Each such byte focuses on a functional issue startups need to solve as they build their company, from idea to scale. In this 3-part edition, we share details about intellectual property law.
A question founders invariably get when they pitch their product or service for investment is “Is this patentable? Having a patent leads to higher valuation. However, founders are so busy in the early days in developing the idea, in creating production and sales channels, in building teams and raising funds, that protecting intellectual property is usually missed out. We introduce you to the three important types of intellectual property rights start-ups need to be aware of – Patents, Trademarks and Copyrights. In the first part, we will cover Patents.
A patent holder is entitled with the exclusive right to make, use, or sell its commercial inventions. A start up needs to focus on two aspects-
Patents may provide a number of benefits to start-up and their business, for example, a patent can help attract investors, as it provides protection from competitors to enter into the same segment and a patent can be used for finances by generating revenue from licensing.
Vlingo is a great example of importance to ensure early check of Patent as a part of business due diligence even for starting a business. Vlingo developed voice recognition technology with its rigorous R&D that led to potential partnership and negotiation talks with Google and Apple. However, another company, Nuance, which held a patent on voice recognition, took Vlingo to the court for patent infringement. Vlingo, although, ultimately won the case, but within this time the company had to stop the negotiations for partnership and lost the same eventually because of the lawsuit, and the cost of defending the suit led Vlingo to sell its business to Nuance. The Nuance patent could have been noted if an early search had been conducted as diligence check and Vlingo might have taken appropriate strategic steps to take suitable steps to address the issue. For example, they might have been able to use a different design to avoid a run-in with Nuance.
Law – Patents Act, 1970; amended in 2006 Relevant Ministry – Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and industry
Patent registration procedure:
A patent once granted is valid for 20 years and requires renewal every year from the third year of the date of application. An application for a patent goes through various steps before it is granted. On an average it currently takes between 4 to 6 years from filing an application in India to getting a patent in India.
Patent Office, KolkataThe rest of India.
|Patent Office Branch, Mumbai||The States of Maharashtra, Gujarat, Madhya Pradesh, Goa and Chhattisgarh and the Union Territories of Daman and Diu & Dadra and Nagar Haveli|
|Patent Office Branch, Chennai||The States of Andhra Pradesh, Karnataka, Kerala, Tamil Nadu, Telangana and the Union Territories of Pondicherry and Lakshadweep|
|Patent Office Branch, New Delhi||The States of Haryana, Himachal Pradesh, Punjab, Rajasthan, Uttar Pradesh, Uttarakhand, Delhi and the Union Territory of Chandigarh, Jammu, and Kashmir and Ladakh.|
While applying for patents and granting of patents might seem like a long process, the benefits outweigh the effort as a successful patent becomes a moat for the company and an asset to monetise.
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