Chapter 9: Legal Challenges for Entrepreneurial Ventures

B corporation

A legal structure that expands corporate accountability to make decisions that are good for society, not just shareholders. B corporations' performance standards enable consumers to support businesses that align with their values

specification

The text of a patent; it may include any accompanying illustrations

insolvent debtor

Those who are unable to pay debts as they become due

limited partnership

A form of company organization that permits capital investment without responsibility for management and without liability for losses beyond the initial investment.

limited liability partnership (LLP)

A form of partnership that allows professionals the tax benefits of a partnership while avoiding personal liability for the malpractice of other partners. If a professional group organizes as an LLP, innocent partners are not personally liable for the wrongdoing of the other partners.

limited liability company (LLC)

A hybrid form of business enterprise that offers the limited liability of a corporation but the tax advantages of a partnership

bankruptcy

A legal process for insolvent debtors who are unable to pay debts as they become due. For business, this includes Chapters 7, 11, and 13 of the federal bankruptcy code.

copyright

A legal protection that provides exclusive rights to creative individuals for the protection of their literary or artistic productions

trademark

A distinctive name, mark, symbol, or motto identified with a company's product(s).

sole proprietorship

A business that is owned and operated by one person. The enterprise has no existence apart from its owner. This individual has a right to all of the profits and bears all of the liability for the debts and obligations of the business.

L3C

A low-profit, limited liability company that facilitates investments in socially beneficial, for-profit ventures. L3C has an explicit primary charitable mission and only a secondary profit concern. Unlike a charity, an L3C is free to distribute the profits, after taxes, to owners or investors.

infringement budget

A realistic budget for prosecuting violations of the patent

claims

A series of short paragraphs, each of which identifies a particular feature or combination of features, protected by a patent.

cancellation proceedings

A third party's challenge to the trademark's distinctiveness within five years of its issuance

limited liability limited partnership (LLLP)

A variant of the limited partnership. An LLLP has elected limited liability status for all of its partners, including general partners

generic meaning

Allowance of a trademark to represent a general grouping of products or services (for example, Kleenex has come to represent tissue)

Revised Uniform Limited Partnership Act (RULPA)

An act that governs limited partnerships and contains 11 articles and 64 sections of guidelines covering areas such as (1) general provisions, (2) formation, (3) limited partners, (4) general partners, (5) finance, (6) distributions and withdrawals, (7) assignment of partnership interest, (8) dissolution, (9) foreign limited partnerships, (10) derivative actions, and (11) miscellaneous.

Revised Uniform Partnership Act (RUPA)

An act that governs limited partnerships and contains 11 articles and 64 sections of guidelines covering areas such as (1) general provisions, (2) formation, (3) limited partners, (4) general partners, (5) finance, (6) distributions and withdrawals, (7) assignment of partnership interest, (8) dissolution, (9) foreign limited partnerships, (10) derivative actions, and (11) miscellaneous.

partnership

An association of two or more persons acting as co-owners of a business for profit.

corporation

An entity legally separate from the individuals who own it, created by the authority of state laws, and usually formed when a transfer of money or property by prospective shareholders takes place in exchange for capital stock in the corporation

fair use doctrine

An exception to copyright protection that allows limited use of copyrighted materials

patent

An intellectual property right granted to an inventor, giving him or her the exclusive right to make, use, or sell an invention for a limited time period (usually 20 years).

patent and trademark office

An office of the federal government through which all patent and trademark applications are filed.

trade secrets

Customer lists, plans, research and development, pricing information, marketing techniques, and production techniques. Generally, anything that makes an individual company unique and has value to a competitor could be a trade secret.

Bankruptcy Act

Federal law that provides for specific procedures in handling insolvent debtors

S corporation

Formerly termed a Subchapter S corporation, an S corporation takes its name from Subchapter S of the Internal Revenue Code, under which a business can seek to avoid the imposition of income taxes at the corporate level, yet retain some of the benefits of a corporate form (especially the limited liability).

abandonment

Nonuse of a trademark for two consecutive years without justification or a statement regarding abandonment of the trademark

intellectual property right

Provides protection such as patents, trademarks, or copyrights against infringement by others

liquidation

See Bankruptcy

cleaning-out procedure

The failure of a trademark owner to file an affidavit stating that it is in use or justifying its lack of use within six years of registration.

unlimited liability

The individual proprietor is personally responsible for all business debts. This liability extends to all of the proprietor's assets.

debtor-in-possession

When a debtor involved in a Chapter 11 proceeding continues to operate the business