ADVICE TO AN ENTREPRENEUR
Consider the following:
1. What advice would you give to a business colleague who is about to start a new high-tech firm that has developed a new accessory for computer tablets? Would you recommend that she seek a patent immediately?
2. What factors shuld she consider in the process of debating whether a patent would be appropriate?
3. Why do you think it is so expensive to develop a software patent?
A good working relationship with a lawyer will ease some of the risk in starting a new business and will give the entrepreneur necessary confidence. When resources are very limited, the entrepreneur may consider offering the lawyer stock in exchange for his or her services. The lawyer then will have a vested interest in the business and will likely provide more personalized services. However, in making such as a major decision, the entrepreneur must consider any possible loss of control of the business.
LEGAL ISSUES IN SETTING UP THE ORGANIZATION
The form of organization as well as franchise agreements are discussed in Chapters 9 and 14 and will not be addressed in detail here. Since there are many options that are entrepreneur can choose in setting up an organization ( see Chapter 9 ), it will be necessary to understand all the advantages and disadvantages of each regarding such issues as liability, taxes, continuity, transferability of interest, costs of setting up, and attractiveness for raising capital. Legal advice for these agreements is necessary to ensure that the most appropriate decisions have been made.
PATENTS
A patent is a contract between the government and an inventor. IN exchange for disclosure of the invention, the government grants the inventor exclusivity regarding the invention for a specified amount of time. At the end of this time, the government publishes the invention and it becomes part of the public domain. As part of the public domain, however, there is the assumption that the disclosure will stimulate ideas and perhaps even the development of an even better product that could replace the original.
Basically, the patent gives the owners a negative right because it prevents anyone else from making, using, or selling the defined invention. Moreover, even if an inventor has been granted a patent, in the process of producing or marketing the invention he or she may find that it infringes on the patent rights of others. The inventor should recognize the distinction between utility and design patents and some of the differences in international patents that are discussed later in this chapter.
• Utility patents. When speaking about patents, most people are referring to utility patents. A utility patent has a term of 20 years, beginning on the date of filing with the Patent and Trademark Office (PTO). Any invention requiring FDA approval has also been amended to extent the term of the patent by the amount of time it takes the FDA to review the invention. Initial filing fees for a utility patent for a small entity can vary from $82 online to $165 by mail. Additional fees exist depending on the number of claims made in the patent application.
A utility patent basically grants the owner protection from anyone else making, using, and/or selling the identified invention and generally reflects protection of new, useful, and unobvious processes such as film developing, machines such as photocopiers, compositions of matter such as chemical compounds or mixtures of ingredients, and articles of manufacture such as the toothpaste pump.
• Design patents. Covering new, original, ornamental, and unobvious designs for articles of manufacture, a design patent reflects the appearance of an object. These patents are granted for a 14-year term and , like the utility patent , provide the 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. The initial filing fee for each design application for a small entity is $110.