This document discusses various topics related to intellectual property and legal issues for businesses. It defines intellectual property as creations of the mind such as inventions, literary works, symbols and images. The key types of intellectual property discussed are patents, trademarks, copyrights and trade secrets. Patents provide exclusive rights to inventors for a limited time. Trademarks protect distinctive names, symbols or designs to identify business products/services. Copyrights grant authors exclusive rights over artistic and literary works. Trade secrets provide indefinite protection for confidential business information as long as it remains secret. The document also outlines procedures for obtaining these types of intellectual property protections and other legal topics like licensing, contracts and insurance.

1. Protecting Ideas
and
Other Legal Issues
Chapter-6

2. Intellectual Property
What is intellectual property ?
 Intellectual Property (IP) refers to the creations of the mind in the fields of
inventions, literary and artistic works, scientific works, symbols, names
and images used in industry, commerce & communication areas. It
includes- Patents, Trademarks, Copyrights and Trade secrets
 It is held by the entrepreneurs. It needs to be registered and protected .
Examples of such creations are a name of new product, a new method, a new
process, a new design etc. Intellectual property rights prevent competitors from
benefiting from an individual’s or firm’s ideas.
“Intellectual property refers to creation of the mind, such as inventions,
literary and artistic works, symbols, names, images, and design used in
commerce. Business intellectual property includes patents, trade secrets,
trade marks and copy rights.”
William Bygrave and Andrew Zacharakis

3. Patent
It is a grant from the government that gives a inventor exclusive
rights to decide when and how the invention can be used by others.
The owner of the patent is granted a legal monopoly for a limited
period of time-in most of the countries, for up to 20 years. When the
time period ends, the patent goes into the public domain and anyone
may use it.
“Patents are a government grants of exclusive right to produce, use or sell
an invention or idea for a specified period of time.”
Papas and Brigham

4. 1. Utility patent: It is granted for new processes, machines,
manufactures etc. This category excludes botanical creation
related to plant and agricultures.
2. Design plant: It is granted for new or original ornamental
(decorative) design for an article of manufactures. A design
patent protects the appearance of the article, not the article itself.
3. Plant patent: It is granted for botanical creations that have been
reproduced and to not exist in nature. For example, unusual
hybrid roses, food grain, herbs, vegetable plants etc.
Types of Patent

5. 1. Patent, Design and Trademark Act 1965, amended in 1987) : A
person should submit an application (in department of industry
or prescribed) with the following particulars.
 Name, address and occupation of the person inventing the patent.
 If the applicant him/herself is not the inventor, how and in what manner he/she
acquired title thereto from the inventor.
 Process of manufacturing, operating or using the patent.
 The theory of formula if any, on which the patent is based.
 Map or drawing of the patent with description.
Procedures for Acquiring Patent Rights in Nepal

6. 2. No registration:
 If the patent is already registered in name of any other person.
 If the application him/herself is not the inventor of the patent nor has acquired
rights over it from the original inventor.
 If the patent is likely to adversely affect the public health, conduct or morality
or the national interest.
3. Term:
 The term of the patent is valid only for a period of seven years from the date
of registration.
 Renewal of a patent may be made for two times of seven years.
Procedures for Acquiring Patent Rights in Nepal

7. Trademark
Meaning
 It is a distinctive work, name, symbol, design or logo that a company uses
to identify and distinguish its products from those of others. It should be
sufficiently distinctly from those of competitors. The owner has unlimited
right to use the trademark. Trademark can be licensed or sold to others.
 When a brand name or brand mark is legally registered with an authorized
department, it becomes a trademark.

8. 1. Product Mark: A product mark is similar to trademark only, but it is to identify the
products or goods instead of services. Herein the product is the unique selling feature
of the company. To safeguard the product category and avoid any duplicity of the same
a product mark is registered.
2. Service Mark: This type of trademark is used to identify and distinguish the
services rather than the products provided by any enterprise. The service mark is for the
intangible products which include the action of helping or doing work for someone; it
can also be a system supplying public needs such as transport, communication or other
utilities such as electricity, water, etc.
3. Collective Mark: As the name suggests these marks are linked with a group of
people and not one single product or service. These trademarks are primarily owned by
an organization, institutes or any association that is related to several members. For
example, Society of Certified Accountants.
4. Certification Mark: The certification mark is created to show the standard of a
company i.e. it is to show that a trader's goods or services are certified as meeting
particular standards. The issue of certification mark states that the product has
successfully passed a test that further says about a certain standard that is reached by
the product. For example, International Standard Organization (ISO), Nepal
Standard (NS, till date 126 industries, Nepal Bureau of Standards and Metrology
(NBSM) etc.
Types of Trademark

9. Procedures for Obtaining Trademark Rights in Nepal
1. Application: Application should be submitted to the department in the
prescribed format along with four specimen of such trademarks.
2. Registration: The department registers trademark in the name of the
applicant after necessary investigation.
3. Prohibition: No trademark may be used as a registered trademark without
registering it at the department.
4. Time limit: If the registered trademark is not brought into use within one
year from the date of registration, the department conducts necessary
inquires and cancel such registration.
5. Term: It is valid for a period of seven years from the date of registration.
6. Punishment: If one uses trademark of others without transforming the
ownership or written permission, the department impose a fine not
exceeding one hundred thousand rupees and articles and goods connected
with such offense are also confiscated.

10. Copyrights
Meaning
 It is an exclusive property right grated to author and originators of
literary or artistic production. The literary or artistic works can be books,
dramatic or musical works, pictorial, graphics, sculptural works, films,
audio-visual works etc.
 The author or originator has the exclusive right to reproduce, distribute,
display, license or transfer the copyright. Duration of the copyright is as
specified in law.
 The copyright is distinct from patent and trademark in the sense that
copyright is protected for the life of the originator plus 50 years.

11. Procedures for obtaining copyrights in Nepal(Copyright Act, 2002)
 Fulfillment of the application form which is distributed free of cost by Nepal
Copyright Registrar's Office. The form can be downloaded from
www.nepalcopyright.gov.np
 A photocopy of the citizenship of the right owner.
 Postage stamp of Rs 5/-
 Rs. 100/– cash for registration fees. (Receipt will be provided by Nepal
Copyright Registrar's Office)
 Written agreement with the involved parties if the creation/work has been
prepared by two or more parties/persons. (For example, for dual authorship)

12. Trade Secret
Concept of Trade Secret
 The entrepreneur may prefer to maintain an idea or process as confidential and
to sell or license it as a trade secret. Trade secret gives the business an
advantage over competitors who do not know the information.
 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 trade secret either while an employee or after leaving the organization.
The trade secret will have a life as long as the idea or process remains a secret.
 Trade secrets cannot be registered. They are usually protected by contract or
non-disclosure agreement. No other legal form of protection exists.
 Types of trade secrets: Customer lists, research and development, production
techniques, marketing techniques, formulas etc.

13. Licensing
 A license is a contract through which one party grants another permission to
use its patents, trademarks, copyrights, designs or trade secrets. The
organization receiving the license, or licensee, compensates the licensor by
paying a flat fee, royalties or a combination of the two. The agreement does not
transfer ownership of the intellectual property. By licensing to third parties,
small business owners can expand their businesses' reach and grow sales
without having to invest in new locations or distribution networks, and risking
failure.
 Licensing is a part of franchisee agreement.

14. Insurance
 The entrepreneur should purchase insurance in the event that problem do occur.
Most firms should consider coverage in specific areas as
a means of managing risk in the business. Common types of insurance include:
Property insurance(risk associated with fire and explosion, vehicle
damage, windstorm etc.)
Casualty insurance
Life insurance(protects the continuity of the business-sole trading or
partnership)
Worker's compensation(may be mandatory in some country. Provides
benefits to employees in case of work related injury)

15. Contracts
 While starting a new venture, the entrepreneur will be involved in a number of
negotiations and contacts with vendor, landlords and clients. A contract is a
legally enforceable agreement between two or more parties subject to
certain conditions. It is very important for the entrepreneurs to understand the
fundamental issues related to contracts while also recognizing the need for a
lawyer in many of these negotiations.
 Business deals are often concluded with an oral agreement. When things are
going smoothly, this procedure is sufficient. However, if there are
disagreements it may create conflict between the parties.

16. Contract Conditions
 Offer and acceptance(should be voluntary)
 Consideration(something of value) is given by both parties.
 Contractual capacity(minor, person of unsound mind and other persons
disqualified by law are treated as incapable to enter into a contract)
 Contract must be legal(nature and subject matter should be legal)
 Breach of contract and remedies(The party in violation of a contract may be
required to pay damages. )