Chapter 4 Legal Issues

Chapter four Any Innovation, Commercial or Artistic, or any Unique
Legal Issues For Entrepreneurs Name, Symbol, Logo or Design is an Asset for the
3.1 Need for a Lawyer Entrepreneur. It must be protected from unauthorized use.
Any business in a country is regulated by law. The There are four ways to protect these assets 1. Patents on
entrepreneur needs to be aware of regulations that affect the Inventions 2. Trademarks on Branding Devices 3.
new venture. At different stages the entrepreneur will need Copyrights on Music, Videos, Patterns, Forms of
legal advice. The legal expertise required will vary based on Expression 4. Trade Secrets for Methods/Formulas with
factors such as type of product and organizational category. Economic Value
The entrepreneur should carefully evaluate his or her needs
before hiring a lawyer. 3.2 Patents
A contract between government & inventor in exchange for
Legal Issues in Setting up the Organization disclosure of invention• grants the inventor exclusivity to
There are many options an entrepreneur can choose in make, use & sell the invention for specified amount of time
setting up an organization. Legal advice is also needed to • territorial• holder obtains monopoly for certain period of
prepare the agreements necessary to begin a partnership, time.
franchise, or corporation.
 Utility Patents: Protect Useful Processes, Machines,
What Is Intellectual Property? Articles of Manufacture, and Compositions of
Intellectual property which includes patents, trademarks, Matter. Some Examples: Fiber Optics, Computer
copyrights, and trade secrets represent important assets of Hardware etc
entrepreneur and should be understood even before  Design Patents: Guards the Unauthorized Use of
engaging the services of an attorney. New, Original, and Ornamental designs for Articles
Intellectual property refers to products that come from the of Manufacture. The look of an Athletic Shoe, a
creative mind. Intellectual property is imagination made Bicycle Helmet, the Star Wars Characters are all
real. Intellectual property is an asset just like your home, protected by Design Patents.
your car, or your bank account.  Plant Patents: Are the way we protect Invented or
Discovered plant varieties. For Example: Hybrid Tea
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Roses, Silver Queen Corn, Better Boy Tomatoes are Patent registrations cover inventions. When your company
all types of plant patents. creates a new product or improves on an existing product,
you may register that design with the country’s Patent and
Utility, design, or plant patents protect inventions and Trademark Office.
improvements to existing inventions. Inventions must be
"things that have purpose" and not ideas or names. For 3.3 Copyright Laws
example, I would patent my invention of an improved car A copyright protects the form of expression of a creator
tire that never goes flat. against copying. Literary, dramatic, musical and artistic
A patent grants inventors the right to exclude others from works are included within the protection of the country’s
making, using, selling (or offering to sell) or importing their copyright law.
inventions throughout the country for a limited period of It protects works of authorship, such as writings, music, and
time. To obtain a patent, the inventor submits his or her works of art that have been tangibly expressed. To stop
application to the country’s Patent and Trademark Office. others from printing, copying, or publishing. It does not
There are three categories of patents: protect idea itself, others can use idea/concept in a different
manner• term of copyrights is the life of author plus 50
 Utility patents are most commonly granted for the years & 75 years for an institute.
protection of new, useful, non-obvious and Copyrights cover original works including books, music,
adequately specified processes, machines, movies, sound recordings and choreographic works.
compositions of matter, and articles of manufacture Businesses that create and sell creative works use the
(or any new and useful genuine improvements copyright process to claim ownership.
thereof)
 Design patents are issued for new, original, 3.4 Trade Secrets
decorative and non-obvious designs for articles of Trade secrets are information that companies keep secret to
manufacture. give them an advantage over their competitors. Trade
 Plant patents (used less frequently) are for certain secrets unprotected by a patent, copyright, or trademark as
new varieties of plants that have been asexually no public disclosure has been made.
reproduced
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3.5 Trademark Laws Product Liability Claims Types: 1. Negligence: anywhere
in Production & Marketing Process (Toyota/Pepsi) 2.
Trademarks protect words, names, symbols, sounds, or Warranty (Assurance): Exaggerating the Benefits (Energy
colors that distinguish goods and services. Trademarks, Drinks) 3. Strict Liability: Defective Products for Sale
unlike Patents, can be renewed FORVER as long as they (Food) 4. Misrepresentation: material facts on Labels
are being used in business. A great trademark can help with (Hidden Costs)
the sales of goods and services and very desirable goods or
services can make a trademark famous. 3.6 Business Insurance
Insurance is the transfer of risk from the business owner to
Trademark registration covers words, phrases, symbols and an insurance underwriter and allows business owners and
original designs used in commerce. Most companies providers of capital to businesses to, in essence, take on
federally register the business name, business logo, slogan additional risk or pursue activities that, uninsured, might
and other product designs. prove too uncertain to risk capital.
It is a contract (policy) in which an individual or entity

3.6 Product Safety & Liability (legal responsibility) receives financial protection or reimbursement against
A Firm must not Breach any Legal Specifications of a losses from an insurance company.
Product under the country law. Pre-Assessment to check if It is a cover against any unexpected risk. Managing Risk in
the Product is Subject to any Regulations under country the New Business, Type of Insurance to Purchase depends
law. Entrepreneur must follow the Prescribed Specification upon the Nature of Business/Industry. For Example: – Staff
to meet the country law’s requirement. Safety is more of concern in Chemical Industry than Banks
– International Marketing Personnel/Sales Managers Travel
more frequently than Financial Executives – Need
Company’s Insurance Coverage
2. Buying Insurance
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There are five variables to consider when purchasing 1. Price:
insurance: (1) Price, (2) coverage offered, (3) specialization 2. Coverage Offered:
of insurance company, (4) reputation of the insurance 3. Specialization of the Company:
underwriter, and (5) size of the deductible. 4. Reputation of the Insurance Company:

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Chapter four Any Innovation, Commercial or Artistic, or any Unique

It is a contract (policy) in which an individual or entity

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