The statement, “A startup with a patent has more chances of succeeding than a startup without one,” is indeed a conclusion drawn from research, specifically from an MIT Innovation Initiative study.
Startups are widely recognized as the primal support systems for innovation and growth. Before a decade or two, Startups had supine investors, and support organizations such as incubators, and accelerators were very limited in number.
The Indian startup ecosystem has indeed witnessed significant growth and evolution, with increased investor interest, the emergence of support organizations like incubators and accelerators, and government initiatives aimed at fostering a favorable environment for startups as various Government initiatives have come up to develop a conducive environment for our startup ecosystem and here, the Intellectual Property plays a major role.
With new initiatives by the Indian government like “Start-up India: Stand-up India” and changes made by the Indian patent office, startups reap a number of benefits in the process of developing and owning intellectual property. The initiatives taken by the government are meant to promote entrepreneurship in the country.
However, it’s important to note that success in the startup world is influenced by many factors, and having a patent is just one of them.
What is a startup according to the Indian patent Rules?
According to the Indian patent Rules, a “Startup” means an entity in India recognized as a startup under the Startup India initiative. The Startup India initiative lists the following conditions for an entity to be a startup:
(i) A startup is an entity where not more than ten years have lapsed from the date of its incorporation or registration. (Registration of your startup can now easily be done online.)
(ii) It must be incorporated as a Private Limited Company, a Registered Partnership Firm, or a Limited Liability Firm.
(iii) The annual turnover of the startup in those ten financial years should not be more than INR hundred crore.
(iv) The startup must be working towards innovation, development, deployment, and commercialization of new products or processes to create new products or both or provide services that are driven by technology.
(v) It is not considered a startup if it is created by splitting or reconstructing an already existing business.
(v) Mere development of products or processes or offering services that have no commercial potential will not be considered as a startup, the aim should be to advance the existing products and increase their commercial value and not re-invent what is already invented and established.
For both physical and electronic filing, a startup or small entity must fill out Form 28 which acts as evidence that the startup is truly a startup under the Indian Patent Act and Rules.
The accompanying document that is mandatory to be submitted along with Form 28 by an Indian startup applicant is the certificate of recognition as a startup from the Department for Promotion of Industry and Internal Trade (DPIIT Startup Certificate). In the case of a foreign entity, any document as evidence of eligibility will be sufficient.
Let us have a look at a few ways in which Intellectual Property can impact startups:
Protection of Innovations: Startups often rely on innovative ideas and technologies as their competitive advantage. Intellectual property rights, such as patents, trademarks, and copyrights, provide legal protection for these innovations, preventing others from copying or using them without permission.
Attracting Investors: Investors are more likely to invest in startups that have taken steps to protect their intellectual property. Having a strong IP portfolio can enhance a startup’s credibility and valuation.
Market Expansion: Intellectual property rights can enable startups to expand into new markets and regions while maintaining control over their technology or brand.
Licensing Opportunities: Startups can monetize their intellectual property by licensing it to other companies. This can be a significant source of revenue.
Competitive Advantage: IP can create a barrier to entry for competitors, giving startups a competitive advantage in the market.
Legal Recourse: In the event of IP infringement, startups can take legal action to protect their rights and seek damages.
Now, let us have a look at some of the major benefits for startups in obtaining patents:
Fees for startup entities: There is an 80% reduction in the patent filing fees for smaller entities and startups. So, if we have a shrunken budget, startups do have a solution in place!
Quicker assessment (expedited examination of the patent application): Startups are eligible for expedited examination. According to rule 24C of the Indian Patent Rules, 2003, a Startup applicant may file a request for expedited examination in Form 18A along with the prescribed fee. The expedited examination procedure welcomes a fast-track grant of a patent application. Expedited examination requests filed by startups will not be questioned by the Indian Patent Office, merely on the ground that the startup which has already filed an application for a patent, ceases to be a startup due to the lapse of the period during which it is recognized as a startup or its turnover subsequently crossing the notified financial threshold limit.
Attract investors: Having a patent increases the market value of the invention and automatically attracts many investors to invest their time and money. Business grows due to the added weightage of a patent.
Attract partners: Having a patent and investors looking to invest increases the chances of fetching partners who are looking to flourish and join hands to innovate.
Growth: The patent approvals assist the start-up to innovate more and grow and with all the added support from the government, it is easy to garner the well-being of a start-up.
Plan ahead: Startups having patents under their name are free to license their patent portfolio and get significant ROI which helps in building business credibility as this generates trust in various investors.
Startups often bring fresh ideas, disruptive technologies, and entrepreneurial spirit to the market, driving innovation and creating jobs.
The Indian government has recognized the importance of intellectual property in the startup ecosystem and has taken various initiatives to support startups in this regard. These initiatives include simplifying patent registration processes, offering financial incentives, and providing resources for IP education and awareness. In conclusion, protecting new innovations through patents is indeed a strategic move for startups. The competitive landscape for startups is often intense, with many new ideas constantly emerging. Here are the key points to consider:
Protection for Innovation: Startups thrive on innovative ideas, and obtaining protection for these innovations is essential. Patents provide legal protection, preventing others from using or replicating a startup’s technology without permission.
Monopoly for 20 Years: Patents grant the owner a monopoly over their invention for a period of 20 years. During this time, no other party is allowed to use the protected technology. This exclusivity can be a valuable asset for startups.
Adding Value to the Portfolio: A strong patent portfolio adds substantial value to a startup’s portfolio. It can enhance the startup’s credibility, attract investors and partners, and set it apart in a competitive market.
Benefiting Startups: Startups, in particular, benefit from the advantages provided by the patent system. They can take advantage of reduced patent filing fees, expedited examination, and the potential to secure their innovations, which can be crucial for their growth and success.
In the fast-paced and competitive world of startups, intellectual property protection, including patents, serves as a valuable tool for safeguarding and capitalizing on innovative ideas, ultimately contributing to a startup’s long-term viability and success.