SECTIONS 22370-22371 - California Statutes

BUSINESS AND PROFESSIONS CODE

SECTION 22370-22371

22370. (a) The Legislature finds that there are in the State of
California members of the general public who have ideas or inventions
that they believe have substantial commercial value but which
members of the general public do not have the resources or expertise
necessary to develop, manufacture or market these ideas or
inventions; that these members of the general public are commonly
referred to as "inventors"; that these inventors are generally not
people who earn their livelihood from developing, manufacturing,
promoting or marketing ideas or inventions, from manufacturing or
marketing products, from publishing literary works or from owning,
operating or controlling commercial enterprises; that their is a
significant number of persons who have realized that inventors are
willing to expend substantial sums for services represented to result
in the development, manufacture, promotion, sale or general
exploitation of the commercial value of their ideas or inventions;
that these persons are frequently known as invention developers; that
the invention developers' services are generally offered for sums
ranging from $500 to $5,000 plus either a percentage of the income
that may be derived from the sale or marketing of the idea or
invention or a partial ownership interest in the idea or invention;
that the inventors generally have a very passive role in the
development, promotion, manufacture or sale of their ideas or
inventions after the contract with the invention developer is
executed, usually doing little more than receiving periodic reports
from the invention developer; that an extremely small number of
inventors to whom these invention developers offer their services
ever have their products sold or marketed; that there exists in
connection with invention development services, sales practices and
business methods which have worked a fraud, deceit, imposition, and
financial hardship upon many people of this state; that existing
legal protection to consumers is inadequate to prevent these abuses;
that the invention development industry has a significant impact upon
the economy and well-being of this state and its local communities;
and that the provisions of this chapter relating to such services are
necessary for the public welfare.
(b) The Legislature declares that the purpose of this chapter is
to safeguard the public against fraud, deceit, imposition, and
financial hardship, and to foster and encourage competition, fair
dealing, and prosperity in the field of invention development
services by prohibiting or restricting false or misleading
advertising, onerous contract terms, harmful financial practices, and
other unfair, dishonest, deceptive, destructive, unscrupulous,
fraudulent, and discriminatory practices by which the public has been
injured in connection with invention development services but not to
interfere with, or further regulate by this chapter, those persons
who provide researching, marketing, surveying, or other kinds of
consulting services to professional manufacturers, marketers,
publishers or others purchasing such services as an adjunct to the
traditional commercial enterprises in which they engage as a
livelihood.

22371. As used in this chapter, the following words have the
following meanings:
(a) "Contract for invention development services" shall include a
contract by which an invention developer undertakes to develop or
promote an invention for a customer.
(b) "Customer" shall include any person, firm, corporation, or
other entity that is solicited by, inquires about or seeks the
services of, or enters into a contract for invention development
services with an invention developer, except (1) any department or
agency of the federal, state, or local government, (2) any
charitable, scientific, educational, religious, or other organization
qualified under Section 501(c)(3) or described in Section 170(b)(1)
(a) of the Internal Revenue Code of 1954, as amended, and (3) any
person, firm, corporation, or other entity regularly engaged in a
trade, business, or profession which has either a net worth of one
hundred thousand dollars ($100,000) or more or gross receipts from
any source of fifty thousand dollars ($50,000) or more during the
calendar year in which any contract for invention development
services is signed.
(c) "Invention" shall mean (1) an invention, (2) an idea, (3) a
concept, or (4) any combination thereof.
(d) "Invention developer" shall mean any person, firm,
corporation, or association, and the agents, employees, or
representatives of such person, firm, corporation, or association
that develops or promotes or offers to develop or promote an
invention, except (1) any department or agency of the federal, state,
or local government, (2) any charitable, scientific, educational,
religious, or other organization qualified under Section 501(c)(3) or
described in Section 170(b)(1)(a) of the Internal Revenue of Code
1954, as amended, (3) any person, firm, corporation, association, or
other entity whose gross receipts from contracts for invention
development services, as defined in subdivision (a) of Section 22371,
do not exceed 10 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, or (4) any person, firm,
corporation, association or other entity that does not charge a fee
for invention development services. For the purposes of this
paragraph, "fee" shall include any payment made by the customer to
such entity including reimbursements for expenditures made or costs
incurred by such entity but shall not include any payment made from a
portion of the income received by a customer by virtue of invention
development services performed by such entity.
(e) "Invention development services" shall include acts required
or promised to be performed, or actually performed, or both, by an
invention developer for a customer.