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Do you have an Intellectual Start-Up?

The article highlights how IP protection is integral for the long term growth of any business.

Sunday November 13, 2016,

5 min Read

Intellectual Property Rights (IPR) should be integral part of any business strategy.

For some entities, creating IPR may come as a natural process and may be a direct consequence of the manner in which the business is flourishing. For some, the entire business model may depend on innovation and exclusivity over the IPR it owns. As an example, as the business grows, a StartUp may adopt and use new trademarks and extend the already existing brands. On the other hand, some StartUps may already have registered patents on which the entire business structure is being developed. Some StartUps may develop a software/application in the form of digital platforms (market places/content platforms), whereas some may depend on novel designs to attract customers to the product being offered. As we are aware, a design is an integral part of any smartphone now.

Evidently, every business entity may directly or indirectly be involved in creating different forms of IPR. It’s important to note that some of these rights may be exclusive or inclusive of one another. Accordingly, it’s imperative that these rights are recognised and protected at the right time. The world recognises that most technology based Unicorns were able to reach where they are now by harnessing their IPR to their maximum advantage.

In India, IPR can substantially be strengthened by procuring registrations under various statues. A registration provides the owner with a statutory right in the form of exclusivity in that form of IP. This exclusivity can not only defend a StartUps unique edge over its competitors in manufacturing products or rendering services but can be the driving force of the business. In the long run, the costs for procuring registrations may not be much but from an investment point of view, the potential it offers is immense.

In the event of a subsequent merger and/or acquisition, especially incase of a IP sensitive company, the right registrations of IPR can be making or breaking point for a deal. Registrations of important IPR can not only increase the value of a company but is a comforting factor for any investor. From a brand perspective, a trademark registration provides the owner with a statutory right. A company shall keep accruing common law rights over the mark owing to any use of the same in the course of trade, but a trademark registration should be procured to formidably strengthen the owners’ rights. In a digital world, procuring trademark registrations in important business markets of interest is extremely helpful in legal proceedings involving cyber-squatting and/or counterfeiting.

However, there are certain legal technicalities which all StartUps should consider. As an example, for Patent and Design, novelty is a key factor so if the product is launched without prior filings in appropriate jurisdictions, the entity may lose the novelty and would not be able to procure the registration for the same in due course. Accordingly, if an entity believes that the invention can be patented or a design is novel and can be registered, proper scrutiny and legal advice should be taken prior to the launch of the product. Since computer programs per se cannot be patented in India, the Source Code may be protected as a literary work under the Copyright Act. It is to be noted that copyright registrations are not mandatory in India but a registration certificate serves as a prima facie evidence of ownership. Also, it’s important to remember that under copyright law, one cannot have exclusivity over the idea but only on the expression of the idea.

Depending on the business situation, the option of protecting IPR as a trade secret may also be explored. This can be advantageous in the business models involving recipes, formulae etc. The advantage is that through proper measures, such IP can then be protected for perpetuity or till when required and would not be available in the public domain. The StartUp should also consider filing Non-Disclosure Agreements with third parties where confidential information is being shared. Depending on the business areas, other jurisdictions apart from India should be considered for registering IPR. India is already a signatory to many international treaties and the advantages offered under the same should be harnessed to procure international registrations.

The Government of India (GOI) under the StartUp India program is providing substantial amount of opportunities to encourage and facilitate StartUps in India. Fulfilling certain criteria, an entity can get itself registered as a StartUp and avail the various benefits being offered. The applicability process is online and substantial amount of information is available over the internet. One of the many benefits is that a registered StartUp can get its IPR registered at nominal costs through the IPR facilitators registered with GOI.

Every entity shall have some form of IPR and its important that the same is identified and protected at the earliest. It’s a recognised fact that some of the biggest companies today were able to reach where they are owing to the smart decisions they took in respect of their IPR at an early stage of their journey. For many StartUps in India, the journey has just begun.