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NOTES

Meaning of key words:

Agreement: Every promise and every set of promises forming the consideration for each
other is an agreement. It is a negotiated and usually legally enforceable understanding between
two or more competent parties.
License: A permit from an authority to own or use something, do a particular thing, or carry on a
trade.
Contract: An agreement enforceable by law is contract.
Promise refers to the engagement of a party without reference to the reasons or considerations for
it, or duties of the other parties.
Attorney: A person appointed to act for another in business or legal matters.
Copyright: Copyright refers to a bundle of exclusive rights vested in the owner of copyright.
Intellectual Property (IP): It refers to creations of the mind: inventions, literary and artistic works,
and symbols, names, images, and designs used in commerce.
Intrinsic Factors: The factors relating to the essential nature of a thing; inherent.
Piracy: The unauthorized use or reproduction of copyrighted or patented material.
Trademark: Trademark means a different mark of authenticity, through which the products of
particular manufacturers or different commodities of particular manufacturer, trader, or vendor
may be distinguished from those of others.
TRIPs: Trade Related Intellectual Property Rights:

Legal Issues for Entrepreneur


Objectives:
Legal considerations before starting a business:
The basic legal steps before doing business are: handling issues with your prior employers,
choosing a company name, filing all the documents with the secretary of the chosen state, paying
all the required fees with the chosen state, working on the capital structuring of the equity, drafting
employee agreements and legal documents for incentive stock options, if any.
Legal help required inthe following areas: Incorporation; copyrights;
trademarks; patents; contracts and agreements; personal needs of the venture team; real estate and
leasing agreements; employee stock ownership plans; franchising and licensing; formal litigation;
delinquent accounts; liability protection; merger and acquisitions; employee benefit plans; tax
planning and review; government and regulatory reporting.
1. Intellectual Property Rights
Intellectual Property (IP) refers to creations of the mind: inventions, literary and artistic works,
and symbols, names, images, and designs used in commerce.
Entrepreneurship Small Scale Industries (SSI)Management
Intellectual property is divided into two categories: Industrial property, which includes
inventions (patents), trademarks, industrial designs, and geographic indications of source; and,
Copyright, which includes literary and artistic works such as novels, poems and plays, films,
musical works, artistic works such as drawings, paintings, photographs and sculptures, and
architectural designs.

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Rights related to copyright include those of performing artists in their performances, producers of
phonograms in their recordings, and those of broadcasters in their radio and television programs.
a. The term Intellectual Property (IP) reflects the idea that its subject matter is the product of the
mind or the intellect. These could be in the form of Patents; Trademarks; Geographical Indications;
Industrial Designs; Layout-Designs (Topographies) of Integrated Circuits; Plant Variety
Protection and Copyright.
b. IP, protected through law, like any other form of property can be a matter of trade, that is, it can
be owned, bequeathed, sold or bought. The major features that distinguish it from other forms are
their intangibility and non-exhaustion by consumption.
c. IP is the foundation of knowledge-based economy. It pervades all sectors of economy and is
increasingly becoming important for ensuring competitiveness of the enterprises.
Following are the various components of intellectual property rights:
2. Copyrights
Copyright is a form of intellectual property protection granted under Indian law to the creators of
original works of authorship such as literary works (including computer programs, tables and
compilations including computer databases which may be expressed in words, codes, schemes or
in any other form, including a machine readable medium), dramatic, musical and artistic works,
cinematographic films and sound recordings.
3. Legal Issues for Entrepreneur
Copyright protection commences the moment a work is created, and its registration is optional.
However it is always advisable to obtain a registration for a better protection. Copyright
registration does not confer any rights and is merely a proof of an entry in respect of the work in
the Copyright Register maintained by the Registrar of Copyrights.
Trademarks:

Trademark means a different mark of authenticity, through which the products of particular
manufacturers or different commodities of particular manufacturer, trader, or vendor may be
distinguished from those of others. Trademark in India is mainly governed by the rules and
regulations laid down in Indian Trademark Act, 1999. According to Act trademark is a mark
capable of being represented graphically and which is capable of distinguishing the goods or
services of one person from those of others and may include shape of goods, their packaging and
combination of goods. The definition of mark as contained in the Act is not exhaustive and there
is practically no limit to the combination of various types of marks.

The Trade Marks Registry was established in India in 1940 and it acts as a resource and
information Centre and is a facilitator in matters relating to trade marks in the country.
The objective of the Trade Marks Act, 1999 is to register trademarks applied for in the country
and to provide for better protection of trade mark for goods and services and also to prevent
fraudulent use of the mark.
Copyright and Trademark Law
Copyright and Trademark forms an intrinsic part of Intellectual property rights. Copyright gives
long lasting rights pertaining to literary, artistic and musical creations whereas trademarks are
protected against imitation as long at least as they continue to be employed in trade. According to
Indian legislation governing Intellectual property rights all artistic, literary, musical, dramatic
works are comes within the purview of copyright but if it has to be used in context with goods than

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a certificate concerning the same has to be obtained from the Registrar of Trademarks. Thus though
they are governed by different laws they are two sides of same coin.
Trade Secret is confidential information not generally known to others. The information must
derive independent economic value, actual or potential. The secret must give the holder a
competitive edge. However, the English Law does not distinguish between various types of
confidential information. But, generally, Trade Secrets, relate to different types of information.
Some of these are given below:
_ Technical and Scientific information
_ Commercial information
_ Financial information and
_ Negative information
Patents:
In India the law which govern patent right is “Indian Patent Act 1970”. Indian Patent Act, 1970
grants exclusive right to the inventor for his invention for limited period of time.
.
Patent Law in India
The entire patent system and the patent law in India are governed by the superintendence of
General Controller of designs patients, trademark patent and by geographical indications. This
office of general controller runs under department of industrial promotions and policy. There are
four patent office in India, Head office is located in kolkata and other offices are located in Delhi,
Chennai and Mumbai. The examiners of each patent office have to release their work according to
the direction of controllers.

Intellectual Property Rights in India


Among the agreements of WTO, Trade Related Intellectual Property Rights (TRIPs) is of special
significance to the Entrepreneurs. India has modified its laws on intellectual property to be
compliant with WTO provisions.
The Trade Marks Registry is also proposed to be further strengthened and modernized.
A project for modernization was earlier implemented during 1993-96. Further strengthening of the
Registry is being taken up at a cost of ` 86 million. The main thrust now is to strengthen the
infrastructure of the Trade Marks Registry and the early removal of backlog of pending
applications, transfer of records to CD-ROMs, re-engineering of work processes, appointment of
additional examiners, etc.
As regards the aspect enforcement, Indian enforcement agencies are now working very effectively
and there has been a notable decline in the levels of piracy in India. In addition to intensifying
raids against copyright infringers, the Government has taken a number of measures to strengthen
the enforcement of copyright law.
Legal Issues for starting the Business:
There are a multitude of legal issues that includes business name to its structure to its operation
has legal implications.
Business Name: You will need to make sure that the business name you plan to use is not already
being used by another business. You can do this by doing a name search with the appropriate state
agency, which is usually the office of the Secretary of State. If your chosen name is not already in
use, you can reserve it with the Secretary of State’s office for a period of time, about 120 days,
while you prepare your articles of incorporation, articles of organization, or a partnership
agreement.

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Structure: You will need to decide which business structure best suits your business. Your
business could be structured as a sole-proprietorship, partnership, limited partnership, corporation,
S-corporation, or limited liability company. To decide what form is best, you will need to consider
liability issues associated with your business and which form will provide the best tax structure
for your business.
Licenses: Depending on what type of business you plan to engage in, you may need a variety of
licenses or permits.
Non-disclosure Agreements:
If you will be setting up financing for your business or entering into contracts with suppliers, you
should consider confidentiality and non-disclosure agreements. Since these outside firms will have
access to business information that you may want to keep private, you should consider having
them sign these agreements. If you are ordering a thousand gizmos for your grand opening, you
don’t want the supplier to call your competitor to see if they want a thousand gizmos so that they
can offer them on the same day. The more confidential information your business plan contains,
the more important these agreements are.
Zoning
When you are selecting the location for your business, you will need to make sure it is properly
zoned for the type of business you plan to operate. It is not okay to just assume that, if your business
is of the same type as the one that is currently there, the zoning is appropriate. Zoning may have
changed while the other business was operating, and that business might have been provided an
exemption that won’t be provided to yours.
Task Conduct a survey of your local area and study the legal issues of the business
while they are initiated.

Case Study:

China Cracks Down on Counterfeiters:


In November 2006, the Chinese government cracked down on Viagra counterfeiters. A
Chinese man, Xi Yongli (Yongli), was jailed for eight years for producing 60 tonnes of fake pills
for ED. It was alleged that Yongli and his accomplices had sold pills worth 21.8
million yuan ($3.6 million) under the names, America Number One, Male Exclusive,
Great Big Brother.
Pfizer Loses Viagra Trademark Row:
When Pfizer launched Viagra in China it could not use the popular Chinese equivalent
brand name ‘Wei Ge’ as the name was already registered by Guangzhou Viaman
Pharmaceutical Co. Ltd. (Viaman). Viaman had registered this brand name in 1998, when
Pfizer launched Viagra in the US. Viaman produced another ED drug by the name ‘Wei Ge’
containing the ingredient Phentolamine mesylate.
Summary
 Intellectual Property (IP) refers to creations of the mind: inventions, literary and artistic
works, and symbols, names, images, and designs used in commerce.
 Among the Agreements of WTO, Trade Related Intellectual Property Rights (TRIPs) is of
special significance to the Entrepreneurs.
 Copyright protection commences the moment a work is created, and its registration is
optional. However it is always advisable to obtain a registration for a better protection.

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 The objective of the Trade Marks Act, 1999 is to register trademarks applied for in the
country and to provide for better protection of trade mark for goods and services and also
to prevent fraudulent use of the mark.
 According to Indian legislation governing Intellectual property rights all artistic, literary,
musical, dramatic works are comes within the purview of copyright but if it has to be used
in context with goods than a certificate concerning the same has to be obtained from the
Registrar of Trademarks.
 Any confidential business information which provides an enterprise a competitive edge
may be considered a trade secret. So, a trade Secret is a formula, practice, process, design,
instrument, pattern, or compilation of information used by a business to obtain an
advantage over competitors or customers.
 Patent law is one of the fastest growing fields of law, which deals with issues surrounding
the protection of ideas. By protecting the rights of the inventor, the government can be sure
that people will continue to think of unique and new ideas to share with the world.
 In addition to the above legislative changes, the Government of India has taken several
measures to streamline and strengthen the intellectual property administration system in
the country.
The Indian Trademarks Law has been extended through court decisions to service marks
in addition to trade marks for goods. Computer software companies have successfully
curtailed piracy through court orders. Computer databases have been protected.

Comp.
Dr. SVS.
2.2.2018

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