Intellectual Property Rights and Start-Ups
September 30, 2019
Regulatory framework for patent in India
India’s patent regime is governed by the Patents Act, 1970 (“Patents Act”) and the Patents Rules, 2003 (“Patents Rules”). A person claiming to be the true and first inventor of an invention can file an application for grant of patent with the patent office. An invention means a new product or process involving an inventive step and capable of industrial application; inventive step meaning a feature of an invention that involves technical advance as compared to the existing knowledge or having economic significance or both and that makes the invention not obvious to a person skilled in the art. A patent is granted for a term of 20 years from the date of filing of the application for the patent. Section 3 of the Patents Act provides a list of items which are not considered inventions. For instance, a mathematical/business method, computer program per se or algorithm is not considered as an invention and patent protection is not granted for the same.
It is very important for start-ups to understand that patent protection is not just advantageous from the perspective that it protects your intellectual property which is your valuable asset from infringement, but also from the angle that such protection is commercially beneficial. Patent, once granted, gives exclusive right to the patent holder to make, use, offer for sale, sell or import the patented product or the product obtained directly by the patented process. Further, licenses can be granted by patent holder for use of patented technology, product or process by third parties, which in turn can generate massive revenues for a start-up. Patents, seen as a breakthrough in technology and innovation, enhance the market image and help attract potential investors.
The Patents Act clarifies that the patent is not granted merely to enable patentees to enjoy a monopoly for the importation of the patented article and they are granted to secure that the inventions are worked in India on a commercial scale and to the fullest extent that is reasonably practicable without undue delay. Therefore, as per Section 146(2) of the Patents Act and Rule 131 of the Patents Rules, every patentee and every licensee are required to furnish statement in Form 27 under the Patents Rules regarding the working of the patented invention on a commercial scale in India. This statement is required to be furnished within 3 months of the end of each year. Patent can be revoked, in certain circumstances, if the patented invention is not being worked in India on a commercial scale to an adequate extent or is not being so worked to the fullest extent that is reasonably practicable.
The National Intellectual Property Rights Policy released by the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India (“DIPP”) dated May 12, 2016, notes that efforts should be taken for creation of an effective and simple loan guarantee scheme in order to encourage start-ups and cover the risk of genuine failures in commercialization based on intellectual property rights as mortgage-able assets.
Facilitators to advise and assist start-ups
DIPP released the ‘Scheme for Facilitating Start-Ups Intellectual Property Protection’ on January 13, 2016 (as amended from time to time) and in force up to March 31, 2020 (“SIPP”). All start-ups which have obtained a certificate of recognition from DIPP can avail benefits provided under SIPP. Facilitators have been empanelled by the government who advise start-ups on intellectual property and in getting through the application process (for patents, designs and trademarks) on a pro bono basis. No fees is payable by the start-up to the facilitator and the same is taken care of by the government. However, start-up is required to give a self-declaration to the facilitator stating that it has not availed any funds under any government scheme for the purpose of paying the facilitator/patent agent/trademark agent for filing and prosecuting registration application. List of facilitators for patent and designs, as on March 14, 2019, has been provided on the government portal. Visit http://ipindia.nic.in/writereaddata/Portal/Images/pdf/508_1_List_of_Faciliattor_for_Patent_and_Designs_as_on_14.03.2019.pdf.
The stated object of SIPP is to nurture and mentor innovation and emerging technologies among start-ups. Facilitators have an important responsibility in assisting the start-ups in protecting and commercializing their intellectual property by giving them best advice and filing services. Office of the Controller General, Patents, Designs and Trademarks (“CGPDT”) issued a Public Notice on March 17, 2017, noting that instances were reported whereupon the registered facilitators were not providing assistance to the start-ups citing various reasons and were asking extra fees from them. CGPDT cautioned all such facilitators to cease such practices and warned that such denial of assistance to start-ups will be considered as professional misconduct on the part of the facilitator which can lead to the removal of name from list of facilitators and subsequent removal of name from list of patent/trademark agents. In case any facilitator denies providing assistance to your start-up or charges any fee, you may approach CGPDT to resolve your grievance.
Expedited process and fee rebate for start-ups
The government amended the Patents Rules through the Patents (Amendment) Rules, 2016, by which, it provided the process for expedited examination of patent applications of recognized start-ups. Further, the First Schedule under the Rules, which provides for filing fees, was also amended to provide up to 80% rebate in filing fees to start-ups.
Procedure for filing/processing of start-ups’ applications
CGPDT, through Public Notice dated June 8, 2016, released guidelines for facilitators and start-ups clarifying on the procedure to be adopted for filing/processing of start-ups’ applications (for patents, designs and trademarks). The same can be referred to here: http://ipindia.nic.in/writereaddata/Portal/News/315_1_Public-Notice.pdf. Start-ups can also refer to FAQs released specifically for the start-ups by DIPP and CGPDT under the title “IPR Facilitation for Start-ups”, access here: http://www.ipindia.nic.in/writereaddata/images/pdf/startups_IPRFacilitation_22April2016.pdf.
Regulatory framework for copyright in India
The law on copyrights in India is contained in the Copyright Act, 1957 (“Copyright Act”) and the Copyright Rules, 2013 (“Copyright Rules”). Copyright is granted in any original literary, dramatic, musical and artistic works; cinematograph films; and sound recording. Grant of copyright gives exclusive right to the copyright holder to reproduce the work in any material form including the storing of it in any medium by electronic means, to issue copies of the work to the public, communicate the work to the public, etc. In case of a computer programme, the copyright holder gets the exclusive right to sell or give on commercial rental any copy of the computer programme. Copyright subsists during the lifetime of the author and for 60 years thereafter.
Applying for copyright is easy. New users need to register online on http://copyright.gov.in/UserRegistration/frmNewUser.aspx and then proceed to e-filing with the login details generated through registration. As per the Copyright Rules, every application for registration of an unpublished work is required to be accompanied by 2 copies of the work and every application for registration of a computer programme should be accompanied by the source and object code. The Second Schedule under the Copyright Rules provides for the fee to be paid for copyright registration.
It may be noted that registration of copyright is not compulsory to assert right over your work. However, it is highly advisable as it serves as a good piece of evidence in copyright infringement cases. Section 55 of the Copyright Act provides for civil remedies for infringement of copyright which includes injunctive relief which can be obtained to immediately cease the continuing infringement of copyright work.
Assignment and licensing
The Copyright Act not only helps start-ups in protection of their computer codes, software programs, program graphics, promotional materials, product /service descriptions, etc., but the Copyright Act also enables assignment of copyright which can generate revenue in the form of royalty. Copyright can be assigned through a written agreement signed by both parties or their authorised agents and should contain description of assigned work, description on rights assigned, duration of assignment (5 years if not mentioned), territorial extent of assignment (within India if not mentioned) and the amount of royalty payable to the assignor. The owner of the copyright may also grant any interest in the right by licence through a written agreement. The difference between an assignment and licence of copyright should be noted. Assignment gives the assignee the complete ownership of the assigned right for the assignment period and the assignee can even further licence the copyright work. Licence, on the other hand, is a limited grant of certain rights and copyright holder can issue licences to multiple people at the same time.
Regulatory framework for trademark in India
The Trade Marks Act, 1999 (“Trademarks Act”) and the Trade Marks Rules, 2017 (“Trademarks Rules”) provide for the legal framework governing the registration and usage of trademarks in India. Trademark registration helps start-ups distinguish their goods or services from others in the market. It serves as an identity for your goods or services which can be easily recognised by your loyal customers/clients as well as prospective customers/clients. Registration of trademark confers on the proprietor exclusive right to the use of the trademark and to obtain relief in respect of infringement of the trademark. If the trademark is not registered under the Trademarks Act, you cannot institute any proceeding to prevent or to recover damages for, the infringement of such unregistered trademark.
Public search for trademark can be conducted on the government website. Every application for registration is required to be filed in the office of the Trade Marks Registry within whose territorial limits the principal place of business in India of the applicant is situated. E-filing is also possible. Trade Marks Registry has its offices at Mumbai, Ahmedabad, Kolkata, New Delhi and Chennai. To know about the territorial jurisdiction of the offices, please visit http://www.ipindia.nic.in/locations-and-jurisdiction.htm. Start-ups can take the assistance of facilitators for registration of trademark. The role of facilitators has already been outlined above. List of facilitators for trademarks, as on March 14, 2019, has been provided on the government portal. Visit http://www.ipindia.nic.in/writereaddata/Portal/Images/pdf/508_1_List_of_Faciliattor_for_Trademarks_as_on_14.03.2019.pdf. As per the information available on the government portal, more than 2,600 start-ups have already obtained registration of their trademarks and more than 6,300 applications for trademark registration have been filed by start-ups. There is 50% registration fee rebate for start-ups under the First Schedule of the Trademarks Rules, access here: http://www.ipindia.nic.in/form-and-fees-tm.htm. Trademark registration is valid for a period of 10 years and can be renewed for a further period.
Regulatory framework for design in India
The Designs Act, 2000 (“Designs Act”) and the Designs Rules, 2001 (“Designs Rules”) form the legal framework in India relating to the protection of designs. Design is defined as only the features of shape, configuration, pattern, ornament or composition of lines or colours applied to any article whether in two dimensional or three dimensional or in both forms, by any industrial process or means, whether manual, mechanical or chemical, separate or combined, which in the finished article appeal to and are judged solely by the eye. It does not include any mode or principle of construction or anything which is in substance a mere mechanical device. It also excludes any trademark, property mark or artistic work covered under the copyright law. As rightly put on the government portal, the object of the Designs Act is to protect new or original designs so created to be applied or applicable to particular article to be manufactured by industrial process or means. Sometimes the purchase of articles for use is influenced not only by their practical efficiency but also by their appearance. The important purpose of a design registration is to see that the artisan, creator, originator of a design having aesthetic look is not deprived of his bonafide reward by others applying it to their goods.
As per the Designs Rules, application for registration of design should be accompanied by 4 copies of representation of the design. These copies should be exactly similar drawings, photographs, tracings or other representations including computer graphics of the design or should be specimens of the design. The registered proprietor of the design has copyright in the design during 10 years from the date of registration. Further extension for a period of 5 years can be granted from the expiration of the original period of 10 years.
During the existence of copyright in any design, piracy of the registered design by any person can make such person liable to pay to the registered proprietor of the design a sum subject to a maximum of INR 50,000 as provided in sub-section (2) of Section 22 of the Designs Act. Alternatively, the proprietor can bring a suit for recovery of damages and injunction. Please refer to the FAQs provided on the government portal for important information on marking of articles, first-to-file rule, essentials before registration, transfer of the right of ownership through assignment, etc. Please visit http://www.ipindia.nic.in/faq-designs.htm. Facilitators can assist your start-up in getting your design registered. The list of facilitators is provided on the government portal. Please visit the link provided in this regard in the patent section of this article. A checklist of documents required for registration is also provided, access here: http://www.ipindia.nic.in/writereaddata/Portal/Images/pdf/Check_list_for_DESIGN_APPLICATION.