The COVID-19 pandemic has put the economies around the world to a standstill, Indian economy has been derailed due to the nationwide lockdown which has lead to disruption of the supply chain. Governments around the world have come with plans to revive the economy. Following the lead, the Indian Government has also realized the urgent need of putting a revival plan in place in order to mitigate the loss. The Government of India has pushed for the revival of our economy by adopting various economic reforms to boost our economy. Amongst the numerous measures, the Government has introduced a policy for pushing local industries called ‘AATAMNIRBHAR BHARAT‘ i.e. manufacturing and using goods made in India. This policy has been introduced to promote the startup ecosystem. The policy makes the startup ecosystem more important than ever not only for the revival of the economy but to also compete and comply with the global standards.
Intellectual Property Rights and its Grave Importance
Over the years, the Government of India has made an honest effort to spread awareness regarding the importance of IPR amongst the startups by highlighting its necessity during current times and also by offering various incentives for startups to protect their IPR rights such as offering tax incentives and rebates. However, despite the best efforts, there exists a massive void amongst the entrepreneurs in relation to understanding the importance of IPR before or during the operation of a startup. In order to understand the protection of IPR, let us understand the type of IPR and its protection under the Indian laws in the Startup ecosystem. The India IPR law is divided into various categories that offer unique protection on its own. The categories are as follows:
Every startup that wishes to grow big, would require to necessarily protect its brand from the very inception. The Trade Marks Act, 1999 provides any individual/proprietor/ company to file a trademark not only for the name/logo/mark that already is into existence but also those that any entity contemplates for being adopted, on ‘proposed to be used basis’ as well. This helps in claiming rights over the particular name/logo/ mark so that no other entity can use and subsequently exploit it in the future. The importance of Trade Marks is of utmost importance because it not only stops any third party from exploiting it but at the same time it helps the brand to have an economical value of its own which can be commercially exploited in the future to reap benefits.
Another extremely crucial aspect for startups is the protection of their ideas that can be expressed in any form i.e. writing, performance, etc. Many startups put in an abundance of creativity in developing the most attractive yet productive website/software/ applications, which are copyrightable under the Copyright Act, 1957. Since their websites/ applications/ software is the backbone of the majority of startups, special care and attention are required to be given towards their protection. If they are not protected within the right timeframe, there may be a chance that a rival or competitor may exploit any expression of an idea through various modes, as mentioned.
Another extremely crucial aspect for startups is the protection of their inventions under the Patent Act, 1970. This can be the very first step for a startup to get protection for its unique product. In case, if the idea behind the invention is novel, non-obvious, and has an industrial application, the same can be patented under the Patents Act, 1970. It is an extremely important step in the process of protection of IPR as if the invention is registered, no other entity can use it without due authorization.
The term Design has been defined in the Designs Act, 2000 as the features of shape, configuration patterns, or ornament applied to any article, which are functional and have some aesthetic value. Any such industrial Design is registrable under the Designs Act. Any startup getting a design registered from the inception can restrict anyone from using it without due authorization. For example, where a startup is engaged in the beverages segment, wherein, the beverages are served in a uniquely shaped bottle which is developed by putting a lot of mental efforts. If such bottle design is registered under the Designs Act, the startup will get a right to restrict anyone from copying the design and will also be able to commercially exploit the same.
Trade secrets include any confidential business information, which gives its holder a competitive advantage over other market players. Trade secrets include manufacturing or industrial secrets and commercial secrets, formula, practice, process, design, instrument, pattern, commercial method, or compilation of information, which is not generally known or reasonably ascertainable by others. Unauthorized use of the same is considered as an unfair practice. India does not have a codified law for regulation and protection of trade secrets in India, however, trade secrets are regulated by a variety of laws such as contract law, copyright law, principles of equity, etc.
Protecting the IPR is a long-term and sustainable investment with high returns; a gift that keeps on giving. Having an IPR Protection goes a long way in giving a startup the upper hand against its competitors in the market.
Importance of IP Rights
It is extremely essential for most startups to develop a proper IPR strategy, in addition to all kinds of strategies in relation to various other modalities such as finance and sales. However, IPR protection strategy often takes a back seat and is sometimes completely forgotten by various startups. This is usually owing to the rush to enter the market to capitalize on the immediate opening in the market. In this undue haste often startups completely forget to protect their basic IP rights which a lot of competitors then take unfair benefit of and exploit their ideas and brand value. Therefore, the piecemeal approach not only costs more but also deprive startups of their valuable intangible rights, not only in the present but costing heavily in the future.
The need for an hour for the startups is to pay heed to the important concepts such as entering into Non-Disclosure Agreements (NDA) while divulging any confidential information in relation to IPR to prevent any form of exploitation of their IP rights and assets. Any person/entity/ corporation willing to use their IP assets can seek a legal license to use the same in any form. Further, in a lot of situations, a startup ends up disclosing the core idea and invention to the investors in order to raise capital. However, where the IPR is not adequately protected, the investor or partner may end up taking undue advantage by exploiting a similar idea in a different form. Therefore, sound legal advice from the inception can help startups to protect their IP rights and gradually turn them into assets for them.
Young entrepreneurs and Investors across the globe have a once in a lifetime opportunity to develop their ideas into a commercial form with the “AATAMNIRBHAR BHARAT” policy pushed by the government. However, the immediate need for an hour requires awareness amongst entrepreneurs regarding the extreme importance of IPR and the need of adopting a proactive approach towards protecting their IPR. In order to change the mindset of these entrepreneurs, it is important to make them understand the need for developing an IP protection strategy at the very inception. This is undeniable that there might be a cost involved to protect these rights but the cost is rather an investment as IPR is an asset, which will economically reap numerous benefits for the entrepreneur if protected from the very inception.
Prateek Kumar is a partner at Chambers of Jain and Kumar. The firm is a full-service law firm located in the heart of Delhi with a network of lawyers across the country.
Prateek is an alumnus of Amity Law School, Delhi, Indraprastha University, enrolled with the Bar Council of Delhi in the year 2016. He is a lawyer with expertise in the laws relating to Criminal Law, Arbitration laws, Insurance Laws, Banking laws and Intellectual Property Rights. His area of practice has largely been the Delhi High Court, District Courts of Delhi and various Tribunals, wherein several of his judgements have been reported.
In the past, he has worked in a tier-one Intellectual Property Law firm and subsequently with a former Special Public Prosecutor of CBI before the Hon’ble Delhi High Court. He is also a member of Delhi High Court Bar Association.
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