MISSOURI STATUTES : INVENTION MARKETING COMPANIES

(As of 12/12/98)

THESE STATUTES MAY BE INCOMPLETE OR OUTDATED.

Definitions.

417.400. As used in sections 417.400 to 417.436, the following terms mean:

(1) "Contract", an agreement by which an invention developer undertakes to develop or promote an invention for a customer;

(2) "Customer", any person who is solicited by, inquires about, seeks the services of, or enters into a contract with, an invention
developer for invention development services;

(3) "Fee", any payment made by the customer to the invention developer including reimbursement for expenditures made or
costs incurred by such invention developer, but does not include a payment made from a portion of the income received by a
customer by virtue of invention development services performed by the invention developer;

(4) "Invention", a process, machine, manufacture, composition of matter, improvement upon the foregoing, or a concept;

(5) "Invention developer", any person, or the agent, employee, or representative of the person, that develops or promotes, or
offers to develop or promote, an invention of a customer in order that the customer's invention may be patented, licensed, or
sold for manufacture or manufactured in large quantities, except the term does not include:

(a) Any attorney registered to practice in any court in any state of the United States and acting within the scope of that person's
professional license, or any person registered before the United States Patent and Trademark Office acting within the scope of
that person's professional license;

(b) A department or agency of federal, state or local government;

(c) A charitable, scientific, educational, religious, or other organization, qualified under section 501(c)(3) or described in section
170(b)(1)(A) of the Internal Revenue Code of 1986, as amended;

(d) An entity that does not charge a fee for invention development services other than any payment made solely from a portion
of the income received by a customer by virtue of invention development services performed by the person;

(6) "Invention development services", acts required or promised to be performed, or actually performed, or both, by an
invention developer for a customer.
 


 
Disclosures required to be made in writing by invention developer to customer, content.

417.403. In the first oral communication with a customer or in the first written response to an inquiry by a customer, other than
an oral communication or written response the primary purpose of which is to arrange an appointment with the invention
developer for presentation of his invention development services, the invention developer shall cause the following disclosures
to be made in writing and delivered to the customer:

(1) A statement of the fee charged, if known, or a statement of the approximate range of fees charged;

(2) If it is the invention developer's normal practice to seek more than one contract in connection with the invention developer's
services to a given customer or if the invention developer normally seeks to perform services for a customer in more than one
phase with the performance of each phase covered in two or more contracts, a statement describing that practice with a
summary of the normal terms of each such contract including the fee for the service to be performed under each such contract
as set forth in subdivision (1) of this section;

(3) A statement which in reasonable detail summarizes the services which the invention developer intends to provide under the
initial contract and each succeeding contract with the customer. If the invention developer's services are limited to mailing
notices to a list of potentially interested parties and then awaiting their response, the statement shall make this fact clear;

(4) A statement that sections 417.400 to 417.436 require the invention developer to keep confidential and not use for his
benefit or for the benefit of others any information disclosed by the customer except as provided in section 417.427. If the
invention developer intends to disclose any of such confidential information to others, he shall include a statement as to the
nature of the information to be so disclosed, including the fact that the customer will be required to waive such confidentiality
obligation to the extent necessary to permit such disclosure;

(5) A statement setting forth the total number of customers who have contracted with the invention developer and the number
of those customers who have received, by virtue of the invention developer's performance of invention development services,
an amount of money in excess of the total fee paid by those customers to the invention developer pursuant to a contract for
invention development services. The numbers entered in such statement need not include those who have first contracted with
the invention developer during the six months immediately preceding the date of the written disclosures nor those who have
contracted with the invention developer prior to August 28, 1995; and

(6) A statement as follows: "Any contract for invention development services between you and ourselves is regulated by law.
We are not qualified or permitted to advise you whether protection of your invention is available under the patent laws of the
United States or any other laws. If your invention is patentable or infringes an existing valid patent, your failure to inquire into
these matters may affect your rights to your invention or make you liable to others for patent infringement. Furthermore,
disclosure of your invention to others on a nonconfidential basis may also adversely affect your rights. We urge you to seek the
counsel of an attorney or agent registered to practice before the United States Patent and Trademark Office.".

 


Contract for invention development services, form, content.

417.406. Every contract for invention development services shall set forth in at least 10-point boldface type, or equivalent size
if handwritten, all of the following:

(1) A full and detailed description of the acts or services that the invention developer undertakes to perform for the customer.
To the extent that the description of acts or services grants the invention developer discretion to decide what acts or services
are to be performed by the invention developer, the invention developer shall exercise that discretion to promote the best
interests of the customer;

(2) A statement whether the invention developer undertakes to construct one or more prototypes, models, or devices
embodying the customer's invention;

(3) A statement whether the invention developer undertakes to sell or distribute one or more prototypes, models or devices
embodying the customer's invention;

(4) The name of the person or firm contracting to perform the invention development services, the name under which said
person or firm is doing business as an invention developer, and the name of any parent, subsidiary or affiliated company that
may engage in performing the invention development services;

(5) The invention developer's principal business address and the name and address of his agent in the state of Missouri
authorized to receive service of process;

(6) The business form of the invention developer, whether corporate, partnership, or otherwise;

(7) If an oral or written estimate of projected customer sales, profits, earnings or royalties is made by the invention developer,
the contract shall state the estimate and the data on which the estimate is based;

(8) The name and address of the custodian of all records and correspondence relating to the performance of the invention
development services;

(9) The expected date of completion of the invention development services, whether time is of the essence, and whether the
terms include provisions in case of delay past the expected date of completion;

(10) The terms and conditions of payment and contract termination rights as set forth in section 417.412; and

(11) The extent to which the contract effectuates or makes possible the acquisition by the invention developer of an interest in
the title to the customer's invention.




Cover sheet required for contract content--additional information on cover prohibited.

417.409. 1. A contract for invention development services shall have a conspicuous and legible cover sheet attached. The
cover sheet shall set forth:

(1) The name, home address, office address and local address of the invention developer; and

(2) The following notice printed in bold-faced type of not less than 10-point size:

"The contract between you and the invention developer is regulated by sections 417.400 to 417.436. You are not required to
make any payments under this contract until seven working days after you sign this contract and receive a completed copy of it.

"You can terminate this contract at any time before you make payment. You can terminate this contract simply by not
submitting the initial payment.

"If you assign a partial interest in the invention to the invention developer, the invention developer may have the right to assign or
license the developer's interest in the invention, or make, use and sell the invention, without your consent.

"You are encouraged to consult with an attorney with experience in patent law before signing this contract. By proceeding
without the advice of an attorney with experience in patent law you could lose any rights you might have in your idea or
invention.

"The performance of the services detailed in the contract provides no guarantee or promise of profits, or that your invention or
idea will be purchased by a manufacturer. The marketing or licensing of a new product is a difficult and uncertain process with
no guarantee of success or profit.

"This contract does not provide any patent, copyright or trademark protection for your idea or invention.

"Your potential patent rights may be adversely affected by any attempt to commercialize your idea or invention before a patent
application covering your idea is filed. Nonconfidential disclosures of your idea or invention may also trigger certain statutory
deadlines for filing a patent application in the United States and would prevent you from obtaining valid patent rights in countries
whose laws provide that patent applications must be filed before any public disclosure.".

2. The cover notice may not contain anything in addition to the information required by subsection 1 of this section.




Termination of contract, procedure--service on contract not required, when.

417.412. Until 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 failing to make payment to the
invention developer. The invention developer may exercise the option to terminate by giving to the customer a written notice of
his exercise of the option. The written notice becomes effective on its receipt by the customer. Notwithstanding any contractual
provision to the contrary, payment for invention development services may not be required, made, or received, before the
seventh day after the day on which the customer receives a fully executed copy of the contract.
 



Bond required for invention developer, when, amount--copy to be filed with department of economic development--cash deposit accepted instead of bond.

417.415. 1. Every invention developer rendering or offering to render invention development services in this state, who has
had, or is affiliated with another who has had, a decree or judgment entered against him by a court or agency of a state of the
United States, or a court or agency of the United States, resulting from or based on allegations of misrepresentation, deception,
mishandling of customers' funds, unfair trade practices, fraud or concealment or omission of facts from others, shall maintain a
bond issued by a surety company admitted to do business in this state. The principal sum of the bond shall be twenty-five
thousand dollars. The bond shall be payable to the state of Missouri as trustees for the customers of the invention developer
and shall be conditioned upon compliance by the invention developer with sections 417.400 to 417.436. A copy of such bond
shall be filed with the director of the department of economic development prior to the time the invention developer first
commences business in this state. The invention developer shall have ninety days after the end of each fiscal year within which
to change the bond as may be necessary to comply with the requirements of this section.

2. Instead of furnishing the bond required by subsection 1 of this section, the invention developer may deposit with the director
of the department of economic development a cash deposit in the like amount. This cash deposit may be satisfied by any of the
following:

(1) Certificates of deposit payable to the director of the department of economic development 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 director of the department of economic development and issued by
a savings and loan association doing business in this state and insured by the Federal Deposit Insurance Corporation;

(3) Bearer bonds issued by the United States government or by this state; or

(4) Cash deposited with the director of the department of economic development.




Payment for services to be by check--taking other negotiable instrument, effect--contract limitation--execution of note or series of notes prohibited.

417.418. 1. In payment for invention development services, the invention developer shall not take from a customer a negotiable
instrument other than a check as evidence of the obligation of the customer. Notwithstanding any provision of chapter 400,
RSMo, to the contrary, a holder of a negotiable instrument is not a holder in due course if he takes a negotiable instrument
taken from a customer in violation of this section.

2. No contract for invention development services shall require the execution of any note or draft or series of notes or drafts by
the customer which, when separately negotiated, will cut off as to third parties any right of action or defense which the customer
may have against the invention developer.
 



Records and correspondence retention requirement--customer's right to copy, cost, procedure.

417.421. Every invention developer shall maintain all records and correspondence relating to performance of each invention
development service contract for a period of not less than three years after expiration of the term of each such contract or
completion of all obligations pursuant to the invention development service contract, whichever is later. The records and
correspondence required to be maintained by this section shall be made available to the customer or his representative for
review and copying at the customer's expense on the invention developer's premises during normal business hours upon seven
days' written notice, such time period to begin from the date the notice is placed in the United States mail, properly addressed
with first-class postage prepaid.




Contract unenforceable against customer, when, exceptions--waiver by customer void, exception.

417.424. 1. Any contract for invention development services that does not comply with the applicable provisions of sections
417.400 to 417.436 is unenforceable against the customer as contrary to public policy; provided, that no contract is
unenforceable if the invention developer proves that noncompliance was unintentional and resulted from a bona fide error in
spite of the developer's use of reasonable procedures adopted to avoid any such errors, and if the developer makes an
appropriate correction.

2. Any contract for invention development services entered into by a customer with an invention developer who has used any
fraud, false pretense, false promise, misrepresentation, misleading statement, or deceptive practice, in respect to that customer
with the intent that the customer rely thereon, whether or not the customer was in fact misled, deceived, or damaged, is
unenforceable against the customer.

3. Any waiver by the customer of the provisions of sections 417.400 to 417.436, except the waiver of confidentiality as
provided in subsection 2 of section 417.427, is contrary to public policy and is void and unenforceable.




False or fraudulent statements, failure to make required disclosures, civil liability--damages--punitive damages, when--attorney general's duties.

417.426. 1. Any invention developer who violates any provision of sections 417.400 to 417.436, or who makes any false or
fraudulent statement, representation, or omission of material fact, or fails to make all the disclosures required by sections
417.400 to 417.436, shall be civilly liable to any person injured thereby in the amount of at least twice the damages sustained
by such person together with costs and reasonable attorney's fees. In addition, if the invention developer is found to have acted
with malice, the court in its discretion may award punitive damages. For purposes of this subsection, the amount of damages
sustained by the person shall be presumed to be at least the amount of all moneys paid to the invention developer by such
person.

2. Failure to make the disclosures required by sections 417.400 to 417.436 renders any contract subsequently entered into
between the customer and the invention developer voidable by the customer.

3. The attorney general shall enforce the provisions of sections 417.400 to 417.436 and may recover a civil penalty and may
seek equitable relief to restrain the violation of sections 417.400 to 417.436.




Confidentiality of all disclosures by customer, exceptions--waiver by customer must be in writing after receiving disclosure.

417.427. 1. An invention developer shall maintain as confidential and not use for his own benefit or for the benefit of others all
disclosures made to him by a customer seeking invention development services, whether or not the customer actually retains the
invention developer's services. This duty of confidentiality applies to all such information except:

(1) Information which at the time of disclosure is in the public domain;

(2) Information which, after disclosure, becomes part of the public domain by publication or otherwise, independently of any
act or omission by the invention developer;

(3) Information which the invention developer can establish by competent proof was in his possession at the time of disclosure
by the customer, and was not acquired, directly or indirectly, from the customer; or

(4) Information received by the invention developer from a third party without restriction on disclosure or use; provided that
such information was not obtained by said third party with restriction on disclosure or use, directly or indirectly, from the
customer.

2. This duty of confidentiality shall include the taking of reasonable steps by the invention developer to prevent disclosure of
confidential information to third parties. This confidential relationship cannot be waived by a customer except by an express
written waiver by the customer of the invention developer's obligation of confidentiality, and no waiver shall be entered into until
after the disclosures set forth in section 417.403 have been made to the customer.




Assignee of invention developer subject to all claims and defenses of customer.

417.430. Any assignee of the invention developer's rights shall be subject to all claims and defenses of the customer against the
invention developer existing in favor of the customer at the time of the assignment.




Report in writing to be delivered quarterly to customer--content.

417.433. 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; and

(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.




Invention developer law not exclusive subject to applicable laws.

417.436. The provisions of sections 417.400 to 417.436 are not exclusive and do not relieve the parties or the contract
subject thereto from compliance with all other applicable provisions of law.


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