As part of our “Kickstarter Week” here at BizzVenue, we are giving you the down low on what legal tips should be guiding you through your Kickstarter project. The most basic Kickstarter legal tips are of course (and this applies for anything on the net) following the community guidelines, terms of use (covered below), and privacy policy.
Any dispute is between the donor and the project creator: The funds when leaving your credit card as a backer are transferred directly to the team, meaning that Kickstarter itself has no control over the funds, and hence Kickstarter pledges are non-refundable. It’s up to the creator to issue a refund, which they can do through their Amazon Payments account (within 60 days). As Kickstarter explained in one of their blog posts,
It’s the project creator’s responsibility to complete their project. Kickstarter is not involved in the development of the projects themselves.
However, this does not mean that a creator can take advantage of the system, or does it? Kickstarter’s Terms of Use require creators to fulfill all rewards of their project or refund any backer whose reward they do not or cannot fulfill – we have yet to see what legal action, if any, is possible between a backer and a creator when terms are breached. Even if legal action is possible, does it even makes sense to go down that route after backing a creator with an investment of $200? It appears that anything more than a refund is not very likely, and it is likely that you won’t get that in a messy scam situation – like Mythic.
Terms of Use on Kickstarter
How Projects Work: Clause 4 states that there is no contract with Kickstarter (at least not with backers). All backers and creators have a direct contract agreement based on this clause that states that if a creator is unable to reach their stated goal, then they have got to reimburse the backer or you can make all the legal woes disappear by simply being straightforward and fair with backers. You can visit them to see a few ways of avoiding a refund, even if the product is never developed, or something similar is the fruit of your work.
If you go to court, Kickstarter will not back you up (as a creator). One of the terms you agree to in order to use the Kickstarter platform is to release them from any liability in your campaign.
If you are not a scam artist and you got backed, but never got the successful product onto the market you’ll probably be in the clear.
Speaking of spam: Kobe Red
Maybe one day, Kickstarter will make a change and begin scanning projects before they are uploaded to prevent Kobe Beef II. However things might be better off as they are – as a free-market.
How Funding Works: First of all, it is pro-entrepreneur as charges on your card may be reserved, and because no one can really say when the product will hit your shelf. This is also where you’ll find that there are no refunds (unless you are able to prove a breach of clause 4 – good luck).
All in all, the terms are very clear and written in a simple manner so that no matter if you are or aren’t a lawyer, after an hour you can understand what rights you have (if any). If you are a creator, Kickstarter is a very legally-friendly site to kick off your project, but make sure you cover a few more legal issues before hand.
Of all the Kickstarter legal tips and info, the biggest thing has everything to do with publicizing your idea.
Protect your Idea
One fear that many entrepreneurs have, especially at the early stage and when there is not a huge cash-flow, is that someone could steal the idea. That fear can become a reality on Kickstarter (and any other crowdfunding network), as you share your ideas with millions of people. It is highly recommended that you do not share every tidbit of info with potential backers. In any case, make sure you start working towards ensuring that you have trademarks, service marks, or copyrights if it is applicable to your project. Note, that not everything needs to have a “mark”- it’s best you check with a lawyer.
