product safety & liability[1]

8/9/2019 Product Safety & Liability[1].

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LEGAL ISSUES FOR THE

ENTREPRENEUR


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Learning Objectives

Identify and Distinguish Intellectual PropertyAssets of a new venture.Understand nature of patents and subsequent

issues.Understand the purpose of Trademark and theprocess of filingLearn about copyrights, trade secrets ,licensing ,and contracts.Understand issues related to insurance andproduct safety and liability.


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Entrepreneurial Venture

Daniel Schreiber Andrew Goldman(Attorney) (Software Engineer)

Company- Alchemedia

Product Clever Content Server (formerly PixSafe)

Feature Provide protection that a user deemed proprietary.Prevent Web Surfers from downloading anyinformation, graphics, or image that were sensitive toillegal issue.


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Intellectual Property

Important assets to the Entrepreneur.Patent

TrademarkCopyrightTrade Secret

These are to be understood beforeengaging services of an Attorney.


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Need for a Lawyer

Legal advice is important at different stage of a start-up.

Entrepreneur does not usually have expertise to handlepossible risks associated with difficult laws andregulations.

Legal Expertise vary on the type of venture, type of product and issues of import and export.


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Selection of a Lawyer

Mode of payment to the attorney.Retainer Basis (stated amount per month or year).One-time payment patents, purchase of Real Estate

Existence of a comfort zone between theparties .

Personalized service by the Attorney if heis offered stock in the business.


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Patents


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PATENTS

A contract between the government andinventor.Grants inventor exclusivity regarding theinventionEventually invention becomes part of public domainGives owner negative right


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Types of Patents

Utility PatentsTerm of 17 yearsFor new, useful and unobvious processesPhotocopiers, chemical compounds

Design PatentsTerm of 14 yearsNew, original and unobvious designs

Reebok and NikeFiling fees $ (150-300)Issuance Fees $400


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Plant Patents

Term of 17 yearsNew plant varieties

International Patents7 year for trademarks20 years for patents50 years for films, music, and software


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Patent and Trademark Office

Disclosure Document Program Discloses intent to patent the idea

Defensive Publication Document ProgramPrevents anybody from patenting the idea but gives

public access to it


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The Patent Application

IntroductionBackground and advantages of inventionDistinction from existing offerings

Description of InventionDrawingsSpecifications, materials, components

Claims

What the entrepreneur Is trying to patentDeclarationAverage Cost - $ ( 1,500 to 2,000 )


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Patent Infringement

Does patent exists? File for Patent

Is patent recent? Do expired patents exist thataccomplish the same purpose?

Develop productusing older designs

Can product be

changedslightly withoutinfringement?

Begin planning for

introductionwhen existing patent expires

Seek License Develop modified version

New

Yes

New

Unacceptable

AcceptableOr

Ready to expire

No Yes


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TRADEMARKS

A distinguishing word, name, symbol, or sound used toidentify source or sponsorship of goods/servicesCan last indefinitely

20 year registration with 20 year renewable termsIn 5 th to 6 th year affidavit to be filed dictating that mark iscurrently in useTo be used in interstate or foreign commerce


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Categories of Trademark

Coined Marks No relationship between mark andgood/service

Polaroid,Kodak Arbitrary Mark Has another meaning

AppleSuggestive Mark suggests features, characteristics of product

Halo shampoo

Descriptive Mark distinctive and gained consumer recognitionRubberoid


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Benefits of a Registered Trademark

Provides notice that you have exclusiverights to use the markEntitles you to sue for trademarkinfringementEstablishes incontestable rights regardingcommercial use of mark

Provides basis for filing trademarkapplication in foreign countries


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Registering the Trademark

File application to PTOFour Requirements

Completion of written form

Drawing of mark5 specimens showing actual use of markFee

Determine whether mark is suitable for

registration 3 months13 months from the date of filing


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Copyright

Right given to prevent others from printing,copying or publishing any original works of authorshipDoes not protect the idea itself and allowssomeone else to use it1980-Compter software copyright actProtection of material on internetNew York Times vs Amazon.com


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Registered with Library of CongressForm

Two copies of workFees

TermLife of author + 50 yearsInstitution 75 years from publication

Desirable for books, articles, songs, models,printed material on board games


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TRADE SECRETS

o Protection against others revealing or disclosinginformation that could be damaging to business

o Employees asked to sign confidential information agreement

o Right to sue in case of breach

o How much information can be given


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Control info. presented by employeesUse security measuresSign non disclosure agreementsDebrief departing employeesAvoid faxing important info

Mark confidential documents


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LICENSING

Contractual agreement giving rights to othersto use intellectual property in return for aroyalty or feeInformation, process or technology protectedby patents , trademarks or copyrights

Used as a marketing strategy


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Technology licensing rights to a product,process and/or management technologyTo improve competitive advantage or technicalskills

Reduces R&D costs, marketing and legislativerisks and speeds up market entryIncrease revenues without risk or initial

investmentWay to expand business or complement anexisting product line


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PRODUCT SAFETY &LIABILITY

Definition : Responsibility of the company tomeet any legal specifications regarding a new

product covered by the consumer product safety act

Consumer product safety act 1972

Amendment in 1990


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CLAIMS REGARDING PRODUCT LIABILITY FALLUNDER FOUR CATEGORIES .

NegligenceWarrantyStrict liabilityMisrepresentation

PROTECTION AGAINST PRODUCT LIABILITY :

Produce safe products

Warn consumers of potential hazards


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INSURANCE

DEFINITION: Provide means of managing risk inthe new business.

Types of insurance & possible coverage

Type of insurance Coverage possibleProperty Fire insurance, risk due to

explosion, riot, smoke etcBurglary & robberyBusiness interruption

Casualty General liability covers cost of defense & judgmentAutomobile liability


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Types of insurance & possible coverage

Type of insurance Coverage possible

Life Protects continuity of businessProtection for survivors

Workers compensation Work related injury

Bonding Protects companyProtects contractor


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Insurance continued

What typeHow muchFrom whom

Important costs

Workers compensation premium

Health insurance premium

Officers or directors liability insurance


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CONTRACTSDEFINITION: A legally binding agreement betweentwo parties

Contract conditions:An offer is made, it can be oral or written but not bindinguntil voluntary acceptance of offer is given.Voluntary acceptance of offer.Consideration( something of value ) is given by both parties.Both parties are competent &/or have right to negotiate for

the firms.Contract must be legal. Eg: Gambling not a bindingSales of $ 500 or more must be in writing.


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Results of a contract breach:

The party in violation of contract maybe required to liveup to the agreement or pay damages.

Contract restitution if one party fails to live up to itsend of a contract, the second may also do so.


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4 ESSENTIAL ITEMS TO PROVIDE BEST LEGAL PROTECTIONUNDER CONTRACTS

All of the parties involved should be named and their specific roles in the transaction specified. (Eg: buyers,sellers)

The transaction should be described in detail (Eg: exactlocation of land, dates, units)

The exact value of the transaction should be specified (Eg:installment payment with finance charges)

Obtain signature(s) of the person(s) involved in the deal.


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product safety & liability[1]

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