Issues in Intellectual Property Protection and Business Law

Introduction

Performing successfully in a business environment might be a challenging task given the complexity of relational issues and the risks inherent in the competition obtainment when entering a market. Indeed, the consideration of risks is particularly important for new businesses that utilize their new idea or a unique product to gain a competitive advantage and build a favorable reputation in their designated field. For that matter, the knowledge and application of laws related to business management and intellectual property protection are pivotal.

Newly created companies, start-ups, or freshly launched products entering the business environment filled with competitors are exposed to the risks of breaching intellectual property protection rights. Indeed, to ensure that the uniquely developed business idea is properly protected under the provisions of law, it is essential for business owners to consider implementing one or several intellectual property methods to ensure that other parties cannot use it for their profit or hinder the reputation of the original company. Similarly, cooperation with other companies requires the application of business law to minimize the opportunity for breaching rules and duties. These reports are designed to explore and analyze the legal issues related to intellectual property and business management to solve the cases.

Report 1: Intellectual Property Law

This case study involves Fred’s launching a new type of valve in a trumpet tube. His intentions of creating a new website, making photos, and launching his invention as a product of his newly created limited liability company requires serious consideration of intellectual property protection. This report is aimed at identifying the most relevant issues in relation to the protection of Fred’s music, invention, website, and company secrets, as well as the opportunities for commercializing the intellectual property assets.

Intellectual Protection Issues

When launching a new company and creating a lot of new unique content, Fred should ensure that his intellectual property is substantially protected from infringement and external parties’ wrongdoing. In particular, given the diversity of content that Fred intends to create to launch his company, including music, photography, a website, and the invented trumpet, he should consider the variety of intellectual property protection options applicable to his case. They include copyright, trademark, patent, and company or trade secret (Stim, 2020). All these options serve different purposes of intellectual property protection. Firstly, copyright is commonly used to protect any written creative works. Indeed, as stated by Stim (2020), “copyright law protects expressions of creative ideas such as songs, artwork, writing, films, software, architecture, and video games” and might last as long as 100 or more years (p. 3). In such a manner, for Fred to protect his music from intellectual property infringement, he should adhere to copyright law.

Secondly, trademark selection is another way of protecting intellectual property that is designated by names, signs, labels, and images. Indeed, apart from the created music, Fred intends to display his company name, his personal name, the label, and the photographs; all this information should be protected by trademarks. According to Stim (2020), “trademark law protects marketing signifiers such as the name of a product or service or the symbols, logos, shapes, designs, sounds, or smells used to identify it” (p. 3). It is essential for a newly designed trademark to use the words and symbols that do not belong to another business. In such a manner, it will be guaranteed that the new business does not infringe on anyone else’s trademark to eliminate the risk of litigation or the need for changing the trademark (Ertekin et al., 2018). It is especially relevant for Fred’s case because his newly launched product involves creating a new website where the name of his product and company will be used as a part of the link title.

Therefore, when choosing a trademark, Fred might consider two options. Firstly, he might research and check trademark names, signs, and logos of the company and the product he intends to launch for matches with the existent trademarks. It might be done by referring to online websites containing trademark databases. However, this approach contains a risk of negligence or improper examination of the trademarks, which might result in infringing or failure of the protection of Fred’s intellectual property in the long-term perspective. Secondly, Fred might consult an attorney specializing in intellectual property protection to obtain professional support in the sphere of trademark selection and usage (Stim, 2020). In such a manner, one of the downsides might be additional costs to cover the attorney’s services. However, it might be considered a solid investment in the successful and secure future of the product and company that Fred intends to open since it will protect his intellectual property sufficiently and within the legal boundaries. Thus, Fred’s name, the name of his company and product, the photographs, and the logo, as well as the website, should be protected by trademark law.

Thirdly, the use of a patent is usually applied when a certain invention should be protected as a piece of intellectual property. Indeed, as stated by Stim (2020), patent law in general and utility patents in particular “are awarded for new processes, machines, manufactures, or compositions of matter or new uses of any of the above” (p. 3). Therefore, since Fred’s newly launched Limited Liability Company is reliant on his invention of the altered valve for the trumpet, it is important to obtain a patent for the invention to protect it under the patent law and safeguard it from unlawful use by external parties.

Lastly, a trade secret is often used by organizations and businesses that seek to secure their confidential information that might hinder their competitive advantage. Such a way of intellectual property protection implies the protection of “confidential designs, devices, processes, compositions, techniques, formulas, information, or recipes” (Stim, 2020, p. 3). All the inside information that is shared between the members of the company should not be disclosed to other parties; the breach of such a law might lead to legal responsibility and litigation if any harm is caused (Ertekin et al., 2018). Therefore, since Fred seeks to protect his intellectual property and the information about his company and invention, it is relevant for him to consider the trade secret protection law to eliminate the risks of public display of confidential information that might jeopardize his reputation or competitive advantage in the market. In such a manner, Fred’s product, music, and the company brand will be protected from imitation and infringement.

Commercialization of Intellectual Property

For a company to function properly and perform in the competitive market, it must be able to obtain profit from its intellectual property. In the case of Fred’s company, his trademark, patent, and copyright might generate significant profit if adequate principles of intellectual property commercialization are applied. According to Van Norman and Eisenkot (2017), the commercialization of intellectual property leads to innovation and allows for a continuous process of development of new inventions and business ideas. Overall, the commercialization of intellectual property might be implemented via a variety of strategies and practices, which should be informed by the nature and quality of the content protected under the intellectual property law. In the case of Fred’s newly launched limited liability company, the opportunities for the commercialization of his intellectual property stemming from the diversity of his content and the integration of both his music as a composer and the instrument he has invented.

Firstly, one of the opportunities for commercializing the content under Fred’s copyright is by monetizing his music. Since Fred is a composer whose music is one of the products of his company, he might initiate taking fees for listening to his music. According to Ramli et al. (2019), digital platforms for music streaming constitute a significant part of the contemporary music industry. In particular, the newly created limited liability company might promote its music to several digital music streaming platforms and obtain fees from online users for listening to or downloading their music. In such a manner, the customer base of the company will be reached online, and their purchasing of the product under Fred’s copyright will generate commercial benefits for the company.

Apart from digital music streaming platforms, the music composed by Fred and protected by his copyright might be commercialized by introducing it to other entertainment industries. For example, it might be used in films, cartoons, advertisements, shows, and other media to generate profit. Such an approach is additionally beneficial since it allows for expanding the body of prospective customers who will be more likely to purchase the music from digital platforms. Furthermore, more conventional ways of commercialization of music might be adhered to if the company cooperates with a recording and distributing organization to sell albums or singles in the music industry market. In such a manner, the music under the copyright will generate both short-term and long-term profit for the limited liability company.

Since Fred’s business manages other intellectual property assets apart from his music, it is essential to address the opportunities for monetizing them. In particular, the invented valve of the tube for the trumpet that is protected from infringement and imitations by the patent might be commercialized if it is produced by a manufacturer for sale in the musical instrument market. Indeed, the invention might be interesting for investment by some sponsors since the sales of the altered trumpet might induce innovation in the overall music industry (Van Norman & Eisenkot, 2017). Such a commercialization approach is predominantly aimed at long-term financial benefits for the company and its sponsors because it might involve significant investment at the stage of manufacturing planning and implementation. Indeed, the production of the instruments will require full-scale manufacturing procedures, including cooperation with suppliers, production companies, marketing specialists, and retailers. Nonetheless, the investment in these interventions will yield long-term substantial financial profit for the company, given that a promotional marketing campaign generates loyalty in the target market.

Finally, the commercialization of intellectual property assets in the form of the company labels, names, and signs might be initiated. When used by other businesses or organizations, the intellectual property protected by the trademark will be monetized, which will generate financial income for the limited liability company launched by Fred. It might be implemented through the licensing procedures according to which the company owning the trademark will allow other businesses to represent the brand for a fee. Thus, the above-mentioned ways of intellectual property monetization will allow Fred and his company to generate profit and obtain long-term financial benefits based on the proper use of his music, invention, and trademark.

Report 2: Business Law

This case addressed the issues of business law and its applicability to the Stanza company. The organization is planning to purchase musical instruments from a company called Fortune Ltd. Chen is the executive director of operations at Stanza, as well as an advisor and shareholder at Fortune Ltd. To purchase the musical instruments from Fortune Ltd, Stanza needs to obtain funding of £57,500. The case analysis explores the ways of obtaining the funding for musical instrument purchasing, as well as the manifestations of business law breaches committed by Chen within this project.

Ways of Obtaining Funding

Stanza is in need of obtaining musical instruments from its new supplier. To purchase the required instruments, the company needs to obtain £57,500 of funding to cover the expenses for the instruments. To receive this sum from a bank, the company should prove its creditworthiness to the commercial bank, which will require presenting the whole inventory of the organization as collateral for the loan. Such a decision might bear significant financial risks for Stanza since it induced liability in the form of all the assets owned by the business. In other words, in the case of failing to pay the loan on time, the company will become financial non-liquid, which hinders its prospects for long-term goals. Indeed, according to research, “loans from commercial banks are used as the most common tool to access finance by companies,” which “requires companies to provide collateral or guarantees in exchange for loans” (Yigitcanlar et al., 2018, p. 464). However, the interest rate of the bank might be high, as well as the collateral loan’s implications might jeopardize the company’s long-term performance.

Given the risks implied in the obtainment of a collateral loan from a commercial bank, it is recommended that Stanza receives its funding from alternative sources. In particular, one of the effective and safe ways of receiving funding for a business is the reference to public funds. Indeed, as stated by Yigitcanlar et al. (2018), public funding might be obtained through governmental subsidies in the form of long-term low-interest loans. Moreover, the company might consider engaging in investor attraction practices to use sponsors as a source of funding. In this regard, privately-owned companies or individuals might invest in the organization with some interest rate that might be discussed and negotiated so that both parties benefit (Yigitcanlar et al., 2018). In such a manner, the company will be able to mitigate the risks of losing its assets and influence the funding source during the negotiation process.

Apart from the above-mentioned funding options, Stanza might consider such sources of financial support as crowd-funding, sale of shares to potential shareholders, and using self-funding strategies. Indeed, crowd-funding might be a potentially beneficial and low-risk source of funding where random individuals and organizations make donations to the company (Yigitcanlar et al., 2018). Furthermore, the engagement of new shareholders by selling the shares of the company might be considered a long-term contribution to the company’s financial stability and timely completion of the project aimed at purchasing the musical instruments from Fortune Ltd. In this regard, the assets obtained from the fees for shares will be allocated to the finances for musical instruments supply with an eventual return per share for the shareholders.

Finally, self-funding is one of the most common yet risky ways of funding might be considered by Stanza. Indeed, as claimed by research findings, self-funding is the use of the available financial assets of the business obtained from previous performance to cover the expenses of the tentative projects (Pangratie et al., 2021). The advantages of such a source of funding for

Stanza is two-fold. Firstly, the company is capable of reducing the risks of overpaying the interest rate to external funding sources. Secondly, such a funding solution provides a basis for long-term benefits since it creates improved creditworthiness of the company. Indeed, Pangratie et al. (2021) state that “the self-funding capacity is an indicator of financial liquidity and solvency, which raises the degree of creditworthiness of the company and increases the confidence of business partners” (p. 171). Thus, it is advisable for Stanza to consider alternative funding sources to minimize its risks when offering its inventory as collateral for the bank loan.

Breach of Business Law

The basis for the consideration of the potential breach of business law in the case is the involvement of Chen in both companies, namely Stanza and Fortune Ltd. Stanza’s purchasing of musical instruments from Fortune Ltd generates profit for the company at which Chen is a shareholder and for Chen personally since she is an advisor at Fortune Ltd. Therefore, her engagement with Stanza might be considered unethical and even unlawful. Moreover, Stanza does not know about Chen’s relationship with Fortune Ltd, which involves even a more significant ethical concern. Indeed, Chen might have a biased perspective on what supplier to recommend. Indeed, since the board of directors of Stanza does not know about her professional involvement with Fortune Ltd, they are unaware of her agenda behind such a project. Such conduct violates ethical norms due to the collision of personal benefits and organizational advantages.

Moreover, in legal terms, the situation causes a conflict of interest between Chen’s personal interest in obtaining compensation from closing the deal and her involvement with Stanza. The conflict of interest issues in business are regulated by the Code of Conduct for Solicitors and the Code of Conduct for Firms (“Guidance,” 2020). According to these legal documents, the existence of a conflict of interest requires termination of cooperation or duty performance to ensure objectivity and ethicality of the professional responsibilities. Indeed, “when it comes to an ‘own interest’ conflict, there are no exceptions to the ban on acting” (“Guidance,” 2020, para. 13). In particular, these legal provisions establish that any performance should be banned if the individual employed at a company has a personal interest due to its family involvement with a cooperating company, employment at, or ownership of that company (“Guidance,” 2020). Therefore, the company should revisit the decision to cooperate with Fortune Ltd since there is a conflict of interest of their executive director. Furthermore, it is important to disclose the relationship between Chen to Fortune Ltd to establish transparent cooperation and make all sides aware of the potential for a conflict of interest.

Conclusion

In summation, the presented two reports have outlined, explored, and analyzed the essential issues in the fields of intellectual property protection law and business law. By reviewing and analyzing the two case studies, these reports have demonstrated that with the use of such intellectual property protection methods as copyright, trademark, patent, and trade secret, a newly launched company is capable of granting its security and legal protection in a case of infringement or someone else’s unlawful use of the registered intellectual property assets. Moreover, it has been claimed that for a company to commercialize its intellectual property, it should sell its music via digital music streaming platforms and recording companies and cooperation with other media. When commercializing the invention, a full-scale manufacturing and retail process might be initiated. In addition, to commercialize the brand and the trademark, the company might engage in licensing for external businesses.

Furthermore, within the context of business law analysis, the case study has revealed some possible ways of obtainment of a loan for business performance with minimal risks. Finally, it has been revealed that due to the conflict of interest, the employee of Stanza and Fortune Ltd. Breached the Code of Conduct for Firms and the Code of Conduct for Solicitors. In such a manner, when incorporating the findings of this case study analysis, the decision-makers might be able to make informed decisions as to the protection of intellectual property, its commercialization, funding sources establishment, and implementation of lawful business practices.

References

Ertekin, L., Sorescu, A., & Houston, M. B. (2018). Hands off my brand! The financial consequences of protecting brands through trademark infringement lawsuits. Journal of Marketing, 82(5), 45-65.

Guidance. (2020). Solicitor Regulation Authority. Web.

Pangratie, A., Mateoc, T., Ciolac, R., Mănescu, C., Orboi, D., & Mateoc-Sîrb, N. (2021). The role of self-funding in economic growth of commercial companies. Agricultural Management/Lucrari Stiintifice Seria I, Management Agricol, 23(2), 170-175.

Ramli, T. S., Ramli, A. M., Permata, R. R., & Budhijanto, D. (2019). Commercialization of copyright content through digital platforms in Indonesia. Progressive Law Review, 1(1), 1-7.

Stim, R. (2020). Patent, copyright & trademark. Nolo.

Van Norman, G. A., & Eisenkot, R. (2017). Technology transfer: from the research bench to commercialization: Part 1: Intellectual property rights—basics of patents and copyrights. JACC: Basic to Translational Science, 2(1), 85-97.

Yigitcanlar, T., Sabatini‐Marques, J., Kamruzzaman, M., Camargo, F., Moreira da‐Costa, E., Ioppolo, G., & Palandi, F. E. D. (2018). Impact of funding sources on innovation: Evidence from Brazilian software companies. R&D Management, 48(4), 460-484.

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LawBirdie. 2023. "Issues in Intellectual Property Protection and Business Law." September 28, 2023. https://lawbirdie.com/issues-in-intellectual-property-protection-and-business-law/.

1. LawBirdie. "Issues in Intellectual Property Protection and Business Law." September 28, 2023. https://lawbirdie.com/issues-in-intellectual-property-protection-and-business-law/.


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LawBirdie. "Issues in Intellectual Property Protection and Business Law." September 28, 2023. https://lawbirdie.com/issues-in-intellectual-property-protection-and-business-law/.