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How to Start a Business Outlines

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Download this step-by-step outline on how to start a successful business. With Docstoc CEO, Jason Nazar.

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									HOW TO START A

         With Docstoc CEO, Jason Nazar

Download this step-by-step outline on how to start
              a successful business.

Table of Contents
Ideation ....................................................................................................................................................... 3
Protecting Your Ideas and Intellectual Property ........................................................................ 7
Business Planning ................................................................................................................................ 30
Setting Up Your Business .................................................................................................................. 32
Corporate Identity ............................................................................................................................... 49
Business Operations ........................................................................................................................... 51
Service Based Businesses ................................................................................................................. 54
Building a Physical Product ............................................................................................................. 59
Home Based Business ........................................................................................................................ 61
Raising Money and Financing ......................................................................................................... 62
HR Essentials ......................................................................................................................................... 63
Sales .......................................................................................................................................................... 68
Marketing ................................................................................................................................................ 72
Working With Vendors ...................................................................................................................... 78
Setting Up Your Business Dashboard........................................................................................... 79
Legal Considerations .......................................................................................................................... 81
Buying a Business ................................................................................................................................ 91
Resources for Small Business........................................................................................................106


    -   Do things that make you uncomfortable, go new places, meet new people
    -   Be curious, ask questions
    -   When you see a clever product/service/approach, consider what the questions are that
        could have led to its creation.

Most common approach:

    -   Fill a need that’s already there, in an industry that always exists, and do it better


Look very closely at businesses that exist, and their customers. Are there inefficiencies, could it
be more attractive? Consider how you can take that business and make it different, faster, more
targeted in some way. Consider, what is it about the business that customers love and/or want,
and what are the things that they don’t need/want. Focus on building out the former. People
want the same product, but not necessarily delivered in the same way. Move beyond old or
traditional methods, listen to your customers and give them more of what they really want.


Walmart took something that already existed (retail super-store) and reduced their margins and
costs, and passed along the savings to consumers. The same market/product, but with a
different approach creates untapped possibilities

Vetting: You can either,

    1) Share your ideas with others to see their responses
          a. Danger: People stealing, passing along your idea
    2) Take your idea and run with it, test-running a prototype to get customer feedback
          a. Danger: No previous vetting and feedback on your idea

Things to consider:

    1) What field or concepts are you passionate about?
         a. When going gets tough, your passion for the business will drive you.
    2) What type of business can you afford?

         a. How much do you have saved up? Starting a business can take 2-3 years to
            become profitable, sometimes even longer.
         b. Some types of businesses can run on less, while others need a large initial
            investment to get off the ground
   3) Remember your idea and business model will probably pivot
         a. The best businesses have pivoted to stay alive (Twitter, etc.)


   Lee Ann Obringer (Marketing Consultant, How Stuff Works Contributor)

   How Business Ideas Work (Article)

Key Points:

   -   Do you have the basic skills?
           o Accounting, Marketing, Management, Enthusiasm
   -   Identify your talents
   -   Find business ideas that fit your talent
           o Business types:
                    Manufactured
                    Distributed
                    Services
           o Strategies:
                    Inventing a new product for a new market
                    Inventing a new product for an existing market
                    Improving on a product for an existing market
                    Selling an existing product to a new market
   -   Evaluating your ideas
           o The best way to get started, possible income vs. addition costs
   -   External deciding factors
           o Time Commitment
           o Family
           o Zoning restrictions
           o Lifestyle compatibility
           o Personal satisfaction and enjoyment


Jay Adelson (co-founder of famous websites including Digg and Revision3)

Ways to Validate a Business Model (Video)

Key Points:

First remember: There is always risk, and you might need to make several different products
until you get it right.

To reduce risk:
    - Research potential customers and users
    - Build a very basic prototype for testing if possible
    - Find questions that are common between customers, follow-up with specific ways that
       your business will fit in


Ari Mir (CEO of Lunch Money)

4 Ways to Vet Your Idea (Video)

Key Points:

   1.   Passion
   2.   Fulfilling a need
   3.   Opportunity
   4.   Chances of Success

                                                 •••• Authors

Starting a Business: The Idea Phase (Excerpt from Start Your Own Business book)

Key Points:

   -    There’s never a “bad” time to start a business. Even in a down economy, there is less
        business competition and possibly better deals on equipment.
   -    With a few exceptions, many new businesses won’t be completely new. They will come
        from improving upon an idea, or targeting a market share that’s underserved in an
        already existing business category.
   -    Consider the things you’re best at, and the things you’re worst at. What could make
        either of those aspects of your life easier, happier, more efficient, give you more time?
   -    Listen to your own or others’ frustration and serve them.
   -    Don’t take the one-size-fits-all approach, customize ideas to your times and community.
        Run the general idea by people, see how they respond.
   -    Just do it. You’ll be told “no” more than you’ve ever heard it in your entire life. People
        will warn you about risk. But remember, if you are curious, flexible, and persistent you
        can mitigate risk


Seth Godin (founder of Squidoo and prominent business author)

Vetting Your Business Idea (Conversations with Godin by BusinesWeek editor Jessie Scanlon,
Bloomberg BusinessWeek)

Key Points:

   -   Are you pursuing a freelance venture, or an entrepreneurial venture?
           o Freelancers keeps costs low, make money for the work they do. Entrepreneurs
                raises money, hire people to do the work, and focus on growth
   -   Sticking to or obsessing about a great or new business idea can be dangerous
           o Not enough focus on growth, distribution, sales, the market
   -   Avoid costly focus groups
   -   Prototyping is valuable
   -   Try not to seek investment too early, before the capital will go directly to building
       something that will generate profits


    Protecting Your Ideas and Intellectual
●   What you will learn in this course
       ○ How to define, protect and share your “ideas”
●   Applicable to situations involving:
       ○ Potential and actual business partners
       ○ Employees
       ○ Independent Contractors
       ○ The World at Large
●   What is Intellectual Property and what can/should you protect?
       ○ Many people have great ideas, but what separates those who can turn their
            ideas into money from those who can’t includes a strategy to define the idea
            enough so that it can become an asset that can be protected.
       ○ “Intellectual property” is an blanket term for a group of intangible personal
            property rights. More detail about each later but for now, IP includes:
               ■     Copyright for Works of Authorship, like books, movies, paintings
               ■     Trademark for Brands and Logos, like Coca Cola, Nike, Docstoc
               ■     Patents for useful Inventions, like the light bulb, or what is called Velcro
               ■     Trade-Secrets and Confidential Information for valuable business
                     Information you want to keep confidential
       ○ a product or service may be protected simultaneously by more than one kind of
            intellectual property. For example, computer software products may be
            protected by:
               ■     Patents, for the way the software functions. The steps carried out by the
                     software may be protected by a patent.
               ■     Trademarks, for the names used with the software. POWERPOINT® is a
                     well-known software brand.
               ■     Copyrights, for lines of computer program code and screen displays.
               ■     Trade secrets, for the undisclosed confidential portions of the program

●   Trade Secrets and Confidential Information are different than other IP
        ○ At some point other IP becomes known to the world at large, but you want your
           trade secrets and confidential information to stay secret amongst a select group
           either forever or until you decide that it should be public.
        ○ You want people
                ■ to know your brand and logo
                ■ buying and using your patented invention, and to get a patent you have
                    to disclose to the Patent and Trademark Office all the parts of your
                    invention, and that disclosure becomes public
                ■ to be exposed to your copyrighted work, which means you have to
                    publish the work

        ○   Coca Cola (the brand), wants people buying its soft drink, but it doesn’t want
            them to know the secret formula
        ○   But, you might want what starts off as a trade secret or confidential information
            to later become public. For example:
                 ■ You have a great idea for the name and logo of your new company or
                     product but before you:
                        ● put a lot of money into protecting that brand with trademark
                        ● put a lot of money into the design of the brand
                        ● put a lot of money into marketing and promoting the branded
                             product or service
                        ● and start making that name and logo public
                 ■ you want to consult with a marketing and branding expert
                        ● You want that expert to keep secret
                                  ○ the proposed brand
                                  ○ the proposed product or service
                                  ○ the results of any brand testing
               ■     Then, after that, if you still want to use the name and logo you can
                        ● file an “intent to use” trademark application (which we will talk
                             more about later)
                        ● start using the brand name and logo publicly, and it will no
                             longer be a secret.
                        ● but you still might want the expert’s brand testing results to be
                             a secret

●   Trade Secrets and Confidential Information
●   Let’s talk more about the different kinds of IP and protecting your ideas, and let’s stick
    with Trade Secrets and Confidential Information for now.
        ○ Definition of Trade Secrets:
                ■    Information that
                ■    has independent economic value, from
                ■    not being generally known to, or and not being readily ascertainable by
                     proper means by, other persons who can obtain economic value from
                     its disclosure or use, and
                ■    reasonable efforts are taken to maintain secrecy
                          ● [resource - Uniform Trade Secrets Act, though each State might
                               have a variation;
        ○ Definition of Confidential Information:
                ■    Information
                ■    maintained in secrecy
                          ● examples:
                                   ○ business information
                                   ○ customer requirements
                                   ○ identities of vendors & suppliers
                                   ○ pricing and costs data
                                   ○ test plans and results

                               ○    pre-release products & prototypes
                               ○    specifications
                               ○    software and documentation
                               ○    products and software subject to restrictions on reverse
                                    engineering and/or disassembly
       ○   “Trade Secrets” are defined and protected by law in most states without
           needing to enter into written agreements, BUT it is wise to enter into written
             ■     formality reinforces and makes people think about their obligations
       ○   Confidential Information protection does require a contract, and it is better to
           have a written contract than an oral one.
             ■     CI which is not a trade secret could be reverse engineered without a
                   contract prohibiting that, because reverse engineering in and of itself is
                   not improper, but reverse engineering when a contract prohibits
                   reverse engineering allows you to file suit.
                       ● (Remember the point above - one factor in order to make
                            something a trade secret is the information is not being
                            generally known to, and not being readily ascertainable by
                            proper means . . .

       ○   For example:
             ■    The secret Coca Cola formula
             ■    Undisclosed Source Code

●   How do you protect your Ideas and Confidential Information (and better protect your
    Trade Secrets) and when do you share or disclose your ideas, Trade Secrets, and
    Confidential Information?
        ○ Don’t leave them lying around for anybody to see
              ■ remember, reasonable efforts must be taken to maintain secrecy
        ○ Enter into written NDA’s
        ○ Then you can share with those who have a need to know.

●   NDAs to protect your Ideas and Confidential Information (and better protect your Trade
        ○ Defined:
        ○ A non-disclosure agreement (NDA), also known as a confidentiality agreement
             (CA), confidential disclosure agreement (CDA), proprietary information
             agreement (PIA), or secrecy agreement, is a
               ■     legal contract between at least two parties that
               ■     outlines confidential material, knowledge, or information that
                           ● the parties wish to share with one another
                           ● for certain purposes,
               ■     but wish to restrict access to or by third parties.
               ■     It is a contract through which the parties agree not to disclose
                     information covered by the agreement.

      ■      An NDA creates a confidential relationship between the parties to
             protect any type of confidential and proprietary information or trade
      ■      As such, an NDA protects nonpublic business information.

○   What is it used for?
     ■      NDAs are commonly signed when two or more companies, individuals,
            or other entities are considering doing business and need to understand
            aspects of each other’s business for the purpose of evaluating the
            potential business relationship, or while engaged in a business
            relationship they share or have access to the CI (or Trade Secrets) of the
            other. [resource: Our Form NDA’s; Doc Complete screen grabs]
     ■      NDAs can be "mutual", meaning all parties to the NDA are restricted in
            their use of the CI they receive, or they can be restricted to the use of
            material by a single party.
     ■      Employees [resource: Confidentiality and Invention Assignment
     ■      Independent Contractors [resource: NDA with IC]
○   Who will not sign?
     ■      Most potential investors, such as VC’s
                 ● because they are privy to so many ideas and opportunities,
                     many that are very similar, and they don’t want to be dragged
                     into court by anyone who thinks the VC shared the idea with
                     someone else they invested in
     ■      Professionals, such as attorneys and accountants (typically because they
            are already bound to maintain confidentiality)

○   Pros and cons (The Jason philosophy vs. the more guarded philosophy)

          ■ Some common issues addressed in an NDA include:
               ● who the parties to the agreement are;
               ● definition of what is confidential, i.e. the information to be held
                   confidential. NDAs will typically include a list of types of items
                   which are covered, including:
                        ○ unpublished patent applications,
                        ○ know-how,
                        ○ financial information,
                        ○ oral representations,
                        ○ customer lists,
                        ○ vendor lists,
                        ○ business practices/strategies,
               ● the disclosure period - information not disclosed during the
                   disclosure period (e.g., one year after the date of the NDA) is
                   not deemed confidential;
               ● the exclusions from what must be kept confidential. Typically,
                   the restrictions on the disclosure or use of the confidential data
                   will be invalid if
                        ○ the recipient had prior knowledge of the materials;

                             ○    the recipient lawfully gained subsequent knowledge of
                                  the materials from another source;
                              ○ the materials are generally available to the public; or
                              ○ the materials are subject to a subpoena, but a good
                                  NDA requires the receiver of CI to notify the discloser
                                  right away about a subpoena so the discloser can try to
                                  prevent the disclosure, or ensure that the information is
                                  treated secretly and not publicly revealed, including be
                                  making sure that information filed in a court case is
                    ● provisions restricting the transfer of data in violation of national
                    ● the term (in years) of the confidentiality, i.e. the time period of
                              ○ Trade Secrets should be kept confidential for so long as
                                  they are Trade Secrets;
                    ● the term (in years) the agreement is binding;
                    ● permission to obtain ex-parte (fast and without notice to the
                         other party) injunctive relief from a court to have the court
                         order that the receiver of CI not disclose it, or take efforts to get
                         it back, or limit its further improper disclosure;
                    ● the obligations of the recipient regarding the confidential
                         information, typically including some version of obligations:
                              ○ to use the information only for enumerated purposes;
                              ○ to disclose it only to persons with a “need to know” the
                                  information for those purposes;
                              ○ to ensure that anyone to whom the information is
                                  disclosed further abides by obligations restricting use,
                                  restricting disclosure, and ensuring security at least as
                                  protective as the agreement;
                              ○ to use not less than reasonable efforts to keep the
                                  information secure.
                                       ■ Reasonable efforts is often defined as a
                                            standard of care relating to confidential
                                            information that is no less rigorous than that
                                            which the recipient uses to keep its own similar
                                            information secure; and
           ○    types of permissible disclosure - such as those required by law or court
                order (many NDAs require the receiving party to give the disclosing
                party prompt notice of any efforts to obtain such disclosure, and
                possibly to cooperate with any attempt by the disclosing party to seek
                judicial protection for the relevant confidential information).
           ○    the law and jurisdiction governing the parties. The parties may choose
                exclusive jurisdiction of a court of a country.

●   Copyright

○   Define by example first:
         ■ A book [Link]
         ■ This course
         ■ A movie or TV script [Link]
         ■ A movie or TV show [Link]
         ■ a musical composition [Link]
         ■ a musical recording [Link]
         ■ a video game [Link]
         ■ software code
         ■ A painting, drawing, photograph, sculpture, architecture
○   Original works of authorship
○   fixed in a tangible medium of expression
○   from which they may be perceived, copied, or communicated
○   To be protectable, the work must have originality
○   Ideas themselves are not copyrightable. Only the manner of expression of an
    idea is protected by copyright, rather than the idea itself
○   Has to be “fixed.” If you tell a friend an idea, that isn’t protected by copyright.
    Fixed means the author has put the work in some tangible form which can be
    seen, reproduced, or otherwise communicated, either directly or with the aid of
    a machine or device.

○   Copyright is a legal concept, enacted by most governments, giving the creator or
    other rights holder of an original work exclusive rights to it, usually for a limited
        ■ Generally, it is "the right to copy", but also gives the copyright holder
                 ● the right to determine who may
                       ○     adapt the work to other forms,
                       ○      perform or publicly display the work,
                       ○     financially benefit from it,
                       ○     transmit or display by radio or video
                 ● and the right to sell, license, or assign these rights to others.
○   Fair use is a limitation and exception to the exclusive rights.
         ■ Examples of fair use include:
                  ● commentary,
                  ● criticism,
                  ● news reporting,
                  ● research,
                  ● teaching,
                  ● library archiving and scholarship.
         ■ Fair use allows the legal, unlicensed citation or incorporation of
            copyrighted material in another author's work under a complex four-
            factor balancing test.[Link]
                  ● The purpose and character of the use, including whether such
                      use is of commercial nature or is for nonprofit educational

                          ●   The nature of the copyrighted work
                          ●   The amount and substantiality of the portion used in relation to
                              the copyrighted work as a whole
                          ●   The effect of the use upon the potential market for, or value of,
                              the copyrighted work

                  ○   What doesn’t qualify for copyright?
                       ■     Titles of books, movies & songs
                       ■     short phrases and slogans (though slogans may qualify for
                       ■     History or facts, like telephone directories or recipes, but if
                             there is originality in the expression, like a cookbook with
                             photographs, or a cute story about the recipe of food item
                             those aspects may qualify
                       ■     the design of useful articles, unless the pictorial, graphic or
                             sculptural features of the design exist independently from its
                             useful purpose.
                       ■     Procedures, concepts, systems, methods and the like
                       ■     Works in the public domain

                  ○   Length: How long does copyright last? In the US:
                        ■     Generally, for the life of the author, plus 70 years
                        ■     If the author is anonymous or a company, for the longer of 95
                              years from publication or 120 years from creation.

                  ○   Automatic. Copyright protection arises automatically when an original
                      work is fixed in a tangible medium of expression.
                  ○   No registration is necessary; but, registration affords additional rights,
                         ■    the right to bring an infringement suit in federal court,
                         ■    entitlement to statutory damages (actual damages can be
                              difficult to prove)
                         ■    entitlement to recovery of attorneys’ fees in certain

                  ○   Registrations are generally classified according to the nature of the
                      work, including
                         ■    serial works,
                         ■    literary works,
                         ■    works of the performing arts,
                         ■    sound recordings, and
                         ■    works of the visual arts
                  ○   [Show how to apply for registration]

                   ○ Creative Commons Licenses and [Site]
[Resource: Copyright license]

●   Trademark and Tradenames (United States)
        ○ Define:
        ○ A trademark
              ■    identifies goods or services
              ■    in a way to distinguish them from the goods or services of
        ○ It can be any
              ■    word,
              ■    name, [Coca Cola]
              ■    abbreviation, [FedEx]
              ■    Acronyms [KFC]
              ■    slogan [“We Make Every Small Business Better” “It’s finger lickin
                   good!”, “It’s the real thing” ],
              ■    symbol [prince glyph, nike swoosh],
              ■    device,
              ■    color [corning pink insulation],
              ■    shape [life savers, coach hang tag],
              ■    smell,
              ■    sound combinations [nbc tones],
              ■    product containers [absolut vodka]

              ■     or any combination of these

        ○   They can be protected under
              ■    federal law
              ■    state law, and
              ■    common law.

○   Think of a trademark as a person’s name. Hearing the name of a person you
    know conjures up the person’s face, voice, and personality.
○   The mark creates an association with a source.
○   Similarly, marks give a product an identity and a familiarity, whether good or
○   When you see the mark Coca-Cola®, you know the signature red and white label
    will guarantee that the product is the REAL THING, and that each bottle will
    taste the same as the bottle you had last year and will have next year (except if
    they tinker with the secret formula). Without marks, you might wander the
    grocery store aisle wondering if the soda you bought last week will taste the
    same as soda you buy this week.

○   Common law - use of a mark provides protection commensurate in scope to the
    extent of the use of the mark.
○   Federal registration of the mark on the Principal or Supplemental Register
    affords additional rights. Registration on the Principal Register entitles the
    owner to use the mark and to exclude use of the trademark by others
    throughout the United States if such use would likely lead to confusion by the
    public, or tarnishes or dilutes a mark.

○   Registering a trademark with the U.S. Patent and Trademark Office (PTO)
    notifies others that the owner of the mark claims exclusive rights to use the
    mark in association with products and services identical or substantially similar
    to those of the mark’s owner.

●   Some types of marks:
○   Tip: Consider the following in connection with protecting choosing and
    protecting “your” domain names and preventing others from cybersquatting
    and using similar or typosquatting domain names.
         ■ The more generic your trademark the more difficult it will be to protect
            against others using it, including in domain names
         ■ The more generic your domain name the more difficult it will be to
            protect against others using similar ones for domain names or the same
            or similar as trademarks

○   Coined or “made-up” marks
         ■ such as Google®, Exxon® and Prozac® are marks that do not convey any
            information about the product or services on which they are used.
         ■ They are unique and easy to protect because a similar competing mark
            likely would confuse the consumer.
         ■ Conversely, they are more difficult to market because they require a
            substantial marketing effort to explain what the product or service is to
            the consumer.
○   Arbitrary marks
         ■ are real words that are unrelated to the products on which they are
            used. For example, Apple® is an arbitrary trademark for certain
            computers and other devices.
         ■ Like coined marks, arbitrary marks they are strong from a legal
            protection standpoint and, since they are actual words, they are slightly
            easier to market than coined marks.
         ■ Because they convey no information about the product, though,
            arbitrary marks still require significant marketing effort to inform the
            customer about the product
○   Suggestive marks
         ■ hint at aspects or qualities of a product, but do not directly describe it.
            For example, Explorer® for a sport utility vehicle suggests qualities of
            the product.
         ■ Suggestive marks are fairly strong from a legal protection standpoint,
            yet much easier to market than coined or arbitrary marks.
         ■ Suggestive marks strike the best balance between the dual goals of
            finding a mark that is easy to protect and easy to market. However, the
            dividing line between suggestive and descriptive marks is often not
○   Descriptive marks
         ■ immediately and directly convey something about the product.
            American Apparel® and The 99 Cent Store® both directly describe the
            products or services with which they are used.

                 ■ Because they describe aspects of a product or service, they are
                     seemingly easy to market but difficult to protect.
                 ■ Descriptive marks are poor at indicating the source of a product and in
                     distinguishing a product from competing products because they
                     describe the product but are not distinctive enough to be associated at
                     the outset with one company.
        ○   Descriptive marks are not protectable until they have developed “secondary
            meaning.” After a sufficiently long period of use in connection with a product, or
            after a significant marketing and advertising effort, a descriptive mark no longer
            just describes the product, but secondarily indicates to consumers that the
            product comes from a particular company

        ○   Generic terms
               ■ so highly descriptive that they are not capable of functioning as
                    trademarks. In contrast to descriptive marks, which merely describe
                    aspects of a product, generic terms immediately describe an entire class
                    of products. So while Ivory® is a trademark, SOAP is a generic term that
                    is incapable of functioning as a trademark.

●   What is US Trademark registration and what does it do?
      o Registering a trademark with the U.S. Patent and Trademark Office (PTO)
            notifies others that the owner of the mark claims exclusive rights to use the
            mark in association with products and services identical or substantially similar
            to those of the mark’s owner.
      o Registration on the Supplemental Register is for marks that are capable of being
            distinctive but have not yet become so and afford no exclusive rights, but
            preclude others from obtaining a registration.
      o The symbol ® is used to give notice that a trademark is federally registered.
      o The symbols ™ and SM are used to give notice that a trademark or service mark
            is considered by its owner to function as a mark to indicate the source of the
            goods or services.
      o State trademark registrations may also be obtained, but they typically provide
            no more protection than is already available to the trademark owner under
            common law.
      o With one exception (intent to use), trademark rights in the United States flow
            from use, not from registration.
      o Registration of the mark makes those rights stronger and easier to enforce.

        o   In the U.S., the trademark registration process involves the following steps:
                 ■ Filing of an application in the PTO;
                 ■ Examination of the application by the PTO, which includes a search of
                    the PTO’s records (and, where conflicts are found, argument with the
                    PTO regarding likelihood of confusion);
                 ■ Where no conflicts are found, publication of the application in the PTO’s
                    Official Gazette;
                 ■ A 30-day period begins, during which third parties can file opposition
                    proceedings against the published application;

                ■ Where no oppositions are filed and the mark already is in use by the
                  applicant, issuance of the trademark registration certificate.

●   The intent-to-use exception
        ○ The exception is that U.S. applications may be based on a good-faith intention
            to use the mark rather than actual use. Registration cannot occur until use in
            the U.S. begins.
        ○ Where an application is based on “intent to use,” the PTO will issue a Notice of
            Allowance. This notice indicates that the PTO will issue a registration as soon as
            the applicant demonstrates use of the mark.
        ○ After the Notice of Allowance is issued, the application may be maintained for
            up to three years by filing extensions every six months, along with a fee and an
            explanation of why the mark is not yet in use. Some enforceable rights arise
            during this “intent to use” process, provided the registration eventually issues.

●   Conducting a Search
●   Why
       ○ Before you choose a domain name, a name for your company, a name for your
           goods or services, and a logo design, and before you pour money into branding
           and marketing you should conduct a search to try to make sure that your
           proposed mark will not infringe on the marks of others.
       ○ You don’t want to get sued for infringement
                ■ If you are sued by a trademark owner for using its trademark, at the
                   least you can be forced to stop using the trademark. Depending on how
                   long and extensively you've used the business or product name, it could
                   be costly -- you could have to change products, brochures, letterhead,
                   business cards, signs, advertisements, and your website.
                ■ And, if you infringe on a federally registered trademark, you will be
                   presumed to have known it was federally registered, even if you did not.
                   This means that you will be found to be a "willful infringer."
                       ● Willful infringers can be held liable for large damages and
                           payment of the registered owner's attorney fees.
       ○ You don’t want to have to re-brand
       ○ You want to increase your chances of having the PTO grant you a registration for
           your mark by not attempting to register a mark that is already registered or in

●   What
      ○     You should search not only for your proposed mark but also for other marks
            that are logically close, such as synonyms and variant spellings, such as colour
            and color, barbeque and barbecue, donut and doughnut, and check for typo’s
        ○   If your search turns up any marks or names that are the same or similar to your
            proposed mark, name or domain name, ask these questions:
                 ■ Is there a likelihood of confusion?
                 ■ Will you offer goods or services that compete with the goods or services
                     being sold under the similar name?

                     ■ Will you offer goods or services that typically are distributed in the same
                         channels as the goods or services being sold under the similar name?
                     ■ Could your business or website divert business away from the business,
                         products, services, or site with the similar name? Is your domain name
                         so similar to the other domain name that users might end up on your
                         website by mistake?
                     ■ Is the other name well known, even if the goods or services are not
            ○   If the answers to all these questions are no, you can feel reasonably free to
                register the domain name and work on your trademark registration application
                and file that.
            ○   If you answer yes to any of these questions there may be some risk of a legal
                challenge down the road. You might want to consult with a trademark attorney.
            ○   Note that you will need to look at international clearance and registration issues
                if you plan on expanding or conducting business outside of the US.
                     ■ Example: Budweiser by Anheuser-Busch [Link] vs. this Czech beer in 23
                         European countries where [Link] Anheuser-Busch cannot use the
                         Budweiser mark.
            ○   Consider expanding product lines
                     ■ Example: Apple computers [Link] vs. Apple Music (the Beatles) [Link]
                         where Apple computers may originally been in a different class of goods
                         and services, but eventually expanded to music, and after several
                         lawsuits over the years has licensed the right to use “Apple” in
                         connection with music for over $500million. (Never mind Fiona Apple)

    ●   Search tools
            ○ search engines (Google, Bing, etc.)
            ○ US PTO
            ○ fee-based search engine such as Thomson's SAEGIS database at www.thomson-
            ○ search domain names being used by Web-based businesses at any domain
                name registrar. You can find a list of domain name registrars at,
            ○ State Secretary of State for state registered trademarks (not all States have
                state registered trademark searches on-line)
            ○ [Resource: Search screen grabs]

[Registration Process]

    ●   How to Register a Trademark in the US
           ○ Once you have decided to federally register your trademark, you can file the
               necessary forms to apply for federal trademark registration with the United
               States Patent and Trademark Office online. The cost is between $275-375 per
               mark for each International Class in which you seek registration, depending
               upon the filing method you chose.

○   The USPTO estimates that filling out the form should take about 15-20 minutes,
    although first time filers are likely to take longer. A federal application
    must contain at least four things, in addition to the filing fee:
          ■ (1) the owner's name and address,
          ■ (2) a clear drawing of the mark (which can be automatically generated
              from text if you do not have a logo);
          ■ (3) a description of the goods or services for which the mark is or will be
              used and the corresponding International Class number(s); and
          ■ (4) the filing basis. There are five filing bases:
                  ● (1) use of a mark in commerce under §1(a) of the Trademark
                       Act, 15 U.S.C. §1051(a);
                  ● (2) bona fide intention to use a mark in commerce under §1(b)
                       of the Act, 15 U.S.C. §1051(b);
                  ● (3) a claim of priority, based on an earlier-filed foreign
                       application under §44(d) of the Act, 15 U.S.C. §1126(d);
                  ● (4) ownership of a registration of the mark in the applicant’s
                       country of origin under §44(e) of the Act, 15 U.S.C. §1126(e); or
                  ● (5) extension of protection of an international registration to
                       the United States, under §66(a) of the Act, 15 U.S.C. §1141f(a).
                       37 C.F.R. §2.34.
○   You can register your trademark for use in connection with more than one set of
    goods or services, but you will have to pay an additional filing fee if the goods
    and services you list fall into more than one International Class.
○   The USPTO has available a searchable index of identifications for goods and
    services that they recommend you use for your application, but you can also
    type in something else if your product or service does not fit into one of these
    categories. If your business does not clearly fall within one category of goods or
    services, you may want to consider filing in more than one class, as this will give
    you greater protection and flexibility.
          ■ A downside to seeking registration in more than one class, aside from
              the additional filing fees, is that you are more likely to encounter a
              conflict with someone else who is using the mark or a similar one in
              another field or industry.
○   There are two different filing bases for a new trademark application:
          ■ use based, or
          ■ intent-to-use.
○   If you have already begun using the trademark in interstate commerce, you
    should file a use based application. To do so,
          ■ in addition to filling out the application, you must supply the USPTO
              with a specimen showing the mark as it is used in connection with your
              goods or services, as well as the date(s) on which you first used the
              mark anywhere and in interstate commerce.
○   If you have not yet begun using the trademark, you should file an intent-to-
    use application. You will be required to submit a specimen and date of first use
    later in the application process before your mark is allowed to register.
○   If this process sounds too complicated for you, you can hire an attorney to do it.
    Trademark registration is usually fairly straightforward for attorneys who
    specialize in it, so it is relatively inexpensive.

○   Within about 3-6 months after you file the registration forms an attorney with
    the USPTO will examine and research your application.
○   There are several categories of marks that the USPTO will refuse to register,
          ■ "immoral, deceptive, or scandalous" marks (such as those including foul
          ■ those that disparage or falsely imply a connection to other people or
             entities, and
          ■ marks that are confusingly similar to others that are already registered.
○   The USPTO attorney may contact you to resolve any issues in your application,
    by issuing what's called an "Office Action." If you receive an Office Action, you
    will have six months in which to respond to any issues raised by the examining
    attorney. If the issues raised in the Office Action are too complex, you may want
    to hire an attorney to draft your response.
○   If the USPTO approves your application, it will publish your trademark in
    the Official Gazette, and anyone who believes that they would be damaged by
    its registration (such as a senior user of a confusingly similar mark) will have
    thirty days in which to oppose registration of the mark.
          ■ If no one opposes (or requests an extension of time to oppose) within
             those thirty days, the USPTO will either approve your mark for
             registration (if you have already submitted an acceptable specimen of
             use) or issue a Notice of Allowance (if your application is still based on
             an intent-to-use). If the USPTO issues a Notice of Allowance, you will
             have six months from the date on which it was issued to either submit
             an acceptable specimen, or request an additional extension of time in
             which to do so. You can request up to five 6-month extensions of time
             in which to submit a specimen of use. The registration process can
             easily take 1-2 years, but once it is approved your rights date back to
             the day on which you filed your application.

o   After a registration has been obtained, it must be maintained.
        ■ Unlike with patents and copyrights a registered trademark can,
             theoretically, last forever as long as a trademark's use is continuous
             Section 8 Affidavit(s) of Continuous Use, as required.
        ■ In the fifth year after the initial registration issues, the owner must
             prove to the PTO that the mark is still in use. If proof is not submitted,
             the PTO will automatically cancel the registration.
        ■ Trademark registrations must be renewed every 10 years. Evidence that
             the mark is still in use must also be submitted with the renewal
             application. Section 9 Applications for renewal

○   Failure to Continue to use
         ■ In the U.S., failure to use a trademark will result in abandonment of the
             mark, whereby any party may use the mark. An abandoned mark is not
             irrevocably in the public domain, but may instead be re-registered by
             any party which has re-established exclusive and active use, and must
             be associated or linked with the original mark owner.

                 ■ If a court rules that a trademark has become "generic" through common
                   use (such that the mark no longer performs the essential trademark
                   function and the average consumer no longer considers that exclusive
                   rights attach to it), the corresponding registration may also be ruled

●   Trademark Symbol Tips:
        o Do NOT use the circle ® until a federal registration has issued. Not even when
          you have filed your application for a ™ registration. Otherwise it is considered
          fraud and a registration might be denied.
        o Use ™ until the registration issues.
        o The ® should be adjacent to the registered mark only. Like Docstoc® Premium.
          Not Docstoc Premium® [Link]
        o Use the applicable ® or ™ symbol in a visible and conspicuous manner at least in
          the first use.
               ■ This may be helpful in asserting that an infringer - someone who has
                   used your mark without authorization and improperly under the law -
                   had actual or constructive knowledge that the mark is registered or in
                   use so that you might be able to prove intentional infringement.

●   Policing
    It is imperative for a trademark owner, especially one of a registered mark to police
    against misuse or infringement, or they might lose their mark, or the value might be
    significantly impaired [Resource: Cease & Desist letter]

●   Infringement
         o Using a trademark in a way that is likely to confuse the purchasing public as to
            the source of a product or service.
         o The concept of “likelihood of confusion” is central to whether a use is infringing
            and is a function of the similarity between the two marks and how closely the
            relevant products or services are related.
                 ■ (Section 43(a) of the Lanham Act (15 U.S.C. § 1125 (a)), which
                     encompasses claims for trademark infringement of both registered and
                     unregistered marks, imposes civil liability on any person who uses any
                     mark which is “likely to cause confusion, or to cause mistake, or to
                     deceive as to the affiliation, connection or association of such person
                     with another person, or as to the origin, sponsorship or approval of his
                     or her goods, services or commercial activities by another person. . . . ”)
         o the courts will typically look to a number of factors, including:
                     (1) the strength of the mark;
                     (2) the proximity of the goods;
                     (3) the similarity of the marks;
                     (4) evidence of actual confusion;
                     (5) the similarity of marketing channels used;
                     (6) the degree of caution exercised by the typical purchaser;
                     (7) the defendant's intent.

●   Fair Use ≠ Trademark Infringement
         o A descriptive defense of “fair use” can be asserted as long as the mark is used in
            a sense and not as a trademark, so that the use of the term is in its original
            “primary” or descriptive sense. The underlying purpose behind the fair use
            defense is to ensure that a monopoly is not created in the marketplace based on
            the unavailability of a trademarked term.
         o Apple computers cannot sue a fruit market for advertising the sale of apples

●   Nominative use ≠ Trademark Infringement
       o occurs when use of a term is necessary for purposes of identifying another
          producer's product, not the user's own product, such as for comparative
          purposes, so long as the use does not suggest endorsement, affiliation or

●   Artistic expression involving another’s mark is often protected under the First
    Amendment. Parody falls into this category. Satire does not. The difference is that
    parody ridicules the mark or the source; satire uses the mark to ridicule something else.
        o The basic idea is that artistic and editorial parodies of trademarks serve a
             valuable critical function, and that this critical function is entitled to some
             degree of First Amendment protection.
        o Jim Henson’s Spa’am character does not tarnish this brand - Henson’s parody
             wasn’t ridiculing Hormel’s SPAM to sell more of its competitive products. In fact,
             it found Spa’am to be a likeable, positive character and that there was no
             evidence that the character would call the quality of Hormel’s meat into

●   Dilution of famous marks.
        o Dilution is a type of damage to a trademark where there is no competition
            between the owners of the two marks.
                  ■ The Federal Trademark Dilution Act of 1995 defines dilution as
                    “lessening the capacity of a famous mark to identify and distinguish
                    goods or services, regardless of the presence or absence of . . .
                    likelihood of confusion, mistake or deception.” 15 U.S.C.A. § 1127.
                  ■ In deciding whether a mark is famous, the courts will look to the
                    following factors:
                         ● (1) the degree of inherent or acquired distinctiveness;
                         ● (2) the duration and extent of use;
                         ● (3) the amount of advertising and publicity;
                         ● (4) the geographic extent of the market;
                         ● (5) the channels of trade;
                         ● (6) the degree of recognition in trading areas;
                         ● (7) any use of similar marks by third parties;
                         ● (8) whether the mark is registered.
                         ● Kodak, Exxon, and Xerox are all examples of famous marks.
                  ■ Under state law, a mark need not be famous in order to give rise to a
                    dilution claim. Instead, dilution is available if:
                         ● (1) the mark has "selling power" or, in other words, a distinctive
                             quality; and

                         ● (2) the two marks are substantially similar.
        o   Dilution of a trademark can be shown by either
               ■“tarnishment” or
               ■“blurring” of the mark
                         ● Tarnishment. Sellers of commercial products trying to attract
                             attention to their commercials or products by poking fun at a
                             widely recognized mark risk diluting that mark by tarnishment.
                             Tarnishment happens when the mark becomes linked to
                             products of inferior quality or the mark is portrayed in an
                             unsavory context likely to evoke unflattering thoughts about the
                             owner's product. In such situations, the trademark's reputation
                             and commercial value might be diminished because the public
                             will associate the lack of quality or lack of prestige in the
                             defendant's goods with the plaintiff's unrelated goods, or
                             because the defendant's use reduces the trademark's
                             reputation and standing in the eyes of consumers as a
                             wholesome identifier of the owner's products or services.
                                  ○ This is tarnishment [link] This is not [link]
                                  ○ the court here holds that even without any evidence of
                                      actual consumer impact, a “semantic association”
                                      between a famous mark and a mark used to sell “sexual
                                      toys, videos, and similar soft-core pornographic
                                      products” is sufficient to establish tarnishment. So this
                                      [link] tarnished this [link]
                                  ○ Here, although the courts recognize a parody defense,
                                      the precise contours of such a defense are difficult to
                                      outline with any precision. There was no reason to think
                                      anyone would believe Coca-Cola manufactured the
                                      cocaine poster, but the court nevertheless issued an
                                      injunction preventing the defendant's use, finding that
                                      the posters were likely to dilute and tarnish Coca-Cola's
                                      distinctive trademark for its "wholesome" product
                         ● Blurring of a mark occurs when an advertiser’s distinctive mark
                             is used on other, unauthorized products. The mark loses its
                             distinctive ability to identify the source of its products. Think of
                             “blurring” as the whittling away of a trademark’s selling power
                             through unauthorized use by others. Are the marks similar?
                             Blurring is more likely to occur in the mind of the consumer if
                             the products are similar. Competition isn’t a factor, but it helps.

●   Domain Names
    If you believe that someone has taken a domain in bad faith, you can either sue under
    the provisions of the Anticybersquatting Consumer Protection Act (ACPA), or you can
    fight the cybersquatter using an international arbitration system created by the Internet
    Corporation of Assigned Names and Numbers (ICANN) called the Uniform Domain-
    Name Dispute Resolution Policy (UDRP).

           ○   The ACPA defines cybersquatting as registering, trafficking in, or using a domain
               name with the intent to profit in bad faith from the goodwill of a trademark
               belonging to someone else.
          ○ ICANN’s UDRP arbitration system is considered by some to be faster and less
               expensive, and the procedure does not require an attorney. For information on
               the ICANN policy, visit the ICANN site and
   ●   Advertising Keywords are rarely found to infringe.

[Resources: Trademark Useage Guidelines; Trademark license]

   ●   Patents
           ○ You will probably need a patent lawyer to help you patent your inventions. This
               is a highly specialized field.
           ○ United States patent laws do not require you to have a prototype in order to
               apply for a patent. You must be able to describe the invention so that others
               could both make and use it.
           ○ Broadly defined,
                     ■ inventions are any discovered product or composition or method,
                        whether or not patentable.
                     ■ abstract ideas, natural phenomena and laws of nature are not
                     ■ When inventions go beyond an abstract idea and meet certain
                        requirements, the invention becomes eligible for protection under the
                        patent law.
                             ● The subject matter of the invention must be patent eligible,
                             ● the invention must be useful,
                             ● it must be new or novel,
                             ● it cannot be obvious and
                             ● it must be described with the particularity required so that
                                     ○ people of skill in the relevant field can
                                              ■ understand what the invention is,
                                              ■ make it and use it
                                              ■ without engaging in undue experimentation.

                   ○   Under U.S. patent law, a patent gives the holder the right to exclude
                       others from making, using, selling, offering for sale, or importing the
                       invention during the patent term. 35 U.S.C. § 271.
                   ○   The term is 20 years from the filing of the application subject to the
                       payment of maintenance fees.
                   ○   Then, after the patent expires, the invention may be used freely by
                   ○   A patent being an exclusionary right does not, however, necessarily give
                       the owner of the patent the right to exploit the patent. For example,
                       many inventions are improvements of prior inventions that may still be
                       covered by someone else's patent. If an inventor takes an existing,
                       spring loaded patented mouse trap design, adds a new feature to make
                       an improved mouse trap, and obtains a patent on the improvement, he
                       or she can only legally build his or her improved mouse trap with

                    permission from the patent holder of the original mouse trap, assuming
                    the original patent is still in force. On the other hand, the owner of the
                    improved mouse trap patent can exclude the original patent owner
                    from using the improvement. This improvement is sometimes called a
                    blocking patent.

●   Types of Patents:
       ○ “Utility Patents” are the most common type.
               ■    They are available for any new and useful process, machine,
                    manufacture, or composition of matter, or any new, useful, and non-
                    obvious improvement thereof. [Slinky iPod]
       ○ “Business method patents” are utility patents that claim the processes involved
            in conducting business, that is, methods of conducting commercial activities as
            distinguished from scientific activities.
               ■     in order for a business method to be patentable it must produce a
                    “useful, concrete and tangible result.”
               ■    There has been a good deal of controversy and uncertainty about what
                    types of business methods might qualify for patents.

        ○   In considering the requirement of utility for patents, there are a few main
            factors to review:
               ■     novelty,
               ■     operability of the invention,
               ■     a beneficial use of the invention, and
               ■     practical use of the invention.

              ■      Example:
                         ● Velcro ® - Hook & Loop -
            Velcro ® brand hook and loop was invented by a man named George de Mestral
            in the 1940's while hunting in the Jura mountains in Switzerland. Mr. de
            Mestral, a Swiss engineer, discovered tiny hooks on the cockleburs that were
            stuck on his pants and in his dog's fur. Under the scrutiny of the microscope, he
            observed the hooks engaging the loops in the fabric of his pants. After nearly
            eight years of research (apparently it's not so easy to make a synthetic burr), de
            Mestral successfully reproduced the natural attachment with two strips of
            fabric, one with thousands of tiny hooks and another with thousands of tiny
            loops. Though the first Velcro was made out of cotton, de Mestral soon
            discovered that nylon worked best because it didn't wear with use. Later
            polyester was used. Velcro® a combination of the words velour and crochet.
            It's important to note that Velcro is the name of a company, not a general term
            for the fastening system. Recall our discussion about Trademarks. "Not all hook
            and loop fasteners are genuine Velcro brand products!" according to Velcro's
            company website. Except, of course, very few people say "hook-and-loop
            fastener," just as no few people say "re-sealable zipper storage bag" instead of
            Ziploc. Because the patent has expired and anyone can manufacture hoop &
            loop products this is one reason why Velcro fights to protect its name: anyone

           can make a hook-and-loop fastening product, but only one company makes

           An old product but people keep thinking of new uses. Hook & Loop + iPad = ?
           (e.g., Car Dashboard for GPS Map?)
  (lic. required?)

●   Requirements for a patent:
       ● Patentable Subject Matter
           Congress intended that everything made through human intervention is
           patentable, so it is more helpful to define what cannot be patented. Generally,
           there are three categories of subject matter that can NOT be patented:
                   (1) laws of nature;
                   (2) natural phenomena; and
                   (3) abstract ideas.
       ● Utility
           The claimed invention must be “useful” for some purpose. An invention that is
           inoperative is not a “useful” invention and, therefore, does not deserve patent
           protection. For a claimed invention to not meet the utility requirement it must
           be “totally incapable of achieving a useful result.”

           An invention that fails the utility requirement does so because either
             ■    an applicant fails to identify any specific utility for the invention or fails
                  to disclose enough information about the invention to make its utility
                  immediately apparent to those familiar with the technological field of
                  the invention. or
             ■    the applicant’s asserted utility for the invention is not credible. Such as
                  a Star Trek type transporter. (Beam me up Scotty.)

           An assertion by the patentee regarding utility will be credible unless:
             ■     the logic underlying the assertion is seriously flawed; or
             ■     the facts upon which the assertion is based are inconsistent with the
                   logic underlying the assertion.
             ■     Credibility as used in this context refers to the reliability of the
                   statement based on the logic and facts that are offered by the applicant
                   to support the assertion of utility.

       ●   Novelty
           This is where Trade Secrets and NDA’s might become important too, because if
           you disclose what your invention is before your provisional or full patent
           application is filed you might not be able to obtain a patent on your invention.
             ■      If the invention in question was described in a patent issued anywhere
                    in the world prior to the patent applicant inventing it, then no patent
                    can be obtained.
             ■      If the invention in question was described in a printed publication
                    published anywhere in the world prior to the patent applicant inventing
                    it, then no patent can be obtained.

      ■     If the invention were publicly known in the US, but not necessarily
            patented or published, prior to the patent applicant inventing it, then
            no patent can be obtained.
    In each of these three cases the earlier reference of knowledge is prior art that
    prevents a patent from now issuing.

    Now some more rules:
      ■   If the invention in question was described in a patent issued anywhere
          in the world more than 12 months prior to a US application being filed,
          then no patent can be obtained
      ■   If the invention in question was described in a printed publication
          published anywhere in the world more than 12 months prior to a US
          application being filed, then no patent can be obtained
      ■   If the invention in question was publicly used in the US more than 12
          months prior to a US application being filed, then no patent can be
      ■   If the device, machine or compound in question was offered for sale in
          the US more than 12 months prior to a US application being filed, then
          no patent can be obtained

    In each of these four cases the earlier reference, knowledge or event is prior art
    that prevents a patent from now issuing, but this time not because the
    invention was not new, but rather because an application was made in the US
    too late!

    To complicate matters more this is the law relative to novelty that will be in
    place up to and including March 15, 2013. Effective March 16, 2013, the United
    States becomes a first to file country, and the law of novelty substantially

●   Nonobviousness
    Even if an applicant can demonstrate patentable subject matter, utility and
    novelty, a patent will not be granted if the invention is trivial or if it contains
    only obvious differences from prior art. An invention is obvious if the
    differences between the subject matter sought to be patented and the prior art
    are such that the subject matter as a whole would have been obvious at the
    time the invention was made to a person having ordinary skill in the art to which
    said subject matter pertains. The obviousness inquiry is highly fact specific .For a
    patent to be nonobvious it must display “ingenuity beyond the compass” of a
    person of ordinary skill in the art. The ultimate question of obviousness has an
    “I know it when I see it” quality that is hard to break down into objective

●   Adequate Description
    The applicant still must describe the invention with enough particularity such
    that those skilled in the art will be able to make, use and understand the
    invention that was made by the inventor.

○   An inventor's notebook
    is used by inventors, scientists and engineers to record their ideas, invention
    process, experimental tests and results and observations. It is not a legal
    document but is valuable, if properly organized and maintained, since it can
    help establish dates of conception and reduction to practice. The information
    can improve the outcome of a patent or a patent contestation.

●   Patent Searching:
    A United States patent search is normally the first step in the patent application
    process. Such a search is used to determine whether the time and expense of
    moving forward with a patent application is worthwhile. The patent process can
    be expensive. You don’t want spend a lot of money preparing and filing an
    application when there is easy to find knock-out prior art that will prevent a
    patent, or make any patent that is obtained narrow.

    Many inventors don’t thoroughly examine the patents found, and they may miss
    opportunities to use the prior art found to focus in on what may be unique and

    If no prior art is found a patent search might result in a better, stronger patent
    application and process because the initial application is critical. All aspects of
    an invention must be disclosed; nothing new can be added without
    compromising the filing date (aka priority date). After reviewing the results of a
    search your initial disclosure can be written to carefully define the invention to
    focus on what is most likely the patentable features or components.

    Anyone can do a patent search using the online Patent Office database, but this
    database only contains patents issued since 1976, so such a search is not
    complete. Google has a patent search engine, but the results provided are
    organized by a Google algorithm that may or may not cause the most relevant
    patents to be forced to the top of your search.

    Google might be best used initially. But when you want to look for specific
    things Google might not be totally useful. And it has been reported that there
    are some holes in the database. Plus the most recent patents are not available
    on Google. So although you cannot rely on Google, you still must use Google
    because Google’s database covers patents that are issued all the way back to US
    Patent No. 1, which is broader than what you will find on the USPTO. So while
    you might not find everything, and while it is difficult to specifically narrow your
    search, you might still want to also use the Google database to see if there are
    old references that might be on point.

    After you find a relevant patent you might want to use Free Patents Online for
    the PDFs and to access related patents, which is much easier because most
    everything at that site is hyperlinked.

Now that I’ve told you all that - a patent search is like looking for a needle in a
haystack. That is why after you do some in the initial searching yourself, if you
haven’t found a knock-out patent that you can’t draft claims around, you might
want to hire a reputable professional patent searcher, who is also admitted to
the patent bar and who prosecutes patent applications in the field of your so-
called invention. You don’t want a mechanical engineer patent specialist
searching for bio-tech patents.

                       Business Planning
   10 Questions to Consider When Starting a Business
   Do You Need a Business Plan
        o Raising Money
        o Understanding my strategy
        o Will a ppt do?
   Your business model
        o Product vs. Service offering
        o Target Customer
        o Segmentation
        o Monetization
        o Competition
        o Differentiation
        o Sales/Distribution Strategy
                 Inside Sales
                 External Sales Reps
   Components of a Business Plan
        o Exec Summary
        o Market Research/Opportunity
        o Competition
        o Product/Offering description
        o Strategy (price/marketing)
        o Team
        o Accomplishments
        o Financials
   Business Plan Decks
        o Purpose
        o Size
        o Key Components
   Financial Modeling
        o 3 Year Projections
        o Research exact expenses
        o Rev Projections (Don’t be too conservative, but don’t be ridiculous)
   Key Financial Terms
        o Sales/Gross Profit
        o COS/COGS
        o Net Profit
        o OpEx
        o CapEx
        o Net Income
        o Profit Margin
        o CPA
        o CPM

       o   G&A
       o   Amortization
       o   Budgeting
       o   Assets
       o   Liabilities
       o   Equity
       o   Long-term Debt
       o   Short-term Debt
       o   Current Assets
       o   Current Liabilities
   Example of real business plans
       o DebtMarket
   Know your audience
       o Research who you are pitching to
       o What have they invested in before
       o How can you connect with them

                Setting Up Your Business
   Choosing the Right Structure

       o   Sole Proprietorship (limited to one owner)

                  Easy and inexpensive to create and operate.

                  A sole proprietor is essentially doing business as themselves or under a
                   fictitious business name (FBN or “dba”), but the business and the
                   person are, for legal and tax purposes, one and the same.

                  Profits and losses are reported on the sole proprietor’s tax return
                   (owner and business are treated as a single entity).

                  Thus, business losses can be used to off-set other income for the owner.

                  A sole proprietor has no liability protection from court judgments or
                   business debts and therefore their personal assets at risk even if the
                   activity or debt that creates the risk originates with the business.

                  Additionally, the entity’s existence is tied to individual owner.

                  To set up a sole proprietorship the owner simply needs to offer their
                   products or services for sale and obtain the appropriate business

                  If the sole proprietor will operate under a name other than their own
                   (e.g., “Evergreen Yard Care” as opposed to “John Smith Yard Care”) a
                   Fictitious Business Name (FBN or “dba”) must be applied for (usually
                   with the county in which the business will operate).

       o   General Partnership (must have two or more people involved)

                  Easy and inexpensive to create and operate

                  Profits and losses are reported on the owners’ tax returns (partnership
                   does file an informational return)

                  No liability protection from court judgments or business debts (personal
                   assets at risk)

                  Any partner may bind the partnership as a whole, and each partner is

             Each partner is entitled to full information and disclosure of partnership
              business (fiduciary duty owed between partners)

             New partners usually limited to approval by all partners (or other terms
              as stated in a partnership agreement)

             Entity existence is in question upon death or leaving of a partner
              (depends on partnership agreement or state law); entity existence may
              be set for fixed period of time in partnership agreement

o   Limited Partnership (LP)

             Limited personal liability for business debts for Limited Partners who do
              not participate in management of partnership

             General Partners are personally liable for business debts

             Limited Partners may not participate in management to maintain
              limited personal liability

             Management requirements can be as costly and complicated as
              operating as a corporation

o   LLP

             Limited to partnerships between certain licensed professionals (law,
              medicine, accounting)

             Partners are not personally liable for malpractice of other partners

             Proportionate share of profits reported on individual tax returns of

             Personal liability for partners for many types of business debts

o   LLC

             An LLC is a form of business entity that offers liability protection for the
              owners and a pass-through tax structure.

             The owners of an LLC are called “members” and they own a
              “membership interest”.

             For a lot of small business owners, the relative ease of creation and
              maintenance of an LLC, as opposed to a corporation, makes it the most
              appealing option of the business entity choices.

   One of the benefits of an LLC is the limited liability protection for the
    owners. This liability protection shields the owners of the LLC from
    liability for business debts and court judgments against the LLC.

   Under common circumstances, a member of an LLC risks only the share
    of capital they paid into the business. This is different from sole
    proprietorships and partnerships (general partnerships and general
    partners in a limited partnership), where an owner’s personal liability is
    not limited and their assets are also at risk even though the debt or
    liability stems from business activities.

   But, the liability protection does not extend personal guarantees made
    by an owner or torts personally committed by an owner.

   Another benefit that many business owners find attractive about LLCs is
    the option to elect a pass-through tax structure.

   A pass-through tax structure allows for the LLCs profits and losses to be
    reported on the owners’ tax returns and not at a separate corporate
    level. But, LLCs also have a choice of tax election – partnership (or sole
    proprietorship if a single member LLC) or corporation.

   How profits and losses are distributed among the owners is flexible.

                    Example: John and Mary decide to start a coffee shop.
                     They decide on an LLC structure, and both contribute
                     $50,000 to fund the venture, with Mary working at the
                     coffee shop full-time while John will keep his current
                     job and only work at the coffee shop on weekends. In
                     the Operating Agreement they agree that for the first
                     three years Mary will receive 70% of the profits and
                     John will receive 30%. After three years they will share
                     in the profits equally.

   An LLC can choose to pay members either through a salary or a share of
    the LLC profits.

   Only active members (members active in the management of the
    business) may be paid a salary. Inactive members must be paid a share
    of the profits.

        1.   Payments made as a salary are called “guaranteed payments”.

   Salaries paid to members may be deducted as a business expense, but,
    salaries must be reasonable in light of the work performed by the

                   Example: John and Mary both hold a 50% membership
                    interest in their coffee shop business. Mary works full-
                    time and receives a salary (guaranteed payment) of
                    $40,000, and John, who works on weekends, receives a
                    salary (guaranteed payment) of $10,000. For the past
                    year the business, which has no expenses other than
                    the above salaries, receives revenues of $100,000.
                    After compensating Mary and John, the LLC has $50,000
                    in profit that is distributed to Mary and John - $25,000

   All states allow for single owner LLCs.

   The management structure of an LLC is also much more flexible than a
    Corporation. An LLC can be managed by a single member, jointly by one
    or more members, a non-member manager, or a combination of
    members and non-members.

   Compared to corporations, setting up an LLC is quite simple.

   In most situations and states, you typically need to file one document
    for creation of an LLC, and need only create one additional document:

        1.   Articles of Organization – the document used to create the
             business entity (to be filed with the state)

                   Though states differ on their requirements, the Articles
                    typically identify information about your LLC; e.g., name
                    of LLC, name and address of registered agent, LLC
                    principal place of business, type of management
                    (member-managed or manager-managed) and intended
                    duration of LLC.

        2.   Operating Agreement – the document that identifies the
             internal operating and management procedures of the business
             (is not filed with the state)

                   The Operating Agreement sets the rules under which
                    the LLC will be run. Some of the details the Operating
                    Agreement covers are: capital contributions, profit and
                    loss allocation and distribution schedule, ownership

                    interest percentages, tax election, restrictions on ability
                    to transfer membership interests and rules related to
                    admitting new members, management type and
                    management members, member voting rules and
                    member buy-out provisions.

                   It is not a required document for formation, but is
                    recommended for LLCs that have more than one

   States differ as to the fees associated with setting up an LLC. Most
    states charge an initial filing fee and an annually recurring maintenance

   Some states, such as California, also impose an annual tax that is
    calculated based upon the LLC’s annual income. (E.g., in California the
    initial filing fee to set up an LLC is $70, and a $20 fee must be paid when
    the initial Statement of Information is filed 90 days after formation, and
    then every two years thereafter. Additionally, an annual $800 minimum
    tax is due within 75 days of formation and every year thereafter (the
    actual amount of the minimum tax due each year will depend on the
    amount of the LLC’s net income).

   Though an LLC provides limited liability as discussed above, the owners
    must observe a legal distinction between the LLC and the members
    personally. In other words, the members must treat the LLC as a
    separate and distinct entity from themselves and not operate it as a sole
    proprietorship or partnership.

   Recommendations to keeping the member’s identities separate from
    that of the LLC:

        1.   Adequately fund the LLC;

        2.   Do not commingle personal and LLC funds, e.g., maintain
             separate bank accounts;

        3.   Maintain insurance in the name of the LLC to cover business

        4.   Maintain business records that evidence operation as an LLC
             and not as an extension of the members;

        5.   Do business under the LLC’s name and not the members’
             personal names (e.g., enter into contracts under the name of

             the LLC, with an authorized manager or member signing on
             behalf of the LLC);

        6.   Comply with state annual information statement filing
             requirements; and

        7.   If previously the business was operated as a sole proprietorship
             or a partnership, transfer all existing contracts to the LLC.

   LLCs are often a great choice for small businesses due to the general
    ease of formation and maintenance while providing limited liability
    protection and a flow-through tax structure.

   Businesses that will own real property that is likely to increase in value
    may find the LLC the best option due to the avoidance of double
    taxation because of the flow-through tax structure.

                    Example: A business formed as a corporation that owns
                     real property that increases in value will likely have to
                     pay tax on the increased value of the property when
                     sold at both the corporate and shareholder level. An
                     LLC avoids this because the business pays no tax at the
                     LLC level and the increased value of the property (the
                     profits) and any tax liability pass on to the individual
                     members to be reported on their tax returns.

   Some situations, however, where an LLC may not be the best option

        1.   Business owners seek to attract outside investors. Investors
             tend to prefer investing in a corporation, where issuance of
             stock certificates is a familiar and relatively uncomplicated

        2.   Business owners have the intention of selling interests in the
             business to the public. Businesses that intend on going public
             would be better served forming a corporation.

        3.   Business owners that have an interest in offering ownership
             interests to key employees. The process of awarding ownership
             interests to employees is much smoother for corporations than
             for LLCs.

        4.   Concern over self-employment taxes may make an “S”
             Corporation a more advisable option. Rules for payment of

                    self-employment taxes for “S” Corporations are well
                    established, where there are some ambiguities for LLCs.
                    Though a complicated issue, the possibility is that under an LLC
                    a member may be required to pay a “self-employment” tax on
                    100% of income from an LLC, where the IRS limits the self-
                    employment tax for money received by an owner of an “S”
                    Corporation for compensation for services performed and not

o   Corporations

          Corporations are a readily familiar business entity structure that has
           been around for a long time.

          Corporations are governed by state law, thus the 50 states each have
           different rules governing the corporations formed and located in their

          Legally, a corporation is a separate entity from the persons who own it.

          Owners of a corporation are called “shareholders”. The shareholder
           owns shares of stock in the corporation.

          To form a corporation, each state requires that Articles of Incorporation
           (or Certificate of Incorporation in some states) be filed with the state
           (usually with the Secretary of State’s office).

          Articles of Incorporation

               1.   The articles of incorporation identify certain information about
                    the corporation, and the information is generally available to
                    the public. Such information includes:

                           Corporation’s name;

                           The name and address of the corporation’s registered

                           The stated purpose of the corporation; and

                           The number of shares authorized.

          Bylaws

               1.   The corporate bylaws provide the internal operating procedures
                    for the governance of the corporation.

       2.   Provisions within the bylaws provide rules and guidance on
            issues such as:

                  Meetings (Board of Directors meetings (special and
                   annual), Shareholders meetings (special and annual),
                   notice requirements and quorum requirements).

                  Voting rights.

                  How many directors the corporation will have and how
                   they will be elected and replaced, their duties and
                   powers and how they will be compensated.

                  The titles of the officers (common, and sometimes
                   required, titles are: President, Secretary and Treasurer).

                  Who is authorized to sign contracts, inspect corporate
                   books and records (and when), tax elections and fiscal
                   year election, how the bylaws can be amended.

   Shareholders

                  The shareholders own the stock in the corporation, and
                   one person can own all of the stock, or many people
                   can own shares of the corporation and thus own a
                   percentage of the corporation based upon how many
                   shares the corporation has issued.

                  As a shareholder a person has a right to participate in
                   certain corporate functions, including:

                          Amend the Articles of Incorporation;

                          Elect and remove directors;

                          Amend the bylaws;

                          Approve mergers and the sale of corporate
                           assets; and

                          Dissolve the corporation.

                  Though the shareholders have the above rights of
                   participation in certain corporate functions, the
                   management of the corporation is the responsibility of
                   the Directors (who are elected by the shareholders).

                      Moreover, the day-to-day operation of the corporation
                       is the responsibility of the Officers, who are appointed
                       by the Directors.

   Directors

                      The directors manage the corporation. They decide the
                       direction the corporation will take and oversee the
                       business operations.

   Officers

                      Officers see to the day-to-day operations of the

                      Officers are appointed by the directors and many states
                       require that a corporation have at least a president,
                       secretary and treasurer.

                      Additionally, in most states one person can hold all
                       required offices.

   The most notable feature of a corporation is that the owners of a
    corporation are not personally liable for the business debts and court
    judgments incurred by the corporation.

        1.     As a separate entity, the corporation can be sued in its own
               name, and can sue in its own name.

        2.     The liability shie
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