TEXAS STATUTES : INVENTION MARKETING COMPANIES

(As of 12/12/98)

Art. 9020.  Regulation of Invention Development Services Act.

Sec. 1.  Short Title.

  This Act may be cited as the Regulation of Invention
Development Services Act.




Sec. 2.  Definitions.

  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.




Sec. 3.  Customer.

  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.




Sec. 4.  Invention Developer.

  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.




Sec. 5.  Contracting Requirements.

  (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.




Sec. 6.  Standard Provisions for Cover Notice.

  (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.




Sec. 7.  Reports to Customer Required.

  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.




Sec. 8.  Mandatory Contract Terms.

  (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.




Sec. 9.  Remedies.

  (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.




Sec. 10.  Enforcement; Civil Penalty; Restraint of Violations.

  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.




Sec. 11.  Financial Requirements.

  (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.




Sec. 12.  Effect on Other Laws.

  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.

Art. 9022.  Processing fee by holder of dishonored check.

  (a) The holder of a check or its assignee, agent,
representative, or any other person retained by the holder to
seek collection of the face value of the dishonored check on
return of the check to the holder following its dishonor by a
payor may charge the drawer or endorser a reasonable processing
fee, which shall not exceed $25. A person may not charge a
processing fee to a drawer or endorser under this subsection if
the fee has been collected under Article 102.007(e) or Article
102.0071, Code of Criminal Procedure.  If a processing fee has
been collected under this subsection and the holder subsequently
receives a fee collected under Article 102.007(e) or Article
102.0071, Code of Criminal Procedure, the holder shall
immediately refund the fee previously collected from the drawer
or endorser.  Notwithstanding any other provisions of law, a loan
agreement made under Chapter 3A, Title 79, Revised Statutes , may
provide that on return of a dishonored check given in payment
under the agreement, the holder may charge the obligor under the
agreement the processing fee authorized by this Act, and the fee
may be added to the unpaid balance owed under the agreement,
except that interest may not be charged on the fee during the
term of the agreement.

  (b) Nothing herein shall be construed as affecting any right or
remedy to which the holder of a check may be entitled under any
rule, regulation, written contract, judicial decision, or other
statute.

Acts 1983, 68th Leg., p. 3873, ch. 617, Sec. 1, eff. Aug. 29,
1983.  Subsec. (a) amended by Acts 1987, 70th Leg., ch. 687, Sec.
1, eff. June 18, 1987; amended by Acts 1991, 72nd Leg., ch. 396,
Sec. 1, eff. Sept. 1, 1991; amended by Acts 1997, 75th Leg., ch.
1396, Sec. 46, eff. Sept. 1, 1997.


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