What Can I Do if a Startup Owes Me Back Pay and I Am the Main Inventor of a Patent?

Question from Joe, What Can I Do if a Startup Owes Me Back Pay and I Am the Main Inventor of a Patent?

Answer from AI:

If a startup company owes you nine months of back pay as a contractor and you are the main inventor of an innovation patent assigned to the startup, you have several potential courses of action. Here’s a general overview of what you can do, including the possibility of placing a lien on the patent and what happens if the company goes into bankruptcy.

Steps to Take for Back Pay

1. **Demand Payment**:
– Start by formally demanding payment from the startup. Send a written demand letter outlining the amount owed and the services provided. This can sometimes prompt the company to pay what is owed.

2. **File a Claim in Small Claims Court**:
– If the amount owed is within the small claims court limit in your state (usually between $5,000 and $10,000), you can file a claim there. This process is generally quicker and less expensive than other court proceedings.

3. **File a Lawsuit**:
– For amounts exceeding the small claims limit, you may need to file a lawsuit in a higher court. This can be more complex and may require the assistance of an attorney.

Placing a Lien on the Patent

1. **Mechanic’s Lien**:
– Typically, a mechanic’s lien is used in construction and related fields. However, some states allow for a similar process for unpaid contractors. You would need to check your state’s specific laws to see if this applies to your situation.

2. **Security Interest**:
– You might be able to file a UCC-1 financing statement to create a security interest in the patent. This would require the company’s agreement or a court order. A security interest gives you a claim to the patent if the company defaults on its obligations.

3. **Consult an Attorney**:
– Given the complexity of intellectual property and contract law, consulting with an attorney who specializes in these areas is advisable. They can help you understand your rights and the best way to proceed.

What Happens if the Company Goes into Bankruptcy?

1. **Automatic Stay**:
– When a company files for bankruptcy, an automatic stay goes into effect. This means that creditors, including you, are temporarily prohibited from pursuing collection actions against the company.

2. **Priority of Claims**:
– In bankruptcy, claims are paid in a specific order. Secured creditors (those with liens or security interests) are paid first, followed by unsecured creditors. If you have a lien on the patent, you may be considered a secured creditor.

3. **Filing a Proof of Claim**:
– You will need to file a proof of claim with the bankruptcy court to be considered for payment. This document outlines the amount you are owed and the basis for your claim.

4. **Patent Ownership**:
– The bankruptcy trustee will determine how to handle the company’s assets, including the patent. If the patent is sold, the proceeds will be used to pay creditors according to the priority of claims.

Resources and Next Steps

– **Consult an Attorney**: Given the complexities involved, it is crucial to consult with a legal professional who can provide personalized advice based on your specific situation.
– **Bankruptcy Court**: For more information on filing a proof of claim and the bankruptcy process, visit the [U.S. Courts Bankruptcy Basics](https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics) page.
– **UCC-1 Financing Statement**: Learn more about filing a UCC-1 financing statement from your state’s Secretary of State website.

Taking these steps can help you navigate the process of recovering your back pay and understanding your rights regarding the patent. Always seek professional legal advice to ensure you are taking the correct actions for your specific circumstances.