(815 ILCS 620/Art. I heading) ARTICLE I.
GENERAL PROVISIONS
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(815 ILCS 620/101) (from Ch. 29, par. 101)
Sec. 101.
Short title.
This Act shall be known and may be cited as the
"Illinois Fair Invention Development Standards Act".
(Source: P.A. 81-542.)
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(815 ILCS 620/102) (from Ch. 29, par. 102)
Sec. 102.
Legislative intent.
The purpose of this Act is to safeguard the
public against fraud, deceit, imposition of financial hardship, and to foster
and encourage competition, fair dealing, and prosperity in the field of
idea and invention development services by prohibiting or restricting false
and 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 such development services, but not to interfere with or further regulate
by this Act, 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.
Representation of a client by an attorney in connection with the sale or
licensing of an invention is not intended to be regulated by this Act.
(Source: P.A. 81-542.)
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(815 ILCS 620/103) (from Ch. 29, par. 103)
Sec. 103.
Definitions.
As used in this Act, unless the context otherwise requires:
(a) "Invention Development Services" shall include at least one of the
following: (1) evaluation of the market potential of an invention; and (2)
representation of an invention to potential distributors or to potential
manufacturers of the invention.
(b) "Contract for invention development services" shall include a contract
by which an invention developer undertakes to perform invention development
services for a customer.
(c) "Customer" shall include any person, firm, corporation, association,
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.
(d) "Invention" shall mean any discovery, process, method, apparatus,
machine, design, formulation, composition, product, concept, idea or any
combination thereof.
(e) "Invention developer" shall mean any person, firm, corporation, association
or other entity and the agents, employees or representatives of such person,
firm, corporation, association, or other entity that performs invention development
services, 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, or (3) 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.
(Source: P.A. 81-542.)
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(815 ILCS 620/Art. II heading) ARTICLE II.
DISCLOSURES MADE PRIOR TO CONTRACT
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(815 ILCS 620/201) (from Ch. 29, par. 201)
Sec. 201.
Disclosure of fee in advertising.
Every invention developer
who charges a fee or requires any consideration for his invention development
services must clearly and conspicuously disclose such fact in every advertisement
of such services.
(Source: P.A. 81-542.)
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(815 ILCS 620/202) (from Ch. 29, par. 202)
Sec. 202.
Disclosures to customer.
In the first oral communication
with a customer or in the first written response to an inquiry by a
customer; or other than an oral communication or written response the
primary purpose of which is to arrange an appointment with the invention
developer for presentation of his invention development services, the
invention developer shall cause the following disclosures to be made in
writing and delivered to each customer:
(a) A statement of the fee charged, if known, or a statement of the
approximate range of fees charged; and a statement of the approximate
portion of the fee charged, if any, that will be expended for services
relating to patent matters.
(b) A statement that the invention developer does not intend to
expend more for the invention development services than
the fee charged the customer, if, in fact, it does not, and if it does
intend to expend more than the fee charged, a statement of the estimated
expenditures of the invention developer in excess of the fee received
from the customer.
(c) A statement as follows:
"Any contract for invention development services between you and
ourselves will be regulated by law. We are not qualified or permitted to
advise you whether protection of your invention is available under the
patent laws of the United States or any other laws. If your invention is
patentable or infringes an existing valid patent, your failure to
inquire into these matters may affect your rights to your invention.
Disclosure of your invention on a nonconfidential basis may also
adversely affect your rights."
(Source: P.A. 81-1509.)
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(815 ILCS 620/Art. III heading) ARTICLE III.
GENERAL REGULATORY PROVISIONS
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(815 ILCS 620/301) (from Ch. 29, par. 301)
Sec. 301.
Contracts.
Every contract for invention development services
shall be in writing and shall be subject to the provisions of this Act.
A copy of the written contract shall be given to the customer for him to
retain at the time he signs the contract.
(Source: P.A. 81-542.)
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(815 ILCS 620/302) (from Ch. 29, par. 302)
Sec. 302.
Notice on contract.
Each and every contract for invention development
services shall carry a distinctive and conspicuous cover sheet with the
following notice to the customer printed thereon in boldface type of not
less than 10-point size or equivalent size if handwritten:
"The following disclosures are required by law:
You have the right to cancel this contract for any reason at any time within
7 days from the date you receive a copy of it signed by all parties
to the contract. To exercise this option you need only mail or deliver to
the other party 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 your cancellation, the other party must return
by mail, within 5 business days, all money paid and all materials provided by you.
This contract is regulated by law. The other party to this contract is
not qualified or permitted to advise you whether protection of your invention
is available under the patent laws of the United States or any other laws.
If your invention is patentable or infringes an existing patent, your failure
to inquire into these matters may affect your rights to your invention.
Disclosure of your invention on a nonconfidential basis may also adversely
affect your rights."
(Source: P.A. 81-542.)
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(815 ILCS 620/303) (from Ch. 29, par. 303)
Sec. 303.
Title to invention.
No invention developer shall acquire any
interest, partial or whole, in the title to the customer's invention as
part of a contract for invention development services. Nothing in this Section
shall be construed to prohibit an invention developer from contracting with
a customer to receive a portion of any proceeds accruing to the customer
as a result of performance of invention development services by the invention developer.
(Source: P.A. 81-542.)
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(815 ILCS 620/304) (from Ch. 29, par. 304)
Sec. 304.
Rights of customer against third parties.
No contract for invention
development services shall require the execution of any note or series of
notes by the customer which, when separately negotiated, will cut off as
to third parties any right of action or defense which the customer may have
against the invention developer.
(Source: P.A. 81-542.)
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(815 ILCS 620/305) (from Ch. 29, par. 305)
Sec. 305.
Rights of customer against assignee of invention developer.
Any
assignee of the invention developer's rights is subject to all equities
and defenses of the customer against the invention developer existing in
favor of the customer at the time of the assignment.
(Source: P.A. 81-542.)
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(815 ILCS 620/Art. IV heading) ARTICLE IV.
MANDATORY CONTRACT TERMS
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(815 ILCS 620/401) (from Ch. 29, par. 401)
Sec. 401.
Contract requirements.
Every contract for invention development
services shall set forth in at least 10-point boldface type, or equivalent
size if handwritten, all of the following:
(a) A full and detailed description of the acts or services that the invention
developer undertakes to perform for the customer. To the extent that the
description of acts or services grants the invention developer discretion
to decide what acts or services are to be performed by the invention developer,
the invention developer shall exercise that discretion to promote the best
interests of the customer.
(b) A statement whether the invention developer undertakes to construct
one or more prototypes, models, or devices embodying the customer's invention.
(c) A statement whether the invention developer undertakes to sell or
distribute one or more prototypes, models or devices embodying the customer's invention.
(d) The name of the person or firm contracting to perform the invention
development services, the name under which said person or firm is doing
business as an invention developer, and the name of any parent, subsidiary
or affiliated company that may engage in performing the invention development services.
(e) The invention developer's principal business address and the name
and address of its agent in the State of Illinois authorized to receive
service of process.
(f) The business form of the invention developer, whether corporate, partnership,
or otherwise.
(g) A statement of the fee charged, and a statement of the approximate
portion of the fee charged, if any, that will be expended for services relating
to patent matters.
(h) A statement that the invention developer does not intend to expend
more for the invention development services than the fee charged the customer,
if, in fact, it does not, and if it does intend to expend more than the
fee charged, a statement of the estimated expenditures of the invention
developer in excess of the fee received from the customer.
(i) If any oral or written representation of estimated or projected customer
earnings is made, a statement of such estimation or projection.
(j) A statement that the invention developer acts as a fiduciary in respect
to the customer and 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 three years after expiration of the term of
the contract for invention development services.
(k) The name and address of the custodian of all records and correspondence
relating to the performance of the invention development services.
(l) A statement that the records and correspondence required to be maintained
by subparagraph (j) of this Section will be made available to the customer
or his representative for review and copying at the customer's expense on
the invention developer's premises during normal business hours upon 7
days' written notice, said time period to begin from the date the notice
is placed in the United States mail properly addressed first-class postage prepaid.
(m) A statement of the expected date of completion of the invention development
services.
(n) A statement that the invention developer shall deliver to the customer,
at the customer's address specified in the contract at quarterly intervals
throughout the term of the contract, a written statement of the services
performed to date; provided, however, the first such statement need not
be delivered until 180 days after the contract is signed and in effect.
(Source: P.A. 81-542.)
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(815 ILCS 620/402) (from Ch. 29, par. 402)
Sec. 402.
Right of cancellation.
Each party's right of cancellation of
the contract shall be maintained:
(a) Notwithstanding any contractual provision to the contrary, the invention
developer and the customer shall each have the right to cancel a contract
for invention development services, for any reason, at the time within 7
days of the date the cancelling party receives a fully executed copy of
the contract. Cancellation shall be effected by written notice mailed or
delivered to the invention developer or the customer. If said notice is
mailed, it must be postmarked by midnight of the last day of the cancellation
period unless such last day falls on a Sunday or a holiday recognized in
Illinois in which case it must be postmarked by midnight of the next following
business day. If the notice is delivered, it must be delivered by the end
of the last day of the cancellation period and during normal business hours,
unless the last day falls on a Sunday or a holiday recognized in Illinois
in which case delivery may be made during the next normal business day.
Within 5 business days after mailing or delivery of such notice of cancellation
by the invention developer or receipt of such notice of cancellation by
the customer, the invention developer shall return to the customer, by mail,
all moneys paid and all materials provided by the customer. Within 5 business
days after mailing or delivery of such notice of cancellation by the customer
or receipt of such notice of cancellation by the invention developer, the
invention developer shall return to the customer, by mail, all moneys paid
and all materials provided by the customer.
(b) The provisions of subparagraph (a) of Section 402 shall apply to every
contract executed between an invention developer and a customer. Each such
contract shall contain the following statement in type bolder than that
of the surrounding text immediately above the place at which the customer
signs the contract: "The 7 day period during which you may cancel this
contract for any reason by mailing or delivering written notice to the other
party will expire 7 days from the date you receive a fully executed copy
of this contract. If you choose to mail your notice, it must be placed in
the United States mail properly addressed first-class postage prepaid and
postmarked before midnight of that date. If you choose to deliver
your notice to the other party directly, it must be delivered by the end
of business on that date."
(Source: P.A. 81-542.)
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(815 ILCS 620/Art. V heading) ARTICLE V.
REMEDIES AND ENFORCEMENT
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(815 ILCS 620/501) (from Ch. 29, par. 501)
Sec. 501.
Application of other law.
The provisions of this Act are not
exclusive and do not relieve the parties or the contract subject thereto
from compliance with all other applicable provisions of law.
(Source: P.A. 81-542.)
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(815 ILCS 620/502) (from Ch. 29, par. 502)
Sec. 502.
Unenforceability of contract for noncompliance.
Any contract
for invention development services which does not comply with the applicable
provisions of this Act shall be void and unenforceable as contrary to public
policy, provided that no contract shall be void and unenforceable if the
invention developer proves that noncompliance was unintentional and resulted
from a bona fide error notwithstanding the use of reasonable procedures adopted
to avoid any such errors and makes an appropriate correction.
(Source: P.A. 81-542.)
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(815 ILCS 620/503) (from Ch. 29, par. 503)
Sec. 503.
Unenforceability of contract for fraud.
Any contract for invention
development services entered into in reliance upon any false, fraudulent,
deceptive or misleading opinion, statement or other representation by the
invention developer shall be void and unenforceable.
(Source: P.A. 81-542.)
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(815 ILCS 620/504) (from Ch. 29, par. 504)
Sec. 504.
Nonwaiver of Act by customer.
Any waiver by the customer of the
provisions of this Act shall be deemed contrary to public policy and shall
be void and unenforceable.
(Source: P.A. 81-542.)
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(815 ILCS 620/505) (from Ch. 29, par. 505)
Sec. 505.
Damages and attorneys fees.
Any person who has been injured
by a violation of this Act by an invention developer or by any false or
fraudulent statement, representation, or omission of material fact by an
invention developer, may bring a civil action against the invention developer
for the greater of the following amounts:
(1) $3,000, or
(2) Three times the amount of the actual damages, if any, sustained by
the customer. In addition to the greater of the preceding amounts, the court
may award reasonable attorney's fees to the customer.
(Source: P.A. 81-542.)
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(815 ILCS 620/506) (from Ch. 29, par. 506)
Sec. 506.
Offenses.
Any invention developer who wilfully violates any
provision of this Act, or wilfully enters an invention development
contract which omits any duty or disclosure required by this Act, is guilty
of a Class B misdemeanor.
(Source: P.A. 81-542.)
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(815 ILCS 620/507) (from Ch. 29, par. 507)
Sec. 507.
Injunction.
Any circuit court of this State shall have jurisdiction
in equity to restrain and enjoin the violation of any of the provisions
of this Act relating to invention development services and contracts therefor.
(Source: P.A. 81-542.)
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(815 ILCS 620/508) (from Ch. 29, par. 508)
Sec. 508.
Enforcement.
The duty to institute actions for violations
of this Act, including equity proceedings to restrain and enjoin such violations,
is hereby vested in the Attorney General and State's attorneys. The Attorney
General or State's attorneys may prosecute misdemeanor actions or institute
equity proceedings or both.
This Section shall not be deemed to prohibit the enforcement by any person
of any right provided by this or any other law.
(Source: P.A. 81-542.)
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(815 ILCS 620/509) (from Ch. 29, par. 509)
Sec. 509.
Voidability for failure to comply with disclosure requirements.
Failure to make the disclosures required by Article 2 of this Act shall
render any contract subsequently entered into between the customer
and the invention developer voidable by the customer.
(Source: P.A. 81-542.)
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(815 ILCS 620/Art. VI heading) ARTICLE VI.
FINANCIAL REQUIREMENTS
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(815 ILCS 620/601) (from Ch. 29, par. 601)
Sec. 601.
Maintenance of bond.
Every invention developer rendering or offering
to render invention development services in this State shall maintain
a bond issued by a surety company admitted to do business in this State.
The principal sum of the bond shall be 5 percent of the invention developer's
gross income from the invention development business in this State during
the invention developer's last fiscal year, except that the principal sum
of the bond shall not be less than $25,000 in the first or any subsequent
year of operations. A copy of such bond shall be filed with the Secretary
of State prior to the time the invention developer first commences business
in this State. 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 Section.
(Source: P.A. 81-542.)
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(815 ILCS 620/602) (from Ch. 29, par. 602)
Sec. 602.
Cash deposit instead of bond.
Instead of furnishing the bond
required by Section 602 of this Act, the invention developer may deposit
with the Secretary of State a cash deposit in the like amount. This cash
deposit may be satisfied by any of the following:
(a) Certificates of deposit payable to the Secretary of State issued
by banks doing business in this State and insured by the Federal Deposit
Insurance Corporation.
(b) Investment certificates of share accounts assigned to the Secretary
of State and issued by a savings and loan association doing business in this
State and insured by the Federal Savings and Loan Insurance Corporation.
(c) Bearer bonds issued by the United States government or by this State.
(d) Cash deposited with the Secretary of State.
(Source: P.A. 81-542.)
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(815 ILCS 620/603) (from Ch. 29, par. 603)
Sec. 603.
Forfeiture of bond.
The bond required by Section 601 of this
Act shall be in favor of the State of Illinois 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 or failure to
provide the services of the invention developer in performance of the contract.
Any person claiming against the bond may maintain an action at law against
the invention developer and the surety.
The aggregate liability of the surety to all persons for all breaches of
conditions of the bond provided herein shall in no event exceed the amount of the bond.
(Source: P.A. 81-542.)
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(815 ILCS 620/Art. VII heading) ARTICLE VII.
MISCELLANEOUS PROVISIONS
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(815 ILCS 620/701) (from Ch. 29, par. 701)
Sec. 701.
Maintenance of records.
Every invention developer shall maintain
all records and correspondence relating to performance of each invention
development service contract for a period of not less than three years
after expiration of the term of each such contract.
(Source: P.A. 81-542.)
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(815 ILCS 620/702) (from Ch. 29, par. 702)
Sec. 702.
Reference to compliance with Act in advertising.
No invention
developer shall make, or authorize the making of, any reference to compliance
by it with this Act in any advertisement.
(Source: P.A. 81-542.)
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(815 ILCS 620/703) (from Ch. 29, par. 703)
Sec. 703.
Severability clause.
If any provision of this Act or the
application thereof to any person or circumstances is held unconstitutional,
the remainder of the Act and the application of such provision to other
persons and circumstances shall not be affected thereby.
(Source: P.A. 81-542.)
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(815 ILCS 620/704) (from Ch. 29, par. 704)
Sec. 704.
Application of Act and effective date.
This Act shall not apply
to any contract entered into prior to the effective date of the Act. This
Act takes effect upon its becoming a law.
(Source: P.A. 81-542.)
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