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Intellectual Property: Mcgraw-Hill/Irwin Entrepreneurship, 7/E

The document discusses various topics related to intellectual property including patents, trademarks, copyrights, trade secrets, licensing, and product safety and liability. It provides information on registering and protecting each type of intellectual property and strategies for minimizing risks.

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josh mukwenda
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167 views

Intellectual Property: Mcgraw-Hill/Irwin Entrepreneurship, 7/E

The document discusses various topics related to intellectual property including patents, trademarks, copyrights, trade secrets, licensing, and product safety and liability. It provides information on registering and protecting each type of intellectual property and strategies for minimizing risks.

Uploaded by

josh mukwenda
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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Intellectual property

McGraw-Hill/Irwin
Entrepreneurship, 7/e Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.
Intellectual Property

 Includes:
 Patents.
 Trademarks.
 Copyrights.
 Trade secrets.

 Represents important assets to the Business.


 Should be understood even before engaging the services of an attorney.
Selecting a Lawyer

 Lawyer may work on a:


 Retainer basis.
 One-time fee.

 A good working relationship with a lawyer:


 Eases some of the risk in starting a new business.
 Gives the entrepreneur necessary confidence.

 Entrepreneur can offer lawyer stock in exchange for the services.


Types of Patents
 Patent: grants holder protection from others making, using, or selling similar
idea; issued by the PTO.

 Utility patent: grants owner protection from anyone else making,


using, and/or selling the identified invention.
 Design patent: provide inventor with a negative right excluding
others from making, using, or selling an article having the
ornamental appearance given in the drawings included in the
patent.
 Plant patent: given for new varieties of plants, represent a limited
area of interest.
International Patents

 The Patent Cooperation Treaty (PCT) was established to provide firms


protection in global markets.
 Has over 100 participants.
 Facilitates patent filings in multiple countries in one office.
 Administered by the World Intellectual Property Organization (WIPO) in
Geneva, Switzerland.
 Provides a preliminary search that assesses whether filing firm will face
infringements in any country.

 Significant differences may exists in patent laws in each of these countries.


The Disclosure Document

 Statement to U.S. Patent and Trademark Office by inventor disclosing intent to patent
idea.
 Establish a date of conception of the invention.
 Important when two entrepreneurs file patents on similar inventions.
 Relevant when foreign companies are involved.

 To file a disclosure document:


 Prepare a clear and concise description of the invention.
 Include photographs.
 Include a cover letter and a duplicate with the description.
The Patent Application (1 of 2)

 Introduction
 Background.
 Advantages of the invention and the nature of problems that it overcomes.
 States how the invention differs from existing offerings.

 Description of invention
 Description of the drawings that accompany it.
 Detailed description of the invention.
The Patent Application (2 of 2)

 Claims
 Serve to specify what the entrepreneur is trying to patent.
 Essential parts of the invention should be described in broad terms
 Claims must not be too general either.

 Application should contain a declaration or oath signed by the inventor or


inventors.
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
 A good business strategy.

 Products can be licensed from the patent holder.


 Advisable to hire a patent attorney to ensure no possibility of patent
infringement.
Checklist for Minimizing Patent Risks
 Seek a patent attorney who has expertise in your product line.
 The entrepreneur should consider a design patent to protect the product design or
product look.
 Before making an external disclosure of an invention at a conference or to the
media, or before setting up a beta site, the entrepreneur should seek legal counsel
since this external disclosure may negate a subsequent patent application.
 Evaluate competitor patents to gain insight into what they may be developing.
 If you think your product infringes on the patent of another firm, seek legal
counsel.
 Verify that all employment contracts with individuals who may contribute new
products have clauses assigning those inventions or new products to the venture.
 Be sure to properly mark all products granted a patent. Not having products
marked could result in loss or damages in a patent suit.
 Consider licensing your patents. This can enhance the investment in a patent by
creating new market opportunities and can increase long-term revenue.

Table 6.2
Business Method Patents

 Growth of Internet use and software development has given rise to use of
business method patents.
 E.g. Amazon.com.

 Firms that hold these patents use them to assault competitors.


 Subsequently provide a steady stream of income from royalties or licensing fees.
Trademarks

 A distinguishing word, name, or symbol used to identify a product.


 Can last indefinitely.
 Can be filed solely on intent to use the trademark in interstate or foreign
commerce.
 Can also be filed with intent to use in the future.
 Categories:
 Coined marks.
 Arbitrary marks.
 Suggestive marks.
 Descriptive marks.
Registering the Trademark (1 of 2)

 Federal registration of trademarks – PTO.


 Filing must meet four requirements:
 Completion of the written form.
 A drawing of the mark.
 Five specimens showing actual use of the mark.
 The fee.

 Initial determination of suitability takes 3 months.


 Objections must be raise within six months, or application is considered abandoned.
 Right to appeal in case of refusal.
Registering the Trademark (2 of 2)

 Once accepted, trademark is published in the Trademark Official Gazette to


allow any party:
 30 days to oppose.
 Request an extension to oppose.
 Registration issued if no opposition is filed.
 Procedure takes about 13 months from initial filing.
Benefits of a Registered Trademark

 Seek a patent attorney who has expertise in your product line.


 It provides notice to everyone that you have exclusive rights to the use of the
mark throughout the territorial limits of the United States.
 It entitles you to sue in federal court for trademark infringement, which can result
in recovery of profits, damages, and costs.
 It establishes incontestable rights regarding the commercial use of the mark.
 It establishes the right to deposit registration with customs to prevent importation
of goods with a similar mark.
 It entitles you to use the notice of registration.
 It provides a basis for filing trademark application in foreign countries.

Table 6.2
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.
 Example: Napster.

 Copyrights are registered with the Library of Congress


 Usually do not require an attorney.
 Term of the copyright is the life of the author plus 70 years.
Trade Secrets

 Protection against others revealing or disclosing information that


could be damaging to business.
 Have a life as long as the idea or process remains a secret.
 Not covered by any federal law but is recognized under a
governing body of common laws in each state.

 Entrepreneur needs to take proper precautions.


 Legal action can be taken only after the secret has been revealed.
Licensing (1 of 2)

 Contractual agreement giving rights to others to use intellectual property in


return for a royalty or fee. Type of licensing:
 Patent license agreement: specifies how the licensee would have access to the
patent.
 Trademark: involves a franchising agreement.
 Copyrights.

 Licensing has become a revenue boom for many Fortune 500 companies.
Licensing (2 of 2)

 Question to be considered by an entrepreneur:


 Will 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?
Product Safety and Liability (1 of 2)

 Responsibility of a company to meet any legal specifications regarding a new


product covered by the Consumer Product Safety Act.
 First passed in 1972.
 Created a five-member commission with:
 Power to prescribe safety standards.
 Responsibility and power to identify substantial hazards and bar products it considers
unsafe.
 Act was amended and signed into law in 1990.
 Establishes stricter guidelines for reporting product defects and any injury or death
resulting from such defects.
Product Safety and Liability (2 of 2)

 Claims regarding product liability usually fall under one of the following
categories:
 Negligence.
 Warranty.
 Strict liability.
 Misrepresentation.

 Best protection against product liability is to:


 Produce safe products.
 Warn consumers of any potential hazards.
Insurance

 Provides a means of managing risk in the new business.

 Entrepreneurs usually have limited resources in the beginning.


 Some insurances are required by law and cannot be avoided.
 Other insurances are not required but may be necessary to protect the financial net
worth of the venture.
Types of Insurance and Possible
Coverage

 <<Insert Table 6.4>>


Contracts (1 of 2)

 A legally binding agreement between two parties.

 Business deals are concluded with a handshake, but in case of


disagreements, entrepreneurs:
 May find that there is no deal.
 May be liable for something never intended.
 Rule is to not to rely on a handshake if deal cannot be completed
within one year.

 Courts insist on a written contract for all transactions over $500.


Contracts (2 of 2)

 Four essential items in an agreement to provide the best legal protection:


 All parties involved should be named and specific roles in the transaction specified.
 Transaction should be described in detail.
 Exact value of the transaction should be specified.
 Signature(s) of the person(s) involved in the deal should be obtained.

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