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Minnesota Statutes 2006
Chapter 325A.    Invention Services

Copyright 2006 by the Office of Revisor of Statutes, State of Minnesota.

325A.01
Definitions.
325A.02
General contract regulation.
325A.03
Right of cancellation.
325A.04
Mandatory contract form.
325A.05
Disclosures made prior to contract.
325A.06
Financial requirements.
325A.07
Restriction on use of negotiable instruments.
325A.08
Records.
325A.09
Remedies and enforcement.
325A.10
Citation.

325A.01 DEFINITIONS.
    Subdivision 1. Scope. As used in sections 325A.01 to 325A.10, the following terms shall
have the meanings given:
    Subd. 2. Contract for invention development services. "Contract for invention
development services" includes a contract by which an invention developer undertakes to develop
or promote an invention for a customer.
    Subd. 3. Customer. "Customer" means any natural person who is solicited by, inquires
about, seeks the services of or enters into a contract with an invention developer for invention
development services.
    Subd. 4. Invention. "Invention" includes a process, machine, manufacture, composition of
matter, improvement upon the foregoing, or a concept.
    Subd. 5. Invention developer. "Invention developer" means any person, firm, corporation
or association and the agents, employees or representatives of the person, firm, corporation
or association which 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:
(1) a partnership or corporation when all of its partners, stockholders or members are
licensed by a state or the United States to render legal advice concerning patents and trademarks,
or a person so licensed,
(2) a department or agency of the federal, state or local government,
(3) a charitable, scientific, educational, religious or other organization registered under
Minnesota Statutes, section 309.52 or described in section 170 (b) (1) (A) of the Internal Revenue
Code of 1954, as amended and in effect on January 1, 1977,
(4) a person, firm, corporation, association or other entity that does not charge a fee for
invention development services, or
(5) any person, firm, corporation, association or other entity whose gross receipts from
contracts for invention development services do not exceed ten percent of its gross receipts
from all sources during the fiscal year preceding the year in which any contract for invention
development services is signed.
For the purposes of this subdivision, "fee" shall include any payment made by the customer
to the entity, including reimbursements for expenditures made or costs incurred by such entity,
but shall not include a payment made from a portion of the income received by a customer by
virtue of invention development services performed by the entity.
    Subd. 6. Invention development services. "Invention development services" includes
acts required or promised to be performed, or actually performed by an invention developer
for a customer.
    Subd. 7. Business day. "Business day" means any day other than a Saturday, Sunday or
holiday as defined in section 645.44, subdivision 5.
History: 1977 c 288 s 1

325A.02 GENERAL CONTRACT REGULATION.
    Subdivision 1. Written contract; customer copy. Every contract for invention development
services shall be in writing and shall be subject to the provisions of sections 325A.01 to 325A.10.
A copy of each fully executed, written contract shall be given to the customer at the time the
customer signs the contract.
    Subd. 2. Multiple contracts or performance phases; written statement and summary to
customer. If one or more contracts are contemplated by the invention developer in connection
with an invention or if the invention developer contemplates performance of services in
connection with an invention in more than one phase with the performance of each phase covered
in one or more contracts, the invention developer shall so state in a written statement and shall
supply to the customer the written statement together with a copy of each contract or a written
summary of the general terms of each contract, including the total cost or consideration required
from the customer, before the customer signs the first contract.
History: 1977 c 288 s 2; 1986 c 444

325A.03 RIGHT OF CANCELLATION.
    Subdivision 1. Form and manner. Notwithstanding any contractual provision to the
contrary, the customer shall have the unconditional right to cancel a contract for invention
development services for any reason at any time before midnight of the third business day
following the date the invention developer and the customer sign the contract and the customer
receives a fully executed copy of it. Written notice of cancellation may be delivered personally or
by mail. If given by mail, the notice is effective upon deposit in a mailbox, properly addressed
and postage prepaid. Notice of cancellation need not take a particular form and is sufficient if it
indicates, by any form of written expression, the intention of the customer not to be bound by
the contract. Within ten business days after receipt of the notice of cancellation, the invention
developer shall deliver to the customer, personally or by mail, all moneys paid, any note or other
evidence of indebtedness and all materials provided by the customer.
    Subd. 2. Contract notice. Every contract for invention development services shall contain
the following statement in 10-point boldface type immediately above the place where the
customer signs the contract:
"The three business day period during which you may cancel this contract for any reason by
mailing or delivering written notice to the invention developer will expire on (last date to mail
or deliver notice). If you choose to mail your notice, it must be placed in the United States mail
addressed to (Name of Invention Developer), at (Address of Invention Developer's Place of
Business) with first class postage prepaid before midnight of this date. If you choose to personally
deliver your notice to the invention developer, it must be delivered by the end of the developer's
normal business day on this date."
History: 1977 c 288 s 3; 1986 c 444

325A.04 MANDATORY CONTRACT FORM.
    Subdivision 1. Type size. A contract for invention development services shall set forth the
information required in this section in at least 10-point type or equivalent size if handwritten.
    Subd. 2. Disclosure statement. The following disclosure statement shall be in boldface type
and shall be located conspicuously on a cover sheet that contains no other writing:
"The following disclosures are required by law and are expressly made a part of this contract:
You have the right to cancel this contract for any reason at any time within three business days
from the date you and the invention developer sign the contract and you receive a fully executed
copy of it. To exercise this option you need only mail or personally deliver to this invention
developer written notice of your cancellation. The method and time for notification is set forth in
this contract immediately above the place for your signature. Upon cancellation, the invention
developer must return by mail or personal delivery, within ten business days after receipt of
the cancellation notice, all money paid and all materials provided either by you or by another
party in your behalf.
An invention developer who is also a lawyer may give you legal advice concerning patent,
copyright, or trademark law or advise you of whether your idea or invention may be patentable or
may be protected under the patent, copyright, or trademark laws of the United States or any other
law. An invention developer who is not a lawyer may not give you legal advice on these subjects.
No patent, copyright or trademark protection will be acquired for you by the invention
developer or by this contract. Your failure to inquire into the law governing patent, copyright or
trademark matters may jeopardize your rights in your idea or invention both in the United States
and in foreign countries. Your failure to identify and investigate existing patents, trademarks or
registered copyrights may place you in jeopardy of infringing the copyrights, patent or trademark
rights of other persons if you proceed to make, use, distribute or sell your idea or invention."
    Subd. 3. Description of acts or services to be performed. The contract shall describe fully
and in detail the acts or services that the invention developer contracts to perform for the customer.
    Subd. 4. Prototypes or models. The contract shall state whether the invention developer
contracts to construct one or more prototypes, models or devices embodying the customer's
invention, the number of such prototypes to be constructed and whether the invention developer
contracts to sell or distribute such prototypes, models or devices.
    Subd. 5. Earnings estimate. If an oral or written estimate of customer earnings is made, the
contract shall state the estimate and the data upon which it is based.
    Subd. 6. Other customer disclosure. In a single statement the contract shall set forth both
(1) the total number of customers who have contracted with the invention developer, except
that the number need not reflect those customers who have contracted within the last 30 days,
and (2) the number of customers who have received, by virtue of the invention developer's
performance of invention development services, an amount of money in excess of the amount of
money paid by such customers to the invention developer pursuant to a contract for invention
development services.
    Subd. 7. Completion date. The contract shall state the expected date of completion of
the invention development services.
    Subd. 8. Title issues. The contract shall state whether and the extent to which it effectuates
or makes possible the purchase by the invention developer of an interest in the title to the
customer's invention.
    Subd. 9. Records retention. The contract shall explain that the invention developer is
required to maintain all records and correspondence relating to performance of the invention
development services for that customer for a period not less than three years after expiration of
the term of the contract for invention development services.
    Subd. 10. Customer review of records. The contract shall state that the records and
correspondence required to be maintained pursuant to section 325A.08 will be made available to
the customer or the customer's 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,
the time period to begin from the date the notice is placed in the United States mail properly
addressed and first class postage prepaid.
    Subd. 11. Identity disclosures. The contract shall state the name of the person or firm
contracting to perform the invention development services, all names under which said person or
firm is doing or has done business as an invention developer during the previous ten years, the
names of all parent and subsidiary companies to the firm and the names of all companies that have
a contractual obligation to the firm to perform invention development services.
    Subd. 12. Business address and service of process disclosures. The contract shall state the
invention developer's principal business address and the name and address of its agent in this state
authorized to receive service of process in this state.
    Subd. 13. Bond compliance. The contract must state that the invention developer has fully
complied with the bonding requirements of section 325A.06.
History: 1977 c 288 s 4; 1986 c 444; 2001 c 190 s 1

325A.05 DISCLOSURES MADE PRIOR TO CONTRACT.
    Subdivision 1. Requirement. In either the first written communication from the invention
developer to a specific customer or at the first personal meeting between the invention developer
and a customer, the invention developer shall make a written disclosure to the customer of the
information required in this section.
    Subd. 2. Median fee. The disclosure shall state the median fee charged to all of the invention
developers' customers who have signed contracts with the developer in the preceding six months,
excluding customers who have signed in the preceding 30 days.
    Subd. 3. Other customers. The disclosure shall include a single statement setting forth
(1) the total number of customers who have contracted with the invention developer, except
that the number need not reflect those customers who have contracted within the preceding 30
days, and (2) the number of customers who have received by virtue of the invention developer's
performance of invention development services an amount of money in excess of the amount of
money paid by those customers to the invention developer pursuant to a contract for invention
development services.
    Subd. 4. Intellectual property statement. The disclosure shall contain the following
statement:
"An invention developer who is also a lawyer may give you legal advice concerning patent,
copyright, or trademark law or to advise you of whether your idea or invention may be patentable
or may be protected under the patent, copyright, or trademark laws of the United States or any
other law. An invention developer who is not a lawyer may not give you legal advice on these
subjects.
No patent, copyright or trademark protection will be acquired for you by the invention
developer. Your failure to inquire into the law governing patent, copyright or trademark matters
may jeopardize your rights in your idea or invention, both in the United States and in foreign
countries. Your failure to identify and investigate existing patents, trademarks or registered
copyrights may place you in jeopardy of infringing the copyrights, patent or trademark rights of
other persons if you proceed to make, use, distribute or sell your idea or invention."
History: 1977 c 288 s 5; 1986 c 444

325A.06 FINANCIAL REQUIREMENTS.
    Subdivision 1. Surety bond. Every invention developer rendering, offering to render, or
advertising invention development services in this state shall maintain a continuous corporate
surety bond issued by a surety admitted to do business in this state, and equal to either ten percent
of the invention developer's gross income from the invention development business in this state
during the invention developer's preceding fiscal year, or $50,000, whichever is larger. A copy of
the bond shall be approved by and filed with the attorney general before the invention developer
renders, offers to render, or advertises invention development services in this state. The attorney
general shall maintain a list of all outstanding bonds filed under this subdivision. The invention
developer shall have 90 days after the end of each fiscal year within which to change the bond as
may be necessary to conform to the requirements of this subdivision.
    Subd. 2. Bond administration and enforcement. The bond required by subdivision 1 shall
be in favor of the state of Minnesota for the benefit of any person who, after entering into a
contract for invention development services with an invention developer, is damaged by fraud
or dishonesty of the invention developer in performance of the contract, by the insolvency or
the cessation of business by the invention developer or by the intentional violation of sections
325A.01 to 325A.10 by the invention developer. Any person claiming against the bond may
maintain an action at law against the invention developer and the surety company.
The aggregate liability of the surety company to all persons for all breaches of conditions
of the bond shall in no event exceed the amount of the bond.
    Subd. 3.[Repealed, 2001 c 190 s 5]
History: 1977 c 288 s 6; 2001 c 190 s 2; 2004 c 251 s 11

325A.07 RESTRICTION ON USE OF NEGOTIABLE INSTRUMENTS.
In connection with a contract 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. A holder is not a holder in due course if the holder takes a negotiable
instrument taken from a customer in violation of this section.
History: 1977 c 288 s 7; 1986 c 444

325A.08 RECORDS.
Every invention developer shall maintain all records and correspondence relating to
performance of each invention development contract for a period of not less than three years
after expiration of the term of the contract.
History: 1977 c 288 s 8

325A.09 REMEDIES AND ENFORCEMENT.
    Subdivision 1. Compliance with other law. The provisions of sections 325A.01 to 325A.10
are not exclusive and do not relieve the parties or the contract from compliance with all other
applicable provisions of law.
    Subd. 2. Compliance with act. Any contract for invention development services that does
not comply with the applicable provisions of sections 325A.01 to 325A.10 shall be unenforceable
against the customer as contrary to public policy, provided that no contract shall be unenforceable
if the invention developer proves that noncompliance was unintentional and resulted from a bona
fide error in spite of reasonable procedures adopted to avoid any such errors, and if the invention
developer makes an appropriate correction.
    Subd. 3. Fraud, misrepresentation, or deceptive practices. 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, shall be unenforceable against the customer.
    Subd. 4. Waivers void. Any waiver by the customer of the provisions of sections 325A.01 to
325A.10 shall be deemed contrary to public policy and shall be void and unenforceable.
    Subd. 5. Private actions. Any person who has been injured by a violation of sections
325A.01 to 325A.10 by an invention developer, by any false or fraudulent statement,
representation or omission of material fact by an invention developer or by failure of an invention
developer to make all the disclosures required by sections 325A.01 to 325A.10 may bring a
civil action against the invention developer for the damages sustained together with costs and
disbursements, including reasonable attorney's fees. The court in its discretion may increase the
award of damages to an amount not to exceed three times the damages sustained or $10,000,
whichever is greater.
    Subd. 6. Contract voidability. Failure to make the disclosures required by section 325A.05
shall render any contract subsequently entered into between the customer and the invention
developer voidable by the customer.
    Subd. 7. Attorney general enforcement. In addition to the penalties provided in
subdivisions 1 to 6, any invention developer who is found to have violated sections 325A.01 to
325A.10 shall be deemed in violation of section 325F.69, subdivision 1, and the provisions
of section 8.31 shall apply.
    Subd. 8. Limitation on actions. The statute of limitations on actions arising out of a breach
of contract for invention development services shall be six years as provided in section 541.05,
subdivision 1
.
History: 1977 c 288 s 9; 1986 c 444; 2001 c 190 s 3,4

325A.10 CITATION.
Sections 325A.01 to 325A.10 may be cited as the Invention Services Act.
History: 1977 c 288 s 10