I have a bit of a dilemma and I'd appreciate you input.
I have an associate that I hired to do some design work for me. I went to him with a simple problem (design a simple control system). He took a look at the overall project and pointed out various things that needed improvement - he also sold me on a pneumatic control system rather than a24VDC system .... as a result, the project has turned into a somewhat larger project -which is all fine.
Certain components (particular valves) aren't available off the shelf and I also needed them for another project, so I game him a sketch of what I wanted and he came up with a simple design. Its not rocket science, its basically a pneumatic cylinder forcing a plug into a hole stopping product flow (kinda like a plug valve).
Anyways, I stopped by for an update last night and he informed me that he will be maintaining ownership of the valve, and will require royalties if I use it. Furthermore, the new design on the system is his design and any future systems that I sell then he expects a royalty on that as well. Oh yes, he also wants a piece of the company.
Is this guy out to lunch? Am I out to lunch? Should I have my attorney draw up contracts that make my company the owner of all intellectual property that I hire other people to design?