Summary of the Indian Designs (Amendment) Rules, 2021

The Indian Government has recently notified an amendment to the Designs Rules, 2001. The Designs (Amendment) Rules, 2021 (“the Amendment Rules”), were notified in the Official Gazette on January 25, 2021, and are deemed to be in effect from that date.

The Amendment Rules have sought to streamline the process of applying for and prosecuting industrial designs in India. The notable features of the Amendment Rules are:

1. Recognition of startups

The Amendment Rules have recognized startups as a category of applicant, and have also extended a rebate on the official fees payable for such entities. In order to claim startup status, an entity must satisfy the following criteria:

1. Indian entities must be recognised as a startup by the competent authority under the Union Government’s Startup India initiative
2. In the case of foreign entities, the following criteria must be satisfied:

a. The entity must be a private limited company, limited liability partnership, or partnership firm.

b. Its turnover at any point during the course of its business (from inception) should not exceed INR 100 crores (approximately USD 13.7 million as on date)

c. The entity would be considered a startup only for a period of 10 years from the date of incorporation.

d. An entity formed by splitting up or reconstruction of an existing business shall not be considered a “Startup”

For a foreign entity to claim the benefit of being a startup, an affidavit (which under Indian practices would need to be notarized, although this has not been explicitly mentioned in the Amendment Rules) along with supporting documents must be submitted at the time of filing the application.

2. Reduction in fees for small entities & simplification of fee structure

Under the previous Designs Rules, the official fees payable varied depending on whether the applicant entity was a natural person, small entity, or any other type of entity. The fees for a small entity were higher than those applicable for a natural person but less than for other entities. Under the 2021 Amendment Rules, all-natural persons, small entities, and startups shall pay the same fees. This has led to a nearly 50% reduction in the fees payable for small entities (for most actions). The revised fee structure can be seen here.

In order to claim startup status, an entity must satisfy the following criteria:

a. Indian entities must be registered under the MSME Act, 2006.

b. Foreign entities must produce “any document as evidence of eligibility”

Notably, the text of the Amendment Rules does not require an affidavit to claim small entity status, as it does for startups. It may be likely that some clarifications will be issued shortly in this regard.

3. Service by email and mobile phone

Keeping the recent global trend of moving to digital communications, the Amendment Rules now mandate an Indian cell phone number to be provided at the time of recording an address for service of documents.

4. The difference in fees to be paid in cases of transfer of rights

In case an application processed by a natural person, startup or small entity is fully or partly transferred to any entity not within the ambit of any of these three categories, the difference, if any, in the scale of fees between the fees charged from the natural person, startup or small entity and the fees applicable for the new entity are to be paid by the new applicant along with the request for transfer.

Notably, this provision does NOT apply in cases where a startup or small entity ceases to be so due to the lapse of the period during which it is recognised by the competent authority, or its turnover subsequently crosses the financial threshold limit as notified by the competent authority.

5. Adoption of the current Locarno classification system

The Amendment Rules also formally mark India’s adoption of the prevailing edition of the Locarno Classification published by WIPO. Earlier, the Indian Designs Office maintained its own Classification system. While this was almost entirely in line with the Locarno Classification system earlier as well, the new Amendment Rules have eliminated any discrepancies that existed previously.

6. Changes to costs allowed in proceedings before the Controller

The Fourth Schedule of the 2001 Rules, which lays down the amount of the costs allowed in proceedings before the Controller, has been modified with the advent of the 2021 Rules. The revised Schedule now provides for differences in costs which may be imposed depending on the nature of the entities involved in proceedings. The full range of costs as contemplated by the new Rules can be seen here.

On the whole, the changes implemented in the Amendment Rules are fairly positive, as they would likely have the effect of streamlining and simplifying the process of protecting industrial designs in India. It should be noted however that at the time of writing this post, the reduction in fees payable for small entities was not reflected in the Designs Office’s e-filing portal. It is likely that this change will be implemented shortly.