Small Business Opportunity Center Presentation for Kendall College Top Legal Issues Facing Entrepreneurs February 3, 2010
Contents Intellectual Property Entity Choice Top 10 Legal Issues Entrepreneurs Should Know Questions
Why is Intellectual Property Important? <ul><li>Intellectual property represents approximately 70% of an average firm’s va...
Types of Intellectual Property <ul><li>Intellectual property is a number of distinct types of legal monopolies where the o...
Trade Secrets <ul><li>A  Trade Secret  is: </li></ul><ul><ul><ul><li>(1)  any information , including any formula, pattern...
Establishing Trade Secret Protection <ul><li>Identify Trade Secrets  – all documents that contain trade secrets should be ...
Copyrights <ul><li>A  Copyright  gives the author of an original work exclusive legal right to obtain certain economic ben...
“ Exclusive Rights” of Copyrights <ul><li>Exclusive rights granted with copyright: </li></ul><ul><ul><ul><li>(1) to reprod...
Obtaining Copyright Protection <ul><li>To be eligible for copyright protection: </li></ul><ul><ul><ul><li>(1) work must be...
Patents <ul><li>A  Patent  is an exclusive right granted by the federal government that entitles the inventor to prevent a...
Trademarks <ul><li>A  Trademark  is any word (or phrase), name, symbol, sound, or device that identifies and distinguishes...
Establishing a Trademark – Inherently Distinctive <ul><li>Trademark must identify and distinguish the product from those o...
Establishing a Trademark – Descriptive <ul><li>Descriptive marks  indicates characteristics of the product it identifies. ...
Create Rights in the Trademark <ul><li>Rights are obtained by using the trademark in business. </li></ul><ul><ul><ul><li>I...
Contents Intellectual Property Entity Choice Top 10 Legal Issues Entrepreneurs Should Know Questions
Why is Entity Choice Important? <ul><li>Impacts every aspect of your business: </li></ul><ul><ul><ul><li>Formation </li></...
Liability <ul><li>Limiting liability is one of the most important reasons to form an entity instead of continuing as a sol...
Tax <ul><li>Types of tax treatment: </li></ul><ul><ul><ul><li>Flow-through </li></ul></ul></ul><ul><ul><ul><li>Double taxa...
Types of Entities <ul><li>Common types of entities include: </li></ul><ul><ul><ul><li>Sole Proprietorship </li></ul></ul><...
Sole Proprietorship <ul><li>A  sole proprietorship  is a business owned by one person. </li></ul><ul><ul><ul><ul><li>Preva...
General Partnership <ul><li>A  general partnership  is two or more persons as co-owners.  </li></ul><ul><ul><ul><li>Format...
Limited Partnership <ul><li>A  limited partnership  has one or more general partners and one or more limited partners. </l...
Limited Liability Partnership <ul><li>A  limited liability partnership  is a hybrid entity. </li></ul><ul><ul><ul><ul><li>...
C-Corporation <ul><li>A  C-Corporation  is a legal entity owned by its shareholders. </li></ul><ul><li>Shareholders elect ...
S-Corporation <ul><li>An  S-Corporation  is a type of corporation that allows its shareholders to operate as a corporation...
Limited Liability Company <ul><li>A  limited liability company  combines the pass-through federal tax treatment of a partn...
L3C <ul><li>A  low-profit limited liability company  (L3C) is a hybrid structure that combines the financial advantages of...
Contents Intellectual Property Entity Choice Top 10 Legal Issues Entrepreneurs Should Know Questions
1.  Make sure you are free to start your business <ul><li>For Faculty : Can you spend time on the new business? </li></ul>...
2.  Consider ways to prevent others from stealing your idea or product <ul><li>Do not disclose the idea to any outsider to...
3.  Be careful when selecting a business name <ul><li>Name availability </li></ul><ul><li>Trademark infringement </li></ul...
4.  Think about incorporating or forming a limited liability company <ul><li>Sole proprietorship </li></ul><ul><li>Partner...
5.  If you have a business partner, put it in writing <ul><li>Shareholders Agreement </li></ul><ul><li>Operating Agreement...
6.  Think about your relationships with other people who work for your business <ul><li>Employee </li></ul><ul><li>Indepen...
7.  Some thoughts about your first lease <ul><li>Option on adjacent space </li></ul><ul><li>Termination </li></ul><ul><li>...
8. Consider sub-licensing your intellectual property <ul><li>You do not necessarily need to manufacture and distribute you...
9.  Negotiate contracts with vendors, customers and others <ul><li>Same “page” </li></ul><ul><li>Important terms </li></ul>
10.  Consider financing options, including bank loans and outside equity investors <ul><li>Loans </li></ul><ul><li>Equity ...
Contents Intellectual Property Entity Choice Top 10 Legal Issues Entrepreneurs Should Know Questions
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Kendall College Presesntation

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All entrepreneurs and small business owners encounter a number of critical legal issues as they open or expand their companies. Learn more about the legal decisions you’ll have to make as you set up your business, identify your customers and suppliers and protect yourself from liability.

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  • GOAL: Provide basic information to avoid needing a lawyer.
  • Entrepreneurs often assume that IP is only important for mature, technology driven companies with scientists Virtually all businesses, even start-ups, have knowledge and information that is important to competitive success. Ex: Name or Logo Basic knowledge is critical to knowing when experienced help is needed.
  • Most businesses have important confidential information that helps them compete in the marketplace Ex: business plan, customer list, software Ex: Protection from employee stealing knowledge
  • Establish Protection: Develop a trade secret protection program Policies (in writing) Comprehensive but not too complex and burdensome 1) Identify Trade Secrets 2) Mark documents with “confidential”
  • Formation : Timing – Automatic versus file forms Costs – varying costs &amp; business licenses Ownership : How many people do you want involved? Shared return/profit but also shared liability/risk Debt rather than equity Control : Multiple classes of stock; preferred shares Governance: applicable default rules Attractiveness : Determine the types of investors you would like to attract: Self-funded Friends and family Angel investors Angel networks Venture capital Private equity
  • Sole Proprietorship This is the easiest entity to form, it happens automatically. You don’t need to file any articles with the state (other than registering the name of the business). You’re the sole owner, you have complete control, and taxes are easy because you just count the business profits as personal income. However, the drawbacks are severe: your personal assets are not protected at all; the owner has unlimited liability for the losses of the business. So potential plaintiffs can tap into your personal assets for recovery on a suit.  
  • General Partnership A partnership is a business owned by at least two people. Don’t need formal filing to form a GP, can just be an understanding between two people (handshake), but there must be a meeting of the minds. Partnerships are generally treated as a distinct legal entity and the partnership can sue, be sued, own real estate, etc. Each partner is an agent of the partnership, and can thus incur obligations/liability on behalf of the partnership (and other partners). So if your partner acts within the scope of his duties, you, as the other partner, will be bound by his actions. If his actions result in debt, you’re on the hook too. Profits are split 50/50 So if you put in $9,000 and your partner only puts in $1,000, if the partnership were to dissolve you’d split the $ and each get $5,000. Tax structure is “flow-through.” Actually all partnerships do not pay income tax, that’s a major attraction of a partnership. Governance You can contract the provisions of the partnership through a Partnership Agreements You can mutually decide how profits and losses will be allocated and distributed. The more details the better What to do in case of withdrawal or death of a partner Alternatives to liquidation, i.e. a buyout Partner contributions of services versus cash If you don’t have one, then state statutes are the default
  • Limited Partnership The limited partner’s liability is limited to their capital commitment. Formation: written Partnership Agreement is required and must file a certificate with the Secretary of State. If something is not contracted for in the Partnership Agreement, state statutes will be the default rules. Generally limited to Real Estate &amp; Securities Firms
  • Limited Liability Partnership Only open to certain professions such as lawyers, architects, accounting firms. These types of professions are restricted by state law from organizing as limited partnerships. (probably so that plaintiffs can sue for malpractice) Each partner can participate actively in the business and as unlimited personal liability for his own actions (malpractice) but is liable for the misdeeds of other partners only to the extent of the partnership’s assets. In general, partnerships have limited sources of operating capital. Money is usually raised through contributions from partners and loans (law firms usually run on revenue generated by the partners, and/or loans from banks. VC’s do not invest in law firms)    
  • Kendall College Presesntation

    1. 1. Small Business Opportunity Center Presentation for Kendall College Top Legal Issues Facing Entrepreneurs February 3, 2010
    2. 2. Contents Intellectual Property Entity Choice Top 10 Legal Issues Entrepreneurs Should Know Questions
    3. 3. Why is Intellectual Property Important? <ul><li>Intellectual property represents approximately 70% of an average firm’s value (up from 40% in the past). 1 </li></ul><ul><li>Entrepreneurs can use intellectual property laws to help protect and realize the value of their assets. </li></ul><ul><li>All businesses need to take precautions to avoid violating other’s intellectual property rights – even unintentional violations can ruin a business. </li></ul><ul><li>1 Kevin G. Rivette & David Kline, Discovering New Value in Intellectual Property , Harvard Business Review, Jan-Feb 2000, at 58. </li></ul>
    4. 4. Types of Intellectual Property <ul><li>Intellectual property is a number of distinct types of legal monopolies where the owner is granted certain exclusive rights to: </li></ul><ul><ul><ul><li>a variety of intangible assets, such as musical, literary, and artistic works; </li></ul></ul></ul><ul><ul><ul><li>ideas, discoveries and inventions; and </li></ul></ul></ul><ul><ul><ul><li>words, phrases, symbols, and designs. </li></ul></ul></ul><ul><li>Common types of intellectual property include: </li></ul><ul><ul><ul><li>Trade Secrets </li></ul></ul></ul><ul><ul><ul><li>Copyrights </li></ul></ul></ul><ul><ul><ul><li>Patents </li></ul></ul></ul><ul><ul><ul><li>Trademarks </li></ul></ul></ul>
    5. 5. Trade Secrets <ul><li>A Trade Secret is: </li></ul><ul><ul><ul><li>(1) any information , including any formula, pattern, compilation, program, device, method, technique, or process, that </li></ul></ul></ul><ul><ul><ul><li>(2) provides a business with a competitive advantage from not being generally known by current/potential competitors or readily discoverable through legitimate means, and </li></ul></ul></ul><ul><ul><ul><li>(3) is the subject of reasonable efforts to maintain its secrecy . </li></ul></ul></ul><ul><li>Examples: business plan, customer list, products formula, custom software, survey results, sales data, financial statements. </li></ul><ul><li>Is a product that can be “reverse engineered” be a trade secret? </li></ul>
    6. 6. Establishing Trade Secret Protection <ul><li>Identify Trade Secrets – all documents that contain trade secrets should be marked as “Confidential.” </li></ul><ul><li>Pre-employment Clearance </li></ul><ul><ul><ul><li>stress that no trade secrets from former employers are to be used on the job or shared with others in the company. </li></ul></ul></ul><ul><ul><ul><li>Review any employment or nondisclosure agreements that any new employee had with a former employee. </li></ul></ul></ul><ul><li>Nondisclosure Agreement – a promise by an employee to avoid the unauthorized use or disclosure of the company’s trade secrets and to use care to prevent unauthorized use and disclosure from occurring. </li></ul><ul><li>Noncompetition Agreement – prevents employees who leave the company from using trade secrets and other sensitive information on behalf of a competitor. </li></ul>
    7. 7. Copyrights <ul><li>A Copyright gives the author of an original work exclusive legal right to obtain certain economic benefits from the work, including the right to prevent reproduction and distribution of the work. </li></ul><ul><li>Examples: software, movie, music, multimedia, photos, website, plays, advertisements, diagrams </li></ul><ul><li>Duration: </li></ul><ul><ul><ul><li>For an individual creator – life of creator plus 70 years </li></ul></ul></ul><ul><ul><ul><li>For work made for hire – earlier of 95 years from publication or 120 years from creation </li></ul></ul></ul><ul><li>Doctrine of Work Made for Hire – employer owns works created by its employees in the scope of their employment. </li></ul>
    8. 8. “ Exclusive Rights” of Copyrights <ul><li>Exclusive rights granted with copyright: </li></ul><ul><ul><ul><li>(1) to reproduce copies of the work </li></ul></ul></ul><ul><ul><ul><li>(2) to develop derivative works based on the copyrighted work </li></ul></ul></ul><ul><ul><ul><li>(3) to distribute copies of the work </li></ul></ul></ul><ul><ul><ul><li>(4) to perform the work publicly </li></ul></ul></ul><ul><ul><ul><li>(5) to display the work publicly </li></ul></ul></ul><ul><li>“ Derivative Work” is a work that is based on another work </li></ul><ul><ul><ul><li>Ex: Translation of book into another language </li></ul></ul></ul><ul><li>Copyrights do not protect ideas </li></ul><ul><ul><ul><li>Ex: Book can be copyrighted, but not the ideas in the book! </li></ul></ul></ul>
    9. 9. Obtaining Copyright Protection <ul><li>To be eligible for copyright protection: </li></ul><ul><ul><ul><li>(1) work must be fixed in a tangible medium of expression </li></ul></ul></ul><ul><ul><ul><li>(2) work must be original </li></ul></ul></ul><ul><ul><ul><li>(3) work must contain some minimal level of creativity </li></ul></ul></ul><ul><li>Protection automatically arises when an original work of authorship is first fixed in a tangible medium of expression! </li></ul><ul><ul><ul><li>Advisable to place copyright notice “©” with name of author and year of publication, along with “all rights reserved” </li></ul></ul></ul><ul><li>To pursue an infringement suit, the owner of the copyright must register the copyright with the Register of Copyrights. </li></ul>
    10. 10. Patents <ul><li>A Patent is an exclusive right granted by the federal government that entitles the inventor to prevent anyone else from making, using, selling, or offering to sell the patented process or product in the US for a specific period of time (20 years). </li></ul><ul><li>Requirements : </li></ul><ul><ul><ul><li>Patentable (Utility & Design) </li></ul></ul></ul><ul><ul><ul><li>Useful </li></ul></ul></ul><ul><ul><ul><li>Novel </li></ul></ul></ul><ul><ul><ul><li>Non-obvious </li></ul></ul></ul><ul><li>Scope of Rights to Exclude: </li></ul><ul><ul><li>Specified rights: makes, uses, offers to sell, or sells </li></ul></ul><ul><ul><li>Geographic Limits: only within the United States </li></ul></ul><ul><ul><li>Time Limits: Only during the term of the patent </li></ul></ul>
    11. 11. Trademarks <ul><li>A Trademark is any word (or phrase), name, symbol, sound, or device that identifies and distinguishes one company’s products from those made or sold by others. </li></ul><ul><ul><ul><li>Service Mark – trademark used in connection with a service </li></ul></ul></ul><ul><ul><ul><li>Trade Name – a businesses’ formal, legal name </li></ul></ul></ul><ul><li>Trademark law helps to protect both trademark owners and consumers from the confusion that can result when different companies use the same name or confusingly similar indentifying marks. </li></ul>
    12. 12. Establishing a Trademark – Inherently Distinctive <ul><li>Trademark must identify and distinguish the product from those of competitors. Seek distinctiveness – the more distinctive, the better. </li></ul><ul><li>Inherently distinctive marks are the strongest form of trademark because these mark have not meaning within the industry before their adoption. Three types of “inherently distinctive” trademarks: </li></ul><ul><ul><ul><li>(1) Fanciful Marks – made up works (e.g., “Exxon”) </li></ul></ul></ul><ul><ul><ul><li>(2) Arbitrary Marks – real word that has no relation to product (e.g., “Apple”) </li></ul></ul></ul><ul><ul><ul><li>(3) Suggestive Marks – suggestion something about the product but do not describe it (e.g., “Chicken of the Sea”) </li></ul></ul></ul>
    13. 13. Establishing a Trademark – Descriptive <ul><li>Descriptive marks indicates characteristics of the product it identifies. </li></ul><ul><ul><ul><li>Ex: “Rapid Seal” </li></ul></ul></ul><ul><li>Descriptive marks are not immediately protectable but may become fully protectable once they acquire secondary meaning in the marketplace. </li></ul><ul><li>Secondary Meaning is acquired when a significant number of people come to associate the mark with particular company or product. </li></ul>
    14. 14. Create Rights in the Trademark <ul><li>Rights are obtained by using the trademark in business. </li></ul><ul><ul><ul><li>If the mark is inherently distinctive , the first person to use the mark becomes the owner. </li></ul></ul></ul><ul><ul><ul><li>If the mark is descriptive , using the mark beings the process of developing secondary meaning. </li></ul></ul></ul><ul><li>Additional rights – trademark registration with USPTO. Benefits: </li></ul><ul><ul><ul><li>(1) Registration is evidence of ownership if contested </li></ul></ul></ul><ul><ul><ul><li>(2) Everyone is presumed to be aware of the trademark </li></ul></ul></ul><ul><ul><ul><li>(3) After five years, trademark declared “incontestable” </li></ul></ul></ul><ul><ul><ul><li>(4) Allows the owner to prevent use of trademark </li></ul></ul></ul>
    15. 15. Contents Intellectual Property Entity Choice Top 10 Legal Issues Entrepreneurs Should Know Questions
    16. 16. Why is Entity Choice Important? <ul><li>Impacts every aspect of your business: </li></ul><ul><ul><ul><li>Formation </li></ul></ul></ul><ul><ul><ul><li>Ownership </li></ul></ul></ul><ul><ul><ul><li>Control </li></ul></ul></ul><ul><ul><ul><li>Governance </li></ul></ul></ul><ul><ul><ul><li>Attractiveness to potential investors and lenders </li></ul></ul></ul><ul><ul><ul><li>Liability </li></ul></ul></ul><ul><ul><ul><li>Tax </li></ul></ul></ul>
    17. 17. Liability <ul><li>Limiting liability is one of the most important reasons to form an entity instead of continuing as a sole proprietorship or general partnership. </li></ul><ul><li>Protect your personal assets. </li></ul><ul><li>Prevent courts from piercing the corporate veil. </li></ul><ul><li>Encourage potential investors to invest in your company because creditors cannot seize their personal assets. </li></ul>
    18. 18. Tax <ul><li>Types of tax treatment: </li></ul><ul><ul><ul><li>Flow-through </li></ul></ul></ul><ul><ul><ul><li>Double taxation </li></ul></ul></ul><ul><li>Affects the types of financing you would like to pursue because certain entities are more or less favorable for investors based on their tax treatment. </li></ul><ul><li>Talk to an accountant! </li></ul>
    19. 19. Types of Entities <ul><li>Common types of entities include: </li></ul><ul><ul><ul><li>Sole Proprietorship </li></ul></ul></ul><ul><ul><ul><li>General Partnership </li></ul></ul></ul><ul><ul><ul><li>Limited Partnership </li></ul></ul></ul><ul><ul><ul><li>Limited Liability Partnership </li></ul></ul></ul><ul><ul><ul><li>C-Corporation </li></ul></ul></ul><ul><ul><ul><li>S-Corporation </li></ul></ul></ul><ul><ul><ul><li>Limited Liability Company </li></ul></ul></ul><ul><ul><ul><li>L3C </li></ul></ul></ul>
    20. 20. Sole Proprietorship <ul><li>A sole proprietorship is a business owned by one person. </li></ul><ul><ul><ul><ul><li>Prevalent but risky </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Forms automatically </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Unlimited liability </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Tax is structured as personal income (Schedule C) </li></ul></ul></ul></ul>
    21. 21. General Partnership <ul><li>A general partnership is two or more persons as co-owners. </li></ul><ul><ul><ul><li>Formation: informal </li></ul></ul></ul><ul><ul><ul><li>Each partner: </li></ul></ul></ul><ul><ul><ul><ul><ul><li>Is an agent of the partnership </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Has unlimited liability for the debts of the partnership </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Has power to incur obligations on the other’s behalf </li></ul></ul></ul></ul></ul><ul><ul><ul><li>Profits are split 50/50 </li></ul></ul></ul><ul><ul><ul><li>Tax structure is “flow-through” </li></ul></ul></ul><ul><ul><ul><li>Governed by Partnership Agreements </li></ul></ul></ul><ul><ul><ul><ul><ul><li>The more detailed the better </li></ul></ul></ul></ul></ul><ul><ul><ul><li>State statutes are default </li></ul></ul></ul>
    22. 22. Limited Partnership <ul><li>A limited partnership has one or more general partners and one or more limited partners. </li></ul><ul><ul><ul><ul><li>General Partner has unlimited liability and controls the business </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Limited Partner has limited liability but does not control the business </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Formation: Must file Partnership Agreement with the Secretary of State. </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>The more detailed the better </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><li>Tax structure is “flow-through” </li></ul></ul></ul></ul>
    23. 23. Limited Liability Partnership <ul><li>A limited liability partnership is a hybrid entity. </li></ul><ul><ul><ul><ul><li>Only open to certain professions </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Each partner has personal liability and limited partnership liability </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Tax structure is “flow-through” </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Sources of capital for partnerships are limited to partner contributions and loans </li></ul></ul></ul></ul></ul>
    24. 24. C-Corporation <ul><li>A C-Corporation is a legal entity owned by its shareholders. </li></ul><ul><li>Shareholders elect the board of directors, which is responsible for major decisions. </li></ul><ul><li>Officers carry out day-to-day management of company. </li></ul><ul><li>Taxed as a separate legal entity. </li></ul><ul><li>Common choice of entity for publicly-traded companies. </li></ul>
    25. 25. S-Corporation <ul><li>An S-Corporation is a type of corporation that allows its shareholders to operate as a corporation while being taxed as individuals. </li></ul><ul><li>Requirements: </li></ul><ul><ul><li>Maximum of 100 shareholders (can only be individuals, certain tax-exempt organizations, qualifying trusts or estates) </li></ul></ul><ul><ul><li>All shareholders must be U.S. citizens </li></ul></ul><ul><ul><li>Only one class of stock </li></ul></ul><ul><li>Does not pay federal income tax at an entity level </li></ul><ul><ul><li>Profits/losses flow through to individual shareholders </li></ul></ul><ul><li>Most commonly used for family or closely owned businesses that raise capital from the shareholders or debt from outside sources </li></ul><ul><ul><li>No equity incentives on a significant scale </li></ul></ul><ul><ul><li>No raising capital from VC funds or institutional investors </li></ul></ul>
    26. 26. Limited Liability Company <ul><li>A limited liability company combines the pass-through federal tax treatment of a partnership with the liability protections of a corporation. </li></ul><ul><li>Members have no personal liability for LLC’s obligations. </li></ul><ul><li>No ownership limitations (such as with S-Corp). </li></ul><ul><li>Not suitable for businesses financed by VC funds. </li></ul><ul><li>Attractive for businesses financed by corporate investors and wealthy individuals (angels). </li></ul><ul><li>File articles of organization with secretary of state and adopt operating agreement. </li></ul>
    27. 27. L3C <ul><li>A low-profit limited liability company (L3C) is a hybrid structure that combines the financial advantages of an LLC with the social advantages of a non-profit entity. </li></ul><ul><li>Primary focus is to achieves socially beneficial aims </li></ul><ul><ul><li>Secondary focus on profitability </li></ul></ul><ul><li>Not tax-exempt </li></ul><ul><ul><li>Contributions are not tax-deductible </li></ul></ul><ul><li>Illinois’ L3C bill takes effect 1/1/10 </li></ul><ul><ul><li>VT, MI, WY, UT and ND have passed L3C laws </li></ul></ul>
    28. 28. Contents Intellectual Property Entity Choice Top 10 Legal Issues Entrepreneurs Should Know Questions
    29. 29. 1. Make sure you are free to start your business <ul><li>For Faculty : Can you spend time on the new business? </li></ul><ul><ul><li>“ External activities that compromise or diminish a Faculty Member's capacity to meet these obligations represent a Conflict of Commitment. Accordingly, Compensated Professional/Commercial Activities, including outside consulting activity, should not generally exceed, on the average, one day per calendar week during that portion of the year when a Faculty Member is drawing academic year or summer salary.” [www.research.northwestern.edu/policies/faculty-conflict-of-interest.html] </li></ul></ul><ul><li>For Employees : NU owns your invention if it is related to your work at NU or if you use NU facilities, but NU does not own your song, painting, book or (in some cases) computer program [http://www.northwestern.edu/ttp/policies/index.html] </li></ul>
    30. 30. 2. Consider ways to prevent others from stealing your idea or product <ul><li>Do not disclose the idea to any outsider too early! </li></ul><ul><li>Types of Protection: </li></ul><ul><ul><li>Trade Secret </li></ul></ul><ul><ul><li>Copyright Law </li></ul></ul><ul><ul><li>Patent </li></ul></ul>
    31. 31. 3. Be careful when selecting a business name <ul><li>Name availability </li></ul><ul><li>Trademark infringement </li></ul><ul><li>Name uniqueness </li></ul>
    32. 32. 4. Think about incorporating or forming a limited liability company <ul><li>Sole proprietorship </li></ul><ul><li>Partnership </li></ul><ul><li>Corporation </li></ul><ul><li>Limited Liability Company </li></ul>
    33. 33. 5. If you have a business partner, put it in writing <ul><li>Shareholders Agreement </li></ul><ul><li>Operating Agreement </li></ul>
    34. 34. 6. Think about your relationships with other people who work for your business <ul><li>Employee </li></ul><ul><li>Independent Contractor </li></ul><ul><li>Intern </li></ul>
    35. 35. 7. Some thoughts about your first lease <ul><li>Option on adjacent space </li></ul><ul><li>Termination </li></ul><ul><li>Personal guaranty </li></ul><ul><li>Consider local incubators or rental lab space </li></ul><ul><ul><ul><li>“ The Incubator” [www.theincubator.com] </li></ul></ul></ul><ul><ul><ul><li>www.iltechparks.com </li></ul></ul></ul>
    36. 36. 8. Consider sub-licensing your intellectual property <ul><li>You do not necessarily need to manufacture and distribute your own product </li></ul>
    37. 37. 9. Negotiate contracts with vendors, customers and others <ul><li>Same “page” </li></ul><ul><li>Important terms </li></ul>
    38. 38. 10. Consider financing options, including bank loans and outside equity investors <ul><li>Loans </li></ul><ul><li>Equity </li></ul>
    39. 39. Contents Intellectual Property Entity Choice Top 10 Legal Issues Entrepreneurs Should Know Questions
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