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The Legal Environment The Legal Environment

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2

Chapter 8

The Legal The Legal EnvironmentEnvironment

Legal Issues Facing Start-UpsLegal Issues Facing Start-Ups

Handling Government RegulationsHandling Government Regulations

8.1

8.2


3

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

8.1


4

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.


8.1


5

intellectual property law

patent

public domain

patent pending

copyright

trademark


8.1

service mark

permit

license

contract

consideration

capacity


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



7

Protecting Ideas: Intellectual Property Law

Intellectual property laws protect the following:


trade secrets

patents

copyrights

trademarks


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.



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



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



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.


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



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



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



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



16

Laws That Affect Start-Up of a Business

Entrepreneurs should be aware of laws involving:


permits and licenses

contracts

location


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


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



19

Contracts

To be valid and legally inferable, a contract must contain the following components:


agreement

consideration

capacity

legality


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



21

Contracts

By law, minors do not have capacity to sign a contract.

capacity the legal ability to enter into a binding agreement



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.



23

1. Explain how to protect your intellectual property.


8.1

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.


24

2. Discuss the laws affecting the start-up of a business.


8.1

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.


25

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


26

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


8.2


27Section 8.2 Handling Government Regulations

8.2

Equal Employment Opportunity Commission (EEOC)

wrongful termination

price discrimination

Uniform Commercial Codewarranty of merchantabilitybait-and-switch advertisingFICA

Laws That Affect Employees

Section 8.2 Handling Government Regulations 28

discrimination in hiringdiscrimination in hiring

child labor lawschild labor laws

wrongful terminationwrongful termination

sexual harassmentsexual harassment

Americans With Disabilities ActAmericans With Disabilities Act

Family Medical Leave ActFamily Medical Leave Act

Equal Pay Act of 1963Equal Pay Act of 1963

Fair Labor Standards ActFair Labor Standards Act

Occupational Safety and Health ActOccupational Safety and Health Act


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



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.


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



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.



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.



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.



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.



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.



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.



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


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



40

Consumer Protection Laws

Manufacturers of consumer products must become familiar with consumer protection laws in order to avoid recalls and lawsuits.



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



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



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.



44

Truth in Advertising

The Federal Trade Commission protects customers from false and misleading advertising with truth-in-advertising laws.



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



46

Tax Laws

All business owners are responsible for certain taxes, including:


sales taxes

payroll taxes

federal unemployment taxes

business income taxes


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



48

1. Explain the laws that affect employees.


8.2

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.


49

2. Identify the laws that regulate trade.


8.2

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.


50

3. Discuss the tax laws that apply to a new venture.


8.2

Businesses are responsible for sales taxes, payroll taxes, federal unemployment taxes, and business income taxes.


51Section 8.2 Handling Government Regulations 51

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.

Steps to Conceivinga Web Site


52Section 8.2 Handling Government Regulations 52

Tech Termscontent 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


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