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Texas Vernon's Texas Civil Statutes - Article 9020. Regulation Of Invention Development Services Act
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Art. 9020. REGULATION OF INVENTION DEVELOPMENT SERVICES
ACT.
Short Title
Sec. 1. This Act may be cited as the Regulation of Invention
Development Services Act.
Definitions
Sec. 2. In this Act:
(1) "Invention development services" means any act done by
or for an invention developer for the procurement or attempted
procurement by the invention developer of a licensee or buyer of an
intellectual property right in an invention. The term includes the
evaluation, perfecting, marketing, brokering, or promoting of an
invention, a patent search, and preparation or prosecution of a
patent application by a person not registered to practice before
the U.S. Patent and Trademark Office.
(2) "Invention" means a discovery, process, machine,
design, formulation, product, concept, or idea, or any combination
of these, whether patentable or not.
Customer
Sec. 3. For the purposes of this Act, a customer is:
(1) an individual who enters into a contract with an
invention developer for invention development services; or
(2) a firm, partnership, corporation, or other entity that
enters into a contract with an invention developer for invention
development services and that is not purchasing those services as
an adjunct to the traditional commercial enterprises in which it
engages as a business.
Invention Developer
Sec. 4. For the purposes of this Act, an invention developer
is an individual, firm, partnership, or corporation, or an agent,
employee, officer, partner, or independent contractor of one of
those entities, that offers to perform or performs invention
development services for a customer and that is not:
(1) a department or agency of federal, state, or local
government;
(2) a nonprofit, charitable, scientific, or educational
organization, qualified under the Texas Non-Profit Corporation Act
(Article 1396-1.01 et seq., Vernon's Texas Civil Statutes) or
described by Section 170(b)(1)(a) of the Internal Revenue Code of
1954, as amended;
(3) an attorney acting within the scope of the attorney's
professional license;
(4) a person registered before the U.S. Patent and Trademark
Office acting within the scope of that person's professional
license; or
(5) a person, firm, corporation, association, or other
entity that does not charge a fee, including reimbursement for
expenditures made or costs incurred by the entity, for invention
development services other than payment made from a portion of the
income received by a customer by virtue of acts performed by the
entity.
Contracting Requirements
Sec. 5. (a) Each contract for invention development services
by which an invention developer undertakes invention development
services for a customer is subject to this Act. The contract must
be in writing and the invention developer shall give a copy of the
contract to the customer at the time the customer signs the
contract.
(b) If it is the invention developer's normal practice to
seek more than one contract in connection with an invention or if
the invention developer normally seeks to perform services in
connection with an invention in more than one phase with the
performance of each phase covered in one or more subsequent
contracts, the invention developer shall give to the customer at
the time the customer signs the first contract:
(1) a written statement describing that practice; and
(2) a written summary of the developer's normal terms, if
any, of subsequent contracts, including the approximate amount of
the developer's normal fees or other consideration, if any, that
may be required from the customer.
(c) For the purposes of this section, delivery of a
promissory note, check, bill of exchange, or negotiable instrument
of any kind to the invention developer or to a third party for the
benefit of the invention developer irrespective of the date or
dates appearing in that instrument is payment.
(d) Notwithstanding any contractual provision to the
contrary, payment for invention development services may not be
required, made, or received before the fourth working day after the
day on which the customer receives a copy of the contract for
invention development services signed by the invention developer
and the customer.
(e) Until the payment for invention development services is
made, the parties to a contract for invention development services
have the option to terminate the contract. The customer may
exercise the option by refraining from making payment to the
invention developer. The invention developer may exercise the
option to terminate by giving to the customer a written notice of
its exercise of the option. The written notice becomes effective on
its receipt by the customer.
Standard Provisions for Cover Notice
Sec. 6. (a) A contract for invention development services
must have a conspicuous and legible cover sheet attached. The cover
sheet must set forth:
(1) the name, home address, office address, and local office
address of the invention developer; and
(2) the following notice printed in bold-faced type of not
less than 10-point size:
THIS CONTRACT BETWEEN YOU AND AN INVENTION DEVELOPER IS
REGULATED BY THE STATE OF TEXAS' REGULATION OF INVENTION
DEVELOPMENT SERVICES ACT. YOU ARE NOT PERMITTED OR REQUIRED TO MAKE
ANY PAYMENTS UNDER THIS CONTRACT UNTIL FOUR (4) WORKING DAYS AFTER
YOU SIGN THIS CONTRACT AND RECEIVE A COMPLETED COPY OF IT.
IF YOU ASSIGN EVEN A PARTIAL INTEREST IN THE INVENTION TO THE
INVENTION DEVELOPER, THE INVENTION DEVELOPER MAY HAVE THE RIGHT TO
SELL OR DISPOSE OF THE INVENTION WITHOUT YOUR CONSENT AND MAY NOT
HAVE TO SHARE THE PROFITS WITH YOU.
THE TOTAL NUMBER OF CUSTOMERS WHO HAVE CONTRACTED WITH THE
INVENTION DEVELOPER SINCE (year) IS (number) . THE TOTAL NUMBER OF
CUSTOMERS KNOWN BY THIS INVENTION DEVELOPER TO HAVE RECEIVED, BY
VIRTUE OF THIS INVENTION DEVELOPER'S PERFORMANCE, AN AMOUNT OF
MONEY IN EXCESS OF THE AMOUNT PAID BY THE CUSTOMER TO THIS INVENTION
DEVELOPER IS (number) .
YOU ARE ENCOURAGED TO CONSULT WITH A QUALIFIED ATTORNEY
BEFORE SIGNING THIS CONTRACT. BY PROCEEDING WITHOUT THE ADVICE OF A
QUALIFIED ATTORNEY, YOU COULD LOSE ANY RIGHTS YOU MIGHT HAVE IN YOUR
IDEA OR INVENTION.
(b) The invention developer shall complete the cover sheet
with the proper information to be provided in the blanks. In the
first blank the invention developer shall enter the year that the
invention developer began business or the effective date of this
Act. The numbers entered in the last two blanks of the cover notice
may be rounded to the nearest 100 and need not include those who
have contracted with the invention developer during the three
calendar months immediately preceding the date of the contract. If
the number to be inserted in the third blank is zero, it must be so
stated.
(c) The cover notice may not contain anything in addition to
the information required by Subsection (a) of this section.
Reports to Customer Required
Sec. 7. For each contract for invention development services,
the invention developer, at least once each calendar quarter during
the term of the contract, shall deliver to the customer at the
address specified in the contract a written report that identifies
the contract and that sets forth:
(1) a full, clear, and concise description of the services
performed to the date of the report and of the services to be
performed;
(2) the name and address of each person, firm, or
corporation to whom the subject matter of the contract has been
disclosed, the reason for each disclosure, the nature of the
disclosure, and copies of all responses received as a result of
those disclosures.
Mandatory Contract Terms
Sec. 8. (a) A contract for invention development services
shall set forth in bold-faced type of not less than 10-point size:
(1) the terms and conditions of payment and contract
termination rights required by Section 5 of this Act;
(2) a full, clear, and concise description of the specific
acts or services that the invention developer undertakes to perform
for the customer;
(3) a statement as to whether the invention developer
undertakes to construct, sell, or distribute one or more
prototypes, models, or devices embodying the customer's invention;
(4) the full name and principal place of business of the
invention developer;
(5) the name and principal place of business of any parent,
subsidiary, or affiliated company that may engage in performing any
of the invention development services;
(6) a statement of estimated or projected customer earnings
and a description of the data on which the estimation or projection
is based if the invention developer makes an oral or written
representation of estimated or projected customer earnings;
(7) the name and address of the custodian of all records and
correspondence pertaining to the invention development services
for which the contract is made;
(8) a statement that the invention developer is required to
maintain all records and correspondence relating to performance of
the invention development services for that customer until the
second anniversary of the date of the expiration of the contract for
invention development services and that on seven days' written
notice the invention developer will make the invention development
services records and correspondence available to the customer or
the customer's representative for review and copying at the
customer's reasonable expense on the invention developer's premises
during normal business hours; and
(9) a statement setting forth a time schedule for
performance of the invention development services, including an
estimated date by which performance of the invention development
services is expected to be completed.
(b) To the extent that the description of specific acts or
services required by Subsection (a)(2) of this section gives the
invention developer discretion in determining which acts or
services will be performed, the invention developer is a fiduciary.
Remedies
Sec. 9. (a) A contract for invention development services
that does not substantially comply with this Act is voidable at the
option of the customer. A contract for invention development
services entered into in reliance on any false, fraudulent, or
misleading information, representation, notice, or advertisement
of the invention developer is voidable at the option of the
customer. Any waiver by the customer of any provision of this Act
is contrary to public policy and is void.
(b) A customer who has been injured by a violation of this
Act by an invention developer, by a false or fraudulent statement,
representation, or omission of material fact by an invention
developer, or by failure of an invention developer to make all
disclosures required by this Act may recover in a civil action
against the invention developer:
(1) court costs;
(2) attorney's fees; and
(3) the amount of actual damages, if any, sustained by the
customer or $1,000, whichever is greater.
(c) Alternatively, any violation of this Act by an invention
developer, or omission of material fact by an invention developer,
or failure of an invention developer to make all disclosures
required by this Act constitutes a deceptive trade practice under
Chapter 17 of the Business & Commerce Code. Remedies available
under Subsection (b) of this section are mutually exclusive to
those provided under this Subsection (c) in conformance with
Section 17.43 of the Business & Commerce Code, as amended.
(d) For the purpose of this section, substantial violation
of any provision of this Act by an invention developer or execution
by the customer of a contract for invention development services in
reliance on a false or fraudulent statement, representation, or
material omission establishes a rebuttable presumption of injury.
Enforcement; Civil Penalty; Restraint of Violations
Sec. 10. The attorney general shall enforce this Act. The
attorney general may recover a civil penalty not to exceed $2,000
for each violation of this Act and may seek equitable relief to
restrain a violation of this Act.
Financial Requirements
Sec. 11. (a) Except as provided by Subsection (c) of this
section, each invention developer rendering or offering to render
invention development services in this state shall maintain a bond
issued by a surety company authorized to do business in this state.
The principal sum of the bond must be at least five percent of the
invention developer's gross income from the invention development
business in this state during the invention developer's last fiscal
year or $25,000, whichever is greater. The invention developer
shall file a copy of the bond with the secretary of state before the
day on which the invention developer begins business in this state.
Before the 91st day after the last day of the invention developer's
fiscal year, the invention developer shall change the amount of the
bond if necessary to conform with the requirements of this section.
(b) The bond required by Subsection (a) of this section must
be in favor of the State of Texas for the benefit of any person who,
after entering into a contract for invention development services
with an invention developer, is damaged by fraud, dishonesty, or
failure to provide the services of the invention developer in
performance of the contract. Any person claiming against the bond
may maintain an action at law against the invention developer and
the surety. The aggregate liability of the surety to all persons
for all breaches of conditions of the bond required by this
subsection is limited to the amount of the bond.
(c) Instead of furnishing the bond required by Subsection
(a) of this section, the invention developer may deposit with the
secretary of state a cash deposit equal to the amount of the bond
required by this section. The cash deposit may be satisfied by:
(1) certificates of deposit payable to the secretary of
state issued by banks doing business in this state and insured by
the Federal Deposit Insurance Corporation;
(2) investment certificates of share accounts assigned to
the secretary of state and issued by a savings and loan association
doing business in this state and insured by the Federal Savings and
Loan Insurance Corporation;
(3) bearer bonds issued by the United States government or
by this state; or
(4) cash deposited with the secretary of state.
Effect on Other Laws
Sec. 12. This Act does not annul or limit any obligation,
right, or remedy that is applicable or available under the law of
this state.
Acts 1981, 67th Leg., p. 260, ch. 108, eff. May 7, 1981.
Article: 659, shall be guilty of a felony, and upon conviction, shall
be imprisoned in the penitentiary not exceeding two years.
Acts 1925, 39th Leg., p. 38, ch. 15, Sec 8657 8658 8659 8930 9010 9020 9023d 9023e 9026a 9026b 9026c 9030 695d
Last modified: August 10, 2007
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