
New York incubator requires participants to grant IP rights - puzzled_by_ny
We were invited to participate in this program:<p>https:&#x2F;&#x2F;transitinnovation.org&#x2F;challenge&#x2F;covid<p>https:&#x2F;&#x2F;transitinnovation.org&#x2F;terms-and-conditions<p>https:&#x2F;&#x2F;transitinnovation.org&#x2F;covid-terms<p>The contract includes:<p>&quot;7.2. Limited License to Your Intellectual Property. Although you retain ownership in your Intellectual Property, you hereby grant to us a limited license to exercise any Intellectual Property that you hold in the Submitted Technology, both patented and non-patented intellectual property, &lt;snipped due to HN post length limit&gt;&quot;<p>The license could extend a couple of years. They can copy your hardware --as many as they want-- and use it.<p>Then...<p>&quot;7.2.5. Sublicenseable. We are entitled to permit our contractors, consultants, and other interested parties to exercise the licensed rights on our behalf &lt;snipped&gt;&quot;<p>Sub-licensees can copy your hardware, as many as they want.<p>Later...<p>&quot;you hereby irrevocably agree to grant us, at a minimum, a non-exclusive, irrevocable, sublicenseable, Full-Service Use license on terms that are fair, reasonable, and non-discriminatory (so-called “FRAND” licensing terms). Such pricing shall be competitive with (or more favorable to us than) comparable third party solutions available on the market.&quot;<p>And...<p>&quot;9.2. Permitted Use of Name and Likeness. If you become a Proof of Concept Finalist, you agree to permit the MTA to use for publicity, advertising and promotional purposes (“Publicity Purposes”): (a) your name and likeness, (b) your town or city and state, (c) Submission information, and (d) statements you make about the TTL, all without additional permission or compensation.&quot;<p>...no time limit.<p>You have to be registered to do business in NY state. If you are not it&#x27;s $300 to register so you may participate.<p>This seems like a really odd way to put together an incubator evaluation.<p>Is this normal? What would you do?
======
codingdave
I haven't seen enough contracts from incubators to say what is normal, but I
can make a few points:

1) If you don't like a contract, don't sign it. Tell them your problems, see
how they respond. I've seen attorneys put clauses in contracts that they just
expect you to fight, but try to throw them in case people are timid. Don't be.
Speak up and discuss these points.

2) Don't sign a contract that has vague terms. If you are going to agree on a
business relationship, then talk through the terms now. Saying you'll grant
fair and reasonable terms in the future is too vague to even know what you are
agreeing to, and is just asking for future legal arguments. Either be
specific, or remove it from the contract.

~~~
gentleman11
That’s impossible for most people. Imagine following through with that in
daily life, or even for your business. How many contracts have we all been
forced to agree to that say “we can amend these terms with no notice and it’s
binding”?

~~~
noodlesUK
It’s a little different between that liability waiver you might sign when you
sign up for your gym, and some significant ongoing business venture you’re
entering into with another party. I do consultancy work from time to time, and
contract negotiations are actual negotiations. If I had a client with
objectionable terms in their contract, and their response was “this is
standard and you need to sign this, no ifs, ands, or buts” I’d take that as a
major red flag, and if they were seriously objectionable (like the above), I’d
tell them to pound sand.

~~~
gentleman11
Those are negotiations between semi-equals still. If you had to join Nvidia's
developer program, or use a commercial game engine, or take part in some other
lopsided professional partnership, your negotiotaion potential is basically
limited to complaining to their support in an email.

------
HunterWare
This is a misleading title and everything else under. From the site:

“How does the Transit Tech Lab work?

Applicants participate in a rigorous selection process that may include in-
person presentations. At the conclusion of the application process, the MTA
will select companies to participate in an 8-week accelerator to learn about
the MTA and modify their technology to meet the transit system's needs.
Following the accelerator, the MTA will select the most promising companies to
deploy a 12-month, unpaid pilot with the transit system. The Transit Tech Lab
offers companies an opportunity to demonstrate their technology in the
nation’s largest transit systems and receive mentorship.

Do companies receive compensation for participating in the Transit Tech Lab?

There is no compensation for participation in the Transit Tech Lab, and pilots
are unpaid. Companies may apply for limited grant funding from NYSERDA.“

This is not an “incubator evaluation” to anyone but the author of the comment.
It’s a technology evaluation for MT(S)A that is designed to not waste their
time through a selection process of applicants with a defined path of
application and trail.

~~~
puzzled_by_ny
You really need to read the two contracts. One of them being an addendum
related to COVID-19. That's why I provided links to everything. The only
reason I had to summarize my findings is that HN limits posts to 2,000
characters...so it's hard to explore corner cases in an initial post.

For example, if we take the text you posted, we are looking at a 12 month
unpaid pilot, during which you agree to grant an irrevocable (etc...) license
to your IP that explicitly allows them to build, replicate and use your
product without paying you a dime. Furthermore, you grant an extension of this
license for 9 to 12 months (depending on how you read it) past the pilot
period. And, to make it even more fun, you grant them the right to transfer
this license to anyone else.

In our case the product is hardware with software and an ML/AI component. It
represents a non-trivial amount of investment in both time and money --self
funded. In order to participate in this program we have to be willing to watch
a random entity reproduce our system and USE IT for basically two years,
potentially without compensation. What do you want to bet that the market for
these specific COVID-19 devices is very different 18 to 24 months from now?

And then there's the potential for them to grant our IP license to <insert
large well-embedded company here> and effectively cut us completely out of the
loop.

The more I read and extrapolate these terms the more they seem to stink.

------
scotthom
As mentioned by other people, this is a call for proposals to initiate a pilot
project
([https://transitinnovation.org/challenge/covid](https://transitinnovation.org/challenge/covid))
with various transit entities in NY state. The phrase "proof of concept" on
the page refers to determining how the prototype or product would be
implemented with each transit partner.

There is a demo day with judges, however this is for startups or teams that
have a prototype or later stage, not for validating an idea or discerning
product-market fit (which is normally where an early stage incubator or
accelerator would fit). They did have an accelerator program - but the
deadline for that was Dec 19 2019
([https://transitinnovation.org/lab](https://transitinnovation.org/lab)).

As with anything legal, have your own lawyer review it prior to signing.

If you meet the criteria and have been invited to apply, contact them and set
up a meeting to ask them detailed questions. Best of luck!

~~~
puzzled_by_ny
You conveniently skipped over the part where they require you to grant an
irrevocable and transferable license to your IP for up to two years with the
express ability of reproducing and using this IP.

That is _not_ a trivial matter at all. For example, they could take your IP
and transfer the license to company B. They could then ask company B to make
1,000 of your widgets for "testing"...which really means using. They could do
so for about two years. At the end of two years you have derived zero benefit
from a thousand of your widgets being manufactured and used to solve a
problem, the market changes, someone circumvents what you created (maybe
company B) and you find yourself filing for bankruptcy protection.

This isn't a small matter at all. If we remove this requirement your comment
might be applicable. Otherwise, you are posting a comment about something this
thing is not.

------
hatenberg
Fundamentally the tech startup scene is structurally similar to Modelling,
Movie Casting and Influencer Marketing - a giant sieve to find the few
diamonds while taking advantage of youthful optimism bias and a lack of
experience.

Not a thought the HN crowd will love but the power differential involved
guarantees exploitation.

------
jb775
I think competitions like this exist so city governments can get cheap or free
labor in exchange for a pat on the back.

And take a look at who the "judges" work for (most are from venture capital
places). They're only there to see if there's any possible way to profit off
any of the ideas.

~~~
sukilot
It's not free. They are soliciting proposals for paid contracts.

~~~
puzzled_by_ny
Once you grant them a license to your IP it might as well be free. This in the
sense that they can transfer the license to someone else, manufacture your
device, use it and you won't see a dime for it. From your perspective, the IP
owner, they got your product for free. The investment in time, money, R&D and
risk you put into the product produces no returns for you.

~~~
beepbop4441
If you don’t like it then don’t participate. That’s it.

~~~
puzzled_by_ny
Amazing that I never thought of that. Thanks.

------
muzani
I think this is the key point: "The COVID-19 Response Challenge calls for
technologies and approaches that help to make New York's public transportation
system safer, healthier and more responsive to customer and workforce needs."

The main purpose here is to deal with a pandemic. Giving IP is not common
incubators, but in this situation, it's trying to push a solution out as fast
as possible to deal with one of the hardest hit cities, giving you an express
line to transit companies.

They probably waiver a little legal security here for speed. It does look a
little shady, but I suppose trust is essential here.

------
sukilot
Seems normal. It just says that if they work with you then both you and they
have the right to use what you give them. What's the problem?

And why are you calling it an incubator? It looks like a Call For Proposals
for business propositions.

> limited license to exercise any Intellectual Property that you hold in the
> Submitted Technology

What's the "limit"? What's the "submitted technology"?

Why do you think they can "copy your hardware"? What hardware?

~~~
puzzled_by_ny
> And why are you calling it an incubator?

It's terminology they used during conversations. On the site they also call it
"accelerator".

Don't focus on semantics. As is the case for patents, where the blah-blah
doesn't matter, only the claims matter, the only thing that matters here is
the contract you sign. We could call this thing "A trip to Disneyland" and
still the contract terms would rule the relationship.

~~~
obstacle1
> Don't focus on semantics

Semantics is the meaning of what you say. It isn't some subordinate type of
communication; it is fundamental to communication. If we don't focus on
semantics, we don't focus on the meaning of what you said, and we aren't able
to judge whether or not what you've said is true.

You used a word, presumably to make a factual statement about a thing. We need
to know why you think the word applies given the context in order to know what
you're trying to communicate.

If you don't want to communicate with people, you're free not to. But you did
try to communicate with people, so don't be surprised when they ask you to
clarify what you said.

~~~
puzzled_by_ny
It's about the contract, not what you choose to call the thing. Sorry if I
offended you. We could call it "Mickey Mouse Playhouse" and it would still not
matter. The contract is the only important language here. If you'd like to
read and comment on that (links I provided in my post) I am would be very
interested in your opinion. I don't care about what the program is
called...because in court the contract is what will protect you or hurt you.

And, yes, the semantics part is deriving a meaning that does not exist or is
irrelevant from my use of the term "incubator" (which, as I explained, the
contract authors used with me during email conversations).

It's about the contract.

------
wprapido
The entire startup ecosystem is exploitative by design. It's a dream of
exiting big that sells. Few very few do exit big. Others provide cheap labour
and generate lots of intellectual property for virtually no compensation.

------
dakiol
Just don't sign.

