Start-Ups are often embroiled in various issues ranging from their products development and distribution, hiring employees and employment agreement, funding et al. Amidst these issues, the intellectual property protection (IP) takes a back seat. This can, more often than not, scupper your chances to attain success. As a Start-Up, there is no leeway for error. We would quickly run you through the reasons why a Start-Up needs IP protection:

1. Protecting your ideas or invention:

This can be attributed as one of the prime reasons to protect your IP. You won’t surely deny the fact that the world is full of free riders. Even before your idea or invention is into the public domain, you would see it being squatted. Thus, for realization of your commercial success, you need IP protection right from the inception. Much of your future success is reliant on how neatly your IP is protected.

2. Attracting investment:

A well protected IP portfolio can attract investors, suppliers, funders etc. There is a reason behind that. If your IP portfolio is unprotected, it aggravates its chances to meet its doom by posing itself to conflicts. On the other hand, a well-protected IP portfolio could be intriguing to investors as this enhances its chances to attain potential success or stability without getting into hustle and bustle with others.

3. Competitive advantage:

As a matter of common sense, you could attain competitive advantage on others if your IP portfolio is protected. Unprotected IP could be easily taken away by copycats, which would inhibit your commercial success because there would too many sellers with the same subject matter. In other words, it would be helpful in gaining competitive advantage on others.

4. Putting the world on notice:

Once your IP is registered or granted as per the local laws and procedures, you are legally entitled to put the world on notice that your IP is registered or granted with the use of designated symbols. Thus, making it easier for the third parties to understand that no one else is entitled to the use of the IP in question unless rightfully authorized.

5. Protection from infringement suits:

This is an inverse proposition. Once you are granted a registration to an IP right, you are presumed to be the owner of the IP in question. In the process of prosecution of your application, there are high chances that any third party who had already registered their IP with the same subject matter would be objected to by the Registry officials or the third party itself. Thus, this would consequently prevent your IP being registered and thus avoiding any infringement suits in the future.

6. Right to take action against the infringers:

Once you have registered your IP, it enables or provides you with a statutory right to take action against the third party infringers. In the absence of such protection, it would be difficult to prove one’s case in the court of law and one has to resort to other common law remedies such as passing off which is rather more difficult a proposition to prove when compared to the aforesaid right.

7. Increase the value of your enterprise:

As you would already be aware that IP is a form of property, however, intangible in its nature. At times, this can account for more than the tangible value of an enterprise. Thus, it becomes all the more important to protect IP and increase the value of your enterprise on the basis of such intangible assets.

8. Make money:

It is important to note that upon application or registration of your IP, you can assign or license it to third parties for revenue. The different types of IP can generate different revenue streams for a Start-Up and thus, enabling it to survive in initial crunch times. Also, it can help a Start-Up to spread its wings in areas where it lacks expertise or doesn’t have resources to commercialize itself by licensing or assigning the IP.

9. Smooth exit:

Once your IP is protected, it becomes easier for your start-up to exit should you think to do so. Botched up IP portfolios can lead to significant delays in exiting. Thus, if your IP portfolio is in its place, it would be easier for third parties to take over and prevent any such deals to fall apart due to IP issues.

Thus, it is amply clear that there are strong reasons to protect your Start-Up by protecting your IP. In the early stages of business, not protecting IP is often put down to being short on cash. However, in our experience, this would only lead to more distractions and failures than stability. We would advise timely allocating funds for protection of IP.

How to identify IP?

Identifying IP is not a daunting task. You should sit down with your team and a lawyer to cull out what you think should be protected. These are often your creative assets. Once you have zeroed in on the types of IP to be protected, you should seek advice from your lawyer. Different types of IP protection apply to various category of works. For example, subject matter of patent would be inventions, copyrights would protect literary, dramatic, musical and artistic work, and trademarks would protect a Start-Up’s brand name, logo, signatures etc.

How to protect IP?

It is very important to understand that identification of the subject matter/IP is not the end of road. Once you have conceived a brand name or think you have come up with an invention, you should seek lawyer’s advice whether to file an application with the Registry or not. Is the subject matter registrable? Secondly, if registrable, is it already not in use by any third party? This could be assessed by conducting relevant searches with the help of your lawyer. When you have the results that there would be potentially no obstacles debarring your registration or grant, you should go ahead with filing an application with the Registry.

How to manage IP?

Again, as and when your IP is protected, you cannot sit back on a recliner. You then have to manage your IP, which is an ongoing process. You have to liaise with your lawyer as to the renewal deadlines and keep a tab on the renewals in certain IP types. Further, you have to keep a watch on third party applicants or infringers in the market. If there are any applicants with the Registry with the claim to the same/similar subject matter, you ought to take action against such parties. Further, you can take court action for any infringing market use.

Deadlines for protecting different types of IP:

There are different timelines applicable to register your IP. You should consider consulting your lawyer as and when you have created an IP. Depending on the type of IP, a lawyer would accordingly advise you. Generally speaking, patents are the most time sensitive ones. If you don’t patent your invention, anyone can apply for a patent and exploit it for profit exclusively for 20 years. On the other hand, other types of IP such as trademarks and copyright have less rigid rules. Nevertheless, you should be aware as a Start-Up that protecting your IP at the earliest will not only etch your name on the Registry’s records as a notice to the world, but also shoo away any potential copycats, or inverse claims.

Why to engage an IP lawyer:

It is further to be understood that a Start-Up has already too much on its plate to look after. In such a scenario, it is advisable to engage an IP lawyer who is adept at dealing with multitudinous legal issues. Often Start-Ups are inclined to ‘Do-it-yourself’ (DIY) approach. However, this could lead to more complications or delays in prosecuting an application. Further, if there are any third party rights meddling with your application, it could lead to more expenses than saving, for example, contesting an opposition from a third party. An IP lawyer would have conducted basic trademark searches or patent prior art searches to look for potential conflicts.

Templates don’t work when it comes to agreements:

Another pertinent or natural extension of DIY approach is usage of online templates which are basic in their content. Thus, it is crucial that an IP lawyer is engaged who understands intricately all the legal issues involved. Any agreement, for an example, non-disclosure agreement, is multifaceted. It has to cover various aspects which a Start-Up may unwittingly overlook right from defining “confidential information” to return or destruction of information. Thus, it is not wise or appropriate to use online templates as they may be missing critical aspects or anything which has to be tailored as to your specific needs. In the same vein, it is important to mention that a Start-Up should consult an IP lawyer before disclosing any information to third parties.

Basic checklist for Start-Ups:

1. Carry out trademark searches or prior art searches for patent to see if the trademark or patent is already applied for or in use.
2. Register your trademark, brand or logo.
3. Check if the domain name is available.
4. Identify other types of IP that you may have.
5. Keep the information confidential by using non-disclosure agreements.
6. Have proper employment agreements in place to avoid any IP ownership conflicts against employees.
7. Have contributors assign their IP to you or have agreements which obligate them to assign, whether pre-existing the Start-Up foundation or thereafter.
8. Have confidentiality agreements executed with employees.
9. Seek authorization from other parties before you use their IP.
10. Keep proper records of the date of creation or use of the IP.

Government’s scheme:

The Government of India launched a scheme for Start-Ups Intellectual Property Protection (SIPP) in 2016 on pilot basis and extended upto 31-03-2023. In addition, the scheme was made applicable to all Indian innovators/ creators using the services of the TISCs established in India w.e.f. 06-09-2019. To further encourage the IP facilitators to provide quality services to eligible applicants, the scheme was revised and facilitation fees notably increased by at least 100% w.e.f. 02-11-2022. The scheme is now being extended further for a period of three years upto 31-03-2026. However, based on the experience gained from implementation of the scheme so far, certain aspects of the scheme have been amended w.e.f. 01-04-2023.

Objective:

To nurture and mentor innovative Start-Ups and assist them in protecting and commercializing IP assets by providing high quality IP services by facilitators and resources.

Appointment of Facilitators:

The facilitators shall be empaneled or appointed by the Controller General of Patent, Trademark and Design (CGPDTM). It shall regulate conduct and functions of the facilitators at regular intervals. Ms. Suvarna Pandey from RNA IP Attorneys has been appointed as one of the facilitators for patent/design.

Function of Facilitators:

1. Pro Bono advice.
2. Advice and protection of IP in foreign jurisdictions.
3. Assistance in filing and prosecution of patent, trademark and design application.
4. Drafting provisional/complete specifications for Start-Ups.
5. Responding to office actions and other queries of the Registry.
6. Attending the show cause and opposition hearings, if any, at the Registry.

Fees of Facilitators:

The following professional fee structure shall be applicable. Further, the fee is to be borne by the Government (respective IP Offices) and paid directly to the facilitator by the office of CGPDTM upon submission of the claims by the facilitator.

Statutory Fees:

The cost of the statutory fees for each patent, trademark or design application shall be borne by the Start-Up itself. These are tabulated in the respective Patents Rules 2016 as amended, Trade Mark Rules 2017 as amended and Designs Rules 2001. Further, as per the revised Patent Rules 2016, Start-Ups will now be eligible for 80% rebate in the patent fee. The rebated costs are applicable for expedited processing of the application too. In relation to trademarks, the new rules offer 50% discount on the official fees for startups and SME’s (small and medium enterprises) with respect to filing an application for registration of a trademark and for expedited processing of an application.

1. In case of an ISA application for a patent, the cost of PCT fees (transmittal fee, international filing fees, search fees etc.) shall be borne by the eligible applicant itself.
2. In case of an International Trade Mark application, the cost of fees and payments under Madrid System shall be borne by the eligible applicant itself

For a basic application, the following fee shall be applicable:It is to be noted if any application is abandoned before disposal of the application, the facilitator shall be entitled for the filing fee and not for disposal of the application.

Ownership of the Intellectual Property Rights:

The rights under the scheme shall be non-transferable, either wholly or partially, to the facilitators or the government. The Start-Up shall have full rights in the IP generated.

Disclaimer

The scheme does not entitle a Start-Up with any grant or registration. The intellectual property application i.e., patent, trademark or design shall be assessed and disposed-off as per the applicable laws and rules.