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Summary of differences and similarities among RLM, GP and LLPRegistered limited company (RLC)
Legal entity separate from its
members
Members liability/responsability is
limited
General Partnership (GP)
Not a legal entity separate
from its members
Members
liability/responsability is
unlimited (personal assets can
be affected)
Partners can manage the
partnership’s affairs
Limited Liability Partnership (LLP)
Legal entity separate from its
members
Members liability/responsibility is
limited
Directors take decisions for the
Partners take decisions for the
company (are the agents)
partnership (are the agents)
Members can transfer their shares Partners cannot transfer their
interests to others
The assets of the company belong The partners co-own the
to the company
assets
Documents have to be registered No specific formalities are
in the responsible registry entity
requested to create a GP
Accounts are open to public
Accounts are absolutely
oversight
private
Pay corporate tax
Pay individual tax on the share
of profits received
Perpetual succession. If there is
Dissolved when a partner
change in membership it does not decides to no longer be part of
compromise its existence
the partnership
Partners take decisions for the
partnership (are the agents)
Members cannot transfer their
interests to others
The assets of LLP belong to the LLP
Directors manage the company
affairs
Members can manage the
partnership’s affairs
Documents have to be registered in
the responsible registry entity
Accounts are open to public
oversight
Pay individual tax on the share of
profits received
Perpetual succession. If there is
change in membership it does not
compromise its existence
The Law of Taxation
• Understanding Taxation.
Taxation is a term for when a taxing authority, usually a government, levies or imposes a
financial obligation on its citizens or residents. Paying taxes to governments or officials has
been a mainstay of civilization since ancient times.
The term “taxation” applies to all types of involuntary levies, from income to capital gains
to estate taxes. Though taxation can be a noun or verb, it is usually referred to as an act; the
resulting revenue is usually called “taxes.”
KEY TAKEAWAYS
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Taxation occurs when a government or other authority requires that a fee be paid by
citizens and corporations, to that authority.
The fee is involuntary, and as opposed to other payments, not linked to any specific
services that have been or will be provided.
Tax occurs on physical assets, including property and transactions, such as a sale of
stock, or a home.
Types of taxes include income, corporate, capital gains, property, inheritance, and sales.
Understanding Taxation
Taxation is differentiated from other forms of payment, such as market exchanges, in that
taxation does not require consent and is not directly tied to any services rendered. The
government compels taxation through an implicit or explicit threat of force. Taxation is legally
different than extortion or a protection racket because the imposing institution is a government,
not private actors.
Tax systems have varied considerably across jurisdictions and time. In most modern systems,
taxation occurs on both physical assets, such as property and specific events, such as a sales
transaction. The formulation of tax policies is one of the most critical and contentious issues in
modern politics.
• Essentials of Taxation.
These are: (1) the belief that taxes should be based on the individual’s ability to pay, known as
the ability-to-pay principle, and (2) the benefit principle, the idea that there should be some
equivalence between what the individual pays and the benefits he subsequently receives from
governmental activities.
• Types of Tax Systems.
What are the four major categories of taxes? Taxes on purchases, taxes on
property, taxes on wealth, and taxes on earnings.
• Income Tax.
An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income
or profits earned by them (commonly called taxable income). Income tax generally is computed
as the product of a tax rate times the taxable income. Taxation rates may vary by type or
characteristics of the taxpayer and the type of income.
The tax rate may increase as taxable income increases (referred to as graduated or progressive
tax rates). The tax imposed on companies is usually known as corporate tax and is commonly
levied at a flat rate. Individual income is often taxed at progressive rates where the tax rate
applied to each additional unit of income increases (e.g. the first $10000 of income taxed at 0%,
the next $10000 taxed at 1%, etc…). Most jurisdictions exempt local charitable organizations
from tax. Income from investments may be taxed at different (generally lower) rates than other
types of income. Credits of various sorts may be allowed that reduce tax. Some jurisdictions
impose the higher of an income tax or a tax on an alternative base or measure of income.
Taxable income of taxpayers resident in the jurisdiction is generally total income less income
producing expenses and other deductions. Generally, only net gain from sale of property,
including goods held for sale, is included in income. Income of a corporation’s shareholders
usually includes distributions of profits from the corporation. Deductions typically include all
income producing or business expenses including an allowance for recovery of costs of business
assets. Many jurisdictions allow notional deductions for individuals, and may allow deduction
of some personal expenses. Most jurisdictions either do not tax income earned outside the
jurisdiction or allow a credit for taxes paid to other jurisdictions on such income. Nonresidents
are taxed only on certain types of income from sources within the jurisdictions, with few
exceptions.
Most jurisdictions require self-assessment of the tax and require payers of some types of income
to withhold tax from those payments. Advance payments of tax by taxpayers may be required.
Taxpayers not timely paying tax owed are generally subject to significant penalties, which may
include jail for individuals or revocation of an entity’s legal existence.
• Corporate Tax
A corporate tax, also called corporation tax or company tax, is a direct tax imposed by a
jurisdiction on the income or capital of corporations or analogous legal entities. Many countries
impose such taxes at the national level, and a similar tax may be imposed at state or local levels.
The taxes may also be referred to as income tax or capital tax. Partnerships are generally not
taxed at the entity level. A country’s corporate tax may apply to:
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corporations incorporated in the country,
corporations doing business in the country on income from that country,
foreign corporations who have a permanent establishment in the country, or
corporations deemed to be resident for tax purposes in the country.
Company income subject to tax is often determined much like taxable income for individual
taxpayers. Generally, the tax is imposed on net profits. In some jurisdictions, rules for taxing
companies may differ significantly from rules for taxing individuals. Certain corporate acts, like
reorganizations, may not be taxed. Some types of entities may be exempt from tax.
Countries may tax corporations on its net profit and may also tax shareholders when the
corporation pays a dividend. Where dividends are taxed, a corporation may be required
to withhold tax before the dividend is distributed.
• Capital Gains Tax.
A capital gains tax is a tax on the growth in value of investments incurred when individuals and
corporations sell those investments. When the assets are sold, the capital gains are referred to as
having been “realized.” The tax doesn’t apply to unsold investments or “unrealized capital
gains,” so stock shares that appreciate every year will not incur capital gains taxes until they are
sold, no matter how long you happen to hold them.
Day traders and others taking advantage of the greater ease of trading online need to be aware
that any profits they make from buying and selling assets held less than a year are not just
taxed–they are taxed at a higher rate.
The U.S. capital gains tax only applies to profits from the sale of assets held for more than a
year, referred to as “long term capital gains.” The rates are 0%, 15%, or 20%, depending on
your tax bracket. Short-term capital gains tax applies to assets held for a year or less, and are
taxed as ordinary income.
Taxable capital gains for the year are reduced by the amount of capital losses incurred in that
year. A capital loss is when you sell an investment for less than you purchased it for. The total
of long-term capital gains minus any capital losses is known as the “net capital gain,” which is
the amount capital gains taxes are assessed on.
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Capital gains tax is only paid on realized gains after the asset is sold
Capital gains treatment only applies to “capital assets” such as stocks, bonds, jewelry,
coin collections, and real estate property
The IRS taxes all capital gains but has different tax approaches for long-term gains vs.
short-term gains
Taxpayers can use strategies to offset capital gains with capital losses in order to lower
their capital gains taxes
• Value Added Tax
A value-added tax (VAT) is a consumption tax placed on a product whenever value is added at
each stage of the supply chain, from production to the point of sale. The amount of VAT that
the user pays is on the cost of the product, less any of the costs of materials used in the product
that have already been taxed.
More than 160 countries around the world use value-added taxation, and it is most commonly
found in the European Union. Nevertheless, it is not without controversy. Advocates say it
raises government revenues without punishing success or wealth, as income taxes do, and it is
simpler and more standardized than a traditional sales tax, with fewer compliance issues. Critics
charge that a VAT is essentially a regressive tax that places an increased economic strain on
lower-income taxpayers and also adds bureaucratic burdens for businesses.
Value-added taxation is based on taxpayers’ consumption rather than their income. In contrast
to a progressive income tax, which levies greater taxes on higher-level earners, VAT applies
equally to every purchase.
Week 9 Intellectual Property Law I
• The Industrial Age vs. the Knowledge Age.
• Importance of Intangible Assets/ Intellectual Property.
Intellectual property (IP) is a category of property that includes intangible creations of the
human intellect. There are many types of intellectual property, and some countries recognize
more than others. The most well-known types are copyrights, patents, trademarks, and trade
secrets. The modern concept of intellectual property developed in England in the 17th and 18th
centuries. The term “intellectual property” began to be used in the 19th century, though it was
not until the late 20th century that intellectual property became commonplace in the majority of
the world’s legal systems.
The main purpose of intellectual property law is to encourage the creation of a wide variety of
intellectual goods. To achieve this, the law gives people and businesses property rights to the
information and intellectual goods they create, usually for a limited period of time. This gives
economic incentive for their creation, because it allows people to profit from the information
and intellectual goods they create. These economic incentives are expected to
stimulate innovation and contribute to the technological progress of countries, which depends
on the extent of protection granted to innovators.
The intangible nature of intellectual property presents difficulties when compared with
traditional property like land or goods. Unlike traditional property, intellectual property is
“indivisible”, since an unlimited number of people can “consume” an intellectual good without
it being depleted. Additionally, investments in intellectual goods suffer from problems of
appropriation: a landowner can surround their land with a robust fence and hire armed guards to
protect it, but a producer of information or literature can usually do very little to stop their first
buyer from replicating it and selling it at a lower price. Balancing rights so that they are strong
enough to encourage the creation of intellectual goods but not so strong that they prevent the
goods’ wide use is the primary focus of modern intellectual property law.
Why Are Intellectual Property Rights Important?
Intellectual property (IP) contributes enormously to our national and state economies. Dozens of
industries across our economy rely on the adequate enforcement of their patents, trademarks,
and copyrights, while consumers use IP to ensure they are purchasing safe, guaranteed products.
IP rights are worth protecting, both domestically and abroad. This is why:
Intellectual Property Creates and Supports High-Paying Jobs
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IP-intensive industries employ over 55 million Americans, and hundreds of millions of
people worldwide.
Jobs in IP-intensive industries are expected to grow faster over the next decade than the
national average.
The average worker in an IP-intensive industry earned about 30% more than his
counterpart in a non-IP industry
Intellectual Property Drives Economic Growth and Competitiveness
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America’s IP is worth $5.8 trillion, more than the nominal GDP of any other country in the
world.
IP-intensive industries account for over 1/3– or 38%– of total U.S. GDP.
These industries also have 72.5% higher output per worker than the national average,
valued at $136,556 per worker.
IP accounts for 74% of all U.S. exports- which amounts to nearly $1 trillion.
The direct and indirect economic impacts of innovation are overwhelming, acounting for
more than 40% of U.S. economic growth and employment.
Strong and Enforced Intellectual Property Rights Protect Consumers and Families
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Strong IP rights help consumers make an educated choice about the safety, reliability, and
effectiveness of their purchases.
Enforced IP rights ensure products are authentic, and of the high-quality that consumers
recognize and expect.
IP rights foster the confidence and ease of mind that consumers demand and markets rely
on.
Intellectual Property Helps Generate Breakthrough Solutions to Global Challenges
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Nearly all of the 300 products on the World Health Organization’s Essential Drug List,
which are critical to saving or improving people’s lives around the globe, came from the
R&D-intensive pharmaceutical industry that depends on patent protections.
Innovative agricultural companies are creating new products to help farmers produce more
and better products for the world’s hungry while reducing the environmental impact of
agriculture.
IP-driven discoveries in alternative energy and green technologies will help improve
energy security and address climate change.
Intellectual Property Rights Encourage Innovation and Reward Entrepreneurs
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Risk and occasional failure are the lifeblood of the innovation economy. IP rights
incentivize entrepreneurs to keep pushing for new advances in the face of adversity.
IP rights facilitate the free flow of information by sharing the protected know-how critical
to the original, patented invention. In turn, this process leads to new innovations and
improvements on existing ones.
American’s Founding Fathers so recognized the importance of innovation and ensured that
strong IP rights for authors and inventors are protected in the U.S. Constitution, thus
making America the world’s entrepreneural leader— a fact borne out by the overwhelming
number of patents, copyrights and trademarks filed by the U.S. annually.
• Copyright.
What Is Copyright?
Copyright refers to the legal right of the owner of intellectual property. In simpler terms,
copyright is the right to copy. This means that the original creators of products and anyone they
give authorization to are the only ones with the exclusive right to reproduce the work.
Copyright law gives creators of original material the exclusive right to further use and duplicate
that material for a given amount of time, at which point the copyrighted item becomes public
domain.
KEY TAKEAWAYS
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Copyright law protects creators of original material from unauthorized duplication or
use.
For an original work to be protected by copyright laws, it has to be in tangible form.
In the U.S., the work of creators is protected by copyright laws until 70 years after their
death.
How Copyrighting Works
When someone creates a product that is viewed as original and that required significant mental
activity to create, this product becomes an intellectual property that must be protected from
unauthorized duplication. Examples of unique creations include computer software, art, poetry,
graphic designs, musical lyrics and compositions, novels, film, original architectural designs,
website content, etc. One safeguard that can be used to legally protect an original creation is
copyright.
Under copyright law, a work is considered original if the author created it from independent
thinking void of duplication. This type of work is known as an Original Work of Authorship
(OWA). Anyone with an original work of authorship automatically has the copyright to that
work, preventing anyone else from using or replicating it. The copyright can be registered
voluntarily by the original owner if they would like to get an upper hand in the legal system in
the event that the need arises.
Not all types of work can be copyrighted. A copyright does not protect ideas, discoveries,
concepts, or theories. Brand names, logos, slogans, domain names, and titles also cannot be
protected under copyright law. For an original work to be copyrighted, it has to be in tangible
form. This means that any speech, discoveries, musical scores, or ideas have to be written down
in physical form in order to be protected by copyright.
In the U.S., original owners are protected by copyright laws all of their lives until 70 years after
their death. If the original author of the copyrighted material is a corporation, the copyright
protection period will be shorter.
U.S. copyright law has experienced a number of amendments and changes that have altered the
duration of copyright protection. The “life of the author plus 70 years” protection can be
attributed to the 1998 Copyright Term Extension Act, (also known as the Mickey Mouse
Protection Act or Sonny Bono Act), which generally increased copyright protections by 20
years.
Copyright protection varies from country to country, and can stand for 50 to 100 years after the
individual’s death, depending on the country.
Copyright vs. Trademarks and Patents
While copyright law is not all-encompassing, other laws, such as patent and trademark laws,
may impose additional sanctions. Although copyrights, trademarks, and patents are frequently
used interchangeably, they offer different forms of protection for intellectual property.
Trademark laws protect material that is used to distinguish an individual’s or corporation’s work
from another entity. These materials include words, phrases, or symbols—such as logos,
slogans, and brand names—which copyright laws do not cover. Patents cover inventions for a
limited period of time. Patented materials include products such as industrial processes,
machines, and chemical positions.
Week 10 Intellectual Property Law II
• Trademark.
What Is a Trademark?
The term trademark refers to a recognizable insignia, phrase, word, or symbol that denotes a
specific product and legally differentiates it from all other products of its kind. A trademark
exclusively identifies a product as belonging to a specific company and recognizes the
company’s ownership of the brand. Trademarks are generally considered a form of intellectual
property and may or may not be registered.
KEY TAKEAWAYS
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A trademark is an easily recognizable symbol, phrase, or word that denotes a specific
product.
• It legally differentiates a product or service from all others of its kind and recognizes
the source company’s ownership of the brand.
• Trademarks may or may not be registered and are denoted by the ® and ™ symbols
respectively.
• Although trademarks do not expire, the owner must make regular use of it in order to
receive the protections associated with them.
Understanding Trademarks
Trademarks not only help distinguish products within the legal and business systems—but just
as significantly—with consumers. They are used to identify and protect words and design
elements that identify the source, owner, or developer of a product or service. They can be
corporate logos, slogans, bands, or the brand name of a product. Similar to a trademark,
a service mark identifies and distinguishes the source of a service rather than a product, and the
term trademark is often used to refer to both trademarks and service marks.
Using a trademark prevents others from using a company or individual’s products or services
without their permission. They also prohibit any marks that have a likelihood of confusion with
an existing one. This means that a business cannot use a symbol or brand name if it looks or
sounds similar, or has a similar meaning to one that’s already on the books—especially if the
products or services are related. For instance, a soft drink company can’t legally use a symbol
that looks like that of Coca-Cola and it can’t use a name that sounds like Coke.
A trademark does not need to be registered for the owner to prevent others from using it or a
confusingly similar mark.
Trademarks in the United States are registered through the United States Patent and Trademark
Office (USPTO) and are identified with the ® symbol. But trademarks don’t have to be
registered in order to give the company or individual protection rights. Unregistered trademarks
can be recognized with the ™ symbol. By using this symbol, the trademark user indicates they
are using common law to protect their interests.
The laws governing trademarks never expire. This means the holder has the right to the
trademark for the life of the product or service. But there are certain exceptions. The user is
required to make continuous, lawful use of the trademark in order to take advantage of
trademark laws. So a company or individual must regularly manufacture, produce, market, and
sell a product with a particular trademark in order for the trademark law to be enforceable. This
can be done every five years by filing a section 8 declaration through the USPTO. Failure to file
this can result in the loss of registration.
Special Considerations
Trademarks can be bought and sold. For instance, Nike (NKE) purchased the instantly
recognizable Swoosh logo in 1971 from a graphic arts student for a one-time price of $35.
Trademarks also can be licensed to other companies for an agreed-upon time or under certain
conditions, which can result in crossover brands. Take the relationship LEGO has with certain
movie franchises, for example. The private company licenses many famous sub-brands such as
Star Wars and DC Comics to produce LEGO versions of popular products.
As mentioned above, trademarks are also used as an effective way to market brand names. In
fact, the power of branding in business is critical and can fill volumes, and the use of brands in
marketing is legendary. Some brands, like Kleenex, are so prominent and have such successful
brand identities that they have almost replaced the noun that was the original word for the item
or service, like asking for a Kleenex instead of a tissue. Kimberly Clark (KMB) owns the
Kleenex trademark and launched the brand in 1924 as a disposable tissue for removing
cosmetics. In 1930, the company launched the brand again—this time as a substitute for
handkerchiefs. Since then, Kleenex has been the number-one selling facial tissue in the world.
Similarly, we generally don’t ask for a “self-adhesive bandage with sterile cotton liner” but are
more apt to ask for a band-aid. Consumer goods and pharma giant Johnson & Johnson (JNJ)
began making sterile gauze dressings as early as 1887. But it wasn’t until 1920 that the company
launched its BAND-AID® Brand adhesive bandage. A cotton buyer for Johnson & Johnson,
Earle Dickson, invented the band-aid:
Dickson’s wife was prone to cutting her fingers in the kitchen. So, Dickson wanted a bandage
that his wife could apply easily. He combined two of the company’s early products (adhesive
tape and gauze) by placing a strip of gauze down the middle of a long piece of surgical tape that
he covered with fabric to keep the adhesive from sticking. His wife could then bandage her
wounds with a piece cut from the tape and gauze pad. Dickson demonstrated the invention to his
boss, who told company president James Wood Johnson, and a new product was born.
Trademark vs. Patent vs. Copyright
Trademarks are distinctly different from patents and copyrights. A patent grants the design,
process, and invention rights to a piece of property to its inventor. In order to be registered, the
inventor must make full disclosure of the invention—the design and the process—itself through
the USPTO. This gives the inventor full protection over the product or service in question for a
certain period of time—usually 20 years. Anyone can make use of the invention by producing,
marketing, and selling it after the patent expires. This is common in the pharmaceutical
industry. A drug company that patents a drug has exclusive rights over it for a certain period of
time before other companies can market and sell generic brands to the public.
Copyrights, on the other hand, give protection to the owners of intellectual property to legally
copy it. Copyright owners and those who have the authority can exclusively reproduce the
associated work for monetary gain for a specific period of time—usually until 70 years after
their death. Software, art, film, music, and designs are just some of the examples of work that
are covered by copyrights. Brand names, slogans, and logos, however, are not covered. In order
to get a copyright and prevent copyright infringement, the filer must make an application with
the U.S. Copyright Office.
• Industrial Designs.
Industrial design is a process of design applied to products that are to be manufactured through
techniques of mass production. A key characteristic is that design precedes manufacture: the
creative act of determining and defining a product’s form and features takes place in advance of
the physical act of making a product, which consists purely of repeated, often automated,
replication. This distinguishes industrial design from craft-based design, where the form of the
product is determined by the product’s creator largely concurrent with the act of its creation.
All manufactured products are the result of a design process, but the nature of this process can
take many forms. It can be conducted by an individual or a team, and such a team could include
people with varied expertise (e.g. industrial designers, engineers, business experts, etc.). It can
emphasize intuitive creativity or calculated scientific decision-making, and often emphasizes
both. It can be influenced by factors as varied as materials, production processes, business
strategy, and prevailing social, commercial, or aesthetic attitudes. Industrial design, as
an applied art, most often focuses on a combination of aesthetics and user-focused
considerations, but also often provides solutions for problems of form, function, physical
ergonomics, marketing, brand development, sustainability, and sales.
• Patents.
What Is a Patent?
A patent is the granting of a property right by a sovereign authority to an inventor. This grant
provides the inventor exclusive rights to the patented process, design, or invention for a
designated period in exchange for a comprehensive disclosure of the invention. They are a form
of incorporeal right.
Government agencies typically handle and approve applications for patents. In the United
States, the U.S. Patent and Trademark Office (USPTO), which is part of the Department of
Commerce, handles applications and grants approvals.
KEY TAKEAWAYS
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A patent is the granting of a property right by a sovereign authority to an inventor.
A patent provides the inventor exclusive rights to the patented process, design, or
invention for a certain period in exchange for a complete disclosure of the invention.
• In June of 2018, the U.S. Patent and Trademark Office issued its 10 millionth patent.
Understanding Patents
Most patents are valid for 20 years in the U.S. from the date the application was filed with the
USPTO, although there are circumstances whereby exceptions are made to extend a patent’s
term. U.S. patents are only valid in the United States and U.S. Territories.
According to the U.S. Patent and Trademark Office, a patent can be granted to any person who:
Invents or discovers any new and useful process, machine, manufacture, or composition of
matter, or any new and useful improvement thereof, may obtain a patent, subject to the
conditions and requirements of the law.
There are three types of patents:
1. Utility patents cover anyone who invents a new and useful process, article of
manufacture, machine, or a composition of matter.
2. Design patents include an original, new, and ornamental design for a manufactured
product.
3. Plant patents go to anyone who produces, discovers, and invents a new kind of plant
capable of reproduction.
Patents provide an incentive for companies or individuals to continue developing innovative
products or services without the fear of infringement. For example, large pharmaceutical
companies can spend billions of dollars on research and development. Without patents, their
drugs and medicines could be duplicated and sold by companies that didn’t research or invest
the needed capital for R&D.
In other words, patents protect the intellectual property of companies to help their profitability.
However, patents also serve as bragging rights for companies demonstrating their
innovativeness.
How to Apply for a Patent
Before making a formal application, an applicant should research the Patent and
Trademark Office’s database to see if another person or institution has claimed a patent for a
similar invention. The invention must be different from or an improvement upon a previous
design to be considered for a patent. It is important for applicants to take care to maintain
accurate records of the design process and the steps taken to create the invention. Enforcing the
patent is up to the person or entity that applied for the patent.
To apply for a patent in the United States, the applicant submits specific documents and pays
associated fees. Written documentation includes drawings, descriptions, and claims of the item
to be patented. A formal oath or declaration confirming the authenticity of the invention or
improvement of an existing invention must be signed and submitted by the inventor. After fee
payment, the application is reviewed and either approved or denied.
Patents protect the intellectual property of companies and help ensure their profitability, but
patents also serve as marketing for a company’s innovation.
Patent Statistics
The USPTO receives more than 500,000 patent applications per year with just over 300,000 of
them granted. The agency has over 11,000 employees, whereby approximately 75% of them are
patent examiners while the remaining work in the legal and technical areas.
In June of 2018, the USPTO issued its 10 millionth patent. Many patents issued go to
companies in the technology industry where Apple was granted 2,000 in 2018. Microsoft and
Google were also granted patents. However, IBM typically receives more than any company in
the U.S.—IBM was granted over 9,000 patents in 2017 alone as reported by CNN Money.
Examples of Patents
One of the most notable patents in the past 40 years was the personal computer filed in 1980 by
Steve Jobs and three other employees of Apple Inc.
King C. Gillette patented the razor in 1904 and was dubbed a “safety razor.” Garrett Morgan
was granted a patent for the traffic light in 1923. The patent for the television was issued
in 1930 to Philo Taylor Farnsworth for the “first television system.”
At age 20, Farnsworth had created the first electric television image and went on to invent an
early model of the electronic microscope.
What are the 5 requirements for obtaining a patent?
Requirement
What it means
1. The innovation is
patentable subject
matter
Patentable
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New products such as toys, appliances, tools, medical devices,
pharmaceutical drugs
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New process, such as a manufacturing process or an industrial
method or process
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Software
Business methods
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Some types of biological materials
Not patentable
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2. The innovation is
new (called
‘novelty’)
Artistic creations
Mathematical algorithms or models
Abstract intellectual or mental concepts or processes
Plans or schemes
Principles or theories
You cannot patent something that is already publicly known, as it would
be unfair to confer the economic benefits of a patent in relation to
something that is already publicly known. The test of ‘novelty’ is
assessed as at the date you file your application for the patent.
For this reason, if you intend to disclose your product, process or
invention to someone, it is critical that you have a confidentiality
agreement signed beforehand.
3. The innovation is
This requirement of an inventive step relates to the ‘obviousness’ of the
inventive
new product, process or invention. If it is ‘obvious’ to a skilled person, it
is not patentable.
4. The innovation is
useful (called
This requirement does not relate to whether the new product, process or
invention is ‘useful’ in terms of whether or not someone would buy it.
‘utility’)
Instead, it relates to whether the invention is capable of being made in
accordance with the claims and information in the patent.
Requirement
What it means
5. The innovation
must not have prior
If you have been selling the product, using the process in your business,
or if you have licensed it, this prior use disqualifies it from being
use
patentable.
• Trade Related Aspects of Intellectual Property (TRIPs).
The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is
an international legal agreement between all the member nations of the World Trade
Organization (WTO). It establishes minimum standards for the regulation by national
governments of different forms of intellectual property (IP) as applied to nationals of other
WTO member nations.[4] TRIPS was negotiated at the end of the Uruguay Round of the General
Agreement on Tariffs and Trade (GATT) between 1989 and 1990[5] and is administered by the
WTO.
The TRIPS agreement introduced intellectual property law into the multilateral trading system
for the first time and remains the most comprehensive multilateral agreement on intellectual
property to date. In 2001, developing countries, concerned that developed countries were
insisting on an overly narrow reading of TRIPS, initiated a round of talks that resulted in
the Doha Declaration. The Doha declaration is a WTO statement that clarifies the scope of
TRIPS, stating for example that TRIPS can and should be interpreted in light of the goal “to
promote access to medicines for all.”
Specifically, TRIPS requires WTO members to provide copyright rights, covering authors and
other copyright holders, as well as holders of related rights, namely performers, sound recording
producers and broadcasting organisations; geographical indications; industrial
designs; integrated circuit layout-designs; patents; new plant varieties; trademarks; trade
names and undisclosed or confidential information. TRIPS also
specifies enforcement procedures, remedies, and dispute resolution procedures. Protection and
enforcement of all intellectual property rights shall meet the objectives to contribute to the
promotion of technological innovation and to the transfer and dissemination of technology, to
the mutual advantage of producers and users of technological knowledge and in a manner
conducive to social and economic welfare, and to a balance of rights and obligations.
Week 11 Insurance Law
• What is an insurance?
Insurance is a contract, represented by a policy, in which an individual or entity receives
financial protection or reimbursement against losses from an insurance company. The
company pools clients’ risks to make payments more affordable for the insured.
Insurance policies are used to hedge against the risk of financial losses, both big and small, that
may result from damage to the insured or her property, or from liability for damage or injury
caused to a third party.
Insurance
How Insurance Works
There is a multitude of different types of insurance policies available, and virtually any
individual or business can find an insurance company willing to insure them—for a price. The
most common types of personal insurance policies are auto, health, homeowners, and life. Most
individuals in the United States have at least one of these types of insurance, and car insurance
is required by law.
KEY TAKEAWAYS
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Insurance is a contract (policy) in which an insurer indemnifies another against losses
from specific contingencies or perils.
• There many types of insurance policies. Life, health, homeowners, and auto are the
most common forms of insurance.
• The core components that make up most insurance policies are the deductible, policy
limit, and premium.
Businesses require special types of insurance policies that insure against specific types of risks
faced by a particular business. For example, a fast-food restaurant needs a policy that covers
damage or injury that occurs as a result of cooking with a deep fryer. An auto dealer is not
subject to this type of risk but does require coverage for damage or injury that could occur
during test drives.
In order to select the best policy for you or your family, it is important to pay attention to the
three critical components of most insurance policies—the deductible, premium, and policy limit
There are also insurance policies available for very specific needs, such as kidnap and ransom
(K&R), medical malpractice, and professional liability insurance, also known as errors and
omissions insurance.
• The essentials of an insurance contract.
When choosing a policy, it is important to understand how insurance works.
A firm understanding of these concepts goes a long way in helping you choose the policy that
best suits your needs. For instance, whole life insurance may or may not be the right type of life
insurance for you. There are three components of any type of insurance (premium, policy limit,
and deductible) that are crucial.
Premium
A policy’s premium is its price, typically expressed as a monthly cost. The premium is
determined by the insurer based on your or your business’s risk profile, which may include
creditworthiness.
For example, if you own several expensive automobiles and have a history of reckless driving,
you will likely pay more for an auto policy than someone with a single mid-range sedan and a
perfect driving record. However, different insurers may charge different premiums for similar
policies. So finding the price that is right for you requires some legwork.
Policy Limit
The policy limit is the maximum amount an insurer will pay under a policy for a covered
loss. Maximums may be set per period (e.g., annual or policy term), per loss or injury, or over
the life of the policy, also known as the lifetime maximum.
Typically, higher limits carry higher premiums. For a general life insurance policy, the
maximum amount the insurer will pay is referred to as the face value, which is the amount paid
to a beneficiary upon the death of the insured.
Deductible
The deductible is a specific amount the policy-holder must pay out-of-pocket before the insurer
pays a claim. Deductibles serve as deterrents to large volumes of small and insignificant claims.
Deductibles can apply per-policy or per-claim depending on the insurer and the type of policy.
Policies with very high deductibles are typically less expensive because the high out-of-pocket
expense generally results in fewer small claims.
Special Considerations
With regard to health insurance, people who have chronic health issues or need regular medical
attention should look for policies with lower deductibles.
Though the annual premium is higher than a comparable policy with a higher deductible, less
expensive access to medical care throughout the year may be worth the trade-off.
• The concept of moral hazard.
A moral hazard is an idea that a party protected from risk in some way will act differently than
if they didn’t have that protection. We encounter moral hazard every day—tenured professors
who become indifferent lecturers, people with theft insurance becoming less vigilant about
where they park, salaried employees who take long breaks, and so on.
Moral hazard is usually applied to the insurance industry. Insurance companies worry that by
offering payouts to protect against losses from accidents, they may actually encourage risktaking. This often forces them to pay out more in claims. Insurers fear that a “don’t worry, it’s
insured” attitude often leads policyholders with collision insurance to drive recklessly or fireinsured homeowners to smoke in bed.
KEY TAKEAWAYS
•
A moral hazard is an idea that a party protected from risk in some way will act
differently than if they didn’t have that protection.
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In the insurance industry, moral hazard occurs when insured parties take more risks
knowing their insurers will protect them against losses.
Considered to be too big to fail, banks often take additional financial risks knowing
they’ll be bailed out by the government.
Because purely free-market capitalism doesn’t exist, taxpayers end up footing the bill
for moral hazards committed by large corporations.
Understanding Moral Hazard
The basic premise behind a moral hazard is that an individual or one party involved in
a transaction takes on additional—and often unnecessary—risks that usually affect the other
party in the transaction in a negative way.
Consider the idea that a corporation is too big to fail. If the company’s management believes it
will receive a financial bailout to keep it going, they may take more risks to pursue profits.
Government safety nets create moral hazards that lead to more risk-taking, and the fallout from
markets—meltdowns, crashes, and panics—reinforces the need for more government controls.
As such, governments may impose laws to increase the moral hazard in the future.
One alternative to creating a moral hazard like this is to let these corporations fail and allow
stronger ones to buy up the wreckage. Although companies would still fail in a truly freemarket, the impact would be minimized. There would be no industry-wide meltdowns because
most companies would be more cautious, just as most people choose not to smoke in bed
whether they are insured or not. Either way, the risk of getting burned is enough to prompt
serious second thoughts.
Since true free-market capitalism doesn’t exist, taxpayers become unwilling market insurers.
The problem is insurers profit by selling policies, whereas taxpayers gain little or nothing for
footing the bill on the policies and bailouts that create moral hazards.
Real-World Example of Moral Hazard
Moral hazard is all around us. If you want a real-life example, take a look at some of the events
that led to the 2007-2008 financial crisis and the Great Recession. Interest rates hit rock bottom,
making credit much cheaper after the dotcom bubble burst. Borrowers flocked to the housing
market, including those who couldn’t otherwise afford to buy a home. Lenders sold these loans
to banks, which packaged them as low-risk investments. These were sold to investors who
wanted to make a quick buck.
When the economy began to recover, the Federal Reserve increased interest rates. The housing
market crashed, causing property values to drop. No longer able to keep up with their mortgage
payments, many homeowners ended up walking away from their obligations because their
homes were worth less than their debt.
Subprime lenders began filing for bankruptcy, including New Century Financial.1 As a result of
all this, the mortgage-backed securities (MBSs) sold to investors were downgraded and became
overvalued. Many firms tried to unload these securities but ended up writing them off. Together,
they wiped out trillions of dollars in capital from the global banking system.
Everyone plays a key role in preventing and combatting moral hazards like these. The
government intervened by lowering interest rates and providing major banks with a bailout to
prevent them from failing. But sometimes an ounce of prevention is certainly worth a pound of
cure. Consumers need to be more financially literate, educating themselves of the risks
associated with the decisions they make. Lenders, on the other hand, can—and have—tightened
their borrowing requirements to ensure only those who are truly qualified have access to credit.
Moral Hazard FAQs
Why Is Moral Hazard Important?
A moral hazard is a risk one party takes knowing it is protected by another party. The basic
premise is that the protected party has the incentive to take risks because someone else will pay
for the mistakes they make.
What Are Examples of Moral Hazards?
Examples of moral hazards include individuals with collision insurance who drive aggressively,
students who don’t study before an exam but know they’ll pass, and employees who take long
smoke breaks.
What Is the Moral Hazard Problem in Banking?
The moral hazard problem in banking is the idea that certain corporations, such as banks and
automakers, are too big to fail. These companies usually take risks to become more profitable
because they know the government will bail them out in the future.
What Causes Moral Hazard in Insurance?
Moral hazard occurs in the insurance industry when the insured party takes on additional risks
knowing they’ll be compensated by their insurance company. Consider an individual with
homeowners’ and fire insurance who smokes in bed. The homeowner engages in the behavior
despite the risks because they know the insurer will pay if they file a claim.
The Bottom Line
Moral hazards can be found everywhere. They occur when people and companies take risks
knowing they’ll be bailed out by another party in the end. Some institutions are set up to take
advantage of moral hazards, such as the banking system. That’s because the government
normally foots the bill, bailing banks out for the mistakes they make. The world saw this during
the financial crisis that led to the Great Recession. Although it seems like the financial industry
learned its lesson, only time will tell if the world will experience another, similar cycle.
• Different types of business insurances
Business insurance can protect you against losses incurred during the running of your business –
for example, if a customer or employee makes a claim against you, or if your equipment is
damaged.
The terms ‘commercial insurance’ and ‘business insurance’ are often used to describe
employers’ liability and public liability insurance – the two main types of business insurance.
But there are other types of insurance available, each one covering a slightly different aspect of
business.
And as each policy is different, it’s important to know what’s actually covered by your business
insurance so you can fill in any gaps.
The different types of business insurance that you need to be aware of are:
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Public liability insurance
Employers’ liability insurance
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Product liability insurance
Professional indemnity insurance
Business interruption insurance
Business property coverage
Key-man insurance
Credit risk insurance
Cyber insurance
Public liability insurance – for injured clients or their damaged property
If a client slips and falls at your business, or you accidentally damage something of theirs while
you’re working, this insurance could cover the claims and legal fees.
Employers’ liability insurance – for any business with employees
You’re legally required to have this insurance if you have any employees at all, even just one –
temps, part-time or full-time. It can help cover the cost of claims made against you if an
employee is injured or gets ill while working for you.
Product liability insurance – for the products you supply
This can help compensate anyone who has suffered damage or injury because of a product you
designed, repaired, or supplied. You don’t have to be the manufacturer to be liable for
damages.
Professional indemnity insurance – for a client’s lost sales or damaged reputation
Professional indemnity insurance is for businesses that offer knowledge, skills or advice as
part of their work. If your work leads to a client’s loss of sales or damaged reputation, this
insurance can help cover the cost of legal fees and claims.
Business interruption insurance – keeps finances running when your business can’t
Taking out a business interruption insurance policy will cover you for loss of sales and profits
during a period that you’re unable to operate due to unforeseen circumstances like floods or
fires.
Business property coverage – for the physical contents of your business
This is insurance for the things that make your business tick – computers, mechanical
equipment, tools, machines and stock.
Key-man insurance – for your valuable employees
If there are particular people who keep the business going, you can insure them. Then, if for
some reason those individuals can’t work you can be compensated for that loss.
PART 2
What question you are required to answer / required to perform?
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Outline the differences between a registered limited liability company, a general partnership, and a limited liability partnership.
Explore the key rights of general partners. In the light of these duties please share your view on whether you think general partnerships are a
type of business that you would consider for yourself. Please delve into the reasons why you reached your conclusion.
What do you think is the importance of insurance for business relations? Do you think businesses should pay taxes? Why? And What are the key
taxes that might be applied to businesses?
Outline the key characteristics of a registered trademark and delve into how they are important for businesses.
• contextual information
We navigated trough the elements of Company Law, Law of Taxation, Intellectual Property Law and Insurance Law. Take a look at the proposed sources
under the course materials to guide your reflection in light of the questions above, but do not rely exclusively on those. You might also want to pay
attention to the materials posted under ‘Final assignment useful resources’ on Moodle, since they might be useful for this exercise. My suggestion would
be to provide some overview of the theorical concepts and principles that apply to the topics to then justify your opinion (when applicable) resorting to
a critical-thinking approach. Personal anecdotes, as well as case studies, that you might trace when you carry your research for the assignment might
help you to enrich your work. You might choose to do it the other way around, but what is important for me is that you show an excellent understanding
of the key concepts of fields of law covered to critically assess the questions asked. Because critical thinking is one of core concepts that I will be focusing
on in this assignment, you are required to use a least 5 references to support the arguments that you make. Examples will also enrich your answers. And
please be also mindful of plagiarism. The word limit for this exercise is 2000-2500 words and as long as you follow the guidelines that I shared; you are
free to be creative in terms of the presentation. Good luck!
