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The Legal The Legal EnvironmentEnvironment
Glencoe Entrepreneurship: Building a Business
Legal Issues Facing Start-UpsLegal Issues Facing Start-Ups
Handling Government RegulationsHandling Government Regulations
8.1Section
8.2Section
8
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Glencoe Entrepreneurship: Building a Business
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Chapter 8 The Legal Environment
• Explain how to protect your intellectual property.• Discuss the laws affecting the start-up of a business.
Section Objectives
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A new product or service must be protected through patents, copyrights, trademarks, or trade secrets. Other aspects of a business are protected by law as well.
The Main Idea
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Glencoe Entrepreneurship: Building a Business
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Content Vocabularyintellectual property lawUniform Trade Secrets Actpatentpublic domainpatent pendingcopyrighttrademark
service markpermitlicensecontractconsiderationcapacity
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Glencoe Entrepreneurship: Building a Business
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Protecting Ideas: Intellectual Property Law
Intellectual property law protects the inventions and new ideas of business.
intellectual property law
the group of laws that regulates the ownership and use of creative works
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Chapter 8 The Legal Environment
Intellectual property laws protect the following:
trade secretspatentscopyrightstrademarks
Protecting Ideas: Intellectual Property Law
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Trade secrets form the basis of all intellectual property. A trade secret may consist of a formula, an idea, a process, a pattern, or compilation of information that gives the owner a competitive advantage.
Trade Secrets
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Glencoe Entrepreneurship: Building a Business
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Chapter 8 The Legal Environment
Patents
An inventor may acquire a patent, which will protect his or her invention for a period of 20 years.
patent
a document that grants to an inventor the right to exclude others from making, using, or selling an invention or other intellectual property during the term of the patent
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Glencoe Entrepreneurship: Building a Business
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Patents
After a patent expires, it is placed in public domain.
public domainintellectual property whose protection has expired; it belongs to the community at large and people can use any aspect of the property free of charge
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Chapter 8 The Legal Environment
Rules for obtaining a patent are:
The invention must not contain prior art.The invention must fit into one of five classes: machine, process, articles of manufacture, composition, or new use for one of the other four.The invention must be “unobvious.”The invention must have utility.
Patents
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Glencoe Entrepreneurship: Building a Business
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Chapter 8 The Legal Environment
Patents
After you apply for a patent, the Patent and Trademark Office (PTO) does a patent search.During this time, you may market your product but you must put the term patent pending and the patent number on the product or packaging.
patent pendingthe status of an invention between the time a patent application has been filed and when it is issued or rejected
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Glencoe Entrepreneurship: Building a Business
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Chapter 8 The Legal Environment
Copyrights
If you plan to publish a book, place a notice of copyright in a prominent location on the work.
copyrighta legal device that protects original works of authors, including books, movies, musical compositions, and computer software, for the life of the author plus 70 years
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Glencoe Entrepreneurship: Building a Business
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Chapter 8 The Legal Environment
Trademarks
A trademark is followed by the registered trademark symbol ™.
trademark
a word, symbol, design, or color that a business uses to identify itself or something it sells
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Glencoe Entrepreneurship: Building a Business
Legal Issues Facing Start-Ups
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Chapter 8 The Legal Environment
Trademarks
Like a trademark, a service mark can be protected by registering it with the Patent and Trademark office.
service mark
a word, symbol, sign, or color that describes a service business
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Glencoe Entrepreneurship: Building a Business
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Chapter 8 The Legal Environment
Entrepreneurs should be aware of laws involving:
permits and licensescontractslocation
Laws that Affect Start-Up of a Business
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Glencoe Entrepreneurship: Building a Business
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Chapter 8 The Legal Environment
Permits and Licenses
Before you can officially open your business, you must get a permit. In certain professions, such as nursing, you may also need to get a license.
permita legal document giving official permission to run a business
licensea certificate that shows that the holder of the document has the necessary education and training to perform a job
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Chapter 8 The Legal Environment
Contracts
As an entrepreneur, you will need to sign a contract with vendors, landlords, and clients.
contract
a binding legal agreement between two or more persons or parties
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Glencoe Entrepreneurship: Building a Business
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Chapter 8 The Legal Environment
To be valid and legally inferable, a contract must contain the following components:
agreementconsiderationcapacitylegality
Contracts
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Chapter 8 The Legal Environment
Contracts
The money you pay a vendor for a product for your business is valuable consideration.
consideration
what is exchanged for the promise to do something or refrain from doing something
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Chapter 8 The Legal Environment
Contracts
By law, minors do not have capacity to sign a contract.
capacity
the legal ability to enter into a binding agreement
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Glencoe Entrepreneurship: Building a Business
Legal Issues Facing Start-Ups
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Only certain types of real property are available to business owners because they are subject to zoning laws and building codes.
Because a lease is a long-term contract, an entrepreneur should consult an attorney before signing.
Location
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Glencoe Entrepreneurship: Building a Business
Legal Issues Facing Start-Ups
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Chapter 8 The Legal Environment
After You Read
1. Explain how to protect your intellectual property.
To protect trade secrets, you can ask employees, contractors, and investors to sign contracts promising not to reveal secret information about the product. To protect an invention, you should file a patent application with the PTO. To protect an original work, you should place a notice of copyright in a prominent location on the work and register your work with the Copyright Office. To protect a trademark or logo, you should file register it with the PTO.
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Glencoe Entrepreneurship: Building a Business
Legal Issues Facing Start-Ups
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Chapter 8 The Legal Environment
After You Read
2. Discuss the laws affecting the start-up of a business.
A person must obtain a permit from the local government office before he or she can officially open for business. A license is required for certain professions to prove that he or she has the education and training needed to do the job. Licensing requirements vary from one state or locality to another. When entering into an agreement to start a run a business, the owner creates a valid contract. This means the owner must abide by contract laws.
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Handling Government Regulations
Glencoe Entrepreneurship: Building a Business
SECTIONSECTION 8.2
Chapter 8 The Legal Environment
• Explain the laws that affect employees.• Identify the laws that regulate trade.• Discuss the tax laws that apply to a new venture.
Section Objectives
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Handling Government Regulations
Glencoe Entrepreneurship: Building a Business
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Chapter 8 The Legal Environment
Laws and regulations are designed to protect employees, other businesses, and customers from unfair, unsafe, or unhealthy business practices.
The Main Idea
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Handling Government Regulations
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Chapter 8 The Legal Environment
Content VocabularyEqual Employment Opportunity
Commission (EEOC)wrongful terminationprice discrimination
Uniform Commercial Codewarranty of merchantabilitybait-and-switch advertisingFICA
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Laws That Affect Employees
27
discrimination in hiring
child labor laws
wrongful termination
sexual harassment
Americans With Disabilities Act
Family Medical Leave Act
Equal Pay Act of 1963
Fair Labor Standards Act
Occupational Safety and Health Act
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Handling Government Regulations
Glencoe Entrepreneurship: Building a Business
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Chapter 8 The Legal Environment
Laws Against Discrimination in Hiring
Employers are subject to regulations of the Equal Employment Opportunity Commission (EEOC).
Equal Opportunity Employment Commission (EEOC)the government agency charged with protecting the rights of employees; it ensures that employees do not discriminate against employees because of age, race, color, natural origin, religion, gender, or physical challenge
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Handling Government Regulations
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Chapter 8 The Legal Environment
Federal child labor laws protect young workers in many ways.
Employment can not interfere with their education, health, or well-being.Persons under 18 can not work in jobs the government considers hazardous.Persons under 16 are only allowed to work certain hours and times.Persons under 14 can only work in certain jobs.
Child Labor Laws
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Handling Government Regulations
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Wrongful Termination
Employers must keep accurate records for each employee, including employee evaluations, disciplinary actions, and warnings, because employees are protected against wrongful termination.
wrongful terminationthe right of an employee to sue his or her employer for damages if he or she is terminated for an unacceptable reason
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Handling Government Regulations
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Chapter 8 The Legal Environment
At the federal level, Title VII of the Civil Rights Act forbids sexual harassment. Most states also have laws that prohibit sexual harassment.
Sexual Harassment
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Handling Government Regulations
Glencoe Entrepreneurship: Building a Business
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Chapter 8 The Legal Environment
The Americans With Disabilities Act requires employers to provide reasonable accommodations to that allow qualified employees to do their basic jobs. Business owners can ask prospective employees about their abilities, but not their disabilities.
Americans With Disabilities Act
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Handling Government Regulations
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The Family Medical Leave Act (FMLA) provides employees with the right to an unpaid leave of absence for up to 12 weeks for certain family and medical issues.
Family Medical Leave Act
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Handling Government Regulations
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The Equal Pay Act of 1963 says all employers must pay men and women the same wage for the same work.
Laws Requiring Equal Pay for Equal Work
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Handling Government Regulations
Glencoe Entrepreneurship: Building a Business
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The Fair Labor Standards Act, passed in 1938, established a minimum wage and maximum working hours. It also ensured that children under the age of 16 could only be employed full-time by their parents.
Laws Requiring Fair Labor Standards
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Handling Government Regulations
Glencoe Entrepreneurship: Building a Business
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The Occupational Safety and Health Act of 1970 ensures safe, healthful working conditions for employees. The act created OSHA, the Occupational Safety and Health Administration, to oversee safety in the workplace.
Laws Requiring Workplace Safety and Health
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Handling Government Regulations
Glencoe Entrepreneurship: Building a Business
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Chapter 8 The Legal Environment
Laws that regulate trade include:
price discrimination lawsconsumer protection lawsThe Uniform Commercial Code (UCC)truth in lending lawstruth in advertising laws
Laws That Regulate Trade
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Price Discrimination Laws
The Clayton Act of 1914 and the Robinson-Patman Act of 1936 are aimed at prohibiting price discrimination.
price discriminationthe charging of different prices for the same product or service in different markets or to different customers
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Handling Government Regulations
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Manufacturers of consumer products must become familiar with consumer protection laws in order to avoid recalls and lawsuits.
Consumer Protection Laws
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Handling Government Regulations
Glencoe Entrepreneurship: Building a Business
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The Uniform Commercial Code
As a merchant, you must abide by the requirements of the Uniform Commercial Code (UCC).
Uniform Commercial Code (UCC)
a group of laws that regulates commercial business transactions
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Handling Government Regulations
Glencoe Entrepreneurship: Building a Business
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Chapter 8 The Legal Environment
The Uniform Commercial Code
Virtually everything consumers buy comes with a warranty of merchantability.
warranty of merchantabilitya guarantee on the quality of goods or services purchased that is not written down or explicitly spoken
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Handling Government Regulations
Glencoe Entrepreneurship: Building a Business
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Chapter 8 The Legal Environment
Those involved in retail businesses must familiarize themselves with the Consumer Credit Protection Act. This act requires those who give credit to reveal all terms and conditions of their credit agreements.
Truth in Lending
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Handling Government Regulations
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Chapter 8 The Legal Environment
The Federal Trade Commission protects customers from false and misleading advertising with truth-in-advertising laws.
Truth in Advertising
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Handling Government Regulations
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Chapter 8 The Legal Environment
Truth in Advertising
A business that engages in bait-and-switch advertising is violating truth-in-advertising laws.
bait-and-switch advertising
an illegal method of selling that involves advertising a product at a very low price in order to attract customers who are then persuaded to switch to a more expensive product
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Handling Government Regulations
Glencoe Entrepreneurship: Building a Business
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Chapter 8 The Legal Environment
All business owners are responsible for certain taxes, including:
sales taxes,payroll taxes,federal unemployment taxes, andbusiness income taxes.
Tax Laws
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Handling Government Regulations
Glencoe Entrepreneurship: Building a Business
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Chapter 8 The Legal Environment
Payroll Taxes
When a business owner hires employees, he or she must deduct certain payroll taxes from their earnings, including FICA.
FICA (Federal Insurance Contribution Act)a Social Security payroll tax, figured as a percentage of an employee’s income
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Handling Government Regulations
Glencoe Entrepreneurship: Building a Business
SECTIONSECTION 8.2
Chapter 8 The Legal Environment
After You Read
1. Explain the laws that affect employees.
Laws that affect employees include equal opportunity, child labor, wrongful termination, sexual harassment, Americans with Disabilities Act, family medical leave, equal pay for equal work, fair labor standards, and workplace health and safety.
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Handling Government Regulations
Glencoe Entrepreneurship: Building a Business
SECTIONSECTION 8.2
Chapter 8 The Legal Environment
After You Read
2. Identify the laws that regulate trade.
The goal of the Clayton Act of 1914 and the Robinson-Patman Act of 1936 is to prohibit price discrimination. Consumer protection laws protect against unscrupulous sellers, unreasonable credit terms, unsafe products, and mislabeling of products. The UCC is a group of laws that regulates commercial business transactions.
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Handling Government Regulations
Glencoe Entrepreneurship: Building a Business
SECTIONSECTION 8.2
Chapter 8 The Legal Environment
After You Read
3. Discuss the tax laws that apply to a new venture.
Businesses are responsible for sales taxes, payroll taxes, federal unemployment taxes, and business income taxes.
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The Legal The Legal EnvironmentEnvironment
Glencoe Entrepreneurship: Building a Business
Legal Issues Facing Start-UpsLegal Issues Facing Start-Ups
Handling Government RegulationsHandling Government Regulations
8.1Section
8.2Section
8
End of
Chapter 8The Legal Environment