Code of Virginia

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Code of Virginia
Title 59.1. Trade and Commerce
Subtitle .
Chapter 18. Regulation of Invention Development Services
9/24/2022

Chapter 18. Regulation of Invention Development Services.

§ 59.1-208. Definitions.

As used in this chapter, the following terms shall have the following meanings, unless a different meaning clearly appears from the context:

1. "Contract for invention development services" means a contract by which an invention developer undertakes invention development services for a customer.

2. "Customer" means any person, firm, partnership, corporation, or other entity that enters into a contract for invention development services with an invention developer.

3. "Invention development" means the evaluation, perfection, marketing, brokering, or promotion of an invention by an invention developer, including a patent search, preparation of a patent application, or any other act done by an invention developer for consideration toward the end of procuring or attempting to procure a license, buyer or patent for an invention, but shall not include those acts undertaken by attorneys in the practice of their profession, other persons duly registered to practice before the U.S. Patent and Trademark Office, or persons rendering services to such attorneys or registered persons.

4. "Invention developer" means any person, firm, partnership, corporation, and any agent, employee, officer, partner or independent contractor thereof, that advertises invention development services in media of general circulation or that contracts with customers procured as a result of such advertisement.

5. "Invention development service" means acts of invention development required or promised to be performed, or actually performed, or both, by an invention developer for a customer.

6. "Invention" means a discovery, process, machine, design, formulation, product, concept or idea or any combination thereof.

1977, c. 649.

§ 59.1-209. Contracting requirements.

A. Every contract for invention development services shall be in writing and shall be subject to the provisions of this chapter. A copy of the written contract shall be given to the customer at the time he 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, at the time the customer signs the first contract, the invention developer shall so state in writing and shall supply to the customer such writing together with a written summary of the developer's normal terms, if any, of such subsequent contracts, including the amount of the developer's normal fees or other consideration, if any, that may be required from the customer.

C. Notwithstanding any contractual provision to the contrary, no payment for invention development services shall be required, made or received until the expiration of a four-working-day period commencing on the date on which the customer receives a copy of the contract for invention development services signed by the invention developer. Delivery of a promissory note, check, bill of exchange or negotiable instrument of any kind to the invention developer or to a third party, irrespective of the date or dates appearing on such instrument, shall be deemed payment for the purpose of this section.

D. Until the payment specified in this section is made, the parties shall have the option to terminate the contract, which option may be exercised as follows: (i) the customer may exercise the option by refraining from making payment to the invention developer, (ii) the invention developer may exercise the option to terminate by giving to the customer a written notice of its exercise of the option, which written notice shall become effective upon receipt thereof by the customer.

1977, c. 649.

§ 59.1-210. Standard provisions for cover notice.

Every contract for invention development services shall have a conspicuous and legible cover sheet attached with the following notice imprinted thereon in boldface type of not less than 10-point size:

1. "This contract between you and an invention developer is regulated by Chapter 18 (§ 59.1-208 et seq.) of Title 59.1. You are not permitted or required to make any payments under this contract until four working days after you sign this contract and receive a completed copy of it."

2. A statement that the contract is a fee-for-service contract and that the invention developer makes no guarantees as to the success of the invention.

3. Information as to how a customer who feels that his rights have been violated pursuant to this chapter may lodge a complaint with the Consumer Protection Division at the Office of the Attorney General, including the Division's telephone number and directions as to how to file an online consumer complaint.

Such cover sheet shall contain only the notice required by this section.

1977, c. 649; 2014, c. 759.

§ 59.1-211. Interest in inventions prohibited.

No invention developer shall acquire any interest, partial or whole, in the title to the customer's invention or patent rights, unless the invention developer contracts to manufacture the invention and acquires such interest for such purpose at or about the time the contract for manufacture is executed. Nothing in this section shall be construed to prohibit an invention developer from receiving a portion of any proceeds accruing to the customer as a result of performance of invention development services by the invention developer.

1977, c. 649.

§ 59.1-212. Reports to customer required.

With respect to every contract for invention development services, the invention developer shall deliver to the customer at the address specified in the contract at least at quarterly intervals throughout the term of the contract a written report which identifies the contract and which includes:

1. A full, clear and concise description of the services performed to the date of the report and of the services yet to be performed; and

2. A full accounting of the application of the proceeds of the fee referred to in subdivision 6 of § 59.1-213 to the date of the report; and

3. The name and address of each and every person, firm or corporation to whom the subject matter of the contract has been disclosed, the reason for each and every disclosure, and copies of all responses received as a result of such disclosures.

1977, c. 649.

§ 59.1-213. Mandatory contract terms.

Every contract for invention development services shall set forth in boldface type of not less than ten-point size all of the following:

1. The terms and conditions of payment required by § 59.1-209.

2. A full, clear and concise description of the specific acts or services that the invention developer undertakes to perform for the customer; and, to the extent that the description of the specific acts or services affords discretion in the invention developer as to what specific acts or services will be performed, the invention developer shall be deemed a fiduciary.

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 and 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.

5. The names and addresses of the persons and organizations, other than employees of the invention developer, that may perform any of the invention development services.

6. A statement of the fee charged, and the proposed specific application of the proceeds of such fee by the invention developer, including but not limited to the approximate portion that will be expended for services relating to patent matters, and all portions of the fee that represent sales commissions, incentive payments, finder's fees, or any amounts intended to compensate any agent, employee, salesman or other person for procuring the customer.

7. A statement as to whether the invention developer intends to expend more for the invention development services than the cash fee charged the customer.

8. If any oral or written representation of estimated or projected customer earnings is given by the invention developer, a statement of such projection or estimation and a description of the data upon which it is based.

9. A statement as to whether or not the invention developer or any officer thereof is licensed to practice law in any jurisdiction or is a registered patent agent with the United States Patent and Trademark Office.

10. The name and address of the custodian of all records and correspondence pertaining to the contracted for invention development services, and 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 for a period of not less than two years after expiration of the term of the contract for invention development services, which records and correspondence will be made available to the customer or his representative for review and copying at the customer's reasonable expense on the invention developer's premises during normal business hours upon seven days' written notice.

11. 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.

1977, c. 649.

§ 59.1-214. Remedies.

A. Any contract for invention development services which does not substantially comply with the applicable provisions of this chapter may be voidable at the option of the customer. Any contract for invention development services entered into in reliance upon any false, fraudulent or misleading information, representation, notice or advertisement of the invention developer may be voidable at the option of the customer. Any waiver by the customer of any of the provisions of this chapter shall be deemed contrary to public policy and shall be void and unenforceable.

B. In addition, any customer who has been injured by a violation of this chapter by an invention developer or 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 this chapter, may recover in a civil action against the invention developer, in addition to reasonable costs and attorneys' fees, the greater of: (i) $1,000, or (ii) the amount of actual damages, if any, sustained by the customer.

C. For the purpose of this section, substantial violation of any provision of this chapter by an invention developer or execution by the customer of a contract for invention development services in reliance on any such false or fraudulent statements, representations, or material omissions shall establish a rebuttable presumption of injury.

1977, c. 649.

§ 59.1-215. Enforcement; civil penalty; restraint of violations.

A. For the purpose of enforcing this chapter, the Attorney General is hereby authorized to conduct investigations and hold hearings and compel the attendance of witnesses and the production of accounts, books and documents by the issuance of subpoenas.

B. The Attorney General shall enforce the provisions of this chapter, and shall have the right to recover a civil penalty not to exceed $10,000 for each and every violation of any provisions of this chapter, and to seek equitable relief to restrain any such violation.

1977, c. 649; 2014, c. 759.