Royalty income from garage inventions

[megaptera]

Hello -

I've been in the US as a nonimmigrant alien on an academic visa.

I have a quite technical hobby, and I have had a "garage lab." Some of the knowledge I have acquired through my hobby is recognized by a manufacturer to be of their commercial interest, and they want to license my inventions, some with patents, some without, and they want to pay me a flat percentage royalty of the sales. The products are very similar to what I have invented for my own use to practice my hobby, and the company will manufacture, advertise, market, customer support, etc. My role is limited to send proprietary information by certified mail, and check my bank accounts.

My question is whether this royalty income is considered passive income. I do believe so, because I am not working for the company, but merely providing my knowledge. (I would make the same invention for my own use anyway, and most of them were made before the company contacted me.) However, I would like to see others' opinions and rationales before I proceed on this decision.

Thanks!

[megaptera]

Where did you read that? My notebook has technical records but there is no mention of money. There is not even a cost calculation. It would be hard to argue I had intended to start a business based on this alone.

I might also argue that, since my licensee is a business based outside the U.S. (also outside my home country), with money coming from abroad, it doesn't really fall under the U.S. immigration law. (If useful, I can also form a limited liability company in the licensee's country to make the licensing business part overseas.)

As you anticipated, I have had no luck with a lawyer who's interested in taking such a case. Probably there aren't enough people in similar situations to mine to be bothered to do the necessary research...

I don't know why but when I look around my problem is usually a lot more complicated than others'...

[megaptera]

Sounds like the law has problems everywhere... Those open source programmers are probably geeky enough to write the codes for their own enjoyment anyway, and their codes in open resource would only help others... My garage inventions are same... indeed much of my prior work is published on web sites, or openly shared on online forums like you share your legal knowledge, but I can't help others implement my inventions in many cases, or I can't spend too much of my personal time to provide technical support for free. It's not so much fun any more. Naturally, licensing the inventions to a company which can make them properly and have man power to provide customer support would be an ideal solution to me, so that I can focus on my hobby again. Royalty is not going to be a lot of money. I don't even know if it pays for the rent I pay for my garage lab!

Another scenario. Say I'm a print maker, or a painter. I make prints and paintings for my own enjoyment. People recommended me to exhibit my work. So I talked to galleries and they are now very interested in hanging my work. But they require me to offer my work for sale, and they'll take so many percents of the sales. I already have my prints and paintings, and I don't have to do any extra work other than shipping the work to the gallery and check bank accounts. It is the gallery who wants to sell.

Now what if the gallery were located outside the US?

And what if Prentice-Hall wants to print my paintings in their book and wants to pay me some money for them?

And what if I go to cafepress.com to make t-shirt of my paintings so that I can wear them, but now some strangers bought my t-shirts off their web site and I get a few bucks from cafe press?

None of these sounds like making a lot of money, nor harmful to US economy or labor market. It only helps to hire more local art students to sit in galleries or to run t-shirt printers. Yet you may be able to come up with conservative interpretations of laws and regulations against doing any of them...

[megaptera]

Thanks for youre response.

If there are few relevant cases in the past, how a good lawyer could help me on these questions? (I think this might be why lawyers I talked are not very interested...)

Do you know if CIS is willing to provide clarification of their views on cafepress, ebay auction, gallery sales, publishing what's already created, etc? Obviously people have useful guidelines for other passive incomes, such as owning a few houses or companies and taking rents and dividends.

Another question. Suppose I do any one or more of the above activities to generate money I could be entitled to, hypothetically, in absence of limitation of my alien status. I ask the payers to directly send the monies to nonprofit organizations I specify, so that it is well documented that I had no claim on those monies. This is essentially the same, in my mind, as voluneering for nonprofit organization I support but providing my knowledge in the area I'm good at. Does this help me in solving the legal issue?

If the nonprofit organization doesn't work, what if I decline to receive money but provide my knowledge anyway?

The reason why I think about these possibilities is that, even if I get no royalty money, my potential clients can generate profit to pay for their production line and customer support. This will reduce my time spent on responding to emails from questioners who found about my work on the internet. And if my potential client commercializes my knowledge, I can just buy my products in the future so that I can focus on the fun part.

[sick_of_waiting]

I believe it is illegal for people in the US on non-immigrant visas to receive royalty or licensing fee from a company. Why?? Because:

1) You took away the chance of a US citizen to come up with the same invention and receive the royalty/license fee.

2) Even though the work was produced in your garage, you produced it on a non-immigrant visa and are therefore not entitled to any monetary benefit from that work.

Remember...it is illegal to even "throw somebody else's trash out"...I made the mistake of throwing my 80 year old neighbor's trash out, now I live in constant fear...what if immigration gets to know about it!! I even refused cookies she made for me for the fear that it could be construed as compensation for my "throwing out the trash" for her.

So remember, be very careful and refuse to receive any such payments from any such company.

I hope this helps.

[luissanchez13]

Patented technology is not called intellectual property for nothing.Its like you are leasing your property and receiving some rent (royalty).Its completely passive in nature and perfectly legal.

Please read the below book for better understanding.

Protecting Your #1 Asset : Creating Fortunes from Your Ideas : An Intellectual Property Handbook (Rich Dad's Advisors) (Paperback)
by Robert T. Kiyosaki, Michael A. Lechter


****, If i hear one more time misleading people i will come after you,take care.