One of the big challenges for many inventors and entrepreneurs is how to turn a great idea into a profitable and viable business. Once an idea has been conceived, entrepreneurs must develop a business plan and identify how the idea can be commercialised.
A part of this process which should not be overlooked is identifying which legal documents and measures must be put in place to protect a business. This blog deals gives an overview of the legal issues which must be taken into account, when an entrepreneur is trying to turn an idea into a business.
One of the main assets of most businesses is its “intellectual property rights”. Such rights include
Trademarks which protect the name/logo of the business;
- Copyright which protects literary, dramatic, musical and artistic works and include products such as software programs;
- Patents which protect inventions which could form the basis of the business;
- Design rights which protect the outward appearance of a product or an item.
To be protected some rights such as trademarks and patents require you to apply to an authority to obtain protection, while others such as the copyright arises automatically once the work has been created.
Once a business has obtained protection in relation to an intellectual property right, it needs to consider how to make best use of it. The business may wish to make use of the right itself when it manufactures and/or sells its product and/or services. In such a situation the intellectual property rights supports the business.
If on the other hand the business does not wish to make use of the right itself, it can license the right to use the intellectual property right to another business against a fee. The terms of such use should be set out in a license agreement. This is a cheap and efficient way for a business to commercialise its intellectual property rights.
Once an entrepreneur has decided how best to make use of his or her intellectual property rights, there are a number of other contracts which the entrepreneur may wish to implement. These include:
- Trading terms and conditions of the business, so that the terms of trading of the business are protected;
- Consultancy contracts, if the business wishes to engage third parties as consultants;
- Employments contracts, if the business is to employ employees,
- Terms and conditions for the web site of the business.
The entrepreneur may also want to consider:
- The corporate structure of the business;
- The financing of the business;
- A shareholders agreement if there is more than one shareholder in the business; and
- Perhaps if the entrepreneur is thinking long term how he or she wishes to exit the business.
Over the coming weeks we will in a number of blogs deal in more detail with the issues which must be considered, when you are trying to turn an idea into a business.