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Entrepreneurship Lecture 5

The document discusses the legal challenges entrepreneurs face, emphasizing the importance of understanding intellectual property rights, including patents, copyrights, and trademarks. It outlines various legal forms of business ventures such as sole proprietorships, partnerships, and corporations, detailing their advantages and disadvantages. Additionally, it highlights key factors to consider when choosing a business structure, including liability, capital requirements, and tax implications.

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0% found this document useful (0 votes)
12 views19 pages

Entrepreneurship Lecture 5

The document discusses the legal challenges entrepreneurs face, emphasizing the importance of understanding intellectual property rights, including patents, copyrights, and trademarks. It outlines various legal forms of business ventures such as sole proprietorships, partnerships, and corporations, detailing their advantages and disadvantages. Additionally, it highlights key factors to consider when choosing a business structure, including liability, capital requirements, and tax implications.

Uploaded by

praisezaoneka
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
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LEGAL CHALLENGES IN

ENTREPRENEURSHIP
BY:
STEWART MAKOSANI (PhD)
Department of Agribusiness
Management
+265 999 175 725 (not on
WhatsApp)
+265 882 939 333
[email protected]
Lilongwe University of Agriculture & Natural

[email protected]
Resources:ABM Department
LEGAL CHALLENGES IN
ENTREPRENEURSHIP
Entrepreneurs cannot hope to have the
legal expertise or background of an
attorney, of course, but they should be
sufficiently knowledgeable about certain
legal concepts that have implications for
the business venture.

For example, entrepreneurs should have at


least a little knowledge about the
protection of intellectual property such as
patents, copyrights, trademarks, and also
laws
Lilongwe that
University govern
of Agriculture different forms of
& Natural

business.
Resources:ABM Department
INTELLECTUAL PROPERTY
PROTECTION: Patent
A patent is an intellectual property right.

It is the result of a unique discovery , and


patent holders are provided protection
against infringement by others.

A patent provides the owner with exclusive


rights to hold, transfer, and license the
production and sale of the product or
process.

Lilongwe University of Agriculture & Natural


 Design patents last for shorter period of
Resources:ABM Department
INTELLECTUAL PROPERTY
PROTECTION: Patent
The objective of a patent is to provide the
holder with a temporary monopoly on his or
her innovation .

A patent encourages the creation and


disclosure of new ideas and innovations in
the marketplace.

In general, a number of items can qualify


for patent protection e.g. processes,
machines, products, plants, compositions of
elements (chemical compounds), and
Lilongwe University of Agriculture & Natural
Resources:ABM Department
INTELLECTUAL PROPERTY
PROTECTION: Patent
A patent should be broad and commercially
significant. This means it should have the
widest coverage on the idea or concept.

Establish an infringement budget. Patent rights


are effective only if potential infringers fear
legal damages.

Lilongwe University of Agriculture & Natural


Resources:ABM Department
INTELLECTUAL PROPERTY
PROTECTION: Patent
A patent application has two parts:
1. Specification – describing the innovation
in detail and explaining why that
innovation will be useful.

2. Claims – this section identifies features


that are protected by the patent. claims
define and limit the patent.

Once the application is filed with the


Ministry of Trade (Patent and Trademark
Lilongwe University of Agriculture & Natural
Office),Department
Resources:ABM an examiner will determine whether
INTELLECTUAL PROPERTY
PROTECTION: Copyrights
 A copyright provides exclusive rights to creative individuals for
the protection of their literary or artistic productions.

 It is not possible to copyright an idea, but the particular mode for


expression of that idea often can be copyrighted.

 This expression can take many forms e.g. books, periodicals,


dramatic or musical compositions, art, motion pictures, lectures,
sound recordings, computer programs, etc.

 Any work that receives a copyright is protected for the entire life
of the author plus 70 years.

Lilongwe University of Agriculture & Natural


Resources:ABM Department
INTELLECTUAL PROPERTY
PROTECTION: Copyrights
For the author of creative material to obtain
copyright protection, the material must be
1. In tangible form (written or recorded ) so
it can be communicated or reproduced
2. The author’s own work

Due to Fair Use Doctrine (reproduction of a


copyrighted work for purposes such as
criticism, comment, news reporting,
research, teaching – multiple copies for
classroom use), it is sometimes difficult to
establish infringement.
Lilongwe University of Agriculture & Natural
Resources:ABM Department
INTELLECTUAL PROPERTY
PROTECTION: Copyrights
In determining whether the use of a work in
any particular case is a fair use, the factors
to be considered include;
1. The purpose and character of the use,
including whether such use is of a
commercial nature or is for nonprofit
educational purposes

2. The amount and substantiality of the portion


used in relation to the copyrighted work as a
whole
Lilongwe University of Agriculture & Natural
3. The effect of the use upon the potential
Resources:ABM Department
INTELLECTUAL PROPERTY
PROTECTION: Trademarks
 A trademark is a distinctive name, mark,
symbol, or motto identified with a company’s
product(s) and registered as the property of
that company.

 Trademark law forbids one venture’s use of


symbol or name of the other.

 In most cases, the examiners of the trademark


application reject an application for marks,
symbols, or names that are flags or emblems
of government, immoral or deceptive, or items
likely to cause problems because of
Lilongwe University of Agriculture & Natural
Resources:ABM Department
resemblance to a previously registered mark.
IDENTIFYING LEGAL FORMS
OF ENTREPRENEURIAL
VENTURES
Generally, we have three common legal forms of
entrepreneurial ventures:

1. Sole proprietorship

2. Partnership

3. Corporation

 Because each form has specific advantages


and disadvantages , it is impossible to
recommend one form over the other.
Lilongwe University of Agriculture & Natural
Resources:ABM Department
SOME FACTORS TO CONSIDER
WHEN EXAMINING FORMS OF
BUSINESS
We need to consider the following factors
when choosing these legal forms of
organization:
1. How easily the form of business
organization can be implemented
2. The amount of capital required to
implement the form of business
organization
3. Legal considerations that might limit the
options available to the entrepreneur
4. The tax effects of the form of organization
selected
Lilongwe University of Agriculture & Natural
5. TheDepartment
Resources:ABM potential liability to the owner of the
SOLE PROPRIETORSHIP
A sole proprietor is a business that is
owned and operated by one person.

The enterprise has no existence except


apart from its owner.

Because of its ease of formation, the sole


proprietorship is the most widely used
legal form of organization.

Lilongwe University of Agriculture & Natural


Resources:ABM Department
ADVANTAGES OF SOLE
PROPRIETORSHIP
1. Ease of formation. Less formality and fewer
restrictions are associated with establishing a
sole proprietorship than with any other legal
form.
2. Sole ownership of profits.
3. Decision making and control vested in one
owner.
4. Flexibility. Management is able to respond
quickly to business needs in the form of day-to-
day management decisions as governed by
various laws and good sense.
5. Relative freedom from governmental
Lilongwe University of Agriculture & Natural
Resources:ABM Department
DISADVANTAGES OF SOLE
PROPRIETORSHIP
1. Unlimited liability

2. Lack of continuity. The enterprise may


be crippled or terminated if the owner
becomes ill or dies.

3. Less available capital

4. Relative difficulty obtaining long-


term financing
Lilongwe University of Agriculture & Natural
Resources:ABM Department
5. Relatively limited viewpoint and
ADVANTAGES OF
PARTNERSHIP
Partnership is an association of two or more
persons who act as co-owners of a business
for profit.
1. Ease of formation
2. Direct rewards
3. Growth and performance facilitated. More
capital and a better range of skills
4. Flexibility
5. Relative freedom from governmental
control and regulation
6. Possible tax advantages
Lilongwe University of Agriculture & Natural
Resources:ABM Department
DISADVANTAGES OF
PARTNERSHIP
1. Unlimited liability of at least one partner
2. Lack of continuity
3. Relatively difficult to obtain large sums of
capital
4. Bound by just the acts of one partner
5. Difficult to dispose of partnership interest

Lilongwe University of Agriculture & Natural


Resources:ABM Department
ADVANTAGES OF
CORPORATION
A corporation is an artificial being, invisible,
intangible, and existing only in
contemplation of the law.

1. Limited liability

2. Transfer of ownership

3. Unlimited life
4. Relative ease of securing capital in large
amounts
Lilongwe University of Agriculture & Natural
Resources:ABM Department
5. Increased ability and expertise
DISADVANTAGES OF
CORPORATION
1. Activity restrictions. Activities are limited
by the charter and various laws

2. Lack of representation. Minority


stockholders are sometimes voted out by
majority

3. Regulation…..expensive

4. Organizing expenses especially when


establishing it
Lilongwe University of Agriculture & Natural
5. Double taxation
Resources:ABM Department

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