In 2016, the government put in place the Scheme for Startups Intellectual Property Protection (SIPP) with an aim to promote awareness and acquisition of IPR rights among startups and to nurture innovative technologies.
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, Department for Promotion of Industry and Internal Trade, Government of India (CGPDTM).
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 would pay a nominal professional fee for the services related to procuring IPR to the advocates or trademark agents in charge of handling the IPR process.
Startups can avail an array of services under this scheme, including general advice, assistance in drafting applications, preparing and filing responses to examination reports, appearing at hearings, contesting opposition and ensuring the final disposal of the IPR application. Moreover, startups enrolled under this scheme are not required to obtain a certificate of an eligible business from the Inter-Ministerial Board of Certification.
This scheme was extended a couple of times in the past and will lapse on March 31, unless the government decides to continue with it. So, how should startups prepare to seek and protect their IP rights after March 31?
Startups should prepare for changes in strategies related to IP protection in their businesses. Here are some steps they can take.
Prioritising IP Protection
Startups should evaluate and prioritize the evaluation of IP rights involved in their business. Startups can be involved in different industries and the IP rights play a crucial role. 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.
Registration of IP Rights
It is important to register certain IP rights before claiming protection under them. However, it might not be mandatory for all rights. For instance, there is no need for mandatory registration in the case of trademarks and copyright. 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 of IP Rights
It is important for a startup that it does not violate any other person or startup’s IP rights. This will help it protect them from unanticipated legislation or legal action, which can prove to be a hindrance in its business activities. This makes
it even more important for startups to make careful IP decisions in the initial phase and conduct proper due diligence on IP rights that it is using or intends to use. Under the SIPP scheme, the facilitators help in doing prior searches which eliminates the possibility of infringement over existent patents.
Documentation related to IP
It is important to have proper documentation done before filing for a patent to reduce the possibility of rejection of the patent. 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 for IP filings and Hiring Attorney Services
It is important to allocate resources for IP filing as there are certain statutory fees involved in the filing of the patent application. The statutory fee for patent filing for a natural person or a startup, or others alone with startups for online application are Rs 1,600 and Rs 8,000, respectively. Further, startups can hire a patent attorney or any law firm that will help with filing and documentation for the start-ups. In SIPP, this fee is borne by the government itself and startups get a rebate for applying. Big companies, of course, have huge resources allocated for IP protection and filing. They have in-house counsels to help them through this process. They maintain their patent portfolios that help them track the changes in patent applications, renewal or infringement of patents.
It is in the long-term interest of startups to have an Intellectual Property Policy for the management of various IP rights which may be presently owned or acquired in future by startups. Such a policy would ensure there is no dispute among the founders, which is one of the main reasons for the failure of startups.
Other Government Schemes for Startups
Apart from the SIPP, there are no other schemes specifically appointing trusted facilitators or providing free legal help to startups. However, there are several other schemes, initiatives for grant of funds, subsidies, and IPR promotion for the growth of startups that they can rely upon ups. Some of these are as follows.
Start-up India Initiative: It was launched in 2016 to build a strong ecosystem for nurturing innovation and entrepreneurship in the country. As of 2022, under the Startup India initiative, a total of 72,993 have been recognized by Department for Promotion of Industry and Internal Trade. The Fund of Funds for Startups Scheme and Startup India Seed Fund Scheme provide financial assistance to startups through alternative investment funds and incubators, respectively. The DPIIT has also launched a website “L2Pro IP e-learning Platform” to assist startups and small and medium enterprises to understand IPR.
Action Plan for Startup India, 2016: It comprises 19 action items spanning across areas such as simplification and handholding funding support and incentives and ‘Industry academia partnership and incubation’. It laid the foundation of government support, schemes and incentives envisaged to create a vibrant startup ecosystem in the country.
MeitY Startup Hub: The Ministry of Electronics and Information Technology (MeitY’s) vision of promoting technology innovation, startups and the creation of intellectual properties was realised by establishing a nodal entity called MeitY
Startup Hub. The hub has helped domestic tech startups improve scalability, market outreach and setting up innovative partnerships with various stakeholders.
National Startup Advisory Council, 2020: The council advises the government on measures needed to build a strong ecosystem for nurturing innovation and startups to drive sustainable economic growth and generate large-scale employment opportunities.
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.
The SIPP has helped many startups in getting free legal advice and get their intellectual property registered. If the scheme is not extended, startups won’t be able to avail the benefits it provided and they won’t have many options to help them with IP protection.
Under the Start-up India Initiative as well as the National Intellectual Property Rights Policy, 2016, the government has taken several measures towards promoting IPR protection. The Patent (Amendment) Rules, 2016 allowed for expedited examination for startups, but the SIPP is specifically targeted towards providing legal assistance.
Furthermore, startups should be prepared for various requirements and technicalities to be fulfilled before obtaining the grant of a patent. The SIPP scheme has proved to be beneficial and its extension would help startups prosper with IP protection as an asset. But if the scheme isn’t extended, startups should prepare to protect their IPRs themselves.
Nilanshu Shekhar is partner while Akanksha Anand works as associate at law firm KAnalysis. Views are personal.