Protecting designs from being copied

The current project I am working on has brought up a problem that I have had in the past, particularly with this current customer. I
thought I would ask others here that have there own business how they handle it.
The project I outlined in part in the thread titled "Tensioning System" is a good example of the problem. I was asked to present a proposal for my company to redesign a machine that I built some ten years ago, making improvements on the tensioning system. The original simple mechanical tensioning system I provided was scrapped and they installed another system copied from a design they saw while visiting a third company. When I built the winder, I priced the work with the idea that they were going to order two other machines and amortized the engineering time into those extra orders. What happened is that they didn't place the other orders and had someone else build copies of my design. This problem has happened over and over. I've been getting engineering cost up front now for some time but still the design is likely copied anyway instead of my getting the work.
In this and most cases there is nothing to base a patent on, nor would I want to go through the cost of applying. I do feel that there should be some way of protecting myself from this happening, perhaps in a contract with the customer. This company has a history of suing other companies or employees that use ideas they feel are proprietary. They have a non disclosure statement that all vendors sign before doing work in their plant.
I need something to even out the playing field here and the local lawyers don't seem to know squat about this. I thought I would put this to the group and see how others have handled this.
Be well,
HoP
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HoPpeR trading at 1492 wrote:

When customers pay for a design, they own it unless there is paperwork that says otherwise. With a company that has skunked you in the past, the course may be easy. Quote two prices: one for the initial delivery and rights to the design, and a lower one for subsequent copies without modification. An alternative is a price per machine for some number of machines, with a schedule of cancellation fees for machines not ordered that depends on the number actually delivered.
These people evidently value your expertise. They should be willing to pay for it. It is unreasonable for you to expect them to may more than necessary for copies. Just don't give them the opportunity.
Sei gesunt.
Jerry
--
Engineering is the art of making what you want from things you can get.

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Jerry Avins wrote:

On the nondisclosure agreement, I felt my lawyer put it well when he said "don't let them foreclose your future business". The IEEE-USA has a sample contract with some nice language for this sort of thing that protects your customer from you blabbing, but doesn't put their hand down your shorts.
If their contract provisions are too onerous, suggest your own. If they don't buy in, walk.
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Tim Wescott
Wescott Design Services
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wrote:

After 14+ years in this business, here's my 2 cents:
Never look at that carrot on a stick. All engineering costs go into unit #1. If there is a #2 or #3 then you can cut them some slack in the costs.
If a customer doesn't play fair, don't play with him. There are plenty of companies out there willing to be fair with vendors and pay for quality work.
You come up with a good idea, somebody will copy it. Life in the City. So you get all your coins up front, as above. Next.
------ Personally, I wish I could file a UCC-1 on every machine, but it's just too much trouble.
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proclaimed to the world:

I normally do this and you are right. Here is the flip side. I built the first machine and put the engineering cost into it. I knew that they were wanting more later and I told them that the next one would be cheaper and why but in the end they had opted to have another company build the next one and a third company do the third. They did not think about the lower costs I said I could quote but used the cost of my first to dangle in front of others to get a lower price, not asking me to bid. Part of this had to do with a change in management. The new plant engineer was incompetent and I was called in to straighten out a mess he caused. My report said so as nicely as possible but he never liked my work after. He was later fired and I got some business back. Most likely I need to do better at the politics of the companies. I really just want to stay out of it.

True and this is a shortcoming I have as a businessman. I know it but still have a hard time doing it. My writing here shows that I am working on improving. I need to keep myself from becoming friends with customers too much. I'm learning. I'm a better engineer than businessman in many ways.

True but I do want to minimize this. I talk too much for one thing.

UCC-1?
Thanks for the input. It is really great to have a forum filled with people with similar interests, talents and businesses without having to feel like you are their competitors. Like you say, there is plenty of business. I've never had problems with this.
Another problem I have is balancing the time taken in researching for a quote. I got some good advice once about this. Quote fast and quote many. If you are getting every bid, then you are underpinning yourself. Don't worry about the lost ones, move on. I have trouble with this too. I wish I could find a partner that was a good businessman. One who would not screw me in the end. I would like my job a lot better then.
Be well,
HoP
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HoPpeR trading at 1492 wrote:

There's not much you can do with a customer like that, other than to make sure you have a broad customer base, so that you can follow Steve's advise.

You can be friends with customers, you just have to not let the friendship get in the way of good business -- if they're not willing to play fair then they aren't really friends.

Getting a good partner may be a good idea, but if you're not prepared to walk away from the partnership at any time then you _will_ end up on the short end of the stick. Business partnerships are generally unstable; it's best to just learn this stuff yourself.
That having been said, if you feel you're making enough money _for you_ and not working too much, and doing the parts that you like the most, then you aren't "underbidding" the contracts, you're just not bidding them the way the guy down the street would bid.
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Tim Wescott
Wescott Design Services
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proclaimed to the world:
snip

There are many things that I know better than let happen, yet they do anyway. Keeping a broad customer base is pretty easy to figure. I had a customer that I like, that paid well and promptly and kept throwing more and more business at me. Then the director changed. The business stopped. I had let other customers go because of how good the money was, I like the guys etc. I knew better. I used to preach diversity to people.

Yea I need to get out more.;-]

Very few people I deal with a grownups. Maybe it has something to do with the area I am in.

This company in particular irritates me because I have a friend that was the plant engineer. He had ideas. They did not use them. He got canned. He started a business and used the ideas. He got sued into submission. He was not using the ideas to compete. They were merciless. This just makes me want to protect myself. Go figure. Did I post this before? If so, sorry. I am tired.
snip

Which is what I am doing hopefully. Like I said, it is not the knowing so much as the doing.

Good point. I am in this business and am good at it because I love doing it, not for the money. As I get older I also am motivated to make enough money to not have to worry about money. I got sick and now am starting over and am older. Monetary security for my family is important now so I want to stop "playing" and get serious about this aspect.
And again, thank to everyone for their input. Having this forum is very nice. I hope that I can give back to the group sometime.
Be well,
HoP
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On Sat, 29 Oct 2005 13:20:16 -0400, HoPpeR trading at 1492

A lien, security interest like on a building loan. That way if I don't get paid, I can repo the machine and sell the parts on ebay for 10 cents on the dollar. May not be the right title.
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proclaimed to the world:

I know this under another name which escapes me right now. I've had more problems with government agencies paying than anyone else like townships. I Virginia you can not sue the state. I'm trying to make sure I have better contracts with everyone now days.
Be well,
HoP
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proclaimed to the world:

I did some looking at the IEEE site and could not find any sample contracts. Can you help steer me any closer?
Be well,
HoP
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HoPpeR trading at 1492 wrote:

You can find it here: http://www.ieeeusa.org/business/library.asp
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Steve wrote:

HoP:
Whoops, I dropped the ball.
Steve got you to the right place.
If I were you I'd still have my lawyer go over it. I did. Mine didn't make any significant changes that I could see but he did massage it enough to be happy with it for significantly less than he originally estimated he'd take to cook one up from scratch.
--

Tim Wescott
Wescott Design Services
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says...

Thanks guys. This helps me a lot.
And Tim, that is ok.
I'm learning a lot here. Hope I am giving some back. -- Paul Montgomery Progressive Gauging Inc.
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