With good reason, inventors get excited when their creative endeavors – the hard work, time, and energy – finally come to fruition in the form of a workable prototype. At this stage, they are often anxious to present their invention to manufacturers and retail outlets. In their excitement, they may neglect to put in place an appropriate non-disclosure or confidentiality agreement, or they may rush to sign an agreement from the manufacturer that proves to be too limiting, only to realize their mistake when it’s too late.
The Submission Agreement that Sears Brand Management Corporation requires is one such agreement of which to be wary. The inventor must sign the agreement just to have an opportunity to present his invention to the company. The agreement contains provisions that:
- the submitter’s ideas are “submitted gratuitously,” without expectation of compensation, and automatically become the property of Sears – without any compensation.
- Sears can use the ideas for any purpose and in any way, and can even provide the ideas to a third party without any obligation or compensation to the inventor.
- Sears does not commit to keeping the idea a secret.
- if the idea appears patentable, Sears may elect to pay the inventor $5,000 for the assignment (giving the rights to the idea to Sears).
- if Sears markets and sells a product that uses the submitted idea, the inventor would be entitled to only 1% royalty of net sales (gross sales minus returns, discounts, and allowances) for only three years from the first sale of the product.
- Sears has the right to try to cancel or invalidate the patent so they don’t have to pay the inventor/patent holder.
These terms are certainly limiting and grossly in Sears’ favor, but it is not to say that in certain circumstances, the inventor may find the terms acceptable. However, the inventor may find that an experienced patent attorney can better negotiate the terms, or that a license broker can find a manufacturer or retailer that whose contract is more balanced and amenable. The cost of these services are often earned back with better payouts and/or long-term earnings for the inventor.