Guest Opinion
Till Death … Do Your Part
By John Abdo
I’d wager my entire paycheck from last month that most of you are working extra hard to support your families. However, dissimilar to millions of other working people, inventors often reside in a deeper
level of commitment as they assume double-duty by
exerting energy to sustain their day jobs combined with
a higher degree of their passion focused on seeing their
inventions successfully enter the marketplace.
Manifesting the seen from the unseen. Turning an
intangible into a tangible. Growing a brainchild into
a fully matured, revenue-generating entity. Inventors
and their families are motivated by plenty of creative,
goal-motivated emotions as they strive to realize their
dreams. But nothing compares to the upsurge in apprehension during the process of negotiating an inventor’s
contractual agreement, especially if it’s the inventors’
first agreement.
There are numerous standard terms and clauses that
must be included in an inventor’s agreement — the payment section is one of them. In addition to the standard
verbiage, inserting specific “protection” clauses is also
important. Amongst a long list of other inclusions, it’s
often prudent to include atypical clauses that don’t protect the inventor as much as they protect their family, or
the beneficiaries of the inventors’ income.
As impersonal as this will sound, the phrase I’m referring to can be labeled a “death clause.” You or your attorney can call it whatever you decide. This is the clause
that automatically, and legally, justifies the transfer of
an inventor’s royalties to self-assigned beneficiaries upon
the inventor’s passing. God forbid that ever happen, but
without this clause, the inventor’s family (or assigned
recipient) can only moan and gripe as they won’t have a
legal leg to stand on. But unless there is specific language
in the agreement that outlines explicit instructions to
transfer payments, it (probably) won’t happen.
The beneficiary of the inventor’s royalties can be their own
will, trust or estate, a bank account
in which the royalties can be deposited directly into, or a spouse,
child or favorite relative to whom
royalty checks are assigned.
If this is your first time hearing about this, then don’t
get confused with the standard “force majeure” clause
that typically brings up the “act-of-God” subject. The
force majeure clause protects both parties — inventor
and company — from any breach or non-performance
should something out of everyone’s control occur, like a
hurricane, earthquake or an attack from alien invaders.
Here’s an example of a standard force majeure clause:
❯ Force Majeure. Neither party shall be in breach
of this agreement to the extent it is unable to
perform its agreed-upon duties due to any event
of “force majeure,” including, without limitation,
any fire, earthquake, epidemic, explosion, casualty, strike, war, riot, civil disturbance, act of God,
any state of national law, decree or ordinance, or
any executive or judicial order.
In addition to the force majeure section, the so-called
death clause can be inserted separately into the inventors’
agreement. Here’s an example of a death clause, listed
below as “Transfer of Payments,” a more suitable heading.
❯ Transfer of Payments. In the event that inventor becomes deceased and/or incapacitated, any/
all payments due to inventor, along with any/all
other entitlements listed in this agreement, will
automatically be issued to the inventors’ beneficiary as listed in the attached exhibit.
On a separate page that’s usually located at the end
of the agreement titled “Exhibit,” list the beneficiary
by name and title along with their mailing address and
other contact information, bank account and routing
numbers, etc.
Remember, if a death clause is not designated in an
agreement, the decision to handle forthcoming royalties
is left completely in the hands of the company, licensee
or partner whom the inventor has the arrangement with.
In such cases, most likely, the company, licensee or partner will select their legal position, and what’s considered
“legal” is what’s specifically written in the (authorized)
agreement. ■
Disclaimer: Although skilled with intellectual property and contract construction and negotiations, the author of this article is not an attorney. Please
use your best judgment while conferring with licensed legal counsel before
making any contractual commitments.
