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Legal Management, Robert Kiyosaki
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This level of the B-I Triangle, legal management, was one of the most painful lessons I ever had to learn. My rich dad identified a serious flaw in my business: I had failed to secure the legal rights to the nylon and Velcro products I had designed before I started producing them. More specifically, I failed to patent some of my products (I failed to do so because I believed the $10,000 in patent attorney fees was too expensive and not important enough to spend that much money on). Another company quickly came along and copied my idea, and I could do nothing about it.

Today, I am now an evangelist for the other side. Today, especially in the Information Age, your intellectual property attorney and your contract attorney are some of your most important advisors because they help create your most important assets. These attorneys, if they are good, will protect your ideas and your agreements from intellectual bandits, people who steal your ideas and therefore your profits.

The world of business is filled with stories of smart entrepreneurs with great ideas who begin selling their products or ideas before protecting them. In the world of intellectual property, once your idea is exposed, it is almost impossible to protect. Not too long ago, a company came out with a spreadsheet program for small businesses. I bought this brilliant product for my company. A few years later , the company was out of business. Why? Because it had failed to patent its idea and another company, which I will not mention, came along, took its idea, and put it out of business. Today, the company that took the idea is a prominent leader in the software business.

It is said that Bill Gates became the richest man in the world with only an idea. In other words, he did not get rich by investing in real estate or factories. He simply took information, protected the information, and became the richest man in the world while still in his thirties. The irony of it all is that he didn't even create the Microsoft operating system. He bought it from other programmers, sold it to IBM, and the rest is history.

Aristotle Onassis became a shipping giant with a simple legal document. It was a contract from a large manufacturing company guaranteeing him the exclusive rights to transport its cargo all over the world. All he had was this document. He owned no ships. Yet with this legal document, he was able to convince the banks to lend him the money to buy the ships. Where did he get the ships? He got them from the U .S. government after W.W. II. The U.S. government had a surplus of Liberty and Victory class ships used to haul war materials from America to Europe. There was one catch. In order to buy the ships, the person needed to be a U .S. citizen and Onassis was a Greek citizen. Did that stop him? Of course it didn't. By understanding the laws of the B quadrant, Onassis purchased the ships using a U .S. corporation he controlled. This is another example of the laws being different for different quadrants.

Protect Your Ideas

My intellectual property attorney is Michael Lechter, one of the leading IP attorneys today. He is responsible for securing worldwide patents and trademarks for CASHFLOW Technologies, Inc. He is also the husband of my business partner and co-author, Sharon Lechter. Although he is married to Sharon, we still pay the same hourly rate as any other of Michael's clients. No matter what we pay him, the value he returns to our company is priceless. He has made us so much money and protected our rights to continue making money by protecting what we do and guiding us through some delicate negotiations. Michael has written a book, The Intellectual Property Handbook, which is a wonderful explanation of the various protection mechanisms available. He discusses each individually (patents, trademarks, copyrights, and mask works) as well as how they can be used in combinations to give you the broadest protection. It is available through our website.

In Summary

Many a business has been started and has survived by a simple piece of paper. One legal document can be the seed of a worldwide business.

Sharon's Notes

Some of the most valuable assets you can own are the intangible assets called patents, trademarks, and copyrights. These legal documents grant you specific protection and ownership to your intellectual property. As Robert found out with his Velcro wallet business, without this type of protection, you risk losing everything. Once you have protected your rights, not only can you keep others from using your property, but you can also sell or license those rights and receive royalty income when doing so. Licensing your rights to a third party is a perfect example of your assets working for you!

However, legal issues can also surface in almost every facet of a business. Obtaining competent legal counsel is very important not only as you are forming your business but as an ongoing part of your advisory team. Legal fees may seem expensive at first. However, when you compare them to the cost of legal fees from lost rights or subsequent litigation, it is much less expensive to set out your agreements properly in the beginning. In addition to the monetary expense, you must also factor in the cost of lost time. Instead of focusing on your business, you may be forced to focus on legal matters.

This is another area where franchising and network marketing can help you jumpstart your business. Typically, when you purchase a franchise or join a network marketing organization, most of the necessary legal documents to start and grow your business will be provided for your use. This saves you not only a lot of money but also a tremendous amount of time, and it allows you to focus your efforts on the business development. It is still advisable to have your own counsel review the documents on your behalf .

General Corporate:

Choice of business entity Buy-sell agreements Business licenses Regulatory compliance

Office lease or purchase contracts

Consumer Laws:

Terms and conditions of sales Direct mail

Product liability laws

Truth in advertising laws Environmental laws

Contracts:

With suppliers

With wholesale customers With employees

Uniform commercial code Warranties

Jurisdiction

Intellectual Property:

Work-for-hire agreements Nondisclosure agreements Copyrights

Mask works Patents

Trademarks

Licensing of intellectual property

Labor Laws:

Human Resource issues Employee agreements Employee disputes OSHA

Workers' compensation

Equipment leasing or purchase

Loan documents

Private placements IPOs

Shareholder Issues:

Corporate bylaws

Board authority Stock issuance

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