New York incubator requires participants to grant IP rights | Hacker News Reader

New York incubator requires participants to grant IP rights

32 pointspuzzled_by_ny24 comments

We were invited to participate in this program:

https://transitinnovation.org/challenge/covid

https://transitinnovation.org/terms-and-conditions

https://transitinnovation.org/covid-terms

The contract includes:

"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, <snipped due to HN post length limit>"

The license could extend a couple of years. They can copy your hardware --as many as they want-- and use it.

Then...

"7.2.5. Sublicenseable. We are entitled to permit our contractors, consultants, and other interested parties to exercise the licensed rights on our behalf <snipped>"

Sub-licensees can copy your hardware, as many as they want.

Later...

"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."

And...

"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."

...no time limit.

You have to be registered to do business in NY state. If you are not it's $300 to register so you may participate.

This seems like a really odd way to put together an incubator evaluation.

Is this normal? What would you do?

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.

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”?

Any examples of such contracts?

The easiest to find is here: https://www.ycombinator.com/legal/#tou

> We reserve the right, at our sole discretion, to change or modify portions of these Terms of Use at any time. If we do this, we will post the changes on this page and will indicate at the top of this page the date these terms were last revised. We will also notify you, either through the Site user interface, in an email notification or through other reasonable means. Any such changes will become effective no earlier than fourteen (14) days after they are posted, except that changes addressing new functions of the Site or changes made for legal reasons will be effective immediately. Your continued use of the Site after the date any such changes become effective constitutes your acceptance of the new Terms of Use.

This is one of the better versions of it since it claims it will notify you and that there is a 14 day window. Most do not include this clause, including for a lot of the software I work with professionally

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.

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.

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.

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.

As mentioned by other people, this is a call for proposals to initiate a pilot project (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).

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!

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.

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.

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.

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

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.

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

Amazing that I never thought of that. Thanks.

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.

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?

> 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.

> 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.

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.

Yet another take. If this is, as you state, just a call for proposals, why in the world are they asking for an irrevocable and transferable license to participants IP that could last up to two years?

Put a different way: If this is just a sales call, why would they require such a thing?

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.

Just don't sign.

Reply on news.ycombinator.com