Start-Ups; Start Patenting your Inventions

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By Garima Rai, Sr. Associate, Global IP India

Jan 2016

Introduction

Intellectual Property Rights are emerging as an important strategy for business in today’s world. The possession of IP rights in the form of patents, trademarks, and designs has exponentially increased competitiveness of companies. IP rights can prove valuable for Start-Ups, sometimes defining their ultimate fate.

However, for a Start-Up company, investing in protection of IP rights is a huge challenge because of the involvement of many intricate issues. Few examples of such complexities are delays in IPR registration, costs involved, and lack of timely advice.

Thankfully, the Indian government seems to have realized the inherent importance of Intellectual Property for Start-up companies, and the need to provide them with the helping hand for promoting, and protecting their innovation. 

Accordingly, on 16th January 2016, the Government of India announced a new action plan for emerging Start-Up companies in India. Interestingly, the Start-Up action plan includes a special acknowledgement on role of Patents in addition to other important measures. For example, the government has introduced ownership of Indian patent rights as one of the grounds for making Start-Up companies eligible for accessing the government schemes in the action plan.

One critical component of the said action plan is related to the encouragement of IP protection for the Start-Up companies, also referred to as Scheme for Facilitating Start-Ups Intellectual Property Protection (or SIPP)[1]. In the said scheme, the government has emphasized on providing special services and monetary support to Start-Up companies for protecting their inventions by way of patent protection.

Key features of the Start-Up Intellectual Property Protection

In order to promote awareness and encourage Start-Ups to adopt IPRs, protect and commercialize their IPRs, the Start-Up India program has ensured that the Start-Up companies get access to high quality IP services and resources. The main measures being taken by the Indian Government have been listed below:-

  1. FAST TRACK PATENT EXAMINATION: The government has announced a fast track mechanism for expediting examination of patent applications filed by Start-Up companies. The aim of the scheme is to reduce the delays in granting/registration of IPRs to Start-Up companies. The government believes has underlined the fact that the earlier the Start-Ups are incentivized, the better the encouragement it is for them.
  2. APPOINTMENT OF LEGAL FACILITATORS: The government has also proposed to appoint legal facilitators for sensitizing Start-Up companies about IP issues, and advising them from time to time about IPR protection. As per the government policy, the government has proposed to empanel patent agents, trademark agents and advocates having substantial experience in IPR as legal facilitators.
  3. IPR & PATENT FUNDING: The government has announced bearing legal costs (apart from the statutory fees) for filing patent, design, and trademark applications filed by Start-ups though the appointed legal facilitators. It means that the government will pay legal facilitators on behalf of the Start-Up companies to file their patents, trademarks, and design applications.
  4. REDUCTION IN PATENT FEES: Another important measure for encouraging Start-Up companies for patent protection is an 80% reduction in the statutory patent fees. This measure will further relax the Start-Up companies from the expenses involved in IPR protection.

Though there are initial skepticisms about how Start-Up companies could make themselves eligible[2] for accessing the new scheme, many believe that this new IPR scheme of Start-Up India action plan involves many benefits for the Start-Up companies.

Firstly, the measures of government fee reduction and government incentivization shall encourage the Start-Up companies to file more patent applications at nominal expenditure for them by availing reductions in statutory fees and governmental funding of IP protection. This should in return allow the Start-Up companies to invest their savings in commercializing efforts. Secondly, access to legal facilitators would ensure more sensitized Start-Ups, while pursuing IP protection for inventions conceived by them.

Most importantly, the fast track examination shall ensure that the Start-Ups are able to quickly enjoy the fruits of their labors, and can use IPR rights as one of the tools for accessing value for their venture.

Moreover, such involvement of the Indian government for promotion and awareness of IPR among the Start-up companies should encourage development and which should bring significant change in the innovation ecosystem of the country, and should add fuel to fire of genius of millions of innovators and entrepreneurs.

 

Annexure 1

Definition of Start Up according to the Start-Up India Scheme

According to the newly introduced scheme, a Start-Up means an entity, incorporated or registered in India not prior to five years, with annual turnover not exceeding INR 25 crore (approx. 3.7 million USD) in any preceding financial year, working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property,

Provided that such entity is not formed by splitting up, or reconstruction, of a business already in existence.

Provided also that an entity shall cease to be a Start-up if its turnover for the previous financial years has exceeded INR 25 crore (approx. 3.7 million USD) or it has completed 5 years from the date of incorporation/registration.

Provided further that a Start-up shall be eligible for tax benefits only after it has obtained certification from the Inter-Ministerial Board, setup for such purpose.

Start UpCriteria

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[2] Annexure 1 (Lists the definition of Start-Up and eligibility criteria for accessing government schemes) 

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