FACTS: · Gemma and James have pooled their savings to create a start-up company to develop and market an idea they conceived while students together at MIT. They obtained permission to use a college l
LEGAL AND ETHICAL ISSUES IN MANAGEMENT 10
Legal and Ethical Issues in Management
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Legal and Ethical Issues in Management
Gemma and James have created a prototype robotic device that they have naked Phoebe. It is a dream of every individual that wants to start a business to prosper and earn as many profits as possible. Therefore, both Gemma and James have to internalize the partnership, corporation, and limited liability company would best fit their business entity. Considering starting up a business, you have to take into account the kind of business form that will best suit your business. These will help you minimize startup costs, avoid complex government regulations and laws requirements.
In the United States, more than 10 percent of businesses are formed through partnership though the majority is a small and medium-sized business. It is generally easy and less costly to form compared to a corporate kind of business or limited liability company. In this form of business, the impact of business can be resolved using the partnership agreement that points out the rights and roles that each party is mandated to follow (Skripak, Cortes, and Walz,2016). It is the best way of bringing together different forms of ideas and talents to run the business. However, it might not prove ideal in the case of Gemma and James since this is a business that would require more resources in the future. It might reach a point in which contributing more resources to support the operations and expansion of the business becomes hard. It is, however, prudent to consult the professionals when setting up this kind of business agreement.
The corporation is different from the partnership and limited liability company based on the legal entity that will be created to separate both Gemma and James. According to Skripak et al. (2016), corporations in the United States are about 18 percent, which raises 82 percent revenue annually. Unlike a partnership, the corporation creates a board that oversees the operations of the business. They also set goals for the management and hold them accountable to achieve the set goals. Its advantage over partnership varies from limited liability for shareholders, specialized management, accessibility to more financial resources, and continuity of the business. The chances are that in partnership, in case one person between Gemma and James dies, the business might fail or be dissolved. The corporation is built on the legal life separate from the owners, and therefore it can forever exist even when one owner dies. The transfer of ownership in the corporation is simple as shareholders are only required to sell their shares to others but not to the general public. The power to acquire funds from the banks and other lending bodies for corporations is very high compared to that of partnership. It is vital for the management of the small organizations to not that once their businesses have reached a substantial size, it is better to shift that given business into a corporation for the owners to limit their liability.
Limited liability company is a legal form of organization that combines all the attractive characteristics of both corporation and partnership. Limited liability company provides owners of the business with limited liability, which is one of the advantages that corporations. It also has no double taxation, just like partnership and proprietorships. In this case, Gemma and James will not be liable for any debt of this company, and their earnings would only be taxed once at a personal level. Limited –liability companies are permitted to have as low as one member (Skiripak et al., 2016). It is recommendable that Gemma and James both adopt the limited liability company form of business to enjoy both the advantages that they could have enjoyed when operating under the corporation and partnership form of business. Phoebe robot is one of some lucrative businesses that would require more sophisticated resources to operate, therefore choosing a partnership would not be an ideal option. Apart from resources, this kind of business would need a lot of man powers that only a few individuals would not be fit to manage it. All the advantages that come with limited liability companies make it a better choice.
Gemma and James should also consider the legal environment where they are considering setting their base. Therefore, they should consider making possible preparations in time and adjust fast to the factors and forces that come from the microenvironment. The legal environment of the business permanently changes; this is because new businesses are created influences the economic nature of the market (Nogal-Meger, 2018). If Gemma and James understand the legal environment in a better way, it might help then to avoid liability and minimize risks that the company might have in the future. Economic theory states that risks are associated with the conception of uncertainty to indicate the significant differences between environmental factors and forces.
Since the legal environment is continually changing over time, Gemma and James need to ensure that their managers continue to access education on future legal changes. Phoebe is a technology-based. The world of technology keeps on changing over and over time. One of the challenges that a manager must face is change. Top management of the company must remain open and adapt to changes, keeping updated with technological trends. Information overload is another challenge that today’s manager face. It affects decision making, and it is prudent to educate the managers on the best way to extract valuable information from databases. It is challenging to transform extracted data into strategic guidance.
The main intellectual property that is in the business environment includes trade secrets, copyrights, trademarks, and patients. Trade secrets include devices, strategies and information, systems, and formulas that are only known by the company. Trade secrets safeguard any information that has an economic value and has been kept away from the public domain for a reasonable purpose. It protects the processes, methods, formulas, and devices for a duration as long as possible. The costs for trade secrets are weighed based on the competitive significances of the secret against the cost of protection given for the secret. Trademark is the assets that define the source of the given product that the company offers. It does not necessarily need the government to approve for it to effective (Arrasvuori, Liang, Wen & Kuusisto, 2017). Copyright is another type of intellectual property that protects the authorship of the original work based on how it is expressed. It does not protect ideas. The benefit that copyright gives to the owners is the privilege to control the performance, distribution, public performance, and new versioning. Gemma and James are yet to present their idea in a bid to gain funds from financial institutions. The importance of copyright is promoting and spreading creativity but with the mind of balancing the interest of copyright owners. Phoebe is an original work that Gemma and James are coming up with and would like to improve on the next phase. Therefore, they should consider the originality of their ideas.
Case law includes the 1991 United States Supreme Court between Feist Publications Inc. v. Rural Telephone Service Co., which made it clear that constitutionally, originality is required (Yu, 2019). It was the basis that the United States courts would not go easy on the individual that is found violating originality standard, especially for the foreign country in any law copyright case. Later in the 1998 case of Bridgeman Art Library, Ltd. v. Corel Corp. in New York, where the British law was mandated to figure out whether the case met the originality requirement for copyright protection. The court was initially misled but later corrected the mistakes by conceding to the United States law that governs the copyright originality.
The crucial type of intellectual property in the case of Gemma and James over Clarence is the patents. Patents give property rights to the owner of the invention, preventing other people from using, making, and selling the invention. It is a dream of every individual that wants to enter a given market to have a competitive advantage, and that is achievable through invention. The United State Patent and Trademark Office (USPTO), allow inventors to gain patent rights through filling application forms. The patent rights can be divided into utility, design, and plant. Utility patent it the center focus in the Phoebe invention since it covers process, article of manufacture, new and useful improvements, and the machine. For any company to qualify for a patent right, their invention has to be novel, has usefulness, and nonobvious. Therefore, it has to be new, and nobody has any idea of it, that is what is known as a novel. It is what must be protected from Clarence, who had been hanging around their lab. Patent protection gives the holder power to take any legal actions against any person that has copied the invention.
The three types of patent take different periods when into action. Both utility and plant take 20 years while a design patent lasts for 14 years. A case study of Global-Tech. Appliances, Inc. v. SEB S.A., where the Supreme Court was solving the case where Pentalpha copied a SEB deep fryer since their cool-touch technology seemed to have had success in the commercial. Pentalpha did not inform the attorney that the fryer was copied from SEB’s fryer and continued to export it to various retailers. The court analyzed the situation and assumed that patents had not provided the required notice for potential infringers (McJohn, 2018). It is, therefore, important for Gemma and James to consider taking action against Clarence.
Alternative Dispute Resolution describes different styles that companies use to resolve legal disputes. Arbitration is one form of ADR which involves solving disputes outside the courthouses. The two parties have to agree on the decision of the arbitrator(s). it can be either voluntary or mandatory for the conflicting parties to engage in arbitration. Another form of ADR is mediation, which means all each party meets with an experienced neutral mediator. Each party is allowed to describe the problem and its desire.
An example is the Federal Court of Australia, which had a mediation program for alternative dispute resolution from 1987. In 2002 between Hurst v Leeming where Lighman started that alternative dispute resolution forms part of the civil justice system. Conciliation is another alternative dispute resolution through the use of a conciliator. The role of the conciliator has a role in lowering the tension, improving, and providing technical assistance (McGuinness, 2016). It is different from arbitration. It is based on right based v. interest-based resolution.
References
Arrasvuori, J., Liang, L., Wen, G., & Kuusisto, J. (2017). 5. Defending territory: changing forms of intellectual protection. Capturing the Innovation Opportunity Space: Creating Business Models with New Forms of Innovation.
McJohn, S. (2018). Top Tens in 2017: Patent, Trademark, Copyright, and Trade Secret Cases. Nw. J. Tech. & Intell. Prop., 16, 41.
Nogal-Meger, P. (2018). The quality of business legal environment and its relation with business freedom. International Journal of Contemporary Management, 17(2), 111-136.
Skripak, S. J., Cortes, A., & Walz, A. (2016). Entrepreneurship: Starting a Business. Fundamentals of Business, 132-162.
Yu, P. K. (2019). State-to-State and Investor-State Copyright Dispute Settlement. COPYRIGHT IN ACTION: INTERNATIONAL PERSPECTIVES ON REMEDIES, Ysolde Gendreau, ed., Les Éditions Thémis, 19-16.
