Dave Ed and Denise

Dave is currently unemployed and hence has no legal liabilities as of this moment. Ed who is working for a cell phone company, handling their Research and Development is considered bound by law to disclose all activities to his company. As per the moonlighting clause you cannot be working for another company or doing work outside the company which conflicts the interest of the current company. If such is the case then Ed cannot work even in his free hours on a venture or product which is related to the current company. Also Ed sharing with Dave any information of technical knowhow amassed at his time of work would be illegal if he is still employed. Ed would have to consider any and all development work that he might have done during his employment at the current firm. Ed has been working in screen projection technology and if he uses his research work from the company he works at it could be considered theft.

He would consequently need to seek an approval from the board of the current company. It would have to be clear that the company has no interest in the product or they see no violation of their resources or information. Ed will have to make sure that he does not use any intellectual property of the current company in the process of developing the new product. He will have to reveal all his progress to his current company. Even if there isn’t such a clause the company might sue him, considering the nature of the product is so similar. He will have to approach the board of directors for approval and acquisition of license as required.

Answer 2

Dave Ed and Denise would need to divide the company’s shares to account for 100% of the shares of the company. They cannot leave 50% for future investment in the company. Instead they would need to form a LLC in a way the ratios are laid out clearly with regard to the future sale stocks. On the basis of FOMELTED this would be the appropriate decision at this hour. Sharing and selling of stake in the near future, initial set up, taxing liabilities all would be simpler in a LLC than a corporation. Also keeping in mind the nature of business (IP intrinsic), it would be a viable choice to go ahead with a LLC.

While quitting the job from the current company he needs to inform them and make sure there is no conflict of interest and has taken a full and final settlement from them in terms of work in progress. I believe he cannot quit his current company without serving the requisite notice period if any.

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