Why Is Netd Having Problems Commercializing Some of Its Ideas?

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advantage of its resources of developing/ filing the patent faster then Riceman.

Second Option: Continue to employ Riceman but pressure him to work on the breakthrough (without giving him ownership)

It is very unlikely that this option has the best outcome. The coworkers of Riceman estimate that he is going to refuse to work on the project or even would try to sabotage its development. Due to the fact that the probability of a successful product is low the chance of high profits is even lower. In addition to that even if the product turns out to be a success there remains a high risk of Riceman suing NetD for uncompensated work like it happened in the Shuji case in 2005. The risk of getting into a legal prosection and all the costs involved with it could easily overweight the profits in the product. By choosing this option NetD gets controlled by Riceman from a political perspective. Fogg predicts that this is going to have severe consequences for his own career. Finally, NetD has serious concerns about marketing the product. Due to a lack of comprehension of the invention, Fogg has no idea what and how he should approach this task.

Third Option: Fund Riceman

In our opinion, this is the best option to take.

If NetD is funding Ricemans new company they have the chance to be involved as a shareholder. Therefore they have the chance of participating in the growth of his company from day one. I addition to that NetD and Riceman would keep their good relationship. This means that NetD could be involved in further product launches and development of Ricemans company and take profit from being into a new market from a very early stage. This would also satisfy the investors of NetD who are very interested in being involved in this new invention. In addition to being involved into Ricemans company as a shareholder NetD still has the opportunity of using the free offered non-exclusive licence of the product. NetD gets a significant edge against possible competitors by having a free licence because NetD has no cost of using it.

Fourth Option: Accept Ricemans terms

This option is considered worse than the last option because NetD is not sizing all its opportunities in this case. Therefore this option is not recommended.

3. If Riceman leaves the firm should Fogg take legal action to enforce the non-compete agreement? Why?

The best action for Fogg and NetD would be to not intent legal prosecution at all for the following three reasons independently of NetD funding Riceman or not. First of all, if NetD decides to fund Riceman and his new Idea and company they are partners. NetD would depend on the Funding contract, earn from Ricemans success. Therefore a legal prosecution would not only harm riceman but also cut down potential profits for NetD.

The second reason for being passive is that the potential outcome of a legal action is highly uncertain. Due to the fact that Riceman is studying old cases like the Microsoft or the Shuji Nakamura case about engineers possibly breaking there non-disclosure agreement issues which had mixed outcomes, netD cannot be certain about them being the winning party. Due to the fact that a legal prosecution often is followed by media attention Fogg’s concerns about ruining his and the firm’s reputations are valid.

The third reason for doing nothing is that Riceman offered NetD a free license. This free license could give NetD a competitive edge against competitors who have to pay a license fee. Even if Riceman does not accept to be funded by NetD, the company is better off taking the free license. A legal prosecution could Riceman let rethink his deal.

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