Wow, this could get really complicated if you end up building something people want. Before it gets any further, you need to have a talk with your partner and his group members and talk about what they want to do with the site after the class is over and if they're willing to give you significant equity. If they don't give you equity, and you cease development after 20 hours, make sure that you are allowed to launch your own competing startup. You'll have to recode it, but make sure you're allowed to compete.
If they do give you equity, make sure they're not only doing it because otherwise you won't do the project, which is the situation the last crisis poster had. If every member of the group is not really happy with the arrangement, you will have problems.
rms, why do you think jfornear will need to recode? (S)he hasn't signed over the copyright, and there is no mention of it having been discussed in the verbal agreement. And the bulk of it was copy and pasted. The 'customers' cannot copyright the idea, although they may have explicitly stated that part of the discussion consisted of trade secrets.
This is rather different from the Facebook case, where there was pre-existing code when Zuckerberg was engaged.
If the father really thinks it's a valuable proposition, it's in his interest to clean up the intellectual property situation sooner rather than later. I'd have a friendly word with them to say you think the whole project is much more likely to succeed if you've got equity as well. Once you've got an agreement on terms that you all feel are fair, that's the time to get the lawyers to put it into writing.
If they really want to get all legalistic on you, first think whether you want to be in business with them, second you could suggest that they pay your costs to hire your own lawyer.
I think this situation would work out fine if it weren't for the unknown group members -- it seems likely that the OP and his friend with the lawyer dad are on good enough terms to make it work. I get the impression that the other group members don't really care about the project, because they aren't putting up the money to hire the OP. But if the project becomes successful, they could truthfully claim that they were involved with the project from the start.
It doesn't sound like anyone wants to be overly legalistic; it sounds like someone's father is an aggressive lawyer type that saw an opportunity to negotiate the best possible terms. The OP and his partners need to draft some type of agreement. I don't think there is any need to involve lawyers immediately, wait until you incorporate. For now, just get something on paper you all agree with. Send it to friend's lawyer dad to legalize if you so desire. Get a free corporate registration and registered agent from him if you can. Only a Delaware C corp.
IANAL, but it sounds like it's work-for-hire. If you pay someone to do work (particularly by the hour), it's my understanding that they own the intellectual property you generate.
Except this was for a class project, so it's possible the school owns the IP, and if a venture comes out of it, he company will have to ask the school for a license.
exactly. i just finished creating an application for a doctor, but since it was done as part of my master's program, the school owns the code. this means that though the doctor may have aspirations of turning it into a million-dollar product, he can't without working out a deal with my university. i'd be very surprised if this guy's school doesn't have a similar policy regarding code written for its classes. i think it's likely that the contract the other person's lawyer dad drew up is moot--the school probably already owns all (or most) rights to the stuff.
Interesting. I hadn't read the background of WFH. I guess in this case we're talking about contract work, because there's no physical office or purchase of equipment (two tests that are typically applied in determining employee vs. contractor). That means that all of the created IP belongs to the author. (Although, again, IANAL. :)
If they do give you equity, make sure they're not only doing it because otherwise you won't do the project, which is the situation the last crisis poster had. If every member of the group is not really happy with the arrangement, you will have problems.