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Title: Invention Development Service Disclosure
Alternate Title:
Description:
Minnesota’s Invention Services Act requires invention developers selling their services to, among other things: (1) make certain disclosures before entering contracts with Minnesota consumers; (2) include several terms in their contracts with Minnesota consumers; and (3) file a bond with the State before selling their services to Minnesota consumers. Minnesota Attorney General's Office

Subject: Inventions
Creation Date: 9/11/2008 2:14:06 PM
Modification Date: 8/9/2024 11:06:05 AM
Agency Name: Attorney General's Office, Minnesota
Agency URL: https://www.ag.state.mn.us
Agency Description: The Minnesota Attorney General is the chief legal officer for the State of Minnesota. The Office represents and provides legal advice to over 100 state agencies, boards and commissions.
Agency Phone: 651-296-3353
800-657-3787
Agency Fax: Agency URL: https://www.ag.state.mn.us
Agency Address:
1400 Bremer Tower
445 Minnesota Street
St. Paul
MN
55101
Division Name: Consumer Enforcement Division
Division URL:
Division Description:
Division Phone: Division Fax: Division URL:
Audience: Hold Application URL:
Renewal URL:
Versa URL:
Requirements:

Minnesota’s Invention Services Act requires invention developers selling their services to, among other things: (1) make certain disclosures before entering contracts with Minnesota consumers; (2) include several terms in their contracts with Minnesota consumers; and (3) file a bond with the State before selling their services to Minnesota consumers.

Review Invention Services

Invention Developers Must Make Certain Disclosures Before Entering a Contract

The Invention Services Act requires an invention developer to make certain disclosures in writing, either in the first written communication from an invention developer to a specific customer or at the first personal meeting between the two. (See Minn. Stat. § 325A.05) For example, an invention developer must disclose in writing:

  • Median fee information: An invention developer must disclose the median fee charged to all of its customers who have signed contracts with the invention developer in the previous six months (except for customers who have signed up in the last 30 days);
  • Total number of customers: An invention developer must disclose its total number of customers (again, except for those who signed up in the last 30 days); and
  • Number of customers who came out “ahead”: An invention developer must disclose the number of its customers who have received more money as a result of the invention developer’s services than the amount the customer paid to the invention developer.

Failure to make the required disclosures shall render any contract voidable by the consumer. (See Minn. Stat. § 325A.09, subd. 6.)


Invention Developers Must Include Certain Terms in Their Contracts

The Invention Services Act requires invention developers to include certain terms in their contracts with Minnesota consumers. (See Minn. Stat. § 325A.04) For example, an invention developer must include in its contract:

  • Three-day right to cancel: The contract must state that the consumer may cancel the contract for any reason within three business days after signing the contract;
  • Specific information: The contract must describe: (1) the specific acts or services to be performed; (2) whether the invention developer will construct a prototype; (3) any earnings estimate made; (4) other customer data; (5) the expected completion date; and (6) other information about the invention developer; and
  • Compliance with the bond requirement: The contract must state that the invention developer has fully complied with the State’s bonding requirements.

With only one exception, any contract for invention development services that does not comply with the Invention Services Act is unenforceable.See Minn. Stat. § 325A.09, subd. 2.)


Invention Developers Must File a Bond with the State Before Selling Their Services

The Invention Services Act requires invention developers to maintain a bond. (See Minn. Stat. 325A.06) According to the Act:

  • Bond requirements: The bond must be a continuous corporate surety bond issued by a surety admitted to do business in Minnesota, equal to ten percent of the invention developer’s gross income from the invention development business during the preceding fiscal year, or $50,000, whichever is larger;
  • Bond must be filed with the State before selling: A copy of the bond must be filed with and approved by the Minnesota Attorney General’s Office before an invention developer renders, offers to render, or advertises invention development services in Minnesota; and
  • Making a claim on the bond: Any person making a claim against the bond (due to an invention developer’s alleged violation of law) may bring an action against the invention developer and the surety company (the company that issued the bond).

Rules:
Statutes: 325A

Forms:

Minn. Stat. § 325A.04, Mandatory Contract Form


Fees:
Period of Issuance:
Length of Determination:
Other Info:
Activity: Invention Development Services
License Detail URL:

Invention Services

Attorney General's Office, Minnesota


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