Of late there has been a humongous upsurge in the number of Startups being launched in India, and alongside catching up pace, is the awareness about importance of protecting the intellectual property rights. The early stages in a new business is nothing short of a whirlwind for novice entrepreneurs who are burdened with the task of building the company, securing investments, planning their marketing strategies, so on and so forth. Amid all these tasks, legal and in particular intellectual property protection may sometimes take a back seat. The idea of protecting intellectual property rights for Startups and its importance has spread and the Government of India has taken a step forward to help Startups in protecting their patents, trademarks and designs in conjunction with the Prime Minister’s Startup India Action Plan.

Scheme for Facilitating Startups Intellectual Property Rights (SIPP)

SIPP is an initiative of the Startup India: Action Plan, launched by the Department of Industrial Policy and Promotion (DIPP) to promote awareness and encourage intellectual property rights protection amongst Startups. The scheme reads: “Startups, with limited resources and manpower, can sustain in this highly competitive world only through continuous growth and development oriented innovations; for this, it is equally crucial that they protect their IPRs.”

Are all Startups eligible for benefits under the SIPP?

Technically – Yes, PROVIDED they fulfill the eligibility criteria defined in the Scheme. Well so far none of the present statutes in India define a ‘Startup’, therefore to benefit from this Scheme the Government has come up with a few criteria to be met to be deemed a startup-

  • A startup under the definition would mean an entity, that is either incorporated or registered as a Private Limited company under Companies Act, 2013, or a Registered Partnership Firm under the Indian Partnership Act, 1932, or a Limited Liability Partnership under the Limited Liability Partnership Act, 2008.
  • Age: Not more than five years should have lapsed since the incorporation or registration of the startup.
  • Turnover: Not exceeding INR 25 crores in any preceding financial year.
  • The startup to be eligible, must work towards innovation, development and commercialization of:
  • A new product or service or process; or
  • A significantly improved version of an existing product or service or process.
  • The startup must not be formed by splitting up, or reconstruction, of a business already in existence.
  • The startup will be eligible for availing the benefits under the Scheme only after it has obtained Certification from the Start-Up Certification Board.

Along with the above mentioned criteria, the startup in order to be considered eligible should be supported by a recommendation (with regard to innovative nature of business), in a format specified by the DIPP, from either:

  • An Incubator established in a post-graduate college in India; or
  • An incubator which is funded (in relation to the project) from Government of India as part of any specified scheme to promote innovation; or
  • An Incubator recognized by Government of India; or
  • An Incubation Fund/Angel Fund/ Private Equity Fund/ Accelerator/Angel Network duly registered with SEBI that endorses innovative nature of the business; or the Government of India as part of any specified scheme to promote innovation; or
  • Have a patent granted by the Indian Patent and Trademark Office in areas affiliated with the nature of business being promoted.

The DIPP has published the official notification of this scheme initially on a pilot basis and shall be applicable for one year.

Facilitators

The Scheme has also come up with a measure stating that the Controller General of Patents Designs and Trademark would empanel “facilitators” and shall also regulate their conduct and functions. As the name suggests, these facilitators [patent agents and IP lawyers] shall provide advice and information to the startups on protecting and promoting IPRs in India and in other countries as well. Their functions shall also include providing assistance in filing and disposal of IP applications relating to patents, trademarks and designs; drafting specifications for inventions; drafting and filing responses to Examination Reports, notices or letters by the IP office; appearing on behalf of the Startups at hearings; contesting oppositions; and ensuring final disposal of IPR applications.

Having said that, the windfall for startups in this regard is that they need not pay the facilitators for any of the services mentioned above. The Central Government shall bear the entire fees of the facilitators for any number of patents, trademarks or designs that a Startup may file, and the Startups shall bear only the cost of the statutory fees payable.

A “seemingly” optimistic start…

The SIPP appears to be a promising initiative by the Government, but the conspicuous question still remains as to whether all deserving Indian startups will benefit from it.

Strictly adhering to the verbatim of the statutory definition for Startups under the Scheme, only those Startups that have come up with an innovative and new product or service or process; or an improvised version of an existing product or service or process will be termed as Startup eligible for the benefits offered under the SIPP.

Besides this, given the various other formalities such as certification from the Start-Up certification board and recommendation from any of the five specified bodies as aforementioned, one can anticipate that it’s going to be a while before the first few startups actually benefit from this.

That said, it’s a start and a definite step forward.