"Never think that the corporation is there to help you. Always keep your guard up." So say the lawyers who helped little guy Michael Powell win $25 million from big, bad Home Depot after it stole his invention. WalletPop reported the initial verdict of $15 million following the trial, and the judge later added nearly $10 million in punitive damages and legal fees.
In the wake of their victory, attorneys Peter Herman and Alexander Brown of the firm Tripp Scott in Fort Lauderdale, Fla., offered these pointers to WalletPop for you ingenious types who are thinking of selling their inventions or cool ideas to a company.
1. Make sure you have legal counsel. Securing a lawyer in some capacity before you make any deals with a company that wants to see your device is common sense. At the very least, get the advice of a lawyer so you cover your bases, Herman said.
2. Hammer out a nondisclosure agreement. Whether you're in an advanced stage of a patent application, or you carry a brilliant idea or trade secret, you must have a nondisclosure pact in place. The company needs to know you mean business if they disclose or copy your intellectual property. Yes, you might have to pay a lawyer for this -- but it should amount to only four or five billable hours, according to Herman. "It's like preventive maintenance on a car," he said. "It's worth the money to have one put together."
3. If you don't have a nondisclosure agreement or you are not in an advanced stage of patent application, keep your invention concealed until the papers are signed. You need protection in writing.
4. Never leave your prototype, drawings or notes with anyone. Even if you're legally protected or have a full patent, it generally isn't a good idea. Many companies see "borrowing" innovations as the cost of doing business, and they dare you to sue them, according to the attorneys. "They believe the little guy won't go after them," Herman said. Powell, a North Carolina man who invented a safety device so Home Depot employees would stop sawing their fingers and submitting millions of dollars in workers compensation claims, did hand over prototypes. Fortunately for Powell, a photograph of Home Depot officials examining and measuring the device, presumably to copy it, proved damning in the trial.
5. If possible, don't do business with the corporation until you are well into the patent-granting process. "Many rights don't kick in until the patent is cemented," the lawyers said. "That dovetails into nondisclosure," Herman added. "If you didn't properly mark 'patent pending' on the device, some of your damages may not accrue." He is trying to say that when figuring out how much money a company owes you for stealing your invention, the court often starts the award-o'meter at the moment you were on firm legal ground.
6. Be aware of a term called "reverse engineering." The law in some cases allows someone to deconstruct your invention in the name of advancing technology. But if someone copies your gizmo without substantial change, they're ripe for a civil whuppin'.
7. Once you detect that a company is stealing your idea, immediately draft a cease-and-desist order. Preferably, it should be written by a lawyer, Herman said. It should cost just an hour or two. Send by registered mail. The letter should state clearly that you believe you're being infringed but that the company does have the option of working out a licensing agreement with you by mutual consent. Damages don't start adding up until the company gets official notice. In the Powell case, Home Depot low-balled the inventor on a fee per each device, Powell rejected it, and the company copied the device anyway. Powell's offer would have cost Home Depot just $4 million as opposed to the $25 million it now owes him. (Home Depot claims no wrongdoing and is considering an appeal.)
8. Once you suspect that your patent or intellectual property is being ripped off, find an attorney willing to work on a contingency basis. They're out there, just as Herman and Brown were. If the attorneys believe you can win, they'll take the case. Nothing like motivated legal eagles joining forces with an aggrieved David in the face of Goliath."They're not there to help you," Herman said of big companies. "They're there to help themselves."
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