Contents. Legal structures 3-4

Transcription

1 Legal Issues 1

2 Contents Legal structures Sole trader 1.2 Partnership 1.3 Limited liability partnership (LLP) 1.4 Limited liability Company 1.5 Franchise 1.6 Social enterprises Intellectual property The importance of protecting intellectual property 2.2 Intellectual property management - conducting an audit 2.3 Getting legal protection for your intellectual property 2.4 Patents 2.5 Trade marks 2.6 Design right and registered designs 2.7 Copyright 2.8 Assistance with intellectual property protection 2.9 Protecting your ideas overseas 2.10 Intellectual property and freelance contractors 2.11 Prevent intellectual property infringement 2.12 Protecting your business name and domain name 2.13 Protect your name on the Internet 2.14 Intellectual property management - carrying out searches 2

3 1 Legal structures The purpose of this document is to help you understand the differences between various legal business structures, intellectual property rights and basic tax. Overview of legal structures: 1.1 Sole trader This structure is right for you if you are self-employed. You will pay income tax through the selfassessment system. You also need to pay Class 2 and Class 4 National Insurance as well as VAT when you reach the threshold. The advantages of being a sole trader include independence, ease of set up and running, and the fact that all the profits go to you. The disadvantages include a lack of support, unlimited liability and the fact that you are personally responsible for any debts run up by your business. 1.2 Partnership If there are two or more people in your business you should consider a formal deed of partnership. Each partner needs to pay income tax through the self-assessment system and Class 2 and 4 National Insurance. The business its self will pay VAT once you reach the threshold. The advantages of being in a partnership include its ease of set up and running and the range of skills and experience that the partners can bring to the business. The disadvantages can occur when there are disagreements between partners. There is unlimited liability and, as a partner, you are personally responsible for any debts that the business runs up. 3

4 1.3 Limited liability partnership (LLP) LLPs retain the flexibility of a partnership and your personal liability is limited. There is no restriction on the number of members, but at least two must be "designated members" - the law places extra responsibilities on them. However, the formation of an LLP is more complex and costly than that of a partnership and problems can occur when there are disagreements between the members. If the number of partners is reduced, and there are fewer than two designated members, then every member is deemed to be a designated member. 1.4 Limited liability Company Each director of the company needs to register for self-assessment. Directors of a limited company become employees so they have different NI obligations. You need to always display your full corporate name outside the business premises. You need to file statutory documents such as accounts and annual returns. In a limited liability company your personal financial risk will be restricted to how much you invest in the business and any guarantees you have given in order to obtain financing. The disadvantage is that type of company also brings a range of additional legal duties, including the maintenance of the company's public records, e.g. filing of accounts. 1.5 Franchise This means that you are making a contract with the franchiser. The major plus point of a franchise is that it takes advantage of the success of an established business and support networks. Its disadvantage is that your freedom to manage the business is limited by the terms of the franchise agreement. Also franchisees often pay a share of their turnover to the franchiser, which brings down overall profits Social enterprises Social enterprises are businesses that trade for a social purpose and represent a diverse and growing range of business activity across the UK. Many will be limited liability companies, limited by guarantee, with some declaring themselves under the community interest regime.

5 2 Intellectual property All businesses have intellectual property (IP), regardless of their size of business or sector in which they operate. Examples of intellectual property include the name of the business, copyright, designs, patents and trademarks. Your IP is likely to be a valuable asset. Securing and protecting it could be essential to your business' future success, so it's vital to understand your rights and how the law can help you. 2.1 The importance of protecting intellectual property Intellectual property (IP) rights are valuable assets for your business - possibly among the most important it possesses. Your IP can: set your business apart from competitors be sold or licensed, providing an important revenue stream offer customers something new and different form an essential part of your marketing or branding You may be surprised at how many aspects of your business can be protected - its name and logo, designs, inventions, works of creative or intellectual effort or trademarks that distinguish your business can all be types of Intellectual Property. 5

6 2.2 Intellectual property management - conducting an audit The first step to protecting and exploiting your business' intellectual property successfully is carrying out a systematic intellectual property (IP) audit. To carry out an audit, look closely at your business to: identify where IP is used find out who owns the IP rights assess the value of the IP This won't always be straightforward. Remember that your IP doesn't just reside in patents you hold or trademarks you've registered. You also need to consider items such as any bespoke software, written material, domain names and customer databases. Key questions an IP audit should raise: Is my IP protected? Am I infringing anybody else's IP rights? Am I fully exploiting my IP? 2.3 Getting legal protection for your intellectual property There are four main ways in which the law provides protection for your intellectual property. 2.4 Patents 6 Patents protect your inventions for a set period. You must apply to the UK Intellectual Property Office (UK-IPO) for a patent. You can only patent an invention if no one has done so before you. To see if there is an existing patent you need to carry out a patent search. 2.5 Trade marks A trade mark is the distinctive way in which your business' goods or services are represented - in the form of slogans, symbols, words, logos, brand names or shapes, for example. You can take legal action to prevent someone else using your trade mark if you've built up sufficient trading reputation and goodwill in it - but this can be difficult to prove. For added protection it's a good idea to use trade mark registration to safeguard your trade mark. 2.6 Design right and registered designs Design right gives automatic but limited protection for the appearance of three-dimensional objects. A registered design gives added protection and applies to both two-dimensional and three-dimensional objects.

7 2.7 Copyright This is the automatic protection the law affords original literary (including software), artistic or dramatic work and sound recordings that are the result of intellectual effort or creative skill. This could cover your website's content, technical drawings or instruction manuals, for example. 2.8 Assistance with intellectual property protection Patent attorneys are legally qualified in all aspects of patents, trademarks, design and copyright law. They are represented professionally by the Chartered Institute of Patent Attorneys (CIPA). Similarly, trade mark attorneys are legally qualified in trade mark, design and copyright issues. They are represented professionally by the Institute of Trade Mark Attorneys (ITMA). 2.9 Protecting your ideas overseas IP protection is territorial, which means if you've registered protection in the UK it applies only within the UK. However, the majority of countries have similar laws relating to intellectual property and you can seek protection in other countries. 7

8 2.10 Intellectual property and freelance contractors You should take steps to ensure your business owns any intellectual property (IP) rights in work created for you by freelance contractors. For example, unless you take adequate precautions you could find your business would be unable to use a successful advertising slogan across all its promotional material if the phrase in question was coined by an agency that agreed to produce the slogan for a one-off newspaper campaign only. You should therefore set out, in a written agreement, who will own, control and use the IP rights of all work created before a contractor produces anything for your business. Remember that IP rights may reside in promotional material, bespoke software - such as databases and website content management systems - and other creative work which may be undertaken by freelance contractors. You may want to seek legal advice when drawing up agreements with contractors Prevent intellectual property infringement If your ideas get into the wrong hands before you have taken action to protect them, you could find your intellectual property (IP) rights seriously compromised - or even lose them entirely. It is therefore very important that all business materials in which there are IP rights, are kept secure. It is essential before IP protection is applied for, as any disclosure could jeopardise your claim to originality. Enforcing your intellectual property rights against infringers can be timeconsuming and expensive. 8 You can take basic steps to avoid IP infringement, including; introducing confidentiality agreements and keeping important hard-copy information locked up. Information stored electronically, particularly on computers connected to the Internet, needs protection from both lapses in security and IT disasters. You should: ensure sensitive information is kept on password-protected areas of your system install anti-virus software and keep it up to date install firewalls to prevent unauthorised users from hacking into your system and update them regularly back up your work and ensure back-ups are stored securely protect your system against power surges and failures

9 2.12 Protecting your business name and domain name Your business name is the most basic intellectual property asset you have. It could also be the most important. Your business' reputation is tied up with its name so you don't want somebody else trading on it. If the name of your business is distinctive to the goods and services you provide, you may be able to take legal action against anyone using it in the same or a similar field. You will get additional legal protection if you register the name as a trade mark Protect your name on the Internet If you want to set up a website for your business you will probably want to register a domain name incorporating your business name, or any trademarks you have. Many web hosting companies offer domain searching and registration facilities. Having a trade mark doesn't give you an automatic right to a domain name incorporating your trade mark. Someone may have already registered the domain name you want for the same or different goods and services. But you may be able to take legal action if you think: a) someone is using a domain name to pass off their goods and services as yours b) someone has taken out your trade mark as a domain name just to sell it back to you 2.14 Intellectual property management - carrying out searches It is a good idea to carry out searches to check you're not committing Intellectual Property infringement. 9 If you're planning to use a sign to distinguish your business from competitors, you should always carry out a full trade mark search - You could also use the UK Intellectual Property Office (UK-IPO) Search and Advisory service to search for you and check that your trade mark meets registration requirements and does not conflict with any existing trademarks. You should also consider checking with Companies House to ensure that no one else is using your proposed trade mark as their company name. Under the Trade Marks (Relative Grounds) Order 2007 the registrar can now register a trade mark that is the same as or similar to an existing trade mark, unless the owners of the earlier mark successfully opposes the new application. However, it is still worth checking that no one has registered the same or a similar trade mark before you make your application. If you want to make, use, sell or import someone's invention, you should carry out a full patent search. You should also do a search if you're considering applying for your own patent. If you want to make, sell, use or import goods you should carry out a full design search. If you want to use original creative work you should find out whether it is covered by copyright. Making a mistake and infringing upon someone else's rights could be costly, so it is worth obtaining professional help. You can get help with your searches from a patent attorney or trade mark attorney.