How startups should prepare to get IP rights

The scheme provided access to high-quality IP services and resources to startups.

Under this scheme, facilitators, or IP Mitras, were empanelled to assist startups in filing and processing their patent, design or trademark applications.

The fees of such facilitators were borne by the Office of the Controller General of Patents, Designs and Trademarks.

The scheme provides other benefits, too.

Startups can avail patent, trademark, and design services by paying only the required statutory fees and need not pay the professional fees. Instead, the government pays the nominal professional fee for the services related to procuring IPR to the advocates or trademark agents in charge of handling the IPR process.

This scheme was extended a couple of times in the past and will lapse on 31 March, unless the government decides to continue with it. So, how should startups prepare to seek and protect their IP rights after 31 March? Here are some steps they can take.

Prioritizing IP Protection

Startups should evaluate and prioritize the evaluation of IP rights involved in their business. Failure to identify or prioritize IP rights is likely to create problems for the business and future investors or while exiting the business, especially during negotiations. Sometimes IP rights are the only asset available with a startup.

IPR registration

It is important to register certain IP rights before claiming protection. However, it might not be mandatory for all rights. For instance, there is no need for mandatory registration in the case of trademarks and copyrights. On the other hand, registration for patents and designs is necessary. Nevertheless, a registered IP right carries a greater value and acts as evidence of the use of the IP rights before courts as well as enforcement agencies.

Due diligence

It is important for a startup that it does not violate any other person or startup’s IP rights. This will help to protect them from unanticipated legal action, which can prove to be a hindrance in its business activities. So, startups should make IP decisions carefully and conduct proper due diligence on IP rights that it is using or intends to use.

IP documentation

It is important to have proper documentation done before filing for a patent or trademark to reduce the possibility of rejection. Non-disclosure agreements (NDAs) with employees should be effectuated timely so that the intellectual property is protected by proper agreement between the owner and third party or a key employee in a startup.

Resource allocation

It is important to allocate resources for IP filing as there are certain statutory fees involved. The statutory fee for filing patents for a natural person or a startup, or others alone with startups for an online application, is ₹1,600 and ₹8,000, respectively. Startups can hire a patent attorney or a law firm that will help with filing and documentation.

It is in the long-term interest of startups to have an Intellectual Property Policy for the management of various IP rights which they may own already or may acquire in future. Such a policy would ensure there is no dispute among the founders, which is one of the main reasons for the failure of startups.

Challenges

Once the SIPP scheme ends, the startups might have to look for law firms and attorneys to get guidance and legal assistance, which they were able to get under one roof in the scheme. They will have to allocate resources for expenses, which were earlier covered in the scheme, for activities like legal guidance and filing of the application for patent protection.

Further, they will have to rely on other schemes to get rebates and benefits. The government would have to look for new initiatives to help create awareness amongst startups for IP protection.

Nilanshu Shekhar is Partner and Akanksha Anand is Associate at law firm KAnalysis. Views are personal.