Protecting Idea and Other Legal Issues

Concept of Intellectual Property

Protecting Idea and Other Legal Issues refers to the legal strategies and measures taken to safeguard intellectual property, such as inventions, creative works, and brand identities, while also addressing various legal challenges that businesses may encounter, including contract disputes, regulatory compliance, and liability concerns. The concept of intellectual property is designed to cover ownership of literacy and artistic works, inventions and creations. Intellectual property (IP) refers to creations of the mind, such as inventions, literary and artistic works, symbols, names, images, and designs used in commerce.

Intellectual Property Rights (IPRs) are the legal right provided to the creator or inventor of original works, including literacy and artistic works, symbols, names, images and inventions to exclusive use and control over the sale and distribution of their creations. Researchers or inventors can get incentive in return of their investment of knowledge by IPRs through patents, copyrights, trademark and trade secret.

Nature of Intellectual Property

Intellectual property (IP) refers to the legal rights that protect creative works such as inventions, literary and artistic works, designs, symbols, names, and commercial images. These rights are critical for encouraging innovation and creativity because they assure creators that their work will be protected from illegal use. Some of the common characteristics nature of intellectual property rights are as follows:

Legal Property: Intellectual property (IP) is recognized as a type of legal property that gives creators control over their work. This legal recognition allows authors to defend their work against unlawful use, creating a sense of protection.

Encourages Creation: Intellectual property laws stimulate innovation and creativity by protecting new ideas and technologies. This protection supports an environment in which individuals and corporations feel comfortable investing time and resources in developing new concepts, knowing that their efforts would be protected.

Economic Incentives: Intellectual property provides economic incentives for creators by allowing them to earn money from their ideas and creations. This means that when someone invests their knowledge and effort into creating something, they can benefit financially through intellectual property rights like patents, copyrights, trademarks, and trade secrets. For example, a book author gets royalty on his creation.

Territorial Law: IP rights are typically governed by territorial laws, meaning they are enforced within specific jurisdictions. As a result, creators must navigate different laws and regulations when operating in multiple countries, which can complicate international business.

Exclusive Rights: IP grants creators exclusive rights to use, distribute, and profit from their creations. These exclusive rights allow creators to control how their work is used and to benefit financially from it, ensuring they receive recognition for their efforts.

Transferable Rights: IP rights can be assigned or licensed to others, allowing for collaboration and commercialization. This transferability enables creators to partner with businesses or individuals to maximize the potential of their work, expanding its reach and impact.

Independence: Each type of intellectual property (e.g., patents, copyrights, trademarks) operates independently, with its own set of rules and protections. This independence allows creators to choose the most appropriate form of protection for their specific type of work, tailoring their approach to their needs.

Divisibility:

IP rights can be divided, allowing creators to keep some but transfer others. This flexibility allows artists to negotiate conditions that are most appropriate for their needs and commercial objectives, maximizing their control over their intellectual property.

Types of Intellectual Property

The types of Intellectual Property rights are:

Patent

A patent is a special right granted by the government of the creation of an invention. It is a type of intellectual property right which allows the holder of the right to use, sell or distribute an invention for economic objectives.

Copyright

Copyright refers to the legal protection of an author’s creative work. It is a legal protection granted to the creators of original works, providing them exclusive rights to use, reproduce, distribute, and display their creations. This protection applies to a wide range of works, including:

1. Literacy Works
2. Musical Works
3. Dramatic Works
4. Artistic Work
5. Audiovisual Works
6. Software

Industrial Design

Industrial design is a kind of intellectual property which gives an exclusive right to a person who has created a novel appearance of a product. It protects the appearance of a product, which results from attributes such as its shape, colours or materials.

Trademark

Trademark refers to a unique words, phrases, symbols or pictures that distinguishes a company’s product from its other competitors. It helps the consumer recognise the product and build the brand loyalty.

Need for a Lawyer

Every corporate entrepreneur needs to hire lawyers from the beginning stage of the establishment of entrepreneurship. They need to get support from lawyers for the fulfilment of documentation and other legal procedures in the concerned department of the government. Lawyers also support entrepreneurs in their regular business activities by providing legal guidance regarding various aspects of business such as entering into business contracts, solution of labour issues, fulfilment of government rules and other legal matters. Some of the common needs of hiring a lawyer are as follows:

Preparing Documents: This involves creating and organizing important legal papers, such as contracts, agreements, and forms. Properly prepared documents help ensure that your rights are protected and that you meet legal requirements.

Aware of Regulations: This means understanding the laws and rules that apply to your specific situation, whether in business, real estate, or personal matters. Being aware of regulations helps you avoid legal issues and ensures compliance.

Purchasing and Selling Property: This includes the processes involved in buying or selling real estate, such as homes or land. A lawyer can help you navigate contracts, title searches, and closing procedures to ensure a smooth transaction.

Involvement in Contracts: This refers to understanding and managing agreements you enter into, whether for business deals, leases, or services. A lawyer can help draft, review, and negotiate contracts to protect your interests.

Complying with Labour Laws: This involves following laws related to employment, such as worker rights, wages, and workplace safety. Ensuring compliance helps protect both employers and employees from legal disputes.

Preparing for Taxes: This includes organizing financial information and understanding tax obligations. A lawyer or tax professional can help you navigate tax laws, maximize deductions, and ensure accurate filing.

Handling Legal Issues: This refers to addressing any legal problems that arise, such as disputes, lawsuits, or regulatory challenges. A lawyer can provide guidance, representation, and strategies to resolve these issues effectively.

Criteria for Selecting a Lawyer

The role of a lawyer is significant in every corporate organization for the fulfilment of legal and formal procedures. Entrepreneurs need to take support from lawyers for the establishment of new ventures and also for the day-to-day smooth functioning of business activities. However, for the selection of a lawyer, it is essential to consider some specific criteria based on the needs of the organization. Some of the common criteria to be considered for selection of a lawyer are as follows:

Identify Legal Problems: Understanding the specific legal issues at hand is crucial. This helps in finding a lawyer who specializes in the relevant area of law, whether it’s family law, criminal defence, business law, or another field.

Right Experience: Selecting a lawyer with relevant experience in handling cases similar to yours is important. An experienced lawyer will be more familiar with legal processes and potential challenges.

Good Communicator: A lawyer who communicates clearly and effectively is essential. The ability to explain legal concepts understandably and keep clients updated on case progress is vital.

Consider Professionalism: Evaluating the lawyer’s professionalism, including demeanor, punctuality, and treatment of clients, is necessary. A professional lawyer will handle cases with respect and diligence.

Fit with Company: For business-related legal needs, assessing how well the lawyer aligns with the company’s values and culture can lead to a more productive working relationship.

Check References: Requesting references or reading reviews from previous clients provides insight into the lawyer’s reputation, work ethic, and success rate.

Clarify Responsibility: Understanding the lawyer’s responsibilities and the client’s expectations is key. Clear expectations help avoid misunderstandings later on.

Assess Support Network: Considering the lawyer’s support team, including paralegals and administrative staff, is important. A strong support network can enhance the efficiency and effectiveness of legal representation.

Remuneration Payable: Discussing the lawyer’s fees and payment structure upfront is essential. Understanding costs and what services are included helps in budgeting accordingly.

Integrity of Lawyer: Seeking a lawyer who demonstrates honesty and ethical behaviour is crucial. A lawyer with integrity will prioritize the client’s best interests and maintain transparency throughout the legal process.

Patents

A patent is a form of rights to an investor granted by the government to gain material benefits from an invention for a limited time. It is a special right granted by the government for the creation of an invention. It is a type of intellectual property right which allows the holder of the right to use and sell an invention for economic objectives.

Types of Patents:

Utility Patents: These patents have a term of 20 years and provide the owner with exclusive rights to make, use, or sell the identified invention. They typically protect new processes, such as film development or unique mixtures of ingredients.

Design Patents: With a term of 14 years, design patents protect new, original, and ornamental designs for articles of manufacture. They focus on the aesthetic appearance of an object, such as the design patterns used by shoe companies like Reebok or Nike.

Plant Patents: These patents are granted for new varieties of plants and are issued infrequently. It is the rights of material benefits of an inventor to discover some new variety of plant. It permits its owner to exclude others from making, using or selling the plant without prior permission.

Procedure for Obtaining Patent Rights in Nepal

The following are the generally accepted procedures for registering patent rights:

Submission of application: A person willing to patent registered in his name should apply to the department with the following information including all other evidence:

1. The name, address, and profession of the inventor.
2. If the invention was not created by the applicant, an explanation of how rights were obtained from the original inventor.
3. A description of how the invention works or how it can be used.
4. Any principles or formulas that the patent is based on, if applicable.
5. Drawings or sketches of the invention, if necessary.
6. The application fee is specified in the guidelines.

Examination of patent application: The examination of patent applications is the process by which patent offices determine whether an invention can be patented. This includes reviewing the application for proper format and determining whether the invention is novel, useful, and not obvious. If everything is in order, the patent is granted; otherwise, the applicant may need to address issues raised by the examiner.

Certificate of Registration: When a patent is approved, a Certificate of Registration is issued as official proof of its validity. It includes important information such as the patent number, title, names of the inventor(s), grant date, and duration. This certificate is necessary for patent holders to demonstrate their rights and can be used if someone attempts to copy their invention.

Publication of Registered Patents: Once granted, a patent is published in a patent database or journal, allowing the public to learn about the invention. This publication informs others about the patent and contributes to overall knowledge in the field. It also creates a public record that patent owners can use to protect their rights. This usually occurs several months after the patent is granted.

Term and Renewal of Patents: The patentee should have his right to the patent for a period of seven years from the date of registration. The Pantentee should renew the patent within 35 days from the date of expiry having paid the fee mention in schedule. Renewal of a patent may be made for two times of seven years.

Options to Avoid Infringement

To avoid infringing on someone else’s patent, it’s important to conduct thorough research and ensure that your invention does not violate existing patents. This can involve seeking legal advice or conducting a patent search to check for similar inventions.

Trademark

A trademark is a unique symbol, phrase or word that distinguishes one business product from its competitors. It helps consumers easily recognize and distinguish products from those of competitors, building brand loyalty and trust.

Categories of Trademarks

Coinde Marks: Coined marks are brand names that have no inherent connection to the nature or function of the products they represent. For example, names like Mercedes and Kodak do not describe the products or their uses.

Arbitrary Marks: An arbitrary mark is a sign or symbol that has a meaning in a common language, but that meaning does not relate to the goods or services it represents. For example, the brand name “Apple” refers to a fruit, but it has no direct connection to the technology products the company sells, such as computers and smartphones.

Suggestive Mark: A suggestive mark is a sign or symbol that implies or suggests certain qualities or characteristics of the product it represents, without directly describing it. For example, the brand name “Sunsilk” suggests qualities related to sunlight and silkiness, evoking images of smooth, shiny hair.

Descriptive Mark: A descriptive mark is a type of trademark that directly describes the goods or services it represents. These marks convey specific information about the product’s characteristics, qualities, or features. For example, “Fresh & Juicy” for a brand of oranges directly describes the quality and attributes of the oranges sold.

Procedures for Obtaining Trademark in Nepal

The Patent and Trademark Office (PTO) is responsible for registering trademarks. Registering a trademark is an important step for businesses to protect their brand identity. The procedures for obtaining trademark in Nepal are:

Application for the registration of trademark

One who is willing to get registered any trademark of his trade or business under the act should apply to the Department in a prescribe format. Applicants may submit the application online through the PTO’s website. The application must include the following information.

• Copy of registration or license of the business for the product or service in which a trademark is used or intends to use.
• Four copies of model of trademark.
• Authorizations letter if somebody has been authorized to act on behalf of the owner to register the trademark.
• If an applicant is a foreigner, they must submit a certified copy of any foreign registration certificate and a Nepali service address with the application.
• Receipt of payment of prescribe application fee.

Registration of Trademark

The Department of Industry (DOI) will examine the trademark. If there are no objections during the examination, it will be published in the IP Bulletin for 90 days to allow for any opposition. If no issues arise during this opposition period, the trademark will be officially registered.

Term and renewal of Trademark

A registered trademark is valid for 7 years from the date of registration and can be renewed for additional 7-year periods. One must renew within 35 days of expiration.

Cancellation of Trademark

A trademark can be canceled if it harms the reputation of other trademarks or if it hasn’t been used for a certain time. The Department of Industry (DOI) has the power to cancel trademarks for specific reasons stated in the law.

Copyrights

Copyright is a legal right that protects the original works of creators, such as authors, artists, musicians, and filmmakers. It gives them exclusive control over how their work is used, allowing them to reproduce, distribute, and display it. This means that others cannot use or copy their work without permission. Copyright encourages creativity by ensuring that creators can benefit from their efforts and prevents unauthorized use of their creations.

Procedures for Obtaining Copyrights in Nepal

Submission of Application

To apply for copyright protection in Nepal, an application for an original work is required. The application should include the title of the work, the name and address of the author or creator, the date of creation, a brief description of the work, and a copy of the work if possible. The application must be submitted to the Copyright Registrar at the Department of Industry (DOI) along with the required fee, either in person or through designated online platforms, if available.

Registration of copyright

During the registration of copyrights, the Copyright Registrar examines the application to make sure it meets the required criteria and that the work is original. If the application is approved, the work gets registered, and a certificate of registration is issued. This certificate acts as legal proof of copyright ownership and can be used in case of any disputes.

Registration duration

In Nepal, copyright protection lasts for different periods: for individual authors, it lasts for their lifetime plus 50 years after their death, while for works created by organizations or under pseudonyms, it lasts for 50 years from the date of publication. There is no need for renewal, as copyright automatically remains in effect for the specified duration.

Trade Secret

Trade secrets are important confidential information that is not available to the public, giving a business a competitive edge. They include various types of sensitive data, such as formulas, methods, processes, designs, customer lists, and marketing strategies. The subject matter of trade secrets involve various terms of business such as:

• manufacturing process
• promotion methods
• distribution network
• consumer profile
• advrtising strategies
• chemical formula
• special recipes
• commerical of strategies

Steps for Protecting Trade Secrets

Physical Measures

1. Access Control: Limit access to areas where trade secrets are stored. Use key cards, locks, or security personnel to restrict entry to authorized personnel only.
2. Secure Storage: Store sensitive documents and materials in locked cabinets or safes. For digital information, use secure servers or encrypted storage solutions.
3. Surveillance: Install security cameras in sensitive areas to monitor for unauthorized access or suspicious activity.
4. Visitor Protocols: Implement strict protocols for visitors, including signing in, being escorted, and not allowing them access to sensitive areas without supervision.
5. Device Security: Ensure that computers and mobile devices used to access trade secrets are password-protected and equipped with security software to prevent unauthorized access.
6. Physical Destruction: Properly dispose of documents containing trade secrets by shredding them rather than simply throwing them away.

Written Agreement

To protect trade secrets, it is important to identify what information is considered confidential. A Non-Disclosure Agreement (NDA) should be created to define the confidential information, outline the responsibilities of the receiving party, and specify how long the confidentiality lasts. Having a lawyer review the NDA is advisable, and all parties should sign it before sharing any sensitive information. Educating employees and partners about the NDA’s importance will help ensure that trade secrets remain protected.

Licensing

Licensing is a legal agreement in which the licensor permits the licensee to use their product, service, or idea for a fee or royalty. This arrangement enables businesses to expand and penetrate new markets without starting from scratch. A well-structured licensing agreement creates opportunities for both parties while safeguarding the rights of the original owner.

Advantages

1. Passive Income: Licensing can generate revenue without the need for significant investment in production or overhead.
2. Market Access: It allows quicker entry into new markets by leveraging the licensee’s established distribution channels and expertise.
3. Targeted Marketing: Smaller businesses may have better insights into local markets, leading to more effective marketing strategies for the licensed product.
4. Conflict Resolution: Licensing can help resolve disputes over intellectual property use by formalizing agreements rather than resorting to litigation.
5. Brand Expansion: It enables licensors to expand their brand presence without the need for direct investment in new locations or products.

Disadvantages:

1. Loss of Control: The licensor may have limited control over how their intellectual property is used, which can lead to potential misuse or damage to the brand.
2. Revenue Uncertainty: Royalties are often based on the licensee’s profits, meaning the licensor may not receive consistent income if the licensee struggles financially.
3. Competition Risk: The licensee could inadvertently become a competitor, especially in the age of e-commerce, which may harm the licensor’s market position.
4. Reputation Risk: If the licensee engages in unethical practices, it could negatively impact the licensor’s reputation, even if they are not directly involved.
5. Legal Conflicts: Licensing agreements can lead to disputes over revenue sharing or contract terms, which may require costly legal action to resolve.

Product Safety and Liability

Product safety refers to the consideration of all the measures for maintaining the quality of products and fulfillment of all the legal provisions relating to consumer protection. It involves a company’s duty to make sure its products comply with legal safety standards set by the Consumer Product Safety Act.

Product liability holds manufacturers, distributors, suppliers, retailers, and others accountable for injuries caused by their products. It refers to the fulfillment of Liabilities by the business communities under the prevailing laws.

Insurance

Insurance is an essential support system for entrepreneurs, helping them deal with unforeseen challenges. Important types of insurance include property insurance, which safeguards physical assets against incidents such as fire or theft, and casualty insurance, which helps manage liability risks. Life insurance is important for business partnerships as it offers financial protection, while workers’ compensation provides support for employees injured at work. Additionally, bonding protects contractors if a subcontractor does not complete their work, ensuring the project’s integrity. By investing in these types of insurance, entrepreneurs can better prepare for the uncertainties of running a business.

Contracts

Contracts are agreements that are legally binding between two parties. Entrepreneurs often negotiate and create contracts with vendors, landlords, and clients. These agreements are enforceable by law as long as specific conditions are met.

Contracts Conditions and Result of a Breach of a Contract

Contract Conditions:

1. An offer is made, which can be spoken or written.
2. The offer must be accepted willingly by both parties.
3. Both parties must exchange something of value.
4. Both parties should be capable and allowed to negotiate.
5. The contract must be legal.
6. Any sales of $500 or more need to be in writing.

Result of a Breach of Contract: If someone breaks the contract, they must either fulfill the agreement or pay for the damages. If one party doesn’t keep their promise, the other party can also choose to not follow through, which is known as contract restitution.

Conclusion

Intellectual property includes inventions, creative works, and unique business elements that need protection. Patents, copyrights, trademarks, and trade secrets are different types of intellectual property. To protect these rights, entrepreneurs need lawyers, follow legal procedures, and manage contracts, product safety, and insurance. By doing this, businesses can grow and stay safe from competition.

Frequently Asked Questions (FAQ)

Related Notes

• Creativity and Business Idea
• Entrepreneurial Intentions