Business Chapter 8

Four rules of the Patent and Trademark Office (PTO)

1. The invention must not contain prior art. It should not be based on anything publicly available before the date of the invention 2. The invention must fit into one of five classes. It must be a machine (e.g., a rocket, a fax), a process (e.g., chemical reactions), articles of manufacture (e.g., furniture), a composition (e.g., gasoline), or a new use for one of the four categories 3. The invention must be "unobvious." The invention must not be obvious to someone with skills in the field. It should be new and unexpected. 4. The invention must have utility. This means it must be useful, not just whimsical or silly.

patent search

After you apply for a patent, the PTO does a patent search. During this time, the patent is pending. If the PTO decides your claims are valid, it will issue you a patent. It may, as is typically the case, decide that some or all of your claims are not valid. Then, with the help of a qualified attorney, you may revise them and resubmit your application. Once the PTO declares that your claims are accepted, it will issue the patent. At that point, the public may see the patent. You can market your product during the patent pending phase. However, you must put the term patent pending and the patent number on the product or packaging

Category of law you need to be aware of before you start a business

Contracts: A contract is a binding legal agreement between two or more persons or parties. As an entrepreneur, you will sign contracts to start and run your business. Some contracts will be with vendors or landlords, some with clients and some with government agencies. It is helpful to distinguish among various types of contracts. An oral contract is an unwritten contract that does not last for more than one year. A void contract is one that never existed in the first place. The parties did not have the capacity to enter into the contract. A valid contract is most common for businesses because it meets several important criteria

zoning laws and building codes

If you build a new facility or locate your business in an existing building, you must conform to local zoning laws. Cities typically designate particular areas, or zones, for certain uses. Zones are usually specified as residential, commercial, industrial, or public. Zoning laws also address environmental issues. They may restrict disposal of toxic waste, noise and air pollution, and unsuitable building styles. Zoning laws may define the type and style of signs that businesses can use and the appearance of buildings. You also need to check the laws that relate to the actual construction of your facility. These are called building codes. Building codes set standards for construction or modification of buildings. These standards include such things as strength of concrete, amount of insulation, and other structural requirements. Local governments employ inspectors to verify that building code requirements are met at each stage of construction. Licensed building contractors or architects should be familiar with local building codes. You can assure your facility is built to code by hiring such a person to supervise your project

Two steps for publishing your work

If you plan to publish your work, copyright law recommends doing two things. First, place a notice of copyright in a prominent location on the work. This notice must include the symbol © or the word Copyright, the year of first publication, and the name of the copyright holder. Second, register the work with the Copyright Office which is a branch of the Library of Congress

Category of law you need to be aware of before you start a business

Location The law also affects where you locate the business; only certain types of real property are available to business owners

patent infringement

Occurs when someone makes and sells a product that contains all elements of a patent claim. A patent is a powerful document. It gives the holder the right to enforce it in federal court. If he or she wins, the court will issue an injunction preventing the infringer from further use. The court will also award the patent holder a royalty from the infringer

Category of laws you need to be aware of before you start a business

Permits and licenses: Before you can officially open the doors of your business, you must get a business permit. A permit is a legal document giving official permission to run a business. You can obtain this from your local government office. You will probably have to renew it annually. In addition, you will be required to pay periodic fees over the life of your business. The amount is usually based on how much the business earns. Certain professions may require you to also get a license. A license is a certificate that shows you have the necessary education and training to do a job. Such licenses protect consumers from unskilled or unqualified business operators. Licensing requirements vary from one state or locality to another. Therefore, you should check with the appropriate government agency for more information.

working restrictions for children

Persons under the age of 18 can not work in jobs the government considers hazardous. Persons younger than 16 are restricted to hours and times they can work. Youths under 14 may work only in certain jobs. These jobs include delivering newspapers to consumers; performing in theatrical, motion Picture or broadcast productions; and working in a business owned by their parents, except in manufacturing or hazardous occupations

the process to receive a patent on an invention

To protect an invention, you should file a disclosure document with the PTO. In the application, you confirm that you are the inventor of the product and describe it in detail. Within two years, you must file a patent application with the PTO. Otherwise, the disclosure document will be abandoned

patent application

Your first patent application may be for a provisional patent. It was designed to allow inventors to begin talking to manufacturers and strategic partners without risking their invention. The provisional patent lasts for 12 months, during which time you must do a formal patent application. How you word the claims of novelty, utility, and nonobviousness can determine whether you receive the patent. Therefore, you should use a qualified patent attorney when writing a patent application

contract

a binding legal agreement between two or more persons or parties

license

a certificate that shows you have the necessary education and training to do a job

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

patent

a grant to an inventor which gives the inventor the right to exclude others from making, using, or selling the invention during the term of the patent

Uniform Commercial Code (UCC)

a group of laws that regulates commercial business transactions

warranty of merchantability

a guarantee about the quality of goods or services purchased that is not written down or explicitly spoken

copyright

a legal device that protects original works of authors. These works include books, movies, musical compositions, and computer software. A copyright lasts for the life of the author plus 70 years. After that, the work goes into the public domain

permit

a legal document giving official permission to run a business

sales tax

a percentage of the price of an item that goes to a state or local government

trademark

a word, symbol, design, or color that a business uses to identify itself or something it sells. Once a business registers its trademark with the PTO, a competitor cannot use the trademark

service mark

a word, symbol, design, or color that describes a service business

bait-and-switch

advertising in an illegal way 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. It is illegal because it is a deceptive business practice

public domain

comprises all intellectual property whose protection has expired after 21 years. This means people can use any aspect of the device in their own invention free of charge

Fair Labor Standards Act (FLSA)

established a minimum wage and maximum working hours. It also ensured that children under the age of 16 could not be employed full-time except by their parents

legality

for a contract to be valid, it must be legal. That is, it cannot have any provisions that are illegal or that would result in illegal activities

Family and Medical Leave Act (FMLA)

impacts employers with 50 or more employees. The act provides employees with the right to an unpaid leave of absence for up to 12 weeks

trade secrets

involves anything not covered under patents, trademarks, or copyrights. The basis of all intellectual property is trade secrets. These may consist of a formula, device, idea, process, pattern, or compilation of information that gives the owner a competitive advantage. As a trade secret, theoretically, the design and proprietary information are not available to the public

copyright law

laws regarding writing music, software, or book

leasing

most entrepreneurs start with few resources and little money. Herefore, prudent entrepreneurs usually lease buildings and equipment rather than buy them. A lease is a contract to use a facility or equipment for a specified period of time. The lessee (the person who is leasing the building or equipment) has no ownership rights. Those belong to the lessor (the person who owns the building or equipment). Leasing usually does not require spending a large amount of money up front. The money saved can be used for purchasing inventory and supplies and hiring employees. This can be a definite advantage for a new business. Another advantage is that some lease expenses are tax-deductible. This can reduce the tax liability of the company. Nevertheless, leasing may bring its own set of troubles. For example, the lease contract is a very complex document. It states the terms: length of the lease, monthly rent, penalty for failing to pay, and procedure for termination. Because a lease is a long-term contract, an entrepreneur should consult an attorney before signing

agreement

occurs when one party to a contract makes an offer or promises to do something or refrain from doing something and the other party accepts

Occupational Safety and Health Act (OSHA) of 1970

passed to ensure safe, healthful working conditions for employees

trademark issue

protecting a logo for a business

truth-in-advertising laws

protecting customers from false and misleading advertising

patent law

protection an invention

OSHA (Occupational Safety and Health Administration)

requires employers to look for hazardous areas in their workplace. Employers must maintain health and safety records and provide safety training

Americans with Disabilities Act (ADA)

requires employers to provide reasonable accommodation to the workplace that allows qualified employees to do the basic functions of their jobs. The act also restricts the questions business owners can ask job applicants about their disabilities before they make a job offer

Fair Packaging and Labeling Act (FPLA)

requires that manufacturer labels truthfully list all ingredients and raw materials used in production

Truth in Lending Act (TILA)

requires those who give credit to reveal all terms and conditions of their credit agreements

FDA (Food and Drug Administration)

researches and tests new products and inspects the operations of food and drug manufacturers

Equal Pay Act of 1963 (EPA)

says that all employers must pay men and women the same wage for the same work. Same work involves similar skills, responsibility, and effort

building standards

set standards for construction or modification of buildings. These standards include such things as strength of concrete, amount of insulation, and other structural requirements

Federal Unemployment Tax Act (FUTA)

the act was designed to help workers who are temporarily unemployed

price discrimination

the charging of different prices for the same product or service in different markets or to different customers

Equal Employment Opportunity Commission (EEOC)

the government agency charged with protecting the rights of employees. It ensures that employers do not discriminate against employees because of age, race, color or national origin, religion, gender, or physical challenge

intellectual property law

the group of laws that regulates the ownership and use of creative works

capacity

the legal ability to enter into a binding agreement

capacity

the legal ability to enter into a binding agreement. By law, minors, intoxicated persons, and insane people cannot enter into valid contracts. If they do sign such a contract, the agreement can be considered void. This means the contract never existed

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

patent pending

the status of an invention between the time a patent application has been filed and when it is issued or rejected

FICA or Social Security Tax

the tax is figured as a percentage of an employee's income. You are required to contribute an amount equal to the amount deducted from each employee's paycheck

Consumer Product Safety Commission (CPSC)

this commission serves as a watchdog for consumers over products that may be hazardous. It also creates safety standards for products such as toys for children under the age of five

consideration

what is being exchanged for a promise. It causes the contract to be binding. Money is not the only form of consideration. Being prevented from doing something by the terms of the contract is also a consideration

consideration

what is exchanged for the promise

sale prices

you can not offer a reduced price on your product unless it has been offered to the public at the regular price for a period of time

price comparisons

you cannot use list price as your comparison-selling price unless your product has sold for that amount. The list price is commonly the manufacturer's suggested retail price (MSRP). Also, when advertising that your prices are lower than your competitors', you must have proof

misleading ads

your advertising should not mislead customers about what your product can do. It should not claim that the product can do something it can not