Legal Issues Facing Start-Ups Chapter 8 The Legal Environment Legal Issues Facing Start-Ups 8.1 Handling Government Regulations 8.2

Explain how to protect your intellectual property. 8.1 Explain how to protect your intellectual property. Discuss the laws affecting the start-up of a business. Section 8.1 Legal Issues Facing Start-Ups

Other aspects of a business are protected by law as well. 8.1 A new product or service must be protected through patents, copyrights, trademarks, or trade secrets.   Other aspects of a business are protected by law as well. Section 8.1 Legal Issues Facing Start-Ups

intellectual property law patent public domain patent pending 8.1 intellectual property law patent public domain patent pending copyright trademark service mark permit license contract consideration capacity Section 8.1 Legal Issues Facing Start-Ups

Protecting Ideas: Intellectual Property Law Intellectual property law protects the inventions and new ideas of business. intellectual property law the group of laws that regulate the ownership and use of creative works Section 8.1 Legal Issues Facing Start-Ups

Protecting Ideas: Intellectual Property Law Intellectual property laws protect the following: trade secrets patents copyrights trademarks Section 8.1 Legal Issues Facing Start-Ups

Trade Secrets Trade secrets form the basis of all intellectual property.   A trade secret may consist of a formula, an idea, a process, a pattern, or compilation of information that gives the owner a competitive advantage. Section 8.1 Legal Issues Facing Start-Ups

Patents An inventor may acquire a patent, which will protect his or her invention for a period of 21 years. patent a document that grants to an inventor the right to exclude others from making, using, or selling an invention or other intellectual property during the term of the patent Section 8.1 Legal Issues Facing Start-Ups

Patents After a patent expires, it is placed in public domain. public domain intellectual property whose protection has expired; it belongs to the community at large and people can use any aspect of the property free of charge Section 8.1 Legal Issues Facing Start-Ups

Patents Rules for obtaining a patent are: The invention must not contain prior art. The invention must fit it one of five classes: machine, process, articles of manufacture, composition, or new use for one of the other four. The invention must be “unobvious.” The invention must have utility. Section 8.1 Legal Issues Facing Start-Ups

Patents After you apply for a patent, the Patent and Trademark Office (PTO) does a patent search.   During this time, you may market your product but you must put the term patent pending and the patent number on the product or packaging. patent pending the status of an invention between the time a patent application has been filed and when it is issued or rejected Section 8.1 Legal Issues Facing Start-Ups

Copyrights If you plan to publish a book, place a notice of copyright in a prominent location on the work. copyright a legal device that protects original works of authors, including books, movies, musical compositions, and computer software, for the life of the author plus 70 years Section 8.1 Legal Issues Facing Start-Ups

Trademarks A trademark is followed by the registered trademark symbol ™. trademark a word, symbol, design, or color that a business uses to identify itself or something it sells Section 8.1 Legal Issues Facing Start-Ups

Trademarks Like a trademark, a service mark can be protected by registering it with the Patent and Trademark office. service mark a word, symbol, sign, or color that describes a service business Section 8.1 Legal Issues Facing Start-Ups

Laws That Affect Start-Up of a Business Entrepreneurs should be aware of laws involving: permits and licenses contracts location Section 8.1 Legal Issues Facing Start-Ups

Permits and Licenses Before you can officially open your business, you must get a permit. permit a legal document giving official permission to run a business In certain professions, such as nursing, you may also need to get a license. license a certificate that shows that the holder of the document has the necessary education and training to perform a job Section 8.1 Legal Issues Facing Start-Ups

Contracts As an entrepreneur, you will need to sign a contract with vendors, landlords, and clients. contract a binding legal agreement between two or more persons or parties Section 8.1 Legal Issues Facing Start-Ups

Contracts To be valid and legally inferable, a contract must contain the following components: agreement consideration capacity legality Section 8.1 Legal Issues Facing Start-Ups

Contracts The money you pay a vendor for a product for your business is valuable consideration. consideration what is exchanged for the promise to do something or refrain from doing something Section 8.1 Legal Issues Facing Start-Ups

Contracts By law, minors do not have capacity to sign a contract. capacity the legal ability to enter into a binding agreement Section 8.1 Legal Issues Facing Start-Ups

Location Only certain types of real property are available to business owners because they are subject to zoning laws and building codes. Because a lease is a long-term contract, an entrepreneur should consult an attorney before signing. Section 8.1 Legal Issues Facing Start-Ups

Explain how to protect your intellectual property. 8.1 Explain how to protect your intellectual property. To protect trade secrets, you can ask employees, contractors, and investors to sign contracts promising not to reveal secret information about the product. To protect an invention, you should file a patent application with the PTO. To protect an original work, you should place a notice of copyright in a prominent location on the work and register your work with the Copyright Office. To protect a trademark or logo, you should file register it with the PTO. Section 8.1 Legal Issues Facing Start-Ups

Discuss the laws affecting the start-up of a business. 8.1 Discuss the laws affecting the start-up of a business. A person must obtain a permit from the local government office before he or she can officially open for business. A license is required for certain professions to prove they have the education and training needed to do the job. Licensing requirements vary from one state or locality to another. When entering into an agreement to start a run a business, the owner creates a valid contract. This means the owner must abide by contract laws. Section 8.1 Legal Issues Facing Start-Ups

Explain the laws that affect employees. 8.2 Explain the laws that affect employees. Identify the laws that regulate trade. Discuss the tax laws that apply to a new venture. Section 8.2 Handling Government Regulations

8.2 Laws and regulations are designed to protect employees, other businesses, and customers from unfair, unsafe, or unhealthy business practices. Section 8.2 Handling Government Regulations

Equal Employment Opportunity Commission (EEOC) 8.2 Equal Employment Opportunity Commission (EEOC) wrongful termination price discrimination Uniform Commercial Code warranty of merchantability bait-and-switch advertising FICA Section 8.2 Handling Government Regulations

Laws That Affect Employees discrimination in hiring child labor laws wrongful termination sexual harassment Americans With Disabilities Act Family Medical Leave Act Equal Pay Act of 1963 Fair Labor Standards Act Occupational Safety and Health Act Section 8.2 Handling Government Regulations 28

Laws Against Discrimination in Hiring Employers are subject to regulations of the Equal Employment Opportunity Commission (EEOC). Equal Opportunity Employment Commission (EEOC) the government agency charged with protecting the rights of employees; it ensures that employees do not discriminate against employees because of age, race, color or natural origin, religion, gender, or physical impairments Section 8.2 Handling Government Regulations

Child Labor Laws Federal child labor laws protect young workers in many ways. Employment can not interfere with their education, health, or well-being. Persons under 18 can not work in jobs the government considers hazardous. Persons under 16 are only allowed to work certain hours and times. Persons under 14 can only work in certain jobs. Section 8.2 Handling Government Regulations

Wrongful Termination Employers must keep accurate records for each employee, including employee evaluations, disciplinary actions, and warnings, because employees are protected against wrongful termination. wrongful termination the right of an employee to sue his or her employer for damages if he or she is terminated for an unacceptable reason Section 8.2 Handling Government Regulations

Sexual Harassment At the federal level, Title VII of the Civil Rights Act forbids sexual harassment.   Most states also have laws that prohibit sexual harassment. Section 8.2 Handling Government Regulations

Americans With Disabilities Act The Americans With Disabilities Act requires employers to provide reasonable accommodations to that allow qualified employees to do their basic jobs.   Business owners can ask prospective employees about their abilities, but not their disabilities. Section 8.2 Handling Government Regulations

Family Medical Leave Act The Family Medical Leave Act (FMLA) provides employees with the right to an unpaid leave of absence for up to 12 weeks for certain family and medical issues. Section 8.2 Handling Government Regulations

Laws Requiring Equal Pay for Equal Work The Equal Pay Act of 1963 says all employers must pay men and women the same wage for the same work. Section 8.2 Handling Government Regulations

Laws Requiring Fair Labor Standards The Fair Labor Standards Act, passed in 1938, established a minimum wage and maximum working hours.   It also ensured that children under the age of 16 could only be employed full-time by their parents. Section 8.2 Handling Government Regulations

Laws Requiring Workplace Safety and Health The Occupational Safety and Health Act of 1970 ensures safe, healthful working conditions for employees.   The act created OSHA, the Occupational Safety and Health Administration, to oversee safety in the workplace. Section 8.2 Handling Government Regulations

Laws That Regulate Trade Laws that regulate trade include: price discrimination laws consumer protection laws The Uniform Commercial Code (UCC) truth in lending laws truth in advertising laws Section 8.2 Handling Government Regulations

Price Discrimination Laws The Clayton Act of 1914 and the Robinson-Patman Act of 1936 are aimed at prohibiting price discrimination. price discrimination the charging of different prices for the same product or service in different markets or to different customers Section 8.2 Handling Government Regulations

Consumer Protection Laws Manufacturers of consumer products must become familiar with consumer protection laws in order to avoid recalls and lawsuits. Section 8.2 Handling Government Regulations

The Uniform Commercial Code As a merchant, you must abide by the requirements of the Uniform Commercial Code (UCC). Uniform Commercial Code (UCC) a group of laws that regulates commercial business transactions Section 8.2 Handling Government Regulations

The Uniform Commercial Code Virtually everything consumers buy comes with a warranty of merchantability. warranty of merchantability a guarantee on the quality of goods or services purchased that is not written down or explicitly spoken Section 8.2 Handling Government Regulations

Truth in Lending Those involved in retail businesses must familiarize themselves with the Consumer Credit Protection Act.   This act requires those who give credit to reveal all terms and conditions of their credit agreements. Section 8.2 Handling Government Regulations

Truth in Advertising The Federal Trade Commission protects customers from false and misleading advertising with truth-in-advertising laws. Section 8.2 Handling Government Regulations

Truth in Lending A business that engages in bait-and-switch advertising is violating truth-in-advertising laws. bait-and-switch advertising an illegal method of selling that involves advertising a product at a very low price in order to attract customers who are then persuaded to switch to a more expensive product Section 8.2 Handling Government Regulations

Tax Laws All business owners are responsible for certain taxes, including: sales taxes payroll taxes federal unemployment taxes business income taxes Section 8.2 Handling Government Regulations

Payroll Taxes When a business owner hires employees, he or she must deduct certain payroll taxes from their earnings, including FICA. FICA (Federal Insurance Contribution Act) a Social Security payroll tax, figured as a percentage of an employee’s income Section 8.2 Handling Government Regulations

Explain the laws that affect employees. 8.2 Explain the laws that affect employees. Laws that affect employees include equal opportunity, child labor, wrongful termination, sexual harassment, Americans with Disabilities Act, family medical leave, equal pay for equal work, fair labor standards, and workplace health and safety. Section 8.2 Handling Government Regulations

Identify the laws that regulate trade. 8.2 Identify the laws that regulate trade. The goal of the Clayton Act of 1914 and the Robinson-Patman Act of 1936 is to prohibit price discrimination. Consumer protection laws protect against unscrupulous sellers, unreasonable credit terms, unsafe products, and mislabeling of products. The UCC is a group of laws that regulates commercial business transactions. Section 8.2 Handling Government Regulations

Discuss the tax laws that apply to a new venture. 8.2 Discuss the tax laws that apply to a new venture. Businesses are responsible for sales taxes, payroll taxes, federal unemployment taxes, and business income taxes. Section 8.2 Handling Government Regulations

Steps to Conceiving a Web Site In order to reach and sell to its intended customers, a Web site must target its audience and gear the site to appeal to that group.   When planning a Web site, you should set goals, consider the audience, and organize the site so that it is easy to navigate. Section 8.2 Handling Government Regulations 51

Tech Terms content the text and graphic information contained in a Web site   navigation the act of moving around a Web site by clicking on hypertext links site layout the design of a Web site Section 8.2 Handling Government Regulations 52

End of