The Patent, Trademark Facilitators and the meaning of Startup

The Patent and Trademark Facilitators and the meaning of Startup: 

How do the facilitators benefit the Startups and self?

There are two documents which should help to understand the purpose of Trademark, Patent, & Design Patent Facilitators, and How their services would help the Startups.

First Document issued by the  MINISTRY OF COMMERCE AND INDUSTRY, Department of Industrial Policy and Promotion vide notification dated 17th February 2016,  G.S.R. 180(E).- ‘Startup India’, which is an initiative for creating a conducive environment for startups in India. In this aspect,  various Ministries of the Government of India have initiated a number of activities for the purpose. To bring uniformity in the identified enterprises, an entity shall be considered as a ‘startup’-

Main eligibility criteria.
a)  Maximum age 5 years, since incorporation/registration
b)  Turnover shall not be more than 25 Crore in the last 3 financial years.
c)   Shall be Driven by innovation, technology, intellectual property, and commercialization of Goods/Products and Services
d) A significantly improved existing product or service or process, that will create or add value to customers or workflow

It is not considered as a startup when an Entity is formed by splitting up or reconstruction of an existing business

What is mean by an entity.:

  1. a private limited company (as defined in the Companies Act, 2013), or
  2. a registered partnership firm (registered under section 59 of the Partnership Act, 1932) or
  3. a limited liability partnership (under the Limited Liability Partnership Act,2002).
  4. Turnover is as defined under the Companies Act, 2013.

Apart from IP Guidance and Financial support,  extended by the Government, Startups can also have tax benefits, however, such startup shall require obtaining a certificate the lnter-Ministerial board of Certification consisting of:
a) Joint Secretary, Department of Industrial Policy and Promotion,
b) Representative of Department of Science and Technology, and
c) Representative of Department of Biotechnology.

As such,  it is going to be a tough ride to get the recognition as a Startup, because of the following defined conditions.

  1. products or services or processes which do not have the potential for commercialization, or
  2. undifferentiated products or services or processes, or
  3. products or services or processes with no or limited incremental value for customers or workflow would not be covered under this definition.
  4. The process of recognition as a ‘startup’ shall be through mobile app portal of the Department of Industrial Policy and Promotion. Startups will be required to submit a simple application with any of following documents:
    a) a recommendation (with regard to innovative nature of business), in a format specified by Department of Industrial Policy and Promotion, from any Incubator established in a postgraduate college in India; or
    b) a letter of support by any incubator which is funded (in relation to the project) from Government of India or any State Government as part of any specified scheme to promote innovation; or
    c) a recommendation (with regard to innovative nature of business), in a format specified by Department of Industrial Policy and Promotion, from any incubator recognized by Government of India; or
    d) a letter of funding of not less than 20 per cent in equity by any Incubation Fund,/Angel Fund/Private Equity Fund/Accelerator/Angel Network duly registered with Securities and Exchange Board of India that endorses innovative nature of the business. Department of Industrial Policy and Promotion may include any such fund in a negative list for such reasons as it may deem fit; or
    e) a letter of funding by Government of India or any State Government as part of any specified scheme to promote innovation; or
    f) a patent filed and published in the Journal by the Indian Patent Office in areas affiliated with the nature of business being promoted. Department of Industrial Policy and Promotion may, until such mobile app/portal is launched make alternative arrangement of recognizing a ‘startup’.  Once such application with relevant document is uploaded a real-time recognition number will be issued to the startup. If on subsequent verification, such recognition is found to be obtained without uploading the document or uploading any other document or a forged document, the concerned applicant shall be liable to a fine which shall be fifty per cent of paid up capital of the startup but shall not be less than Rupees 25,000.

These above conditions are already in force.  But it is very important to note that Startup registration shall happen through the mobile app portal of the Department of Industrial Policy and Promotion. The app link is available here  http://www.startupindia.gov.in/download-app.php

It is necessary to submit valid documents, but, in case one cannot comply with document evidence and if applied with forged documents, such case the concerned applicant shall be liable to a fine which shall be fifty per cent of paid up capital of the startup but shall not be less than Rupees 25,000.

The second document, which answers the second question that, how do the facilitators benefit the Startups and self?

The Second Document, released by the INTELLECTUAL PROPERTY INDIA PATENTS/DESIGNS/ TRADEMARKS/ GEOGRAPHICAL INDICATIONS explains what are the benefits vide CG/F/Start-up/Guidelines/2016/79  Public Notice  Dated 8-6-2016

What scheme it is, how does it help?  In my opinion its a move to compete with the Developed IP markets. That is the reason, a Startup can save huge amount fo service fees. As far as the fees required for obtaining a Patent/Trademark/Design requires two kinds of fees.

As such there two kind fees/costs which are required for obtaining a Patent/Trademark/Design.

First, the Fee applicable to be paid the patent and Trademark Registry.Second, Services charges to be paid to the Agent, Attorney, who handle the filing and prosecution procedures. For example,  fee applicable for A Trademark Application before the registry under TM Rule 2017 requires is an INR 4500 fees, which has to be paid to the registry by individual applicant/small enterprise/startup, and for the section option, whereas for other types of companies. This fee has to be paid by the applicant. The fee is not subsidized.

The Second, type of fee/cost to be paid as Services charges to the Trademark Agents and Attorneys. Normally, this fees varies according to the quality of the services provided by the attorney and the human resources they have. Normally, for trademark application process Trademark Agent charges a service fee ranging from 7500 to 10000 per application. In the case of a patent,  it might vary from 25000 to 50000 per Patent.

This is where the Government is trying to achieve 2 things, first to promote IP awareness, innovation, development and in the interest of benefit of the society. Second to get innovations and development of technology and commercialisation. In-turn the development of industries in the Country and to stay competent in the world market.

In the scheme, the applicant only pays the fee in advance, services charges are paid by the Government and it is paid directly to the agent/attorney.

As per the Guidelines for Facilitators, and Start-up schemes are defined under 3 kinds of  for filing and processing applications, Namely the  Patent, Designs, and Trade Marks

For Patents:

i)A start- up willing to file a patent application for his invention shall select a facilitator from the list of facilitators published on the official website of CGPDTM i.e. www.ipindia.nic_in and contact him directly for preparation of application. If the startup is unable to select a facilitator, it should contact the Head of Office of the respective Patent office as per jurisdiction, who shall provide 3 names of facilitator and the startup shall finalise the name of Facilitator.

ii)The facilitator after assessing the patentability of the invention and other aspects as per Patents Act and Rules and being satisfied that the application for patent can be filed, shall draft the patent specification in consultation with the start up.

iii. Thereafter, the Facilitator shall file a complete Patent specification at the appropriate Patent Office on behalf of the start- up as per jurisdiction by following the prescribed procedure under the Patent Act and Rules

iv Fee for filing patent application and other statutory fees, as per First Schedule, shall be borne by the start up.

v. After a patent application is received by the Patent Office the facilitator shall submit the claim for fees as per the fee schedule given in SIPP Scheme. A letter addressed to the Head of Office of the respective Patent Office, giving details of claimed fee for drafting of application and his ID proof as a Registered Patent Agent, shall be submitted along with the invoice .

vi. The Head of Office shall verify the ID of the facilitator and ascertain the suitability of payment and arrange for the payment of fee to the facilitator after receiving such claim from the facilitator.

vii. Simultaneously with making the payment to the facilitator, the Head of Office shall forward to the Office of the CGPDTM the details of the application and payment made to the facilitator.

viii. The facilitator shall monitor and perform further steps of proceedings of startup’s patent application, prepare the reply to any query from Patent Office, attend the hearings, etc. and shall file the relevant documents in the Patent Office by following the time fine , as and when required, on behalf of the startup and may submit the claim for payment of the fee as per the fee schedule of SJPP Scheme as per the procedure elaborated above.

Designs : For filing and processing applications for designs, the list of Facilitators for Patents will be applicable and the procedure for claiming the fees by the Facilitator, after he files the design application for a startup as per the designs Act and Rules, shall be as elaborated above.

Trade Marks:

For filing and processing applications for trademarks, the list of Facilitators for Trademarks will be applicable and, after filing a trademark application for a startup as per the Trade Marks Act and Rules, the Facilitator shall submit the claim for payment of fees to the respective Head of Office of the Trade Marks Registry who shall follow the procedure as elaborated under para vi and vii.

Stage of Payment paid by the Department to the Agent  

Patent Trademark Design
At the Time of filing of Application 10,000 5000 2000
At the time of final disposal without opposition 10,000 2000 2000
At the time of final disposal with opposition 10,000 5000 4000

Note: If any application is withdrawn or abandoned before disposal of application, the facilitator shall be entitled to fees only for a filing of an application and not for disposal of the application.

 Comment:

While our country is almost 1 decade old in adopting new technologies and very lagging in quality awareness, It is a welcome move by the Government to promote IP growth in the country, indeed the growth of technology and innovation in Goods and Services that are being traded in the Country.

However, the scheme may be having practical difficulties in promoting and implementing it an efficient manner. Reasons…

  1. we are not sure about the eligibility criteria for the startup. Second, how many applications can be filed by a Single Startup?
  2. how many applications can be filed by a Single Startup?
  3. What are the mechanisms that check the validity of the filing?
  4. Criteria used for determining the innovation part of a Startup.?

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