Unit 3: Protecting ideas and the business plan
Entrepreneurship Development and Project Management notes · PTU syllabus (MCOPGE301-18)
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Unit summary
Ideas must be protected, ventures planned, and exits prepared. This unit covers intellectual property rights — patents, trademarks, copyrights and licensing — product safety and other legal issues in setting up an organisation, the concept and value of a business plan, writing and implementing the plan, succession planning and exit strategies, and reasons for business plan and venture failure.
After this unit you can
- Explain IPR and licensing for new ventures
- Explain legal issues in setting up an organisation
- Write and implement a business plan
- Explain succession planning, exit strategies and reasons for failure
PTU syllabus topics
- IPR
- patents
- trademarks
- copyrights
- licensing
- product safety and other legal issues in setting up an organization
- concept and value of a business plan
- writing and implementing the plan
- succession planning and exit strategies
- reasons for business plan and venture failure
Patent
Invention
Trademark
Brand name, logo
Copyright
Software, content
Licensing
Earn from others using your IP
Contracts and NDAs
Protect trade secrets
Topic 1
IPR for entrepreneurs
| IPR | Law | Protects | Term |
|---|---|---|---|
| Patent | Patents Act, 1970 | Inventions — new, inventive step, industrial application | 20 years from filing |
| Copyright | Copyright Act, 1957 | Literary, artistic, musical, dramatic works, software, films, sound recordings | Author's life + 60 years |
| Trademark | Trade Marks Act, 1999 | Words, logos, shapes, colours distinguishing goods/services | 10 years, renewable indefinitely |
| Design | Designs Act, 2000 | New and original features of shape, pattern, ornament applied to articles | 10 years + 5 years |
| Geographical indication | GI Act, 1999 | Goods linked to a region (Darjeeling tea, Phulkari of Punjab) | 10 years, renewable |
- Patents: non-patentable — discoveries, frivolous inventions, mere new uses of known substances (Section 3(d) — Novartis case, 2013), traditional knowledge; compulsory licensing (Section 84 — Natco v. Bayer, 2012).
- Infringement remedies: injunctions, damages or account of profits, seizure; criminal penalties for trademark and copyright infringement.
Exam tip
In IPR answers, use a comparative table (law, subject matter, term) — it is quick to write and covers most marks.
- Licensing: permitting another party to use IPR for royalty — technology licensing, brand licensing, franchising; protects the owner while earning income.
Topic 2
Legal issues in setting up an organisation
- Choice of legal form: sole proprietorship, partnership, LLP, private limited company, OPC — liability, compliance, fundraising.
- Registrations: company/LLP incorporation, GST, Udyam (MSME), Shops and Establishments, trade licences, FSSAI (food), import–export code, labour code registrations.
- Contracts: founders' agreement, shareholders' agreement, employment and NDAs, vendor and customer contracts.
- Product safety and liability: BIS standards and certification, Consumer Protection Act product liability, labelling (Legal Metrology), environmental clearances.
- Taxation and compliance: income tax, GST, TDS; Startup India benefits (tax holiday under Section 80-IAC for eligible start-ups).
Topic 3
Business plan: concept, value and writing
A business plan is a written document describing the venture, its market, operations, management and finances.
Executive summary
Business description
Market and competitor analysis
Marketing plan
Operations plan
Management and organisation
Financial plan
Costs, sales, break-even, funding
Why business plans fail: unrealistic assumptions, poor market research, weak financial planning, poor execution, lack of commitment and ignoring competition.
Implementing the plan
- Translate the plan into milestones, budgets and responsibilities; monitor KPIs; review and update the plan as the market responds (pivot when needed).
Topic 4
Succession planning and exit strategies
- Succession planning: preparing future leaders — crucial for family businesses (only a minority survive to the third generation); steps — identify successors, develop them, transfer ownership and control, governance (family constitution, boards).
Initial public offering
Listing on main board or SME exchange
Acquisition / trade sale
Sale to a strategic buyer
Management buy-out
Sale to managers
Secondary sale
Investors sell to other investors
Family succession
Transfer to next generation
Liquidation
Closing and selling assets
Topic 5
Reasons for business plan and venture failure
- Plan failure: unrealistic assumptions, poor market research, weak financial projections, ignoring competition, no implementation plan.
- Venture failure: no market need (most common), running out of cash, wrong team, poor product, pricing and cost issues, poor marketing, regulatory problems, premature scaling.
Example
Many Indian start-ups that failed during the 2022–23 "funding winter" scaled too fast with negative unit economics — a lesson in disciplined growth.
Key terms
- Licensing
- Permission to use IPR in return for royalty
- Founders' agreement
- Contract among co-founders on equity, roles and exits
- Business plan
- Written document describing the venture's goals and strategies
- Succession planning
- Preparing successors for leadership and ownership
- Exit strategy
- Plan for owners or investors to realise value
Quick revision
- IPR: patents, trademarks, copyrights, designs; licensing and franchising.
- Legal issues: legal form, registrations, contracts, product safety, tax.
- Business plan: executive summary, market, operations, management, finance.
- Succession planning; exits — IPO, trade sale, MBO, secondary sale, liquidation.
- Failure reasons: no market need, cash crunch, team, premature scaling.
Important exam questions
Practice questions written to the PTU exam pattern for this unit's syllabus: short answers (Section A style) and long answers (Sections B and C style).
Short-answer questions
- Q1.What is a patent?
- Q2.What is licensing?
- Q3.State four registrations needed for a new business.
- Q4.What are the components of a business plan?
- Q5.What is an exit strategy?
- Q6.State three reasons for venture failure.
Long-answer questions
- Q1.Explain the protection of ideas through IPR and licensing.
- Q2.Explain the legal issues in setting up an organisation.
- Q3.Explain the preparation and implementation of a business plan.
- Q4.Explain succession planning, exit strategies and reasons for venture failure.
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