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Death in the fine print

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Death in the fine print

Post  Admin on Fri 29 Apr 2011 - 8:15

Recently, companies have enthusiastically jumped on-board the trend of crowd-sourcing new products and ideas. This trend is driven in part by the realization that consumers can be power allies in product development and in part by the allure of outsourcing a task or problem to a sea of heads to solve the task quicker and less expensively than you can do in-house.

The crowd-sourcing of ideas is potentially exciting to inventors, as this trend expands the available market to its theoretical maximum for inventors by removing the “not invented here” syndrome. A number of web sites have sprung up to provide intermediary services between inventors and potential licensees who wish to benefit from this trend. Typically, these sites allow inventors to submit their ideas and receive votes from other users, and a few sites provide rewards or awards for crowd-selected winning ideas. In theory, these sites may make it much easier for inventors to let the world know about their inventions.

However, this may be dangerous for inventors, as they should carefully select companies that provide crowd-sourcing services. The first step is to carefully read the terms of use that governs the use of the crowd-sourcing sites. To illustrate, we reviewed the terms of use at an actual site, which we referred to as Company X.
The review of the terms-of-agreement revealed dangerous language for the unsuspecting inventor. For example, the license at one site granted significant substantive rights to the company operating the site perpetual irrevocable rights to freely use and reproduce any “Product Idea” or “User Input” to the site as follows:
“License Grant. You hereby grant the Company, its affiliates and its strategic, commercial, social network or other partners, and its and their respective licensees, distributors, agents, representatives and other authorized users, a perpetual, non–exclusive, irrevocable, fully–paid, royalty–free, sub–licensable and transferable (in whole or part) worldwide license under all copyrights, trademarks, patents, trade secrets, privacy and publicity rights and other intellectual property rights to use, reproduce, transmit, display, exhibit, distribute, index, comment on, modify, create derivative works based upon, perform and otherwise exploit any User Input submitted by you, in whole or in part, in all media formats and channels now known or hereafter devised for any and all purposes including without limitation (a) the operation of the Site and associated services, (b) the operation of any site owned or controlled by any commercial, strategic, social network or other partner or relationship of the Company (or any successor or replacement site or service or any assignee or transferee's site or service), and (c) the manufacture, development, commercialization, promotion or sale of any Product Idea or resulting product about which such User Input may relate, all without further notice to you, with or without attribution, and without the requirement of any permission from or payment to you or to any other person or entity.”

User input is broadly defined as virtually everything you submit to the site.

“User Input. Company X allows registered users of the Community to submit input, feedback, comments and other content through communicating, uploading, embedding, displaying and/or otherwise communicating in any manner whatsoever including on or through the Site or the sites of strategic, commercial, social network or other partners of Company X and, as may be made available from time to time, through email or other online and offline methods ("User Input"). The term "User Input" may include, without limitation, designs, text, graphics, pictures, video, animation, information, applications, software, programs, music, sound, audio, schematics, illustrations, diagrams, data, and other files and creative output, in whatever format.”

The term of use also broadly provides a waiver of liability to the company with the following No Liability clause:

“No Liability. You understand and agree that: (i) you are solely responsible for understanding all copyright, patent, trademark, trade secret and other intellectual property or other laws that may apply to your or any other user's Product Ideas or User Input; (ii) you are solely responsible for, and the Company will have no liability in connection with, the legal consequences of any actions or failures to act on your part while using the Site, including without limitation any legal consequences relating to your or any other person's or entity's intellectual property rights or proprietary information; and (iii) Company X an acknowledgement hereunder of your intellectual property rights in your Product Ideas or User Input does not constitute a legal opinion or legal advice, but is intended solely as an expression of the Company's intention not to require users of the Site to forgo certain intellectual property rights with respect to such Product Ideas or User Input submitted by them to the Site, subject to the terms of these Terms and Conditions. Company X shall not be liable to you or any other user (or to any person claiming through you or such other user) for any use, exploitation or disclosure of any Product Idea or User Input.”

The bottom line is, the terms-of-use agreement at this site suggests that virtually all significant commercialization rights can be lost when inventors submit product ideas and suggestions/comments to such a site.

So you may ask, how do I tap into the crowd-sourcing trend on my own if I lack the contacts to market my invention?

Inventors should provide only publicly available information to these sites to avoid the loss of valuable trade secret rights, and avoid offering on these sites non-patentable suggestions and ideas such as drawings, literary work, among others. Avoid loss of rights by granting these sites with the ability to use or benefit from suggestions or comments when the license grant allows the site to do so, as is the case with Company X.

In the end it’s your responsibility as an inventor to understand what you are getting into, and to consult legal counsel before entering into any binding contract, even if that contract appears to simply be registering for a new web site.

You can find out more about Tran & Associates, crowdsourcing, and inventor patents by contacting them at


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Join date : 2011-02-18

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