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F E Smith
F E Smith, Advocate
Category: Law
Satisfied Customers: 8445
Experience:  I have been practising for 30 years.
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I have developed a new process management that a company I

Customer Question

Good Morning. I have developed a new process for information management that a company I am associated with has used to brief clients.
From Jan 15 - Aug 15 I was paid by the company but since that date I have received no compensation although I have remained involved with the company hoping for a paying position eventually and because I have been promised a director ship.
The Director of the company asked me to build an information management process based on a lead he had and I did that in May of 2016. As of today I have briefed the process to three substantial clients and it has generated a great deal of interest. Today the Director has asked me to speak to his lawyer to cement the companies IP rights to the process.
What IP rights do I have to the process as opposed to the company considering I am not a paid employee or a director?
Submitted: 4 months ago.
Category: Law
Expert:  F E Smith replied 4 months ago.

Was there any agreement ever that the intellectual property would belong to the company?

Is the process documented?

I don’t need to know what it is but it would assist if I knew the format that it is in.

Customer: replied 4 months ago.
There was no agreement about IP when I developed this process, there were discussions about my becoming a director but nothing has come of that. The request to talk to the companies lawyer now is so they can clarify this.
The process is recorded on PPT slide sets, five of them. One has beenbriefed to a client twice and the second time it was briefed a company copyright mark was placed on the slides.
Expert:  F E Smith replied 4 months ago.

The situation with intellectual property/copyright is that it endures for 70 years beyond the death of the originator.

It vests in the originator/author regardless of whether the originator/author was paid for the work or not and provided there was no agreement that it would vest in who commissioned the work.

If the originator/author was an employee (which you say you were not) then the intellectual property/copyright vests in the employer.

Hence, from what you have said, the IP/copyright belongs to you and you can do with it what you like. If you wanted to sell it to the big wide world, you could.

You were paid from January to August 2015 and the company that paid you is entitled to some kind of benefit for that payment. What that benefit would be would depend on the nature of the agreement between you for you to do the work on them to pay you.

There is a legal doctrine called Promissory Estoppel and if you were promised something (directorship) and you relied on that promise to your detriment (did work) then you can enforce the promise although in practical terms, becoming a director of a company that doesn’t actually want you is not going to be a particularly good idea.

Can I clarify anything for you?

Please don’t forget to rate the service positive. It’s an important part of the process by which experts get paid. We can still exchange emails.

Best wishes.


F E Smith, Advocate
Category: Law
Satisfied Customers: 8445
Experience: I have been practising for 30 years.
F E Smith and other Law Specialists are ready to help you
Customer: replied 4 months ago.
My paid work from January 2015 - August 2015 involved the following scope of work:Scope of Work Responsibilities will be divided along three main areas of activity: Operations – Internal, Operations– External and IT and Systems. Illustrative tasks: Operations – Internal (50% time): responsibility for ensuring effective use of Company resources; development and management of systems, processes, and work; development and management of staff and consultants, including, HR processes including staff and consultant recruitment; on-boarding processes; legal and regulatory compliance; Operations – External (25% time): development and management of resources for deployed operations, including consultant compliance and preparation; design, development and delivery of bid and project proposals; IT and Systems (25% time): direct contribution to design, development and management of internal IT/Systems, as well the IT/system elements of external project design and delivery.It wasnt until May 2016, nine months after I had stopped being paid that I was asked to build the new process after a client asked the director for help. There are now three clients asking for the service, one of which has confirmed with a purchase order (no purchase order or payment has been issued to me) the other two are evolving into quite large long term contracts. I have approached the director about partial ownership of the company as well based on the results of my work as well. He's unwilling to give me that, instead he offered non voting profit shares as part of the directorship but I am concerned because the articles allow the director to determine if these shares will receive any profit and are forfeited if you are no longer a director with the company and our current director holds all the voting shares.
I added all this for completeness, should have done it at the start, sorry about that. Considering I am being asked to meet with his lawyer to secure IP for the company what is your advice?
Expert:  F E Smith replied 4 months ago.

It seems that you were paid for is different from the process work and even if they try to argue that you were employed in some kind of capacity, the capacity in which you were employed appears to be a different capacity than that for which you did the process.

As they want the process you are in better negotiating position than they are to get what you want out of them if they need you to implement the process.

You are right to be concerned about the shares because of the stipulation in the articles. You should also be concerned because if they remove you as a director for any reason, even if you were getting profit, you would no longer get it.

I have seen many agreements go wrong when the remuneration has been by way of shares and particularly with different classes of shares where agreements and accounting can be so unwieldy as to be unworkable.

Although anyone who took shares in Google for example in the very early days would now be very well off whereas those who took money, not quite so. Therefore, it depends on whether the company is going to be profitable and if so how profitable as to whether you take shares (with a guaranteed profit share) their you take cash. The beauty of taking the money of course is that it’s not profit dependent, it’s not management dependent and it’s easy to quantify. The downside is that if the whole thing takes off exponentially, you will only get the amount of money which is being offered.

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