Hello, this is Dr. Jim Watson president of growth strategies International, here to tell you about how to develop a new product and take it to market. This is Section four scaling your business we're on the last part of that section has to do with the legal aspects of scaling your business and the previous front part of this section we talked about how to take your prototype into manufacturing, distribution, sales. Before you do all that. You want to make sure that you have formed a legal company and you have the intellectual property protection to protect your product. So with us, forming a legal entity, there's basically six different types. One is a sole proprietor, that means you're the one and only you're the owner and the employee.

There's no one else involved in your in your company. Which, which is fine when you're just starting off and but as we, as we said, when you start to scale your business and get into production, you're going to need to hire more people. So perhaps, as a CEO, you're an expert in marketing and you'll do the marketing, but you need help with the operations, the manufacturing parts, you hire a CEO, and they do all the supplier management and you hire a CFO does all the financial accounting and bookkeeping. You hire a CTO chief technology officer that does the engineering design, the technical aspects, or maybe you're comfortable with one of those roles, and you'll hire a CMO Chief Marketing Officer, however you put together your team to make sure you have all the slots filled to functionally perform a company, you're going to have to look at, well, how do I organize the company?

So do you bring on these people as partners? Well, you If you do, you're no longer a sole proprietor. If you bring them on as partners, they'd be considered general partners. And you would provide them some equity in the company. You could provide them a percentage of the maybe 10 15% equity in the company in lieu of pay until you have cash flow. You could give them stock options where they would maybe get some small amount of pay, and then they can exercise stock options later on when you do have revenue.

There's also limited partnerships Limited Partnerships are for investors, they want to invest in your in your company, they're not general partner general partners are part of the management. So whether you're a sole proprietor or whether you're a partnership, I suggest you become a limited liability company and why? Because a limited liability company protects your own personal assets. Now, let's say what certainly you should have insurance in case someone gets hurt business or someone gets injured using your product, ie, you certainly have insurance, but let's say they they go after you and you want do you want to protect your own personal assets. So with a limited liability company, they could they sue the company, they can only get the assets of the company, they can get their personal assets. So it's a small investment to make.

You go to your state, Secretary of State in South Carolina $110 to file Articles of Organization, they give you a certificate Articles of Organization, and you're a limited liability company. So you can be a partnership. You can be a sole proprietor and still be a limited liability company. Now, you can be a corporation a corporation gives you liability protection too. But a corporation has additional benefit and it allows you to sell shares of stock to investors. So And there's an S corp and a C Corp.

So the S corp, the profits just pass through to the shareholders, you can have up to 100 shareholders. And but you only have one class of stock. And it's a common common stock. With a C Corp, you could have preferred stock classes talk and you can have a common classes stock. And it's unlimited number of shareholders you can have so large companies will be C corporations. But of course there's corporate tax and then there's personal tax on what the dividends are.

So there's trade offs, it's becomes more complex. And I said the very least if you're ready to launch your business, start off as a limited liability company and then you when you start talking to investors, you may have to upgrade to a corporation in order to issue stock. So now that we have the legal entity out of the way, let's get into intellectual property. When you go to that manufacturer with your drawings and your products, And you want them to produce your product. Ask them to sign a nondisclosure agreement you could you can find them on Legal Zoom calm, just google the internet you can find examples. And what that says is it's they agree not to release any of your proprietary information and make sure you mark all your drawings and everything proprietary.

So they know that they're not allowed to release that to anyone because you don't want your competition to find out what what it is that you're doing your trade secrets. So talking about trade secrets, when if you if you cannot patent your your product or process, your formula, whatever it is, you can keep it secret as a trade secret. Coca Cola keeps their formula secret, they keep it in a vault, it's not patented. So that's fine. But then if if someone finds out what their trade secrets they have no legal recourse. Were with a pack.

You do have legal recourse. We'll talk about copyrights, trademarks and patents in the next few slides, sir. So let's talk about copyrights. copyrights protect the original form of authorship set forth in fixed tangible form. So I'll probably four books, they're all copyrighted so that people cannot take my material and reproduce it and sell it. You can copyright software, you can you, you file, your copyrighted material, you put C with a circle copyright, the year and the name of your entity on each page, or at least on the front cover saying this information is copyrighted.

And you fought with the US Copyright Office for a fee of $35 or more. And it's good for the life of the author plus 70 years or if it was work that was done for her. It's either 95 years from publication or hundred 20 years from creation, so long period Time that copyrights are enforce trademarks and service marks they protect the word name similar device used to distinguish the good or service. So those your brand names like Kleenex, Nike, iPod, those are all trademarks. There, they're protecting the brand name of the product service Mark protect the brand name of the service. So there you file an application with a US Patent and Trademark Office.

Typically $275 a little bit more, and it's good for 10 years, you can renew it as long as you're using your trademark or service mark. So make sure you protect the brand name, make sure you protect your documentation. You protect your software, and you can get a patent that's even better. So I mentioned there's three types of pens design patents, utility patents, plant patents, plant patents, plant pens or for agriculture. I'm just going to concentrate on design and utility bends. So design patterns protects new ornamental design of an article of manufacturer.

So Nike shoes you see the R with a circle round a superscript. That means it's a registered trademark. And, and they have design patent on the way their shoes are designed iPad has design patent on the way their iPod is designed. So, again, it's it's filing an application with the US Patent and Trademark Office, somewhere between 190 and $760. And it's good for 14 years from issuance until it expires. That's not renewable.

Utility patents they protect new useful and non obvious machines, processes, articles of manufacturer and compositions of matter. So if you have a new invention, you want to stop others from making using selling offering for sale or importing your patented invention. And if you have a patent you can you have legal recourse to go after those infringing on your patent The US Patent and Trademark Office filing fees, typically 65 to 1600. dollars, or good from 20 years from from filing. And I recommend you see a patent attorney to do that to make sure it's done done right. So the the patent process overview is explained in this slide deck from the US Patent and Trademark Office. The link is right on here.

It's actually a video and it takes you through the whole process. It's very comprehensive. it'll, it'll talk about provisional patents. Now remember back when we said when you were developing your MVP, your minimum viable product, your prototype and you were you were taking it to the marketplace to determine if it was acceptable, you're probably talking to investors. Before you do that, you want to file for a provisional patent. So you can Put patent pending on it.

Otherwise, if you have a public disclosure on your invention, and you don't you haven't filed a provisional patent, it may not be patentable because it's open to the public now. So it's a very simple process, you can do it yourself. The filing fees are 130 to $260. It locks in the patent rights for a year. While you attempt to obtain sponsors I'm talking about potential customers investors, provides that early filing date until you file a non provisional lead, which is the official utility ban is only good for utility patents. And it allows public disclosure without jeopardizing the novel patentability.

There's no claims that need to be submitted. So there's no investigation on the patentability. All that does this allow you to advertise your product as patent pending and you have a year From when you file your non provisional patent to from when you file a provisional patent to file the non provisional patent, and when you file your non provisional patent, that's the one that that gets with a claims are investigated, they do the investigation, it's always good to have an attorney do it. But this is a very inexpensive way to lock in that patent pending for a year. While you're validating your minimal viable product in the marketplace. You can go to the uspto.gov website.

You should always search the PTO database to make sure you're not infringing on anyone else's patent with your invention. Maybe there's something already out there that's that's similar, you may so you can go a little different way and and find a way so you're not not to infringe on an existing patent. So you can do a search on this website, the patent Trademark Office website. There's also additional usa.gov there's an understanding intellectual property wizard that helps you understand areas of intellectual property, copyrights, and trademarks. It will take you through the understanding and protecting of your intellectual property. So I encourage you to go to that website on the bottom of this chart.

And in summary, I just want to say that intellectual property protection includes patents, trademarks, copyrights, and trade secrets. Take advantage of any and all intellectual property protection you can and make sure you form that legal entity first, and get those non disclosure agreements with the people you're working on. While you're going through this, this, this process, fact you'll have to have an legal entity before you can even file for a non provisional patent. I thank you very much. I look forward to seeing you in section five we'll talk about profitability analysis, sales cost, profits and obtaining financing Thank you Have a great day.