Ask HN: Should I sign this agreement?
36 comments
Not a lawyer, just a cynical person.
Do not sign anything she gives you, especially a NDA that says you are an unpaid intern. She is trying to fuck you over. Did she file papers for a LLC or the like? If so, whose name is on those papers? Did you file them with her? She could have took off your name. The State you live in probably offers a way to search for business entities and you can see the papers that were filed. [1] Does she have any of the code? Perhaps, you should consider not giving it to her. Absolutely do not host it on any servers or etc. that she has paid for. It seems like if you signed an NDA saying that you are an unpaid intern and she registered some sort of entity without listing you, she could say you were commissioned to do the work as an intern so you would have to give her the code. You gain nothing from signing the NDA. You need to tell your professor what is going on. Also, and I don't have a lot of experience with NDAs, isn't that something you usually sign before a project?
You might be thinking that all of this stress isn't worth a measly little school assignment and that you should just placate her by giving it all away. Do not dare do that. For all you know, she has been in talks with companies and has sales or prospective investors. Even if you already have a job and don't want to do a business, having equity is still worth something, especially so if the business blows up.
[1] I see you go to Columbia, so I assume you live in New York. Here you go. http://www.dos.ny.gov/corps/bus_entity_search.html
Do not sign anything she gives you, especially a NDA that says you are an unpaid intern. She is trying to fuck you over. Did she file papers for a LLC or the like? If so, whose name is on those papers? Did you file them with her? She could have took off your name. The State you live in probably offers a way to search for business entities and you can see the papers that were filed. [1] Does she have any of the code? Perhaps, you should consider not giving it to her. Absolutely do not host it on any servers or etc. that she has paid for. It seems like if you signed an NDA saying that you are an unpaid intern and she registered some sort of entity without listing you, she could say you were commissioned to do the work as an intern so you would have to give her the code. You gain nothing from signing the NDA. You need to tell your professor what is going on. Also, and I don't have a lot of experience with NDAs, isn't that something you usually sign before a project?
You might be thinking that all of this stress isn't worth a measly little school assignment and that you should just placate her by giving it all away. Do not dare do that. For all you know, she has been in talks with companies and has sales or prospective investors. Even if you already have a job and don't want to do a business, having equity is still worth something, especially so if the business blows up.
[1] I see you go to Columbia, so I assume you live in New York. Here you go. http://www.dos.ny.gov/corps/bus_entity_search.html
This incident may yet provide you with the one of the most important business lessons ever, and at relatively low cost to you: have a lawyer read over EVERY agreement you sign in a professional capacity.
It doesn't matter how much you trust the other party, either. Mistakes happen, ambiguous agreements are written. In fact it's entirely possible that the document contains clauses the other party doesn't want either, which have simply been overlooked in boilerplate (I have experienced this first-hand).
Look at agreements as though you were an attacker trying to compromise a system.
One example (which I read about on HN a few years ago): a developer signs an employment contract that grants complete ownership of all intellectual property he creates, including on his own time, to his employer. That's fine because he knows and trusts the employer. Then the company is bought by a bad actor, and that bad actor immediately lays claim to his personal projects as well as his paid work.
It doesn't matter how much you trust the other party, either. Mistakes happen, ambiguous agreements are written. In fact it's entirely possible that the document contains clauses the other party doesn't want either, which have simply been overlooked in boilerplate (I have experienced this first-hand).
Look at agreements as though you were an attacker trying to compromise a system.
One example (which I read about on HN a few years ago): a developer signs an employment contract that grants complete ownership of all intellectual property he creates, including on his own time, to his employer. That's fine because he knows and trusts the employer. Then the company is bought by a bad actor, and that bad actor immediately lays claim to his personal projects as well as his paid work.
Oh, also: treat any pressure to expedite the process ("it's normal for people to sign on the spot", "what's the matter, don't you trust me?", "this is industry best practice") as a massive, MASSIVE warning sign that something is wrong.
No trustworthy, experienced professional would expect you to do anything other than go away and get your own lawyer to review a contract before signing it.
No trustworthy, experienced professional would expect you to do anything other than go away and get your own lawyer to review a contract before signing it.
I see this recommendation repeated often.
How do you find a laywer to read over the agreement? How much do they usually cost? How can a student afford one?
How do you find a laywer to read over the agreement? How much do they usually cost? How can a student afford one?
Re. the first question: http://bit.ly/1idSHvU ;)
In terms of cost, it really depends upon where you live, and what services you require (essentially, how far up the lawyer food chain you need to go). I'd budget up to a grand to review an employment contract, for example.
As for how a student could afford one.... Maybe save the cash in advance, if you can, if you're going into a deal like this? Ask for help from friends and / or family? Look around for organisations offering legal assistance to students (e.g. http://www.lslap.bc.ca/)?
In terms of cost, it really depends upon where you live, and what services you require (essentially, how far up the lawyer food chain you need to go). I'd budget up to a grand to review an employment contract, for example.
As for how a student could afford one.... Maybe save the cash in advance, if you can, if you're going into a deal like this? Ask for help from friends and / or family? Look around for organisations offering legal assistance to students (e.g. http://www.lslap.bc.ca/)?
We expect a student to save up a grand in order to pay for a contract review, when this is for a class and the student has earned no money from it and is likely poor?
The organization offering legal assistance to students that you linked to explicitly says they can't assist in this case (no Business and Commercial Law).
Like I expected it seems like this advice is not practical for the vast majority of students.
The organization offering legal assistance to students that you linked to explicitly says they can't assist in this case (no Business and Commercial Law).
Like I expected it seems like this advice is not practical for the vast majority of students.
> Like I expected it seems like this advice is not practical for the vast majority of students.
A grand is, what, three weeks work at minimum wage in the USA? So yeah, saving in advance would totally be possible in many cases.
Also, bear in mind I said "in a professional capacity". It may well be that students can't afford legal review. The lesson (get professional review when you're a professional) still stands though, with the proof provided by what happens when you don't, as a student.
A grand is, what, three weeks work at minimum wage in the USA? So yeah, saving in advance would totally be possible in many cases.
Also, bear in mind I said "in a professional capacity". It may well be that students can't afford legal review. The lesson (get professional review when you're a professional) still stands though, with the proof provided by what happens when you don't, as a student.
That's just insulting. You should teach her a lesson in business: You don't get anything without offering some consideration for it.
It doesn't matter that you did this as a learning experience. Your motivation for working doesn't transfer ownership of that work to another party. You are the sole owner of the code. If she wants that code then she has to purchase it or license it from you.
I suggest you ask for cash rather than equity in her company since it's unlikely she'll be able to do anything productive without you anyway. If she doesn't want to pay then I suggest you post it to demonstrate your skills, and don't mention her or give her any credit at all.
Either way, she'll learn the valuable lesson of having contracts up front.
It doesn't matter that you did this as a learning experience. Your motivation for working doesn't transfer ownership of that work to another party. You are the sole owner of the code. If she wants that code then she has to purchase it or license it from you.
I suggest you ask for cash rather than equity in her company since it's unlikely she'll be able to do anything productive without you anyway. If she doesn't want to pay then I suggest you post it to demonstrate your skills, and don't mention her or give her any credit at all.
Either way, she'll learn the valuable lesson of having contracts up front.
Important: IANAL.
Now, it seems to me that there are two issues here: (1) Do you sign an NDA? (2) Do you represent yourself as an "unpaid student intern"?
(1) Do you sign an NDA?
First, you may call it "standard", but the real standard is to ask someone to sign an NDA before revealing information to them, so that they can weigh costs vs. benefits. Presenting an NDA to you at this point doesn't make sense.
Second, do you get any benefits from signing this NDA? I think not.
Third, "standard" does not mean "a good idea".
And fourth, what price do you pay by signing this NDA? If you decide you want to do something similar to this app in the future, are you not allowed to? Is your "co-creator" trying to limit the future use of your skills, your future business prospects, etc.?
Putting it all together, I think signing the NDA is a ridiculous idea, "standard" or not. I'd say a firm "no", and call it a learning experience for this person -- part of their business education.
(2) Do you present yourself as an "unpaid student intern"?
It sounds like your "co-creator" is asking for a gift. She wants you to give her the app and relinquish any claims on it.
Why would you do that? Well, altruism, I suppose, and perhaps the desire to rid yourself of any connections with someone with whom you should never have partnered in the first place.
But I see no reason whatsoever that you would be required to do that.
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EDIT: Or, to put it more bluntly, alkxa is right. See the comment by that user.
Now, it seems to me that there are two issues here: (1) Do you sign an NDA? (2) Do you represent yourself as an "unpaid student intern"?
(1) Do you sign an NDA?
First, you may call it "standard", but the real standard is to ask someone to sign an NDA before revealing information to them, so that they can weigh costs vs. benefits. Presenting an NDA to you at this point doesn't make sense.
Second, do you get any benefits from signing this NDA? I think not.
Third, "standard" does not mean "a good idea".
And fourth, what price do you pay by signing this NDA? If you decide you want to do something similar to this app in the future, are you not allowed to? Is your "co-creator" trying to limit the future use of your skills, your future business prospects, etc.?
Putting it all together, I think signing the NDA is a ridiculous idea, "standard" or not. I'd say a firm "no", and call it a learning experience for this person -- part of their business education.
(2) Do you present yourself as an "unpaid student intern"?
It sounds like your "co-creator" is asking for a gift. She wants you to give her the app and relinquish any claims on it.
Why would you do that? Well, altruism, I suppose, and perhaps the desire to rid yourself of any connections with someone with whom you should never have partnered in the first place.
But I see no reason whatsoever that you would be required to do that.
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EDIT: Or, to put it more bluntly, alkxa is right. See the comment by that user.
It sounds like your "co-creator" is asking for a gift.
Cynical me thinks your colleague isn't asking for a gift but rather doing business as usual because "[the course] is taken primarily by business students who have had professional experience". Standard operating practice in business, your partner has learned, is to ask for the moon with cheese on top, and if that's too much it gets knocked down to proper size during negotiations or in the courts, if necessity demands. Besides, you are inexperienced, and your partner is not.
This is not a viable long-term strategy, and it's really dubious ethics, but since it's just an MBA class, and you won't have business dealings again, it's at least a rational strategy. What I'm saying is that the "rational economic actor" is a deeply amoral being, if not an immoral being, and it isn't worth dealing with such a thing.
Cynical me thinks your colleague isn't asking for a gift but rather doing business as usual because "[the course] is taken primarily by business students who have had professional experience". Standard operating practice in business, your partner has learned, is to ask for the moon with cheese on top, and if that's too much it gets knocked down to proper size during negotiations or in the courts, if necessity demands. Besides, you are inexperienced, and your partner is not.
This is not a viable long-term strategy, and it's really dubious ethics, but since it's just an MBA class, and you won't have business dealings again, it's at least a rational strategy. What I'm saying is that the "rational economic actor" is a deeply amoral being, if not an immoral being, and it isn't worth dealing with such a thing.
I would consider explaining to her the following:
1. that the time to have negotiated that deal would have been prior to your doing all the work;
2. now that you have done it and have no obligation to sign this, she can't do anything with the work product without running the risk of your suing her for 50% ownership, which you would certainly do if anything came of it (and by the way, don't post the app, transfer the code, etc)
3. that you are open to any reasonable offer and will sign IP/tech assignment rights, post app, share code, etc. as appropriate if you reach agreement;
4. That she might want to consider this a business lesson of the sort they apparently don't teach in business school, and you won't charge her anything extra for it....
* = i'm assuming US or US-type legal framework here
(edited for formatting only)
* = i'm assuming US or US-type legal framework here
(edited for formatting only)
Do not sign. If she is not going to pay you or give you equity or a percent of app sales, that is a big red flag. Do not submit it to the app store either.
I would in fact talk it over with the Professor running the class or a student association lawyer. It looks like she is trying to gather evidence to suggest that you are not a cofounder after the fact. So you should assert your intellectual property rights for the code you created. In fact, not having a contracting agreement, or an employment agreement makes it more difficult for your cofounder to assert ownership anyway since there is nothing legally binding you together.
I would in fact talk it over with the Professor running the class or a student association lawyer. It looks like she is trying to gather evidence to suggest that you are not a cofounder after the fact. So you should assert your intellectual property rights for the code you created. In fact, not having a contracting agreement, or an employment agreement makes it more difficult for your cofounder to assert ownership anyway since there is nothing legally binding you together.
Disagree with all the people saying you own 50% of it, or, really, anything of it.
Note the poster says straight up he at least implicitly agreed the other owns 100%, and that he did the project as a learning experience.
On the other hand, don't sign anything like this, there's absolutely no upside, plenty of gotchas (albeit, at least if your country's contract law is like ours, it'll be unenforceable because of a lack of "consideration", see the "no upside", but that can be expensive to prove), and no previous agreement to do it.
Keep your end of the bargain, deliver your stuff, and let her have a learning experience about how far one can take a dead body of code and her attitudes towards the creators of such.
Not to mention probably not getting the IP rights locked down. If you have no agreement on that, mark it copyrighted by you, and give it to her like that.
Note the poster says straight up he at least implicitly agreed the other owns 100%, and that he did the project as a learning experience.
On the other hand, don't sign anything like this, there's absolutely no upside, plenty of gotchas (albeit, at least if your country's contract law is like ours, it'll be unenforceable because of a lack of "consideration", see the "no upside", but that can be expensive to prove), and no previous agreement to do it.
Keep your end of the bargain, deliver your stuff, and let her have a learning experience about how far one can take a dead body of code and her attitudes towards the creators of such.
Not to mention probably not getting the IP rights locked down. If you have no agreement on that, mark it copyrighted by you, and give it to her like that.
Without a signed contract he might not own any of the "company" that doesn't actually exist. He does own 100% of the ip of the actual software.
That depends on their original agreement, what the scope of that "100%" she was getting was.
gut instinct is a wonderful thing, don't ignore it completely :)
this sounds like yet another case of a non-technical person trying to strong arm a developer/designer/the person that does actual product development into signing away their rights.
in my very limited experience and from others i know, unequal equity split for co-founders usually always ends up with someone becoming sour over time that they're not getting their fair share. you may not think you might be that person, but if the app takes off or somewhere down the line the company is acquired, would you be okay with not receiving a single penny?
don't sign anything without talking to a lawyer. if you don't know what you're signing, you might even be worse off than signing a "standard NDA".
you can always say no.
this sounds like yet another case of a non-technical person trying to strong arm a developer/designer/the person that does actual product development into signing away their rights.
in my very limited experience and from others i know, unequal equity split for co-founders usually always ends up with someone becoming sour over time that they're not getting their fair share. you may not think you might be that person, but if the app takes off or somewhere down the line the company is acquired, would you be okay with not receiving a single penny?
don't sign anything without talking to a lawyer. if you don't know what you're signing, you might even be worse off than signing a "standard NDA".
you can always say no.
A lesson from the early days of microcomputers is relevant (and I knew some of the players): Visicalc was the first spreadsheet and first PC killer app, "I have to buy an Apple II to run Visicalc". (Per Wikipedia, $2,000 of PC for $100 of software.)
But they, their company Software Arts (SA), made a distribution agreement with Personal Software (PS) that was grossly unfair to latter, and this became a big issue over time, because SA wasn't willing to budge on the agreement.
So PS exercised their only club, that SA would have to port it to any PC model they asked for, and there were a lot of them out there. So while SA was distracted doing a lot of porting, plenty of it silly, and did a generic port to the IBM-PC (forget which OSes of it), Lotus did a much better spreadsheet for the IBM-PC and the rest is history.
Except, there's a bit more relevant about that, see my top level comment. 1-2-3 was written in assembly language by 6-8 people as I remember, and the team didn't stay together after the launch. Lotus didn't have what it took to be a successful software company, clueless management that was kept afloat by stunning sales for a long time, etc. etc.
Their "mid-life kicker" is the best illustration of that: IBM-PC memory was limited, ultimately 1 MB addressable (640K until you hit adapters, but there were tricks you could play), so someone came up with concept where you could add a card with lots of memory and it would map parts of that into the address space on command. Ah, now I remember, Expanded Memory Specification, EMS: https://en.wikipedia.org/wiki/Expanded_Memory_Specification#...
Two engineers at Lotus modified 1-2-3 to use it to great effect, but that was against management orders, and they left the company before it realized they had to use their code base to extend the life of 1-2-3, which they did for some time.
There's of course lots of details I'm leaving out, like an attempt at a C language version, but it's notable that one of the reasons almost all of Microsoft's competitors failed is that they lost their ability to write software that mostly worked, generally after their first major version, and most especially when it came time to do a Windows 3.x version.
But they, their company Software Arts (SA), made a distribution agreement with Personal Software (PS) that was grossly unfair to latter, and this became a big issue over time, because SA wasn't willing to budge on the agreement.
So PS exercised their only club, that SA would have to port it to any PC model they asked for, and there were a lot of them out there. So while SA was distracted doing a lot of porting, plenty of it silly, and did a generic port to the IBM-PC (forget which OSes of it), Lotus did a much better spreadsheet for the IBM-PC and the rest is history.
Except, there's a bit more relevant about that, see my top level comment. 1-2-3 was written in assembly language by 6-8 people as I remember, and the team didn't stay together after the launch. Lotus didn't have what it took to be a successful software company, clueless management that was kept afloat by stunning sales for a long time, etc. etc.
Their "mid-life kicker" is the best illustration of that: IBM-PC memory was limited, ultimately 1 MB addressable (640K until you hit adapters, but there were tricks you could play), so someone came up with concept where you could add a card with lots of memory and it would map parts of that into the address space on command. Ah, now I remember, Expanded Memory Specification, EMS: https://en.wikipedia.org/wiki/Expanded_Memory_Specification#...
Two engineers at Lotus modified 1-2-3 to use it to great effect, but that was against management orders, and they left the company before it realized they had to use their code base to extend the life of 1-2-3, which they did for some time.
There's of course lots of details I'm leaving out, like an attempt at a C language version, but it's notable that one of the reasons almost all of Microsoft's competitors failed is that they lost their ability to write software that mostly worked, generally after their first major version, and most especially when it came time to do a Windows 3.x version.
1. EDITED: I wouldn't be too sure that the EMBA student doesn't already have rights in the app, etc. The facts aren't entirely clear (and can make a big difference), but she might be a "joint author." If so, she'd likely have the right to do whatever she wanted with the code -- but she'd have to account to the poster for whatever profits she made (usually a 50-50 split if the parties haven't agreed otherwise).
Of course, the reverse is also true: If the OP and the EMBA student are joint authors, then the OP might have to account to the EMBA student for any profits he makes.
For more information, see a presentation I did a couple of years ago: http://www.oncontracts.com/docs/Toedt-IACCM-ATE-intellectual... See in particular the slides about "joint works" (with examples such as Weird Al's parody of Lady Gaga's Born This Way as well as the royalty controversy over the organ solo in A Whiter Shade of Pale).
2. If the individuals qualify as a partnership (sounds like maybe not), then the partnership arguably owns the copyright. Under New York law, "[a] partnership is an association of two or more persons to carry on as co-owners a business for profit ...." http://law.onecle.com/new-york/partnership/PTR010_10.html. In general, a partnership can be de facto even without formal paperwork.
3. The usual disclaimer: The above is only general information; small changes in facts can sometimes make big differences in outcome; don't rely on this as a substitute for legal advice from an attorney licensed in your jurisdiction; I'm not your lawyer; etc., etc.
Of course, the reverse is also true: If the OP and the EMBA student are joint authors, then the OP might have to account to the EMBA student for any profits he makes.
For more information, see a presentation I did a couple of years ago: http://www.oncontracts.com/docs/Toedt-IACCM-ATE-intellectual... See in particular the slides about "joint works" (with examples such as Weird Al's parody of Lady Gaga's Born This Way as well as the royalty controversy over the organ solo in A Whiter Shade of Pale).
2. If the individuals qualify as a partnership (sounds like maybe not), then the partnership arguably owns the copyright. Under New York law, "[a] partnership is an association of two or more persons to carry on as co-owners a business for profit ...." http://law.onecle.com/new-york/partnership/PTR010_10.html. In general, a partnership can be de facto even without formal paperwork.
3. The usual disclaimer: The above is only general information; small changes in facts can sometimes make big differences in outcome; don't rely on this as a substitute for legal advice from an attorney licensed in your jurisdiction; I'm not your lawyer; etc., etc.
Mate, unless you have prior agreements that you have signed to the contrary, you own the IP. Period. You own it. Turn this around and invite her to 'share' in YOUR IP. The fact that she is 'in charge of the business model' is immaterial.
I've been in the software game for 30 years, and my advise is: never, never, never do anything that will reduce your ownership of IP. IP is your ticket.
P.S. I am not a lawyer.
I've been in the software game for 30 years, and my advise is: never, never, never do anything that will reduce your ownership of IP. IP is your ticket.
P.S. I am not a lawyer.
No experience and not a lawyer here either
But even putting aside all the money-talk, while I was reading the story I almost feel like she's not being very respectful of the effort you have put in. It sounds like you and her have a co-creaters relationship, and you have participated and put in equal (if not more) amount of work throughout the entire project.
This "I should have 100%" thing makes it sound as if you were working under her all along and she's asking you to sign away all the rights you have for your project. This sounds bad but think about it, she might not even have this app today if it weren't for your effort, why does she own the right to claim 100% of the app?
But even putting aside all the money-talk, while I was reading the story I almost feel like she's not being very respectful of the effort you have put in. It sounds like you and her have a co-creaters relationship, and you have participated and put in equal (if not more) amount of work throughout the entire project.
This "I should have 100%" thing makes it sound as if you were working under her all along and she's asking you to sign away all the rights you have for your project. This sounds bad but think about it, she might not even have this app today if it weren't for your effort, why does she own the right to claim 100% of the app?
OP here: To clarify, I did not agree with her keeping 100% of the equity. At the time, I mainly wanted to focus on developing the product first, thinking that she would find herself ridiculous after seeing the complete app. We never reached an agreement/conclusion and I have not signed anything yet. And thank you so much for all the advice. It has been really helpful!
It'd be interesting if you could post an update about what happened, either here or in a blog post detailing everything. There are also people who might find such an account useful, especially talented developers who get involved with programs and people like this.
yea, I will follow up with a blog post once everything is sorted out :)
IANAL - It's always upsetting to see the 'idea-guys' knock the engineers, so here are my $0.02.
So who owns the IP? If you haven't created a legal entity where you have signed over the IP, then I think technically it is yours, or at least 50% yours.
If that's the case, signing something like this seems a little shady. If you call her your co-creator, that implies you are part of the creation process, and if that's the case, I feel that signing this may not be the best idea.
Additionally, I always think people should have the difficult conversations first, and I think by not signing this, it's not like you are <em>fucking</em> her over, but instead laying out a difficult conversation on the table. I think all founders should be comfortable having conversations in the beginning about equity, and if she isn't comfortable with that, remember that you are part of the reason the product exists to begin with.
On the other hand, if you want to give it, I agree with ggchappell -> it sounds like you're giving her a gift. Yet there is still no reason to sign something like this.
I don't see the signing of this document helping you in any way, but hey - IANAL.
So who owns the IP? If you haven't created a legal entity where you have signed over the IP, then I think technically it is yours, or at least 50% yours.
If that's the case, signing something like this seems a little shady. If you call her your co-creator, that implies you are part of the creation process, and if that's the case, I feel that signing this may not be the best idea.
Additionally, I always think people should have the difficult conversations first, and I think by not signing this, it's not like you are <em>fucking</em> her over, but instead laying out a difficult conversation on the table. I think all founders should be comfortable having conversations in the beginning about equity, and if she isn't comfortable with that, remember that you are part of the reason the product exists to begin with.
On the other hand, if you want to give it, I agree with ggchappell -> it sounds like you're giving her a gift. Yet there is still no reason to sign something like this.
I don't see the signing of this document helping you in any way, but hey - IANAL.
IANAL, but I would trust your gut instinct on this - don't sign anything unless you're comfortable with the terms. It leaves the project in a weird state, but if your co-creator is being this aggressive to dismiss your claim, you may want to leave it this way.
Several years ago I had a problem similar in nature. A co-founder of my old-company parted with us on unfriendly terms. However, before we parted she didn't sign any paperwork. When we got accepted into an incubator and she found out, she threatened to sue us for 33 1/3% of the company. Our legal representation at the time told us that it would be considered an equal partnership if we didn't have paperwork stating otherwise. Ultimately she had all the leverage b/c she didn't sign anything.
Several years ago I had a problem similar in nature. A co-founder of my old-company parted with us on unfriendly terms. However, before we parted she didn't sign any paperwork. When we got accepted into an incubator and she found out, she threatened to sue us for 33 1/3% of the company. Our legal representation at the time told us that it would be considered an equal partnership if we didn't have paperwork stating otherwise. Ultimately she had all the leverage b/c she didn't sign anything.
Don't sign it. Tell her as the author of the code you'll take 100% ownership if she won't agree to a split. Also, I don't know why you need an NDA as the co-founder and sole author. Seems like this biz student is on some kind of ego trip. Be cautious working with this person.
(IANAL)
(IANAL)
OP, can you clarify why the NDA had not been discussed before building? And did you agree beforehand to her keeping 100% of the equity? If you did, was there any contract/agreement signed to that effect?
Also curious to the course structure and student roles: Did other teams in class form companies? If this more like a regular class project, then I wonder if you could call it a day with both sides retaining a copy of the final report, while she retains the biz details (spreadsheets, etc) and you retain the tech bits (code). She would be free to find another dev to build a new app based on current specs, just as you would be free to find another business person if you decided to pursue the concept.
In any case I wouldn't sign any agreement without legal help at this stage.
Also curious to the course structure and student roles: Did other teams in class form companies? If this more like a regular class project, then I wonder if you could call it a day with both sides retaining a copy of the final report, while she retains the biz details (spreadsheets, etc) and you retain the tech bits (code). She would be free to find another dev to build a new app based on current specs, just as you would be free to find another business person if you decided to pursue the concept.
In any case I wouldn't sign any agreement without legal help at this stage.
Even if it didn't have the text about you being an unpaid intern I wouldn't sign it. Why sign away your rights for nothing? You don't gain anything by signing it or lose anything by not signing. The only times I've signed an NDA are before I (potentially) gain access to new information. Your partner is trying to take advantage of you.
I don't know enough to knowledgeably discuss the issue of ownership. You'll probably want to talk with a lawyer. You might have a verbal contract based on your previous discussions on equity. Then again, there might be a good argument that you are the sole owner of the code. You'll have to decide for yourself if you care about the ownership stake.
I don't know enough to knowledgeably discuss the issue of ownership. You'll probably want to talk with a lawyer. You might have a verbal contract based on your previous discussions on equity. Then again, there might be a good argument that you are the sole owner of the code. You'll have to decide for yourself if you care about the ownership stake.
Why would you even entertain signing it? Just say "no".
If you wrote this app without an agreement, it is yours and she'll have to negotiate with you. Tell her she can sign your license agreement. Unless you want to just be nice or whatever.
If you wrote this app without an agreement, it is yours and she'll have to negotiate with you. Tell her she can sign your license agreement. Unless you want to just be nice or whatever.
Not just "no."
But "No and go fuck yourself."
But "No and go fuck yourself."
No you should not sign it. Never sign away your rights to anything with out being compensated.
You were not paid for the work you put into a non trivial piece of software. If your co-founder is serious about continuing with the company and wants to use what you wrote she really only has two options. 1) suck it up and give you a serious equity stake. 2) license it from you where you make a % of sales or a fixed amount per install. She does have a 3rd option to use your software and gamble that the company is never successful enough for you to sue her for an obscene amount money.
You were not paid for the work you put into a non trivial piece of software. If your co-founder is serious about continuing with the company and wants to use what you wrote she really only has two options. 1) suck it up and give you a serious equity stake. 2) license it from you where you make a % of sales or a fixed amount per install. She does have a 3rd option to use your software and gamble that the company is never successful enough for you to sue her for an obscene amount money.
No.
Hire your own lawyer. Find a lawyer who is an alum who works at a top firm. Don't be shy about asking about cost. Ask then what you are asking here. Meanwhile, STFU until you have advice of counsel.
Hire your own lawyer. Find a lawyer who is an alum who works at a top firm. Don't be shy about asking about cost. Ask then what you are asking here. Meanwhile, STFU until you have advice of counsel.
As an additional point of clarification in the hope it helps the OP, and based on lack of clarity on this in some of the responses, "NDA" stands for "non-disclosure agreement". A "standard NDA" -- to the extent there are some generally common practices around NDA's -- specifies simply that you are receiving confidential information and that you may not disclose it to other parties.
NDA's generally also specify that you can't use any information disclosed if specified as confidential, and that promise is usually restricted to things you a) didn't already know or develop on your own [and there are various standards as to how much burden of proof there is on this] and b) are not already in the public domain in various ways.
So in a certain way, NDA's can be used to claim ownership over ideas like the one you're working, (e.g. by labelling it as confidential material covered by the NDA and thereby covering "my idea and everything related to it, which I own and you are now agreeing I own").
This would not, however, cover your work, your code, or anything you did without additionally specifying ownership and transfer of rights from you to her in those things.
If the "NDA" specifies that you are an unpaid intern, as yours seems to, this is an employment agreement or work-for-hire contract (to be clear: not a "standard NDA"). If it specifies that you are to turn over code or assign your work, or otherwise tries to retroactively include your work as her confidential material, in exchange for compensation or otherwise, it is an assignment of intellectual property or technology. If it in any way specifies equity or ownership of the company, it's something else altogether.
There are various legal principles and state laws that also could come into play here, depending where you are. (For example, if she's acting as her own lawyer, she might have created a contract that's unenforceable or voidable in various ways.)
It sounds like you're in a strong position and I stand by my earlier answer with respect to how I think you should approach it, but for god's sake don't sign any such thing without having a lawyer take a look, and all of you, please learn what these things are called and what they do.
IANAL, YMMV, etc.
NDA's generally also specify that you can't use any information disclosed if specified as confidential, and that promise is usually restricted to things you a) didn't already know or develop on your own [and there are various standards as to how much burden of proof there is on this] and b) are not already in the public domain in various ways.
So in a certain way, NDA's can be used to claim ownership over ideas like the one you're working, (e.g. by labelling it as confidential material covered by the NDA and thereby covering "my idea and everything related to it, which I own and you are now agreeing I own").
This would not, however, cover your work, your code, or anything you did without additionally specifying ownership and transfer of rights from you to her in those things.
If the "NDA" specifies that you are an unpaid intern, as yours seems to, this is an employment agreement or work-for-hire contract (to be clear: not a "standard NDA"). If it specifies that you are to turn over code or assign your work, or otherwise tries to retroactively include your work as her confidential material, in exchange for compensation or otherwise, it is an assignment of intellectual property or technology. If it in any way specifies equity or ownership of the company, it's something else altogether.
There are various legal principles and state laws that also could come into play here, depending where you are. (For example, if she's acting as her own lawyer, she might have created a contract that's unenforceable or voidable in various ways.)
It sounds like you're in a strong position and I stand by my earlier answer with respect to how I think you should approach it, but for god's sake don't sign any such thing without having a lawyer take a look, and all of you, please learn what these things are called and what they do.
IANAL, YMMV, etc.
IANAL, and, maybe I'm being pedantic, but it's not clear to me what the situation is: Your co-creator says that she wanted "100%"- did you agree to that? Did you have any further discussion with her about it? Without knowing her real motivations for wanting "100%" or why she would ask you to sign an NDA (as pointed out, usually something you do before someone reveals information to you) it would be hard to give further advice....
I think what you should be considering first is what YOU want- you seem to be inferring that you want to be acknowledged as "co-creator" and possibly some of the future profits of the app? Is she withholding any of these things from you now? Why?
Given that it's not clear to me that you know what she wants or the motivations for her actions, asking her is the best way to find out. I'm going to read into the subtext of the post and say that the financial business relationship is what's important here, not your title on a form, so if you can come to an agreement on the former then you've solved your problem.
If you do come to an agreement just make sure to get some record of it.
I think what you should be considering first is what YOU want- you seem to be inferring that you want to be acknowledged as "co-creator" and possibly some of the future profits of the app? Is she withholding any of these things from you now? Why?
Given that it's not clear to me that you know what she wants or the motivations for her actions, asking her is the best way to find out. I'm going to read into the subtext of the post and say that the financial business relationship is what's important here, not your title on a form, so if you can come to an agreement on the former then you've solved your problem.
If you do come to an agreement just make sure to get some record of it.
I had a similar situation in my startup. Take 50% and continue working on it nights and weekends. Or sell yourcode for $20k or 5% of the company for building the first product.
Too many people here take her request as a personal offense. Its not. It's a business negotiation and she is "anchoring". Now you need to counter offer.
Goodluck.
Be prepared to walk away with the product and bury it.
Too many people here take her request as a personal offense. Its not. It's a business negotiation and she is "anchoring". Now you need to counter offer.
Goodluck.
Be prepared to walk away with the product and bury it.
standard NDA agreement and unpaid intern. and I should have 100% are all different things.
This is overall a bit odd. An NDA agreement isn't necessarily an ownership agreement.
My advice is to talk to an IP lawyer and understand where the ownership truly lies before you sign it.
This is overall a bit odd. An NDA agreement isn't necessarily an ownership agreement.
My advice is to talk to an IP lawyer and understand where the ownership truly lies before you sign it.
Open source it and upload it to Github. There's no rule against giving away your code, is there? It sounds as though there was no prior agreement whatsoever.
Assuming it's OK to open source it, let her know you're going to do that because you own the code by virtue of having created it. If she gets nasty, tough. What's she going to do, sue you for open sourcing your homework assignment? That will just make you famous (and her, infamous).
Assuming it's OK to open source it, let her know you're going to do that because you own the code by virtue of having created it. If she gets nasty, tough. What's she going to do, sue you for open sourcing your homework assignment? That will just make you famous (and her, infamous).
There certainly is a rule about giving away the property of others, and I don't think we have established who owns what here.
If you haven't signed an IP agreement or employment contract, I think it's pretty obvious that you own the property with at most an unlimited license given to the school.
INAL, but if you contribute materially to a business, you cannot be an unpaid intern. It's probably highly illegal to use the fruits of your labor in any significant way. Internships are there for you to learn, not for companies to exploit slave labor.
Of course, as everyone else has said, talk to a lawyer.
Of course, as everyone else has said, talk to a lawyer.
Is no one else pointing out that this is part of a SCHOOL PROJECT? Of course they're asking for the moon! This is a sandbox project for her. What should you do? Scalp her back! Why? Because sandbox!
Don't sign this at all. She is disrespecting you and there is no benefit to any of this for you.
You could sign the doc and then sue her for illegally paying below minimum wage for an intern.
Aside from echoing what everyone else is saying -- that this is a blatant attempt to rip you off and you shouldn't go anywhere near it -- I just wanted to point out that it is in no way "standard" to have an NDA under these circumstances anyway.
In my entire career (over 20 years writing software for money) I have never signed, or even seriously considered signing, a full-on NDA. Doing so can be extremely dangerous to your future career, not least because potentially it will no longer be safe for you to work in certain fields, and you don't even know in advance what those fields are. At the same time, it has basically no upside for the person committing not to disclose. It's not unusual for employment or freelance contracts to include some clauses about not disclosing trade secrets learned during the gig, but even then there ought to be explicit limits on the scope of any restrictions, as well as other safeguards for the employee/freelancer.
If you're dealing with a really big player, and you're a little player trying to break into a market where you need access to their technology, then accepting their NDA terms might be an unavoidable price of admission where you have no real alternative if you want to play the game. I struggle to imagine why you'd consider signing one under less demanding conditions, though.
The situation described here is not even close to that kind of relationship. It seems more akin to the situation where Idea Guy thinks his idea is so amazing that Technical Guy should be willing to sign anything just to know about it. But try that on any veteran Technical Guy, or any serious investor, and Idea Guy will get laughed out of the room. In this case, it makes even less sense, because it sounds like any relevant information has already been shared anyway and there is literally no upside at all to signing anything like this.
There also seems to be some sort of presumption that OP would be the subordinate in any relationship and the other person would be senior. It's not clear why that would make sense from what we've been told so far, because it sounds like the OP has been the one doing most/all of the work so far. However, business people sometimes forget that good technical people aren't under any obligation to work for peanuts, and then they make unfounded assumptions about how they should obviously be the senior player in any deal. A counter-offer where they only get to have a minority share of the equity in a new company owned by both people, or even where they are reduced to being an employee of a company founded by the technical person, may provide an effective reality check in such situations, because without the technical person's work it's entirely possible that the business person has nothing of value to build a company around.
On the bright side, there is at least one useful lesson here, because it has provided an excellent demonstration of one of the most reliable indicators that you you don't want to engage in any sort of business relationship with someone. :-)
In my entire career (over 20 years writing software for money) I have never signed, or even seriously considered signing, a full-on NDA. Doing so can be extremely dangerous to your future career, not least because potentially it will no longer be safe for you to work in certain fields, and you don't even know in advance what those fields are. At the same time, it has basically no upside for the person committing not to disclose. It's not unusual for employment or freelance contracts to include some clauses about not disclosing trade secrets learned during the gig, but even then there ought to be explicit limits on the scope of any restrictions, as well as other safeguards for the employee/freelancer.
If you're dealing with a really big player, and you're a little player trying to break into a market where you need access to their technology, then accepting their NDA terms might be an unavoidable price of admission where you have no real alternative if you want to play the game. I struggle to imagine why you'd consider signing one under less demanding conditions, though.
The situation described here is not even close to that kind of relationship. It seems more akin to the situation where Idea Guy thinks his idea is so amazing that Technical Guy should be willing to sign anything just to know about it. But try that on any veteran Technical Guy, or any serious investor, and Idea Guy will get laughed out of the room. In this case, it makes even less sense, because it sounds like any relevant information has already been shared anyway and there is literally no upside at all to signing anything like this.
There also seems to be some sort of presumption that OP would be the subordinate in any relationship and the other person would be senior. It's not clear why that would make sense from what we've been told so far, because it sounds like the OP has been the one doing most/all of the work so far. However, business people sometimes forget that good technical people aren't under any obligation to work for peanuts, and then they make unfounded assumptions about how they should obviously be the senior player in any deal. A counter-offer where they only get to have a minority share of the equity in a new company owned by both people, or even where they are reduced to being an employee of a company founded by the technical person, may provide an effective reality check in such situations, because without the technical person's work it's entirely possible that the business person has nothing of value to build a company around.
On the bright side, there is at least one useful lesson here, because it has provided an excellent demonstration of one of the most reliable indicators that you you don't want to engage in any sort of business relationship with someone. :-)
No no, do not sign the agreement.
tl;dr. Do not sign the document. Beyond this case, it could also affect your future employability. VCs fund good teams, not ideas, which are cheap. If your partner doesn't realize that, she also has a hard lesson in front of her. Another great HN post: https://news.ycombinator.com/item?id=3844893
+++++++
IANAL.* This is mostly based on my personal experience with NDAs, employment docs, and patent applications. NDA may also go by the name of a "confidentiality agreement" or a "proprietary information" document. You should also refuse to a non-compete agreement that says you can't pursue a related business or anything barring you from recruiting someone from this business. She may also ask you to sign a "work for hire" agreement that assigns your work product to her, which would also give away your ownership claim. Obviously, this work-for-hire contract is typically signed when you're getting paid as an employee or contractor.
More to beware: You may also be presented with documents assigning away all "inventions". Be especially wary of this, as you may be signing away your idea and your right to pursue something even vaguely related later. You may also be giving her what she needs to file a patent.
As others have suggested, company uses of NDAs are all over the place. Many companies do require them. Many don't. Strictness is all over the place, as is validity by state. For example, non-competes are almost unenforceable in California. Some companies who ask you to sign such an agreement will offer to compensate for the time you're under a non-compete -- for example, you can't work at a competitor for 2 years, so they pay your salary for 2 years after separation. If you had to sign a document like this to take a job, sometimes this stuff is negotiable, though not often at big companies or at the entry level. You may see "in perpetuity" given as the timeline for some of the things she's asking you to sign. Consider that as well. The "unpaid intern" part may not even be legally valid. There are stringent employment rules governing interns, generally an internship is supposed to benefit the intern more than the mentor and it is generally illegal to just use interns as a cheap/free alternative to paid labor. That said, this often goes enforced.
Again, don't sign anything. It's better to be in an uncomfortable position where you haven't signed than in a position where you have signed and have to hire a lawyer to even get back to where you started. You need to think about future employers. They may ask you to sign general HR documents or NDAs, and one of the things they often ask you to legally acknowledge is that you aren't bound by other documents you've signed. This is why I really hate these things. Lawyers can't read code, and engineers can rarely understand the convoluted nonsense of a document than can come back to bite them later. You don't know who's going to be running the company 10 years later, when you're long gone but the documents you signed are still in force.
As sjg007 suggested, you may consider going to the professor.
Finally, the cliche is that ideas are cheap. (If she doesn't get that, send her this Onion video: http://www.youtube.com/watch?v=DkGMY63FF3Q) The reality your partner is going to learn is that even if you signed 100% of the code away, it's not much good to her. She can't maintain it and iterate it to a winning product. Anyone who can is either going to want money, or more likely equity. If the idea is truly a good one, as soon as another good dev sees it, or hears her talk about it (and isn't under NDA) could rewrite it. The source is irrelevant, there will always be clones for good ideas. VCs don't expect a perfect product, but they will fund a team that they think can get to one. Teams without technical founders don't get funded.
(*though I spent considerable personal money to hire a human resources lawyer specializing in NDAs when a former employer presented me with a very lopsided NDA. I considered that a small expense to protect my career.)
+++++++
IANAL.* This is mostly based on my personal experience with NDAs, employment docs, and patent applications. NDA may also go by the name of a "confidentiality agreement" or a "proprietary information" document. You should also refuse to a non-compete agreement that says you can't pursue a related business or anything barring you from recruiting someone from this business. She may also ask you to sign a "work for hire" agreement that assigns your work product to her, which would also give away your ownership claim. Obviously, this work-for-hire contract is typically signed when you're getting paid as an employee or contractor.
More to beware: You may also be presented with documents assigning away all "inventions". Be especially wary of this, as you may be signing away your idea and your right to pursue something even vaguely related later. You may also be giving her what she needs to file a patent.
As others have suggested, company uses of NDAs are all over the place. Many companies do require them. Many don't. Strictness is all over the place, as is validity by state. For example, non-competes are almost unenforceable in California. Some companies who ask you to sign such an agreement will offer to compensate for the time you're under a non-compete -- for example, you can't work at a competitor for 2 years, so they pay your salary for 2 years after separation. If you had to sign a document like this to take a job, sometimes this stuff is negotiable, though not often at big companies or at the entry level. You may see "in perpetuity" given as the timeline for some of the things she's asking you to sign. Consider that as well. The "unpaid intern" part may not even be legally valid. There are stringent employment rules governing interns, generally an internship is supposed to benefit the intern more than the mentor and it is generally illegal to just use interns as a cheap/free alternative to paid labor. That said, this often goes enforced.
Again, don't sign anything. It's better to be in an uncomfortable position where you haven't signed than in a position where you have signed and have to hire a lawyer to even get back to where you started. You need to think about future employers. They may ask you to sign general HR documents or NDAs, and one of the things they often ask you to legally acknowledge is that you aren't bound by other documents you've signed. This is why I really hate these things. Lawyers can't read code, and engineers can rarely understand the convoluted nonsense of a document than can come back to bite them later. You don't know who's going to be running the company 10 years later, when you're long gone but the documents you signed are still in force.
As sjg007 suggested, you may consider going to the professor.
Finally, the cliche is that ideas are cheap. (If she doesn't get that, send her this Onion video: http://www.youtube.com/watch?v=DkGMY63FF3Q) The reality your partner is going to learn is that even if you signed 100% of the code away, it's not much good to her. She can't maintain it and iterate it to a winning product. Anyone who can is either going to want money, or more likely equity. If the idea is truly a good one, as soon as another good dev sees it, or hears her talk about it (and isn't under NDA) could rewrite it. The source is irrelevant, there will always be clones for good ideas. VCs don't expect a perfect product, but they will fund a team that they think can get to one. Teams without technical founders don't get funded.
(*though I spent considerable personal money to hire a human resources lawyer specializing in NDAs when a former employer presented me with a very lopsided NDA. I considered that a small expense to protect my career.)
Hard to imagine there are people so naive still out there. Now where can I find some ...
Hell no?
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Here is the whole story: I am a senior engineering student. This is my last semester at school, and I thought it would be an excellent experience to be in a venture course and try something different. The course is offered by the school's business school, and it is taken primarily by business students who have had professional experience and are seriously considering starting a venture. The speakers, pitches, and quality of the students' participation have been a great learning experience for me so far. My co-creator, an EMBA student, and I are taking the course as a way to iterate through our product and process. She is in charge of the business model, and I am doing the coding. Our professors urged everyone to start talking about equity splitting as soon as possible; and my co-creator had a really simple answer to that: "I should have 100%," she said. She knew that I had accepted a full-time offer prior to starting the class and that started this project with her because I saw it as a chance to learn more about business. So far, I am on my final testing of the iOS MVP app, getting ready to submit to app store anytime this week. Along with the app, I also wrote the backend to support all interactions for the iOS app, and another simple inventory POS web-app. She just sent me this NDA to sign, specifying that I enter the agreement as "an unpaid student intern". Everything else seems rather standard, but I'm not sure if I should sign it. Any thoughts?