Three Legal Problems Given the possible risk of lawsuits ba

Given the possible risk of lawsuits based on the internal bleeding side-effects of the scanning device, the entrepreneurs must select a business organizational form that guarantees limited liability. Consequently, the students cannot form either a sole proprietorship (there are five students) or a partnership, in which the partners' personal assets can be seized to settle partnership debts. In addition, a limited liability partnership only provides shelter for the personal assets of the limited partners, someone would still have to stand as the general partner. The students, therefore, must consider a C- or S-corporation or a limited liability company.

Limited liability companies are often used for entrepreneurial technological developments funded by venture capital (See Maizes, 575). However, an LLC cannot be publicly traded, which the students and venture capitalists foresee in five years. The students could get the same limited liability and tax advantages with an S-corporation, but they could then not have corporate members who were not U.S. citizens. Thus, eventually, it may be best for the students to form a C-corporation once the product is ready for market or they are ready to proceed with a public offering. But it would seem that for the development phase of the device, the LLC will provide them with the most organizational flexibility and personal-asset protection necessary for their development of both the device and investors.

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ether the family guarded the information about the production and manufacture processes of Endurofoam, (b) whether the family derived independent economic value from such secrecy, and (c) whether Peter can misappropriate a trade secret for which he has been given credit as a "co-inventor" by the person claiming misappropriation. The last issue is the most complex. A trade secret need not be patented to enjoy legal protection. Patents grant the patent holder the right of exclusivity to the patent information. Trade secret protection, however, is only against improper acquisition and/or use of the information. Thus, others are free to discover a trade secret by any fair means (See Barnard, Loop & McCormack, 8). This does not ensure, however, that the person who comes by a trade secret legally is free to use or reveal that trade secret (See Ed Nowogrowski Ins. Inc., v. Rucker, 137 Wash.2d 427, 437 (Wash. 1999)(former employees remain under a duty not to reveal their former employers' trade secrets). Peter was an employee of Selecorp when he allegedly "co-invented" the Endurofoam trade secret. Peter began as a salesman with the company in 1984 and was still working for the company when he investigated the new processes for i

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