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Chapter Five

Intellectual Property
and Other Legal Issues
The Concept of Intellectual Property
 IP Incentive Theory
• Incentives to invent

• Incentives to disclose

• Incentives to commercialize
 Patents
• It must have utility. (It must be useful with a
practical purpose.)
• It must not contain prior art. It must be novel in
an important way that is not known by others
and not previously published for public
consumption.
• It must be non obvious to someone with
ordinary skills in the field of invention. For
example, it cannot be the logical next step in a
known process.
 Five Classes of Patents
1. Machine or something with moving parts or circuitry (e.g.,
fax, rocket, photocopier, laser, electronic circuit).
2. Process or method for producing a useful and tangible
result (e.g., chemical reaction, method for producing
products, business model).
3. Article of manufacture (e.g., furniture, transistor, diskette,
toy).
4. Composition of matter (e.g., gasoline, food additive, drug,
genetically altered life-form).
5. A new use or improvement of something from the first four
categories.
 Types of Patents
• Utility patents
– Functional part of a machine or process
• Business method patents
– A form of utility patent under the classification of
process
• Design patent
– Visual ornamental characteristics of an article of
manufacture
• Plant Patent
– New and distinct varieties of asexually reproducing
plants
 An Effective Patent Strategy
• Establishes a temporary monopoly
– First-mover advantage
• Improves financial performance
– Majority of assets reside in IP – use as revenue generators
– Save money by using as bargaining chips
• Increases competitiveness
– First mover advantage
– Can be licensed
– Patents of competitors yield important intelligence
When and If to
Patent
 Patent Infringement (Violent)
• When a party other than the inventor or legal licensee
makes and sells a product that contain every one of the
elements of a claim in the patent

• Successful trial of an infringer will result in a reasonable

royalty and an injunction to prevent further use

• Defendants bear the burden of proving the patent is

invalid

• Courts tend to favor inventors

 Trademarks
• Symbol, logo, word, sound, color, design, or other
device used to identify a business or product

• Holder has right to exclude others from using

confusingly similar marks
– Faking and misappropriation
– Infringement, when a mark can cause confusion
– Dilution, when use dilutes the value of the mark to the
owner

• For valid trademark, must show intent-to-use or that

the mark is in use in country commerce.
 Trade Secrets
• Information such as formulas, patterns, devices,
etc. that derive value from not being known and
are not readily ascertainable. (easy to find out).
• Any information commonly known or in common
use cannot be a trade secret
• Conveys the right to prevent others from
copying, using, and benefiting from the secret.
 Copyrights
• Protect the original works of authors, composers,
screenwriters, computer programmers, and
other developers of creative works.
• Protects artistic works
• Work must be in a tangible form
• Copyright notice is not required

– © Copyright 2012 by [name of copyright holder]

 Licensing Intellectual Property
• Licensing: a grant to another party that permits
development, manufacture, distribution, and use of the
licensor’s IP.
• Advantages of licensing
– Platform technologies have too many applications for one
company to handle
– Inventor company does not have the resources to develop
applications
– May be more profitable
– Reach multiple markets without the expense of distribution
channels
 Licensor’s Perspective
• Decide what will be licensed
• Define the benefits to the licensee
• Determine the value of the license
– The economic life of the IP
– Potential for direct competition
– Potential for negative government legislation or regulation
– Changes in market conditions that might obsolete the
technology
• Conduct market research
• Screen candidates
• Manage the license
 Licensee’s Perspective
• Search for the right technology
– Does the technology work in the way the licensor claims?
– On what measures are the performance data calculated?
– Will the licensor provide any guarantees of the technology’s
performance?
– Is the technology completely owned by the licensor or does the
licensee also have to be concerned about another party and their
role in the process?
• Prepare a business plan
• Negotiate the type of license
– Exclusive
– Non-exclusive
Intellectual Property
Protection

In Ethiopia
 In Ethiopia …
• Ethiopia has enacted laws for the protection of
– Inventions,
– Literary and artistic works,
– Distinguishing marks and new plant varieties
Through patents, copyright, trademarks and plant breeders’
rights
• Ethiopia is also party to several international
intellectual property agreements
 Intellectual Property Laws in Ethiopia
• Traditional Knowledge (Access Genetic Resources No. 482), Proclamation, 2006 -
Proclamation No. 482/2006 Access to Genetic Resources and Community
Knowledge, and Community Rights Proclamation
• Copyright, Law (Proclamation), 24/07/2004, No. 410 - Proclamation No. 410/2004
on Copyright and Neighboring Rights Protection
• Industrial Designs (Proclamation No. 123/1995), Regulations, 10/12/1996 -
inventions, Minor Inventions and Industrial Designs Regulations (Proclamation No.
123/1995)
• Industrial Property, Law (Proclamation), 10/05/1995, No. 123 - Proclamation No.
123/1995 concerning Inventions, Minor Inventions and Industrial Designs
• Industrial Property (Science and Technology Commission), Law
(Proclamation),1994, No. 91 - Proclamation No. 91/1994 to Provide for the
Establishment of the Ethiopian Science and Technology Commission

• Other (Transfer of Technology), Regulation, 1993, No. 121 - Council of Ministers

Regulations to Regulate the Transfer of Technology No. 121/1993
 Patent in Ethiopia
• “Inventions, Minor Inventions and Industrial
Designs” Proclamation was enacted in 1995 with
the objective of encouraging local inventive
activities
• A patent is given in Ethiopia for 15 years (and
additional five years if the patentee works the
invention in the country.)
• Included in the country’s patent law is the
protection of minor inventions through utility
model certificates and the protection of designs
through industrial design registration certificates.
 Trademarks
• Ethiopia has issued a Trademark Law in July 2006
for the protection of signs which distinguish goods
or services

• The registration of a trademark in Ethiopia shall

remain valid for a period of seven years

• A trademark which is entitled to protection under

an international convention to which Ethiopia is a
party
 In Ethiopia
• In Ethiopia the law does not permit illegal copying
of books, music tapes or computer software for
business purposes

• The exceptions are copying of the mentioned works

for personal use, for the purpose of teaching and
for use in libraries, museums and other similar
institutions
 Need For a Lawyer
• Entrepreneurs needs to be aware of any regulations that
may affect his or her new venture.
• At different stages of the start-up there will be a need to
seek legal advice.
• The legal expertise required will vary based on such
factors as whether the new venture is independent start-
up, a buyout, consumer versus industrial product, a
franchise, nonprofit, or involves exporting or importing 
• By being aware of when and what legal advice is
required, the entrepreneur can save much time and
money.
 Business Registration
• For a business to operate legally there is a need for
registration and getting a license from the appropriate
regional and/or federal government body.
• For registering a business there are different
requirements.
– Examples: the legal form of the business, its size, and the
sector of operation.
• The entrepreneur needs to determine the
requirements from the appropriate government body
or business formation advisors.
 Product Safety and Liability
• Product liability problems are complex and are
important consideration for entrepreneurs

• Claims regarding product liability usually fall under

one of the following categories: Negligence,
Warranty, Strict Liability or Misrepresentation

• The best protection against product liability is to

produce safe products and to warn consumers of
any potential hazards
 Insurance
• It is in the best interests of the entrepreneur to
purchase insurance in the event that problems do
occur.
• It is important for the entrepreneur to not only
determine what kind of insurance to purchase but
also to determine how much to purchase and
from what company.
• Seeking advice from an insurance agent is often
difficult because the agent is trying to sell
insurance.
 Taxes

• Tax is one of the legal concerns of

entrepreneurs
• There are many kinds of taxes that
entrepreneurs have to withhold
and/or pay to the government.
Thank you
Have a nice fortune