Forming and Protecting a

Business:

BY
Dr. W.A. Owusu-Ansah
Email: woansah@gmail.com
KNUST School of Business
MCS-472 Lectures V &VI
 Learning Objectives
• Understand the key differences between the
various legal forms that a business can take
• Assess which legal form is appropriate to a
particular business opportunity
• Formulate the advantages and disadvantages of
the legal options for business formation
• Identify the various ways of protecting business
ideas and intellectual property
 Introduction: PROTECTING AND
REGISTERING YOUR INTELLECTUAL
PROPERTY
• IP is anything arising from the exercise of human creativity or
ingenuity
• Development of a business involves evolution of ideas, inventions,
designs, know-how or skills, and names associated with the
business
• Legally – property rights resulting from intellectual creation and
exercisable against 3rd parties
• IP allows people to own their creativity and innovation same way
as owning physical property
• These rights include: patents, trade marks, copyright, and
registered designs
 PROTECTING AND REGISTERING YOUR
INTELLECTUAL PROPERTY
• Two main areas of IP
• Industrial Property and Copyrights & Related
Rights
• Main difference between the two areas of IP:
registration
• Industrial Property Laws are administered by the
Registrar General’s Department
• Copyright and related rights are administered by
the Copyright Office
 IP AND THE PROSPECTIVE ENTREPRENEUR
(THE STORY OF TUOBODOM)
• People in Tuobodom use certain herbs to instantly
cure Ebola
• Entrepreneur seeks to find a solution to Ebola problem
• With prior informed consent and a benefit sharing
agreement with the Tuobodom community the
entrepreneur receives information and samples of the
miracle plant
• Entrepreneur isolates active ingredient or develops a
method of extracting the active ingredients:
Confidentiality / trade secret and Patent
 STORY CONT’
• Entrepreneur /Researcher writes a paper or
publishes a book on his findings: copyright
• Entrepreneur sets up a business entity to produce
the drug and names the drug: trademark
• Commissions an artist to design a container for
the drug: industrial design
• Commissions an artist to design labels and leaflets
for the drug: copyright and trademarks
• Entrepreneur decides to license or assign his
rights: IP Commercialization
 PROTECTION – THREE STAGES
• Beginning: define boundaries / ownership
• Beginning throughout process: confidentiality /
trade secret
• Throughout process to end: choosing other IP tools
 Patents / Utility Model Certificate
 Trade marks / Service marks / Collective marks
 Industrial Designs/ Textiles Designs
 Copyright
 Trade secrets
 PATENTS
• Patent Act, 2003 (Act 657)
• Titles granted by Governments/States for the protection of inventions
• An invention is a solution to a problem in any field of technology
• No automatic protection of an invention
• Patent rights are granted to those who seek them (First come first
offer (FCFO) basis)
• Creation of an exclusive right in a niche area of technology
• Strong legal protection of valuable information
• Generation of revenue (direct income through royalties)
• Five criteria for protection:
 New (not anticipated by prior art)
 Inventive Step (non-obvious to a person skilled in the art)
 Industrially applicable (useful)
 Disclosure
 Not excluded from patentability
 PATENT PROSECUTION
• Three routes of protection
• 1. National route
• 2. Regional route (ARIPO)
• 3. International route (PCT / Paris Convention)
 NATIONAL ROUTE
• Patent application Procedure:
• Applicant may purchase the prescribed Forms Nos 1and 2 from the in- house bank at GH 1
cedi.  The application / request should be accompanied with the following specifications.
– Drawings
– Abstracts
– Claims - defines the scope of protection
• The applicant pays a prescribed fee of GH100 (Patent application)
• The application on receipt is accorded the date of the receipt and stamped and marked
with the office stamp.
• The applicant is notified of the receipt of the application by the office and the allotted
number by the office.
• Office conducts formal examination
• Registrar issues Patent Certificate on approval.
• Time Frame: Two – three years.
• Registrar of patents conducts formality and substantive examinations
• NB: In Ghana substantive examinations are outsourced
• Successful applications are published and granted
• Duration of protection is 20 years from date of application
• Annuities must be paid yearly to maintain application and grant
 REGIONAL ROUTE (ARIPO)
• Begin with National application and request for an ARIPO
Patent, designating ARIPO Member States
• Apply directly to ARIPO (in Zimbabwe)
• ARIPO conducts both formality and substantive examinations
• Designated States conducts further substantive examinations
to ensure conformity with national laws
• ARIPO publishes and grants patents for and on behalf of
designated Member States
• Current Member States (19): Botswana, The Gambia, Ghana,
Kenya, Lesotho, Malawi, Mozambique, Namibia, Sierra
Leone, Liberia, Rwanda, São Tomé and Príncipe, Somalia,
Sudan, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe.
 International Route
• Paris Convention for the Protection of Industrial Property:
• Applicants can apply directly to Member States of the Paris Convention within one year after first
application (requires legal representation in all the States; fees paid in local currencies; patent
documents in foreign language).
• Paris Convention members as of September 2014, the Convention has 176 contracting member countries
• Contracting members include: Albania; Algeria; Andorra; Angola; Antigua and Barbuda; Argentina; Armenia;
Australia; Austria; Azerbaijan; Bahamas; Bahrain; Bangladesh; Barbados; Belarus; Belgium; Belize; Benin;
Bhutan; Bolivia; Bosnia and Herzegovina; Botswana; Brazil; Brunei Darussalam, Bulgaria; Burkina Faso;
Burundi; Cambodia; Cameroon; Canada; Central African Republic; Chad; Chile; China; Colombia; Comoros;
Congo; Costa Rica; Croatia; Cuba; Cyprus; Czech Republic; Côte d'Ivoire; Democratic People's Republic of
Korea; Democratic Republic of the Congo; Denmark; Djibouti; Dominica; Dominican Republic; Ecuador; Egypt;
El Salvador; Equatorial Guinea; Estonia; Finland; France; Gabon; Gambia; Georgia; Germany; Ghana; Greece;
Grenada; Guatemala; Guinea; Guinea-Bissau; Guyana; Haiti; Holy See; Honduras; Hungary; Iceland; India;
Indonesia; Iran (Islamic Republic of); Iraq; Ireland; Israel; Italy; Jamaica; Japan; Jordan; Kazakhstan; Kenya;
Kuwait; Kyrgyzstan; Laos; Latvia; Lebanon; Lesotho; Liberia; Libya; Liechtenstein; Lithuania; Luxembourg;
Macedonia; Madagascar; Malawi; Malaysia; Mali; Malta; Mauritania; Mauritius; Mexico; Moldova; Monaco;
Mongolia; Montenegro; Morocco; Mozambique; Namibia; Nepal; Netherlands; New Zealand; Nicaragua;
Niger; Nigeria; Norway; Oman; Pakistan; Panama; Papua New Guinea; Paraguay; Peru; Philippines; Poland;
Portugal; Qatar; Republic of Korea; Romania; Russian Federation; Rwanda; Saint Kitts and Nevis; Saint Lucia;
Saint Vincent and the Grenadines; Samoa; San Marino; Sao Tome and Principe; Saudi Arabia; Senegal; Serbia;
Seychelles; Sierra Leone; Singapore; Slovakia; Slovenia; South Africa; Spain; Sri Lanka; Sudan; Suriname;
Swaziland; Sweden; Switzerland; Syrian Arab Republic; Tajikistan; Thailand; Togo; Tonga; Trinidad and Tobago;
Tunisia; Turkey; Turkmenistan; Uganda; Ukraine; United Arab Emirates; United Kingdom; United Republic of
Tanzania; United States of America; Uruguay; Uzbekistan; Venezuela; Vietnam; Yemen; Zambia; and
Zimbabwe
 Patent Co-operation Treaty (PCT):

• National application followed by PCT application within

one year
• Apply directly to International Bureau of WIPO
• Thirty (30) months period to apply to all designated
states of interest
• One application; one PCT recognized language; search
and preliminary examination report and written opinion
• Patents are granted by individual designated Member
States
• Under the PCT, an inventor can file a single international
patent application in one language with one patent office
in order to simultaneously seek protection for an
invention in up to 191 countries throughout the world
 UTILITY MODEL CERTIFICATE
• UM prosecution is similar to patent
prosecution
• Criteria for protection is less stringent,
involving two main steps, namely; novelty
and industrial applicability
• On request for grant of a utility certificate a
fee of GH50.00 is paid
• Duration of protection in Ghana is 7years
 Trade Secret
• In certain instances, the entrepreneur may prefer
to maintain an idea or process as confidential
and to sell or license it as a trade secret
• Trade secret will have a life as long as the idea or
process remains a secret
• Employees involved in working with an idea or
process may be asked to first sign a confidential
information agreement that will protect against
their giving out the secret while an employee or
after leaving e.g. Coca Cola ingredients
 COPYRIGHT
• Copyright Act, 2005 (Act 690)
• Copyright (Amendment) Act, 2009
• Right of the creator of a work to stop others from copying the
work e.g. original literacy, dramatic, musical or artistic works
• Automatic protection so long as it is original
• Registration provides prima facie evidence of ownership
• To register at the copyright office, submit a filled application form,
three copies of the work and pay prescribed registration fee
• Duration of protection: life time of the author plus seventy (70)
years after his death
• Author can assign economic rights not moral rights
• Moral rights are the rights to be identified as the author of a work,
known as the right of paternity, the right to object to derogatory
treatment of a work, (the right of integrity), the right not to be
identified as the author of someone else's work, & right to privacy
 TRADEMARKS
• Trade Marks Act, 2004 (Act 664)
• A Trademark distinguishes the goods or services of one enterprise
from the goods and services of other enterprises
• Interactive mark; logotype; combination of interactive mark and
logotype
• Registered for a specific list of goods and services
• Symbol “®” or words like Registered Trade Mark
• It is offence to use symbol when mark is unregistered or pending
“TM” or “Trade Mark” may be used without penalty
• Three routes of protection:
• National (Registrar General’s Department)
• Regional (ARIPO through the Banjul Protocol, however, this route is
currently not available to Ghanaians)
• International (International Bureau of WIPO through the Madrid
System)
 TRADEMARKS REGISTRATION: National Route
• Ensure mark conforms with section 5 of the Trademarks Act
(Act 664)
• Grounds for refusal include: (a)an existing trade name;
(b)incapable of distinguishing the goods or services of one
enterprise from another enterprise; (c) contrary to public
order or morality; (d) likely to mislead the public or trade
circles with particular reference to the geographical origin
of the goods or services, their nature or characteristics; (e)
identical to or is an imitation of or contains as an element,
flag, emblem, name, abbreviation or initials of the name,
official sign or hallmark adopted by a State,
intergovernmental organisation or organisation created by
an international convention unless authorised by the
competent authority )
 Trademark: Procedure
• Conduct a search at the trademark registry: USD$110
•  Applicant may pick Form (T.M.NO.2) from the in-house bank
for free.
• The application or request should be accompanied with five
representations of the mark or symbol or sign.
• Applicant pays a prescribed fee of USD$200 or Cedi equivalent
• Application is examined and approved
• Mark is published in the industrial and commercial bulletin.
• Registrar issues Certificate to the applicant at a fee of
USD$200
• Time Frame: 3 months – 1 year
• Annual Renewal is USD$390 or Cedi equivalent.
• Cancellation costs USD$110
 TRADEMARK REGISTRATION
International Route
• National application followed by Madrid
application within 6 months
• Direct application to International Bureau
designating Member States of Interest
• Member State approves and registers
trademarks
 INDUSTRIAL DESIGNS REGISTRATION
• Industrial Designs Act, 2003 (Act 660)
• (a) composition of lines or colours, any three‐dimensional form or
any material, whether or not associated with lines or colours, (b) a
textile design
• is an industrial design where the composition, form or material
gives a special appearance to a product of industry or handicraft
and can serve as a pattern for a product of industry or handicraft.
• In other words, a form of protection granted for novel features of
the appearance of the product
• Three routes of protection:
• National (Registrar General’s Department)
• Regional (ARIPO)
• International (International Bureau of WIPO)
• Currently the only route available to Ghanaians is the Regional route
INDUSTRIAL DESIGN REGISTRATION CONT’

• Application may be submitted to the Registrar

General’s Department or directly to ARIPO
• Fill ARIPO Form 28, attach four copies of designs (with
description where necessary), a statement of
authorship, application fee of US$50 and US$10 for
each Designated State
• You must designate at least 1 Member State
• Application process may take a year
• Duration of protection in Ghana is 5years, renewable
two consecutive five years period
 Registered Textile Designs
• A form of protection granted for novel features of the appearance of the product
• Re: the lines, contours, colours, shape, texture or materials of the product or its
ornamentation
• Designs must be new & have individual character
• “Registered Design No. xxx” to indicate registration
• Confers on its owner exclusive right to use and authorise the use for 15 years

• Procedure:
• Applicant may pick the prescribed Form No 2 from the in house bank for free.
• The application / request should be accompanied with four identical Representations of the
Designs.
• Application fee - GH 15.00 cedis.
• Registration Certificate - GH 15.00 cedis.
• 1st Renewal after 5 years - GH 30.00 cedis.
• Last Renewal after 5 years
• Applicant can collect Certificate of registration within 3-5 months.

• Remedies in case of infringement: injunction, seizure of infringing products or articles,

delivery up, damages or an account of profits
 Conclusion
Protection of IP may offer competitive advantage
 profitability & sustainability
• Where entrepreneur has a unique idea, seek
expert advice
• Invention can’t be protected once in public
domain
• Confidentiality agreement can be signed
• In attempt to bootstrap, many entrepreneurs take
financial short-cuts
 Forming Venture - Legal routes Pt 2

• Understand the key differences between the

various legal forms that a business can take
• Assess which legal form is appropriate to a
particular business opportunity
• Formulate the advantages and disadvantages of
the legal options for business formation
 Legal Structures
• All businesses must operate within certain
legal structures. There are four basic types:
– Sole Trader
– Partnership
– Company
Limited Company
Unlimited Company
– Co-operative
Forms of small business
 Enterprise Explained
• Firstly, an enterprise is simply another name for a business. “Kwasi
Mensah enterprise” or “Michelle set up her successful enterprise after
leaving teaching”.
• Secondly, and perhaps more importantly, the word enterprise describes
the actions of someone who shows some initiative by taking a risk by
setting up, investing in and running a business.
• A person who takes the initiative is someone who “makes things
happen”. He or she tends to be decisive. A business opportunity is
identified and the person does something about it. Showing initiative is
about taking decisions and being bold – not everyone is like that!
• Risk-taking is slightly different. In business there is no such thing as a
“sure fire bet”. All business investments carry an element of risk – which is
the chance or probability that things will go wrong. At the worst, the risk
of an enterprise might mean the person making the investment loses all
his/her money or becomes personally liable for the debts of the business.
• A business/ enterprise is any type of operation that is involved in providing goods
or services with the anticipated outcome of earning a profit.
 Sole Trader
• There is no legal distinction between the business and the person running it.
– Therefore if the business is sued, the person operating the business is sued 
Main Advantages
• Quick, easy and inexpensive to form (Registration of Business Names Act, 1962 (Act
151),
• Registration of Business Names: Procedures:
• Applicant may pick up a prescribed Form A from the in-house bank at GH 3.50cedis.
• Submit filled forms at the bank in addition with a processing fee of GH60.00 cedis
• Registrar examines and issues business registration certificate as well as  certified true
copy of the form to be submitted as attachment
• Renewal each year at GH 25.00 cedis.

• Only one person needs be involved

• No annual Company returns are necessary
• No monthly tax returns required
• A sole trader can employ as many people as he/she likes
• They are the sole recipients of all profits
 Sole Trader
• Main disadvantages
– The individual is personally liable for the debts of the
business
– Personal assets may be sold to discharge business debts
– ‘Profit’ taxed at relevant personal rate of owner
– Prospects for expansion are limited and it may be more
difficult to access credit
– Some may see a Limited Company as a more
professional business, and for this reason prefer to do
business with them
 Partnership
• A “relationship that subsists between persons carrying on a business in common
with a view to profit” – (up to 20)
• A partnership exists where
– Two or more people join forces to ‘own’ and run a business which is not a limited company
– Pooling of assets and a sharing of profits
• In this case ownership of the business is not vested in shareholders
• Where no agreement exists, then the Partnership Act 152 (1962) provides a legal
framework
•
• Incorporation of Partnerships: Procedures:
• Applicant may purchase and complete Form “A” for Incorporation of Partnership from the
in-house bank at GH 3.50 cedis.
• Present duly completed form together with a stamped partnership agreement at the
Registry.
• Pay prescribed fee of GH 160.00 cedis.
• Registrar examines document and issues certificate of registration.
• Time Frame: Within five working days.
• Annual renewal GH50.00
 Partnership
• Each partner is liable for all of the liabilities of the business
– In other words, if the business fails and your partner abandons
you, you could be left to pay all the debts of the business
– A partnership agreement can limit the liability of one partner,
but at least one person must be identified as an unlimited
partner
• Each partner is entitled to full disclosure concerning all
aspects of the business
• While partnership allows greater access to credit and shares
the risk, much depends on trust and good faith between
partners
 Partnership (Advantages)
• Larger pool of talent, complementary skills of
partners
• Larger pool of capital
• Ease of formation and exit
• Possible tax benefits, taxation on individual
basis
• Ability to attract limited partners
• Limited government regulation
 Partnership (Disadvantages)
• Unlimited liability of at least one partner
• If no written agreement, extremely difficult to
prove in event of dispute between partners
• Lack of continuity
• Difficult ownership transfer
• Possibility of forced liquidation
• Potential for personality and authority
conflicts
 Limited Company
• This is a separate legal entity from the person owning / managing the business.
–It can own goods, sue and be sued in its own right.
• There must be at least two directors and secretary;
–One of the directors can also be the secretary of the company.
–Directors are representatives of the business.
• You can form as a limited company through a solicitor or a company formation agent.
• Based on Act 179 (Company Code 1963)
• Memorandum and articles of association must be drawn up and lodged with the
company’s office (Regulation),

• Incorporation of Limited Liability Companies: Procedure:

• Applicant may purchase a set of Limited Liability Forms from the in-house bank at GH30.00 cedis.
• Lodge the following document at the Registry after completion.
–Declaration
–Consent letter from qualified Auditors.
• Pay a prescribed fee of GH 200 cedis and a 0.5 % stamp duty on stated capital.
• Registrar issues certificate of incorporation and a certificate to commence business.
• Time Frame: Five working days.
• Filing of Annual returns year at GH 50 cedis
 Limited Company (Advantages)
• If the business ceases to operate creditors cannot
pursue the personal assets of the directors unless it is
proven that they traded recklessly or fraudulently
• Income tax is only payable on money actually
withdrawn by the employees from the company
• (The owner/ manager is an employee of the company) 
• It allows for expansion of a business
Borrowing becomes easier
Money may be raised through an increase in share capital
• Limited status may be seen as an indication of
professionalism and stability, encouraging others to do
business
• Suitable for employment of professional management
 Limited Company (Disadvantages)
• There are high legal set up costs
• Annual returns must be made to the Registrar’s General
Department (RGD)
• A Chartered Accountant must audit the accounts each year
for the Ghana Revenue Authority (GRA)
• The owner must make monthly PAYE returns (income tax
deductions ) & SSNIT deductions to GRA & SSNIT
respectively
• Double taxation (when company pays corporate tax on
profits and capital gains, and shareholders are personally
taxed on dividends)
• Cost and time of incorporating
• Potential loss of control by founder (s)
Companies Limited by Guarantee
• Procedure
• Applicant may purchase a set of prescribed regulations and a
set of Form 3 from the in-house bank at GH 9.50 cedis.
• Completed forms should be submitted at the Registry with a
payable fee of GH 270.00 cedis.
• Lodge the following document at the Registry after
completion.
– Declaration
– Consent letter from qualified Auditors.
• Registrar issues certificate of Incorporation and a certificate
to commence business.
• Time Frame: Within five working days.
• Annual returns at GH 50.00 cedis.
 Unlimited Company
• This is a rare legal structure
• Members of the company are fully liable for all debts
• No need to file annual accounts with RGD
• Usually used when owners want to benefit from corporate
taxation regulations
It is used when incorporation is necessary and one of the
following applies
– Limited liability not acceptable
– Secrecy is needed re: financial affairs
– Risk of insolvency minimal
– Reduction of company’s share capital may be desirable
 Co-operatives
• Co-ops are owned and controlled by their
members
• Members elect board of directors
• Surplus revenues are distributed among members,
regardless of ownership share
• Usually Non-profit organisations
• Co-ops are formed when the marketplace fails to
provide goods or services needed by a community
• If you are thinking of setting up a co-op, more
detailed information is available on request
 Which structure is the best?
• Four things influence your choice:
– The kind of business you are starting
– The type of person you do business
with
– Your attitude to risk
– How you wish to organise your tax
affairs