (one guy) and have
developed software that has taken us well over a year. I practically
killed myself doing it as we would literally spend 20 hour days
working and even featured a couple of 36 hour days without sleep.
Our agreement is that there'd be NO money while in development (its
made for a tough time surviving) but that he'd "take care of me" once
things got going financially. Obviously, I would have liked to have a
definite agreement/contract with specific amounts/percentages but I
trust this guy.
Some important notes are:
1) The software is based on a theory that he'd spent the past 30 years
working on
2) He is well connected and will be responsible for all sales
3) The software is based on the theory, but he needs the software to
make the sale. It is the key element.
My question is this:
If a startup company had a similar arrangement, but would offer stock
shares (remember, I've gotten NO money at all for work performed, over
a years' solid worth of work) what % would they typically offer? BW Online | January 13, 1997 | BILL GATES'S QUIET SHOPPING SPREE::
Today, Vermeer's FrontPage authoring system is key to Microsoft's Internet effort. Microsoft bought aha!, a developer of software for mobile computers.
http://www.businessweek.com/archives/1997/b3509221.arc.htmHOME |
svpma.org :: silicon valley product management association ::
His experience also includes two years with internet advertising startup, NetGravity, she is also a board member of the Software Development Forum.
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I agree with vballguy-ga that you MUST get something in writing
immediately. Given that this is a one-person start-up and given the
amount of work you have done and the value of the code to the
endeavor, I think at least a 30% ownership interest is appropriate.
You need to determine in advance how that ownership interest will be
manifest: stock in an S-corporation? A C-corporation? A membership
interest in an LLC? A partnership interest? Each of these has widely
varying legal rights and tax implications, especially because in any
scenario where you own less that 50 percent you will be a "minority
interest," and you can and likely will be treated as a financial
second-class citizen by the majority owner(s).
If the other party balks at that, I think you can remind him that
indeed, as vballguy-ga says, you own the to the code. As
long as you have not signed anything "assigning" (giving) to him the
rights to the code, you own the . The general rules for
ownership are that the is owned by the author
(that's you) unless (a) you assign the to someone else in
writing; or (b) it is a work made for hire because you are an employee
and you created the work in the course and scope of your employment;
or (c) you are not an employee but it is still a work made for hire
AND you have a written contract stipulating that it is a work made for
hire. A work made for hire in this context is defined as "a work
specially ordered or commissioned for use as a contribution to a
collective work, as a part of a motion picture or other audiovisual
work, as a translation, as a supplementary work, as a compilation, as
an instructional text, as a test, as answer material for a test, or as
an atlas." See 17 U.S.C. Section 101
(http://caselaw.lp.findlaw.com/casecode/uscodes/17/chapters/1/sections/section_101.html).
Your code does not sound like it falls into any of those categories,
plus in any event it sounds like nothing is in writing. See also
http://www..gov/circs/circ9.html.
You could even go out and lawfully register your in the code
as the author, if you wished. See
http://www..gov/register/index.html. While this is not a
prerequisite to your having ownership rights, it does serve to perfect
and enhance your ability to enforce the should that be
required, e.g., if he rips you off and takes the code and starts to
market it--you could sue him for infringement if you had
previously registered the .
First off, you absolutely MUST come to an agreement before your
partner manages to land funding for the startup, sell the idea ect.
The second point is that even if you own a percentage of the company,
you might not see a single dime for a long time. You need to talk to
a lawyer and get a contract written up. Hypothetically, if your
partner gives you 25% of the company, he could give himself a salary
of 200k a year as chairman and sales rep and without a long court
battle, he could take almost all of the income before any went to
shareholders...
In my mind, the only reason to not come to terms when two people are
not equal, is that the majority holder is waiting till they don't
really need the minority person and then they can negotiate from a
position of power.
One piece of information that might help you is that unless you have
specifically signed a document that you are doing "work for hire",
that you are considered an independant contractor and own the code. I
am not a lawyer nor offering legal advice but here are some links that
discuss it:
"By law, independent contractors retain the of any works
they produce no matter who pays for them, unless they sign contracts
assigning those rights to others. "
http://www.realrates.com/contract.htm
A central proposition of U.S. law is that the author of a
work is also the owner of the in that work. The principal
exception to this are "works made for hire".
http://www.ott.arizona.edu/issues.htm
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