In order for the qualifying start-ups to take advantage of the Intellectual Property reforms, the government has formed a scheme called Start-up Intellectual Property Protection (SIPP), which will help innovative start-ups in filing and protecting their IPRs.
Who Can Apply under SIPP
- It should be Private Limited Company (Under The Companies Act, 2013); or Registered Partnership Firm (under The Indian Partnership Act, 1932); or Limited Liability Partnership (under The Limited Liability Partnership Act, 2008)
- It should not be incorporated prior to 5 years and should not have annual turnover more than 25 Cr.
- It should be involved in production and commercialization of innovative products or processes and it should also create or add value for customers or workflow
- It should obtain a certificate from the Start-up Certification Board certifying that the entity is involved in innovative products/processes
The scheme promises tremendous benefits as listed below
Fast-tracking of patent applications
Patent applications in India take around 5 years to get to a point of grant. As patent rights start from the date of the publication itself, it cannot be enforced till the patent gets a grant. Hence, the 5 year period is too long a time considering that majority of start-ups will eventually fail and close down business within a few years.
Hypothetically, if the examination process is fast tracked and applications by start-ups are prioritized, then considering a request by start-ups for early publication and fast tracked examination by the Indian patent office, it is possible that the timeline of 5 years can be brought down to around 2 years, which could help innovative start-ups capitalize and realize the value of their inventions at the earliest.
In order to fast track patent applications, the new Patent (amendment) rules, 2016 have brought some changes in the patent process to include an option for expedited examination of patent applications. Such, expedited examination request by a start-up is expected to cut the patent process timeline by a year or two. Further, the time for putting an application in order for the grant has been reduced from one year to six months.
Rebate on the filing of applications
As per the data provided by Department of Industrial Policy Promotion ("DIPP") around 35 startups had availed the benefit of the rebate provided under SIPP by end of 2016. As per the recent Patent (amendment) rules, 2016 a new ‘Start-up’ category has been introduced. A rebate or a discount is applicable for especially for 'startups' now under the new and improved patent regime post-SIPP. The rebate will be applicable to the government fee for different actions involved in process of registration, including filing, examination, form filings, etc.
How is the IP filing going to take place on ground level in the new regime
Appointment of Panel of 'Facilitators'
The Controller General of Patent, Designs and Trademarks (CGPDTM) will appoint a panel of facilitators for assisting start-ups. As part of the Start-up India campaign, the CGPDTM has issued the details under the SIPP scheme, which includes the following details:
Criteria of appointment of a facilitator – In order to implement the SIPP scheme, the CGPDTM will empanel facilitators (provided they qualify at least one of the criteria provided below) and regulate the conduct and functions of the facilitators from time to time.
The following are eligible to act as a facilitator:
- Any patent agent registered with the CGPDTM.
- Any trademark agent registered with the CGPDTM.
- Any advocated defined under The Advocates Act, 1961 who is eligible to practice law, is well versed with the provisions of the Patent, Trademark & Design act, and is actively involved in the filing and disposal of applications for patents, trademarks and designs.
- Government departments, organizations, agencies like TIFAC, NRDC, BIRAC, DEITY, DSIR, etc.
Functions of a facilitators: The CGPDTM has listed the core functions of the facilitators but can revise it from time to time. The important functions include:
- Providing general advisory on different intellectual property rights to startups on a pro bono basis,
- Providing information on protecting and promoting IPRs to startups in other countries on pro bono basis,
- Providing assistance in filing and disposal of IP applications related to Patents, Trademarks and Designs at national IP offices,
- Drafting complete/provisional specifications for inventions of start-ups,
- Preparing and filing responses to examination reports and other queries, notices or letters by the IP office,
- Appearing on behalf of start-ups at hearings as may be scheduled,
- Contesting oppositions, if any by other parties,
- Ensuring final disposal of IPR applications.
The flipside of making things cheaper for startups- Quality of facilitators will take a substantial hit
According to the scheme, the fee for the empanelled facilitators for any number of Patents, Trademarks or Designs that may be applied for by a start-up, is fixed as a total of Rs 20,000, if it is without opposition and Rs 15,000 if it is with the opposition, for patents.As part of the SIPP scheme, eligible start-ups will only be paying the required government fee for IP filings in India and abroad. No professional fee will have to be paid to the empanelled facilitators by the start-ups.
Complex nature of Patents makes fees unappealing for established attorneys
A Patent document is a highly technical and legal document, which has to be prepared with proper care and expertise and even a small mistake in it could result in serious impact on the particular patent in a long run. At present, there is a cost involved in drafting the patent document, applying for a first examination report (FER), responding to the objections raised by the examiner in the FER, drafting further amendments, among others, apart from the formal process of filing the patent application.
Period of the scheme: The scheme will be run on a pilot basis for a 1-year period from the launch of Start-up India campaign.
Ever since the Prime Minister, Narendra Modi launched the Start-up India initiative, there have been innumerable policies by various departments of government and funding agencies. These reforms are being made to provide an easy environment for the start-ups to do business. Earlier this year, Department of Industrial Promotion and Policy (DIPP) unveiled a portal and an app for Indian start-ups to receive latest updates on notifications and circulars issued by the government and different funding agencies. The government had also announced various tax benefits proposed under the Finance Bill 2016 for the start-ups. Besides, SEBI and RBI have been helping start-ups to provide business-friendly environment every now and then. Only time will tell how the scheme kicks off and is received by start-ups.
Legistify connects you with the best lawyers in India and top Chartered Accountants in India with simple telephonic conversation or email. Call us at 846-883-3013 or send us an email at firstname.lastname@example.org to get started.