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

3. 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

4. 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

5. 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

6. 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

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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. 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

21. 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

22. 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

23. 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

24. 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

25. 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

26. 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

27. 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

28. 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

29. 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

30. 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

31. 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

32. 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

33. 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

34. 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

35. 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

36. 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

37. 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

38. 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

39. 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

40. 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

41. 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

42. 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

43. 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

44. 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

45. 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

46. 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

47. 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

48. 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

49. 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

50. 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

51. 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

52. 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

53. End of