LEGAL ISSUES FOR AN ENTREPRENUR

LEGAL ISSUES FOR AN

ENTREPRENEUR
While a lot of entrepreneurs at least have a basic understanding of the law, most of them fail to think
about the legal implications of starting a business.

Since, all business is regulated by law, the entrepreneur needs to be aware of any regulations that may
affect his or her new venture . At different stages of the start‐ups , the entrepreneur will need legal
assistance. It is also likely that the legal expertise requirement will vary based on such factors as
whether the new venture is a franchise,
franchise an independent start‐up,
start‐up or buyout ;whether it produces a
consumer versus an industrial product; whether it is a non profit venture or a profitable venture; and
whether it involves some aspect of technology, exporting or importing.

Most entrepreneurs get caught up in the midst of starting their business and quickly forget about the
legal aspects that need to be considered. To ensure that you avoid the negative repercussions of an
avoidable mistake, there are a few common legal issues an Entrepreneurs should be aware of.
LEGAL ISSUES
Intellectual Property Rights
Patents

Trademarks

Copyrights

Trade Secrets

Licensing

Product Safety & Liability

Insurance

Contract
 INTELLECTUAL PROPERTY
RIGHT
IP is protected by law , for
example, patents, copyright and trademarks, which enable
people to earn recognition or financial benefit from what
they invent or create. By striking the right balance between
the interests of innovators and the wider public interest, the
IP system aims to foster an environment in which creativity
and innovation can flourish.

Intellectual property rights are the rights given to persons

over the creations of their minds. They usually give the
creator an exclusive right over the use of his/her creation for
a certain period of time. Too often an Entrepreneur, because
of their lack of understanding of intellectual property, ignore
the important steps they should have taken to protect these
assets.
 PATENT
In India patents are governed by the Indian Patent Act 1970.
Patents are the exclusive rights given to an inventor over his
invention. These exclusive rights allow an inventor to make,
use or sell or to deal with such invention as he/she wants
for a limited period (i.e. for 20 years)
Right to exclude others from using your invention.

It is also important for an Entrepreneur to be sensitive about

whether he or she is infringing on someone else’s patent.
The fact that someone else already has a patent does not
mean the end of any illusions of starting a business. Many
business, inventions, or innovations are the result of
improvements on, or modifications of, existing products.
 TRADEMARK
A trademark or trade mark is a distinctive sign or indicator
of some kind which is used by an individual, business
organization or other legal entity to uniquely identify the
source of its products and/or services to consumers, and
to distinguish its products or services from those of other
entities

A trademark is a device which can take almost any form, as

long as it is capable of identifying and distinguishing
specific goods orservices.
COPYRIGHT
Copyright is the protection granted under Indian Law to the 
creators of the original works of authorship.

Copyright Law protects expression of ideas rather ideas 
Copyright Law protects expression of ideas rather ideas
themselves.

The copyright law has become especially relevant because 
of the tremendous growth of use of internet , especially
of the tremendous growth of use of internet , especially  
relevant to download  music, literary work, pictures and 
videos, to name a few. The issues surrounding access to 
material on the internet have led to major battles. 
Entrepreneur must be aware of it.
Entrepreneur must be aware of it.
TRADE SECRETS
A trade secret is a formula, practice, process, design,
instrument, pattern, commercial method, or compilation of
o a o which
information c iss not o ge e a y known
generally o o easo ab y
or reasonably
ascertainable by others, and by which a business can obtain an
economic advantage over competitors or customers. The
scope of trade secrets is virtually unlimited.

In certain instances, the entrepreneur may prefer to maintain

a idea or process as confidential and to sell or license it as a
trade secret . The trade secret will have life as long as the idea
or p
process remains secret.
 LICENSING
Licensing is defined as a business arrangement,
wherein a company authorizes another company
by issuing a license to temporarily access its
intellectual property rights,
rights i.e.
i e manufacturing
process, brand name, copyright, trademark,
patent, technology, trade secret, etc. for
adequate consideration and under specified
conditions.
conditions

Thus licensing has a significant value as a

marketing strategy to holders of patents,
trademarks,
trademarks or copyrights to grow their business
in new markets when they lack resources or
experience in those markets.
 PRODUCT SAFETY
AND LIABILITY
Designing, manufacturing and marketing a product in
compliance with applicable product safety legislation is
the first stage. Product safety is increasingly a highly
regulated space, with both product specific standards as
well as general product safety duties.

It is very important for an Entrepreneur to assess whether

any product is to be marketed in the new venture is
subject to any regulations. In addition Entrepreneur
needs to set standards for the products and ensure safety
especially for hazardous products.
 INSURANCE
It is in the best interest of the Entrepreneur to
purchase insurance in the event that problems do
. occur. Each types of insurance provides a means
for
f managing i risks
i k in
i the
th new business.
b i The
Th main
i
problem is that the entrepreneur usually has
limited resources at the beginning. Thus it is
important to determine which type of insurance is
needed.
d d

The total insurance cost represents a important

financial planning factor, and the entrepreneur
needs to consider increasing premium in cost
projections.
 CONTRACTS
The entrepreneur in starting a venture will be
. involved in a number of negotiations and
contracts with vendors,
vendors landlords and clients.
clients A
contract is s legally enforceable document
between two or more parties as long as certain
conditions are met.

It is very important for an entrepreneur to

understand the fundamental issues related to
contracts while also recognising the need for a
legal professional in many negotiations.
negotiations