For many people who develop a product, being picked up by a distributor is a dream come true. Business owners in Texas often contract with larger companies that have the ability to market and sell their products, which can take some of the pressure off the owner. However, both parties must uphold their end of the agreement to avoid contract issues and other legal problems. As one recent lawsuit illustrates, both inventors and companies have a stake in these claims.
In 2004, a Texas man who made petrochemical support equipment became an employee of a products company after the business expressed interest in distributing several of the man's commodities. As part of the agreement, the man's existing company would become a division of the business and he would receive lifetime royalties as well as yearly employment. Eight years later, the man received notification that his employment and manufacturer's agreement were both terminated, allegedly without explanation.
Prior to being fired, the man had begun pursuing new contracts as he felt he was not receiving the payments he should nor that his rights to patents and inventions were protected. He filed a lawsuit against the company, citing fraud, civil conspiracy, intentional infliction of emotional distress and breach of contract. He is seeking a number of damages in the suit, including commissions and lost profits.
Business litigation can quickly become complex. Anytime an individual or business is in the midst of a contract dispute, it is imperative to contact an attorney who can navigate the legalese and protect a client’s assets and interests.
Source: The Southeast Texas Record, “Inventor sues company for breach of contract, fraud,” Melody Dareing, May 8, 2014