Inventors often need to consider partnership, sometimes for funding the invention, other times to get the expertise required to have a partner who can make the prototype, and often just so the partners can offer each other emotional support. But a lot can go wrong with a partnership as people promise to do certain thing and then fail to perform. I feel it useful to prepare a simple Memorandum of Understanding when you are considering a partnership of some sort just so each party can be clear on what the other party is doing. Here is a sample of what an agreement would look like. Each agreement you prepare will have differences but they should have certain key elements including who is investing what amount of money, what the duties of each party are, how much time people are committing to the project and some sort of performance guarantee.
Below is a hypothetical sample of what an agreement could look like.
Proposed Memorandum of Understanding
Month, Date Year
Don Debelak
DSD Marketing
8305 Pleasant View Drive
Mounds View MN 55112
AND
Nicholas Berwich
The purpose of this Memorandum of Understanding is to formalize the business arrangement for development of a new golf training aid and partnership arrangement for the golf aid after development.
I. BACKGROUND
Don Debelak, an invention marketing specialist and avid golfer has determined a potential market need for a golf aid that will help golfer determine if a golfer’s swing has the proper weight shift and hip turn to produce the best shot for them. Preliminary thoughts are that the device be worn by the golfer will communicate with an app on a cell phone so the golfer can see if his weight shift and hip turn were similar to the ones that produce his or her best shots. The wearer will first calibrate the unit by rating each golf shot from good to poor in order to determine what movement gives the player their best shot. After calibration, the player can see then after a shot if his or her weight shift and hip movement were optimal for the shot.
Nicholas Berwich has an undergraduate degree in physiology with a master degree in biomechanics, a field which studies the physics of the body. In addition to a in-depth knowledge of the human anatomy, Berwich is familiar with a wide variety of biofeedback devices that can be used to develop the product. Berwich’s understanding of the body and materials will be used to design equipment that will have enough sensitivity to determine differences in swing motion for each player that will impact the effectiveness of their golf swing. Berwich will also use his knowledge of the devices to configure them so they can send a signal to a cell phone or other similar device.
A third party will also be involved later in the project, a programing specialist or team of specialist to develop the cell phone application and algorithm to read the data from the device and let the golfer know if his swing was proper, and if not what part of the swing was off kilter.
II. BUSINESS INTENT
The purpose of the project is to develop a golf training aid for new or high handicap golfers to improve their game. The product will be either be the starting point for a company that will make and market the product, or be sold or licensed to an existing manufacturer.
III. PURPOSE OF MOU
The intent of this MOU is to have an understanding during the preliminary development period until a marketable product is finalized. At that time a formal agreement will be completed.
IV. INTELLECTUAL PROPERTY
It is expected that a provisional patent will be applied for within 60 days and a utility patent within 12 months.
Don Debelak / DSD Marketing will pay all patent costs. Nicholas Berwich will be listed on all the patent as co-inventor and will participate in the drafting of the patent.
V. PRODUCT DEVELOPMENT and TESTING
There are expected to be certain costs associated with product development and testing including purchases of equipment as well as paying for golf balls and other ancillary costs revolving around testing the product for sensitivity. Don Debelak / DSD Marketing will finance these costs up to $10,000. This dollar amount may be raised by mutual consent.
VI. OWNERSHIP
Ownership of the product will be 1/3 Nicholas Berwich, 1/3 Don Debelak / DSD Marketing and 1/3 to software developers. Don Debelak will invest up to $20,000 in this original ownership percentage. If additional funds are required additional investors will need to be brought in and the ownership percentages of the partners may change. Any additional investments and subsequent share dilution must be agreed to by all the original investors.
VII. DUTIES
Don Debelak / DSD Marketing
Provide patent work
Provide overall direction for project
Participate in testing, manufacturing analysis and project coordination
Provide funding for project, including payments for patents and prototype materials and payments for hourly work to Nicholas Berwich
Marketing and licensing work once project is complete.
Nicholas Berwich
Provide product development work with an emphasis on procuring or developing the proper devices to measure the golf swing.
Assist in patent write-ups and technical information
Take the lead in product testing, especially in testing to set the proper sensitivity to the devices.
Create a biomechanical analysis of the golf swing to determine best location for devices that can measure the two elements of the golf swing.
Ensure that devices selected can communicate with cell phone or other suitable device.
VII. PAYMENTS FOR WORK PERFORMED
Don Debelak / DSD Marketing will pay Nicholas Berwich $20 per hour up to $100 per week for work performed during this development period. Payment will be every two weeks with Berwich reporting the hours worked on Monday after two weeks and DSD Marketing paying within seven days. First reporting period to end March 28th and first report due March 30th.
VIII. CONFIDENTIALITY
All work on the project to be kept confidential by all parties. Only exceptions will be a) information granted to the programming partners; b) information that is offered to relevant parties to gather information for product design; c) information given to people who will perform the product testing with prototype units. An all-out effort will be undertaken to do a provisional patent within 60 days so more information can be shared when needed.
IX. ACCOUNTING AND ADMINISTRATION
All development activities will be conducted through DSD Marketing. Once a commercially viable product is developed, a separate company will be formed.
X. TAX FORMS
Nicholas Berwich will fill out a W-9 tax form (http://www.irs.gov/pub/irs-pdf/fw9.pdf) for DSD Marketing will issue 1099 forms as appropriate for IRS reporting. Berwich is responsible for his own expenses such as cell phones, office supplies and Internet charges. Prototype supplies, product testing and other costs will be paid by DSD Marketing.
XI. COMMENCEMENT, REVIEW AND TERMINATION
The MOU will commence on the day on which it is signed by the last participant
Either company may terminate this MOU by written notice to the other company. The MOU will then terminate 30 calendar days after the notice is received.
Don Debelak / DSD Marketing
Nicholas Berwich
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Date
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