Intelectual Property

1. This case leads to an assumption that Ed is subject to an invention or research assignment, non-compete, and no-moonlight clause in his employment contract with the Cell Phone firm. An employment contract provision is good business practice. Ed discovered the new project with Dave using the cellphone company (XYZ Co) resources; XYZ Co owns the resource technology of the screen projection technology Ed is using. In addition, Ed has a fiduciary duty to offer the opportunity to the board of director or company as the new invention is derived from elements of XYZ Co. When Ed is using the technology for his own interest, he also does not abide to the Duty of Loyalty as an employee. Furthermore, Ed does not abide to "Duty of Good Faith" where he should disclose his revelation to his employer.

Therefore, I would advise that Ed should propose the new opportunity and wait for Board's decision. If the board decides not to pursue with the opportunity and Ed wants to pursue for his own interest: First, Ed has to ask a permission of usage of the technology/knowledge from the company. Second, Ed has to discuss the evaluated licensing fee for the rights of using the technology of glass screen projection owned by XYZ Co. When permission is Granted, Ed will not be allowed to work as an employee anymore as there will be conflict of interest.

For Dave, he could be under a legal issue of wrong behavior, tort. Dave will be subjected to "Failure to Warn of Risk" and "Professional Malpractice". For Dave to proceed it is advisable he proceed with the new business project I-Google only when Ed has passed the permission and right of use license payment for the technology owned by XYZ Co. With the License obtained, Ed and Dave could proceed with benefits of the I-Goggle such as immediate access to new technology and avoid research and development costs.

2. The suitable form of business is the Limited Liability Partnership. First, Denise reserved a 50% of the company ownership for future investors; an LLC is open for future investors. Therefore, the new firm will be a corporation when investors are the owners. LLC is an advantage firstly because it is a limited liability; Limited liability protects shareholders when there is a legal dispute and not all shareholders are held liable. Second, it has the tax advantage in different states, continuity of life, centralization of management, and free transferability of ownership interests.

The legal issues they should consider is the fact that Ed resigned without any thought about the cell phone firm's reaction; this is a legal issues that is explained in No 1. When Ed was still an employee, he failed to abide the Duty of Faith as to disclose material information and preserve company opportunity. When the firm proceeds, the new company (Denise, Dave, and Ed) could be sued for Infringement of patents or Misappropriation of Trade Secrets;