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A good friend and I had an idea for a software/mobile device related business last year, but haven't had the time to develop it yet.

He is currently taking a software engineering class at his University, which the main focus is a group project. He decided to do a smaller but closely related idea for his group project in this class. He is the project leader for a group of 4-6 students.

Can we still develop this idea into a business, without having an liability towards his project group members? How can we protect ourselves in the outset so avoid some sort of legit litigation in the future if our idea is successful?

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Get everyone to agree in writing – Henry the Hengineer Jun 25 '12 at 23:33
Agree to what exactly? Also this university project has already started. – EkoostikMartin Jun 26 '12 at 0:02
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Agree to let you "develop this idea into a business". This is in addition to any obligations you have to the university, which should be stated in documents concerning ownership of IP created via university resources. – Henry the Hengineer Jun 26 '12 at 0:12

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There's no good answer. It would depend on his arrangement with the university (sometimes, they claim rights in student inventions done with university equipment), the contributions of the other students (since they may have rights) and the connection between the work done in the class and the business.

Those are all things that your lawyer will ask you about when you go ask him this question.

In general, though, what can you do? Separate the work of the class from that of the business, buy out any rights that the other students have (or just get them to turn them over) and get the university's OK. And document everything.

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How can I make sure to separate everything? The idea is my friends, that is obvious to everyone including the professor who is teaching the class. The source code that the students write for the project will likely be thrown out, my friend and I are professional software developers, we likely won't even want to use any of the project members actual work even if it was free. You bring up a good point about the Universities rights, that may end up being the biggest hurdle. Damn. – EkoostikMartin Jun 26 '12 at 0:06
Well, that's all good info for your lawyer. Check with the university -- if the students are undergrads, then university policy might not apply to them. – Chris Fulmer Jun 26 '12 at 2:19
They are all undergrads, including my friend. Do we need to get a lawyer right now (not sure if we can afford it)? If we can get the university to give up it's IP rights, and all of the students to sign something, on our own, is that enough for now? – EkoostikMartin Jun 26 '12 at 13:39
I would start with asking the university -- there's a good chance that they don't have any rights anyway. Check with your university -- a lot of schools have entrepreneurship programs designed to help starting companies, and those people occasionally have "ask the lawyer" days. – Chris Fulmer Jun 26 '12 at 14:31
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You need suitable agreements (protecting your rights and limiting your liability) between you and your friend; the two of you and the other students; and the two of you and the University.

Unfortunately, you are asking this question a bit late in the game (the university and the other students apparently already are working on the idea), and it is not clear whether you would be able to negotiate appropriate agreements with the other students and the University in any event.

Disclaimer: This information does not constitute legal advice and does not establish an attorney-client relationship.

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Thank you for your answer, it is very helpful. Do the following two statements mitigate some of that risk? #1 - the idea being tackled by the university project group is a small subset of the overall business idea, and #2 - its just an idea currently, and as we know ideas have very little value on their own. – EkoostikMartin Jun 26 '12 at 0:16

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