Legal Issues For The Entrepreneur

LEGAL ISSUES FOR THE
ENTREPRENEUR
What will we learn?
Intellectual Property Rights
Patents
Trademarks
Copyrights
Trade Secrets
Licensing
Product Safety & Liability
Insurance
Contracts
INTELLECTUAL PROPERTY
Any Innovation, Commercial or Artistic, 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 IP
1. Patents on Inventions
2. Trademarks on Branding Devices
3. Copyrights on Music, Videos, Patterns, Forms of
Expression
4. Trade Secrets for Methods/Formulas with
Economic Value
PATENTS
Edison
Bulb
• A Contract Between Government & Inventor in
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 period
and after that it passes into Public Domain
• Patents can be obtained in widely varying
Technical Subject Matters - "almost anything
under the sun made by man".
Holds the Right to issue Licenses to Others
An Idea/Thought can not be Patented
Modifications in Existing Products can also be
Patented (e.g. Galaxy Tab)
Term of Protection should be a minimum of 20
Years
Patentable Inventions in Pakistan:
Invention in NEW
Involves an Inventive Step
Should NOT be Contrary to Law OR Morality
UTILITY PATENTS
Protect Useful Processes, Machines, Articles of
Manufacture, and Compositions of Matter.
Some Examples: Fiber Optics, Computer
Hardware etc
DESIGN PATENTS
Guards the Unauthorized Use of New, Original,
and Ornamental designs for Articles of
Manufacture.
The look of an Athletic Shoe, a Bicycle Helmet,
the Star Wars Characters are all protected by
Design Patents.
PLANT PATENTS
Are the way we Protect Invented or Discovered
plant varieties.
For Example: Hybrid Tea Roses, Silver Queen
Corn, Better Boy Tomatoes are all types of plant
patents.
TRADEMARKS
Protect Words, Names, Symbols, Sounds, or Colors
that distinguish goods and services.
Trademarks, unlike Patents, can be renewed
FORVER as long as they are being used in business.
The roar of the MGM lion, the pink of the Owens-
Corning insulation, and the shape of a Coca-Cola
bottle, The Original Lawn by Gul Ahmed are
familiar trademarks.
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)
COPYRIGHTS
Protects Works of Authorship, such as WRITINGS,
MUSIC, and WORKS OF ART that have been
Tangibly Expressed.
Stop others from Printing, Copying, or Publishing
Does not protect Idea itself, others can use
Idea/Concept in a Different manner
Term of Copyrights is the life of Author plus 50
Years & 75 Years for an Institute.
For Example: Gone With The Wind, Harry Potter
(the book and the film), Beatles Recordings,
Computer Software, and Video Games.
Books, Scripts, Articles, Poems, Songs,

Sculptures, Models, Maps, Blueprints, Collages,
Printed Material, Data & Music all can be
Copyrighted.
TRADE SECRETS
Are information that companies keep secret from
Public/Competitors to give them an advantage
over their competitors.
The formula for Coca-Cola is the most famous
trade secret.
LICENSING
Arrangement between Two Parties i.e. Proprietary Right
Owner/Patentee and the Licensee
The patent owner may give permission to, or license,
other parties to use the invention on mutually agreed
terms
Licensee pays Royalty/Fees against the Right to use IP
Licensing is done to either Expand a Business or to Start a
New Venture.
Inexperience or Lack Resources
If there is an existing patent that might involve
infringement, licensing may be considered.
Licenses are Issued to make PROFITS and REACH
wider span of Public
Patent License Agreement:
Either just market a Product OR Manufacture and Sell
Also
Examples:
Telecommunication Companies, Fuel Stations, Food
Franchises & Drugs Stores etc.
Copyright License Agreement:
Copy Books, Software, Music, Photographs, & Plays etc
Examples:
Indian Idol, X-Factor, Sports Team’s Merchandising,
KFC gifting Coca Cola Glasses etc.
PRODUCT SAFETY & LIABILITY
A Firm must NOT Breach any Legal Specifications
of a Product under the CPSA
Pre-Assessment to Check if the Product is Subject
to any Regulations under CPSA
Entrepreneur must follow the Prescribed
Specification to meet the CPSA’s requirement
Examples:
Toyota Motors Paid in all Million of Dollars to their
Customer, who had Accident in 2009
Famous Pepsi’s Case in India against use of
Chemicals/Fertilizer to wash empty bottles
Halal Products (Lay’s Campaign)
Consumer Product & Safety Act (1994)

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/Bank’s Hidden Costs
INSURANCE
A cover against any unexpected Miss-hap
Managing Risk in the New Business+
Type of Insurance to Purchase depends upon the
Nature of Business/Industry.
Dramatic Increase in Purchase of Insurance in
Pakistan after the Post Violence of Benazir’s
Assassination in Country
For Example:
 Staff 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
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. Worker’s Compensation: on-job Injury
(chemical/manufacturing industry)
5. Bonding: Employee Theft OR Tender Not meets
Deadline (Contractors)
CONTRACTS
Legally Binding Agreement between Two Parties
Entrepreneurs Contract with Vendors, Landlords,
& Clients etc
Written Contracts must be preferred over Verbal
Ones.
Benefits of Written Contracts: termed as Valid &
Legally Enforceable
Examples:
Outsourcing Production (Apple, Samsung, Nike)
Employees Sign a Bond with Firm
Essentials of a Contract
Conditions
Offer is made
Voluntary acceptance
Consideration is given
Both parties are competent
Contract must be legal
Any sales of more than $500 must be in writing
Contract Ingredients
Parties Names & Roles Specified
Detailed Description Of
Transaction
Exact Value Of Transaction
Signatures of All Parties

Involved
Need for a Lawyer
Legal expertise required vary based upon kind of
business like franchise, an independent start-up or a
buy out, consumer or industrial products, Non-profit
or profit oriented, whether involves computer software
or exporting or importing.
How to Select a Lawyer?
Must be specialist in the specific areas of law
A competent attorney is in a better position to
understand all possible circumstances and outcomes
related to any legal action
How to Select a Lawyer?
Fees concern
May work on Retainer basis (stated amount per month
or per year)
In case of Not Availing a Lawyer, Entrepreneur
must 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 Transaction
4. Involved Persons’ Signatures must be Obtained
in the Deal.

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LEGAL ISSUES FOR THE

Books, Scripts, Articles, Poems, Songs,

Consumer Product & Safety Act (1994)

Exact Value Of Transaction

Signatures of All Parties

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