Legal Issues for the Entrepreneur

• 1. LEGAL ISSUES FORTHE ENTREPRENEUR

2. What will we learn? Intellectual Property Rights Patents Trademarks Copyrights Trade Secrets Licensing Product Safety & Liability Insurance Contracts 3. INTELLECTUAL PROPERTY 4. Any Innovation, Commercial or Artistic, orany Unique Name, Symbol, Logo or Design IP is an Asset for the Entrepreneur It must be protected from Un-authorized use. There are four ways to protect IP1. Patents on Inventions2. Trademarks on Branding Devices3. Copyrights on Music, Videos, Patterns, Forms of Expression4. Trade Secrets for Methods/Formulas with Economic Value 5. PATENTSEdison Bulb 6. A Contract Between Government & Inventorin Exchange for disclosure of Invention Grants the inventor EXCLUSIVITY to Make,Use & Sell the Invention for Specified Amount of Time Territorial Holder Obtains MONOPOLY for certain periodand after that it passes into Public Domain Patents can be obtained in widely varyingTechnical Subject Matters - "almost anythingunder the sun made by man". 7. Holds the Right to issue Licenses to Others An Idea/Thought can not be Patented Modifications in Existing Products can also bePatented (e.g. Galaxy Tab) Term of Protection should be a minimum of 20Years Patentable Inventions in Pakistan: Invention in NEW Involves an Inventive Step Should NOT be Contrary to Law OR Morality 8. UTILITY PATENTS Protect Useful Processes, Machines, Articlesof Manufacture, and Compositions of Matter. Some Examples: Fiber Optics, ComputerHardware etc 9. DESIGN PATENTS Guards the Unauthorized Use of New,Original, and Ornamental designs for Articlesof Manufacture. The look of an Athletic Shoe, a BicycleHelmet, the Star Wars Characters are allprotected by Design Patents. 10. PLANT PATENTS Are the way we Protect Invented orDiscovered plant varieties. For Example: Hybrid Tea Roses, Silver QueenCorn, Better Boy Tomatoes are all types ofplant patents. 11. TRADEMARKS 12. Protects Words, Names, Symbols, Sounds, orColors that distinguish goods and services. Trademarks, unlike Patents, can be renewedFORVER as long as they are being used inbusiness. The roar of the MGM lion, the pink of theOwens-Corning insulation, and the shape of aCoca-Cola bottle, The Original Lawn by GulAhmed are familiar trademarks. 13. Four Categories of TMs:1. Coined Marks: Denote NO Relationship b/w Mark & Good (e.g. Kodak, Moosa Jee)2. Arbitrary Mark: Common Word used in Meaningless Context (e.g. Apple, Dollar)3. Suggestive Mark: suggests certain Features, Qualities, Ingredients, or Characteristics of a Product or Service (Clean & Clear, Fair & Lovely, Skin White Products)4. Descriptive Mark: with a dictionary meaning which is used in connection with products or services directly related to that meaning (e.g. Shoe Plant, Darzi, EBH) 14. COPYRIGHTS 15. Protects Works of Authorship, such asWRITINGS, MUSIC, and WORKS OF ART thathave been Tangibly Expressed. Stop others from Printing, Copying, orPublishing Does not protect Idea itself, others can useIdea/Concept in a Different manner Term of Copyrights is the life of Author plus50 Years & 75 Years for an Institute. 16. For Example: Gone With The Wind, HarryPotter (the book and the film), BeatlesRecordings, Computer Software, and VideoGames. Books, Scripts, Articles, Poems, Songs,Sculptures, Models, Maps, Blueprints,Collages, Printed Material, Data & Music allcan be Copyrighted. 17. TRADE SECRETS Are information that companies keep secretfrom Public/Competitors to give them anadvantage over their competitors. The formula for Coca-Cola is the most famoustrade secret. 18. LICENSING 19. Arrangement between Two Parties i.e. ProprietaryRight Owner/Patentee and the Licensee The patent owner may give permission to, or license,other parties to use the invention on mutuallyagreed terms Licensee pays Royalty/Fees against the Right to useIP Licensing is done to either Expand a Business or toStart a New Venture. Inexperience or Lack Resources If there is an existing patent that might involveinfringement, licensing may be considered. 20. Licenses are Issued to make PROFITS and REACH widerspan of Public Patent License Agreement: Either just market a Product OR Manufacture and Sell Also Examples: Telecommunication Companies,Fuel Stations,FoodFranchises & Drugs Stores etc. Copyright License Agreement: Copy Books, Software, Music, Photographs, & Plays etc Examples: Indian Idol, X-Factor, Sports TeamsMerchandising, KFCgifting Coca Cola Glasses etc. 21. PRODUCT SAFETY & LIABILITY 22. A Firm must NOT Breach any LegalSpecifications of a Product under the CPSA Pre-Assessment to Check if the Product isSubject to any Regulations under CPSA Entrepreneur must follow the PrescribedSpecification to meet the CPSAs requirement Examples: Toyota Motors Paid in all Million of Dollars totheir Customer, who had Accident in 2009 Famous Pepsis Case in India against use ofChemicals/Fertilizer to wash empty bottles Halal Products (Lays Campaign) 23. Product Liability Claims Types:1. Negligence: anywhere in Production & Marketing Process (Toyota/Pepsi)2. Warranty: Overstating the Prod Benefits (Energy Drinks)3. Strict Liability: Defective Products for Sale (Food)4. Misrepresentation: material facts on Labels/Advertisements (Hidden Costs) Examples: Suit was filed against Fair & Lovely Teleco/Banks Hidden Costs 24. INSURANCE 25. A cover against any unexpected Miss-hap Managing Risk in the New Business+ Type of Insurance to Purchase depends upon theNature of Business/Industry. Dramatic Increase in Purchase of Insurance inPakistan after the Post Violence of BenazirsAssassination in Country For Example: Staff Safety is more of concern in Chemical Industrythan Banks International Marketing Personnel/Sales ManagersTravel more frequently than Financial Executives Need Companys Insurance Coverage 26. Types of Insurance:1. Property: Fire, Burglary, Robbery & Business Interruption (All/Banks/Goldsmith)2. Casualty: Physical Injury or Property Damage (Fuel Stations/Superstores/Shops/Outlets)3. Life: Protects the Business Continuity (Partnership & JSC)4. Workers Compensation: on-job Injury (chemical/manufacturing industry)5. Bonding: Employee Theft OR Tender Not meets Deadline (Contractors) 27. CONTRACTS 28. Legally Binding Agreement between TwoParties Entrepreneurs Contract with Vendors,Landlords, & Clients etc Written Contracts must be preferred overVerbal Ones. Benefits of Written Contracts: termed asValid & Legally Enforceable Examples: Outsourcing Production (Apple, Samsung, Nike) Employees Sign a Bond with Firm 29. In case of Not Availing a Lawyer, Entrepreneurmust take care of following essential items:1. All Involved Parties shall be Named along with their Roles (Buyer & Seller, Licensee & Licensor etc)2. Detailed Transaction (Exact Location, Date, Time & Place of Delivery etc.)3. Exact Value of Transaction4. Involved Persons Signatures must be Obtained in the Deal.