chapter 8 the legal environment. legal issues facing start-ups protect your intellectual property:...

CHAPTER 8

The Legal Environment

Legal Issues Facing Start-Ups

Protect your Intellectual Property: its an asset

Intellectual Property Law: the group of laws that regulates the ownership and use of creative works.

Trade Secrets: The basis of all intellectual property is trade secrets, which

are covered under the UNIFORM TRADE SECRECTS ACT (UTSA)

May consist of a formula, device, idea, process, pattern or compilation of information that is not general knowledge or accessible by other people

Companies will often ask employees to sign confidentiality agreements that details what is a trade secret

Protecting Your Ideas

Patents: Grants an inventor the right to exclude other from

making, using, or selling an invention during the term of the patent.

A Non-Provisional Patent lasts for 20 years from date of application

File a Provisional Patent first gain one or more years. Used to give inventors protection while talking to manufacturers and inventors.

Patent life expires – becomes Public Domain anyone can use it free of charge


Patents: how to qualify 4 rules US Patent and Trademark Office (USPTP)1. Invention must not contain prior art: not based on

anything publicly available2. Invention must fit into one of five classes: machine,

process, manufacture, composition, new use for one of 4 3. Invention must be “unobvious”: should be new and

unexpected even to someone skilled in the field4. Invention must have utility: must be useful, not just

whimsical or silly.Many companies choose not to patent a new device , but hold it as a trade secret. Once the patent is issued, anyone can view it and may try to find a way around the patent


Patent Application: File a disclosure document with (USPTO) In application confirm that you are the inventor of

product and describe it in detail Your 1st patent must be provisional patent lasts for 12

months. During this time file a non-provisional Use a qualified Patent Attorney to help with application

Patent Search: Done by USPTO During this time the Patent is Pending time period

from filing to either issue or rejection


Patent Application:Patent Search:Patent Infringement:

When someone makes and sells a product that contains all elements of a patent claim.

Patent is a powerful document, right to enforce document in Federal Court. If the holder wins, the court issue an injunction preventing the infringer from further use. Also award the patent holder monetary damages


Trademarks: A word, symbol, design or color that a business uses

to identify itself or something it sells. Trademark symbol before it’s registered

and the after it’s registeredService Mark:

A word, symbol, design or color that describes a service business

Trademark provides legal protection with the USPTO, can’t be

protected until holder actually uses it Held indefinitely unless it becomes common usage in

English language


Copyrights: A legal device that protect original works of authors;

includes books, movies, software, and music Last for the life of the author plus 70 years. After that it

becomes Public Domain. Only protects the form the idea is presented, not the

idea itself Copyright Law:

1. Place a notice of copyright in a prominent location on the work. This notice must include the symbol or the word copyright, the year of first publication, and the name of holder.

2. Register the work with the Copyright Office, branch of Library of Congress

Laws that Affect Start-Up of a Business

Permits and Licenses: a legal document giving official permission to run a

business Obtain from office in that issues licenses in your city Probably renew it each annually Pay periodic fees over the life of the business the

amount is usually based on how much the business earns

Certain professions require you to get a license, a certification that you have the necessary education and training to do job

Licensing requirements vary from stator or locality to another.


Contracts: A binding legal agreement between two or more

persons or parties. Various types of contracts

Oral contract: unwritten contract that does not last for more than a year

Void contract: did not really exist because one or both parties did not have the capacity to enter into the contract.

Valid contract: most common for businesses, meets several important criteria


Contracts: Various types of contracts

Valid contract: most common for businesses, meets several important criteria

AGREEMENT: one party offers or promises the other party accepts

CONSIDERATION: exchange for the promise CAPACITY: legal ability to enter into binding agreement. By

law minors, intoxicated persons, and people who are legally insane cannot enter into contract, agreement considered void

LEGALITY: can not have any provisions that are illegal or that would result in illegal activities.

Failure to live up to obligations seek monetary damages amount determined by the courts

Avoid misunderstanding draw up a legally binding contract


Location ZONING LAWS and BUILDING CODES

Conform to local zoning laws, designate areas or zones for certain uses.

Zones usually residential, commercial, industrial or public. Environmental issues, restrict disposal of waste, noise and

air pollution and unsuitable building styles. Type and style of sign and appearance of building Standards for construction or modification of buildings,

such as strength of concrete, amount of insulation and other structural requirements

Local governments employ inspectors to verify codes are meet


Leasing Limited resources start with leasing building and

equipment rather than buy them A contract between lessee (no ownership) and lessor

(owner)

Doesn’t require spending a large amount of money up front

Lease expenses are tax deductible Complex document, it states the terms, length of lease,

monthly rent, penalty for failing to pay, and procedure for termination.

It’s a long term contract use an attorney before signing

Laws that Affect Businesses

Large and small businesses are affected by federal, state, and local gov’t.

Location: zoning laws, building codes, leases, rental contracts

Employees: Equal opportunity, child labor, wrongful termination,

sexual harassment, Americans with Disabilities Act, Family medical leave, Equal pay for equal work, Fair labor standards, and workplace health and safety

Taxes: Sales tax, payroll taxes, Federal unemployment tax, and

Business income tax

Laws that Affect Businesses

Large and small businesses are affected by federal, state, and local gov’t.

Trade Issues: Price discrimination, Consumer protection, Uniform

commercial code, truth in lending and truth in advertising

Product area: Patents, Copyrights, and Trademark

Start-Up Permits, Licenses, and Contracts

chapter 8 the legal environment. legal issues facing start-ups protect your intellectual property:...

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