Hisrich
Peters
Shepherd
6-2
Patents
Patent - Grants holder protection from others
making, using, or selling similar idea; issued
by the Patent and Trademark Office (PTO).
Utility patent Protection of new, useful, and
unobvious processes, machines, compositions of
matter, and articles of manufacture; term of 20
years.
Design patent Covers new, original, ornamental,
and unobvious designs for articles of
manufacture; term of 14 years.
Plant patent - Given for new varieties of plants.
6-4
Patents
(cont.)
International Patents
The Patent Cooperation Treaty (PCT) was
established to facilitate patent filings in multiple
countries in one office.
It is administered by the World Intellectual
Property Organization (WIPO) in Geneva,
Switzerland; has over 100 participants.
It provides a preliminary search that assesses
whether the filing firm will face infringements in
any country.
Differences may exists in the patent laws of each
of these countries.
6-5
Patents
(cont.)
6-6
Patents
(cont.)
Patents
(cont.)
Patent Infringement
Many businesses, inventions, or innovations are
results of improvements on, or modifications of,
existing products.
Copying and improving on a product may be
perfectly legal and a good business strategy.
If patent infringement is unavoidable, the
entrepreneur may try to license the product
from the patent holder.
It is advisable to hire a patent attorney to
ensure there is no possibility of infringement.
6-8
Table 6.1
6-9
Trademarks
A distinguishing word, name, or symbol
used to identify a product.
It can last indefinitely.
It can be filed solely on the intent to use the
trademark in interstate or foreign commerce;
also with the intent to use in the future.
Categories:
Coined marks.
Arbitrary marks.
Suggestive marks.
Descriptive marks.
6-11
Trademarks
(cont.)
Trademarks
(cont.)
6-13
Table 6.2
6-14
Copyrights
Right given to prevent others from printing,
copying, or publishing any original works of
authorship.
Issues surrounding access to material on
the Internet have led to major legal battles
for the entertainment industry.
Copyrights are registered with the Library
of Congress.
Term of the copyright is the life of the
author plus 70 years.
6-15
Trade Secrets
Provides protection against others revealing or
disclosing information that could be damaging
to business.
Trade secrets have a life as long as the idea or
process remains a secret.
It is not covered by any federal law but is
recognized under a governing body of common
laws in each state.
Employees may be asked to sign a confidential
information agreement.
Entrepreneur needs to take proper precautions.
Legal action is possible only after the secret has
been revealed.
6-16
Licensing
A contractual agreement giving rights to
others to use intellectual property in return
for a royalty or fee.
Types of licensing:
Patent license agreements - Specify how the
licensee would have access to the patent.
Trademark license agreements - Involve a
franchising agreement.
Copyright license agreements - Involve rights to
use or copy books, software, music,
photographs, plays, etc.
6-17
Licensing
(cont.)
Factors to be considered:
Customers recognition of licensed property.
Whether licensed property complements existing
products or services.
Entrepreneurs experience with the licensed
property.
Long-term outlook for the licensed property.
Kind of protection provided by the agreement.
Commitments in terms of payment of royalties,
sales quotas, and so on.
Renewal options.
6-18
Insurance
It provides a means of managing risk in the
new business.
Some insurances are required by law and
cannot be avoided while others are may be
necessary to protect the financial net worth
of the venture.
Skyrocketing medical costs can have a
significant impact on insurance premiums.
Entrepreneurs also have to consider health
care coverage.
6-20
6-21
Sarbanes-Oxley Act
Congress passed the Act in 2002.
Provides a mechanism for greater control over
the financial activities of public companies.
Sarbanes-Oxley Act
(cont.)
Sarbanes-Oxley Act
(cont.)
6-24
Contracts
A legally binding agreement between two
parties.
Often business deals are concluded with a
handshake.
The rule is to not to rely on a handshake if
a deal cannot be completed within one year.
Courts insist on a written contract for all
transactions over $500.
6-25
6-26
Contracts
(cont.)
6-27