Legal and Intellectual

Property Issues in
Entrepreneurship
 What is Intellectual
Property?
Intellectual Property refers to any Patents,
Trademarks, Copyrights or Trade Secrets held
by the Entrepreneur.
These represents important assets to the
entrepreneur.
Intellectual Property should be understood
even before engaging the services of an
attorney.
It must be protected from Un-authorized use
Four Ways to protect Intellectual
Property:

• Patents on Inventions
• Trademarks on Branding devices
• Copyrights on Music, Videos, Patterns,
Forms of Expression
• Trade Secrets for methods/formulas with
economic value
 PATENTS

• A patent is a contract between the

Government and an Inventor. In exchange
fro disclosure of the invention, the
government grants the inventor exclusively
reading the invention for a specified
amount of time.
 Types of Patents

• Utility patents:
• Design Patents
• Plant Patents
 Utility patents:

It grants the owner protection from anyone else

making using and selling the identified invention and
generally reflects protection of new, useful, and
obvious process such as film developing, machines
such as photocopier, composition of matter such as
chemical compound or mixture of ingredients and
articles of manufacture such as toothpaste pump.

A utility patent has a term of 20 years.

 Design Patents

• Covers new, original, ornamental, and

unobvious designs for articles of
manufacture, a design patent reflects the
appearance of an object. These patents
are granted for a term of 14 years.
• The look of an Athletic Shoe, a bicycle
helmet, the star wars characters are
protected by Design Patents.
 Plant Patents:

• These are issued under the same

provisions as utility patents and are for
new varieties of plants. These patents
represents a limit area of interest and thus
very few of these of patents are issued.
• For example: Hybrid Tea Roses, Silver
Queen Corn, Better Boy Tomatoes are all
types of plant patents.
The Patent Application

The Patent application must contain a

complete history and description of the
invention as well as claims for its
usefulness. The actual form can be
downloaded from the patent and trademark
office website.
There are three main section in
the application.

• Introduction: This section contain background and

advantages of the invention and the nature of the
problems that it overcomes.
• Description of Invention: The application should
contain a brief description of the drawings that
accompany it. A detailed description of the invention,
which may include materials, engineering
specification and so on.
• Claims: Serve to specify what the entrepreneur is
trying to patent. Essential parts of the invention
should be described in broad terms.
Business Method Patents
 
The growth of the internet use and software development
has given rise to business methods patents. Firms use
these patents to assault competitors and subsequently
provide income from royalties or licensing fees. Concerns
have evolve regarding these patents.
•Example:
Amazon.com owns a business method patent for the
single clicking feature used by a buyer on its website to
order products.
 Start-up without a
Patent
Not all startups will have a product or concept that
is patentable. In this case the entrepreneurs
should understand the competitive environment to
ascertain any advantages that may exist or to
identify a unique positioning strategy. Maintaining
the differential advantage may be a challenge but
represents an important means of achieving long
term success.
 TRADEMARKS

• A distinguishing word, name or symbol used to

identify a product. Trademarks, unlike Patents,
can be renewed FOREVER as long as they are
being used in business. The Trademark is given
an initial 10 year registration with ten year
renewable terms. In the 5th to 6th year the
registrant is required to file affidavit with the PTO
indicating that the mark is currently in
commercial use otherwise the registration will be
cancelled.
 Four Categories of
Trademarks
• Coined Marks: Denote no relation between the mark and
the goods or service and afford to possibility of expansion
to a wide range of products
• Arbitrary Mark: It is one that has another meaning in our
language and is applied to a product or service.
• Suggestive Mark: It is used to suggest certain features,
qualities, ingredients or characteristics of a product or
service.
• Descriptive Mark: With a dictionary meaning which is
used in connection with products or services directly
related to the meaning.
 Registering the
Trademark

Filing of the trademark registration must meet

four requirements:

•Completion of the written form

•A drawing of the mark
•Five specimens showing actual use of the
mark
•The fee
 Registering the
Trademark
• Initial determination of the suitability takes three
months. Any objections by the entrepreneur
must be raise within six months, or application is
considered abandoned.
• Once accepted, the Trademark is published in
the “Trade Official Gazette” to allow any party 30
days to oppose or request an extension to
oppose. If no opposition is filed, the registration
is issued and the entire procedure usually takes
thirteen months.
 COPYRIGHTS
• Right given to prevent others from printing, copying or
publishing any original works of authorship such as
books, scripts, articles, poems, songs, sculpture, data
and music.
• The protection in a copyright doesn’t protect the idea
itself, it allows someone else to use the idea or concept
in a different manner.
• The Copyright Law has become especially relevant
because of the tremendous growth of the use of internet,
especially to download music, literary works, picture arts
etc. Although software copyright law was added in the
1980, Issues surrounding access to material on the
internet have led to major legal battles for the
entertainment industry.
 LICENSING
• Contractual agreement giving rights to others to
use intellectual property in return for fee.
• Licensing is an arrangement between two parties,
where one party has propriety rights over some
information, process or technology protected by a
patent, trademark or copyright.
• This arrangement requires the license to pay some
specified sum to the holder of the proprietary rights
(licensor) in return for permission to copy the
patent, trademark or copyright.
 Types of Licensing
• Patent License Agreements: Specify how the license
would have access to the patent. The license may either
just market a product or manufacture and sell also. E.g.
Telecommunication companies, Food Franchises
• Trademark License Agreements: Involves a franchising
agreement. The entrepreneur operates a business using
the trademark and agrees to pay a fixed sum for the use
of the trademark, pay amount on sales volume and buy
supplies from the franchise. E.g. Shell, Pepsi, Coca Cola
• Copyright License Agreements: Involve rights to use o
copy books, software, music, photographs, plays, etc.
E.g. Indian Idol, even Celebrities can license the right to
use their image in a product.
Before entering into a Licensing Agreement,
the entrepreneur should ask the following
questions:

• Will the customers recognize licensed property?

• How well does the licensed property complement my
products or services?
• How much experience do I have with the licensed
property?
• What is the long-term outlook for the licensed property?
• What kind of protection does the licensing agreement
provide?
• What commitment do I have in terms of payment of
royalties, sales quotas, and so on?
• Are renewal options possible and under what terms?
 INSURANCE

• A promise of compensation for specific

potential future losses in exchange for a
periodic payment. Insurance is designed
to protect the financial well-being of an
individual, company or other entity in the
case of unexpected loss. Some forms of
insurance are required by the law, while
others are optional
 Types of Insurance
• Property Insurance- In Property Insurance possible
coverage includes: Fire Insurance, Robbery and Business
interruption
• Casualty- Physical injury or property damage (Fuel
stations/Superstore/Shops)
• Life- Protects the Business continuity especially a
partnership.
• Worker’s Compensation- Provides benefits to employees in
case of on-job injury (chemical/manufacturing industry)
• Bonding- It protects company in case of employee theft of
funds or protects a contractor if subcontractor fails to
complete a job.
  
CONTRACTS

-A legally binding agreement between two

parties. Entrepreneurs commonly sign
contracts with vendors, landlords and
clients.
It is very important for the entrepreneur to
understand the fundamentals of issues
related to contracts while also recognizing
the need for a lawyer in many of these
negotiations.
In case of not availing a lawyer,
entrepreneur must take care of
following essential items:

• All involved parties shall be named along with

their roles (Buyer and seller, licensee and
Licensor etc.)
• Detailed transactions (exact location, Date, time
and place of delivery)
• Exact value of transaction
• Involved person’s signature must be obtained in
the deal.
Contract Conditions and Results of a
Breach of Contract

• Contract Conditions: An offer is made. It can

be oral or written but it is not binding until
voluntary acceptance of offer is given. Both
parties are competent and/or have the right to
negotiate for their firms.
• Results of a Contract Breach: The party in
violation of a contract may be required to live up
to the agreement or pay damages. If one party
fails to live up to its end of contract, the second
party may also agree to drop the matter and thus
not live up to the agreement as well.
Four essential items in an agreement
to provide the best legal protection:

• Understand the terms and conditions in

the contract
• Cross out anything that you do not agree
to.
• Do not sign if there are blank spaces
(these cannot be crossed out)
• Make a copy for your files after signing.
THANK YOU!