With start-up fever rising in India, there is also rise in improper investments. In other words, investment without proposer due-delegacy can be referred as bad investment. Basically, start-up can be broadly divided into two categories which we seen in perspective of Intellectual Property are 1. Services oriented start-up and 2. Technology based start-up.
- Service oriented start-up generally have a unique business using existing technology, e.g.: Ola, Flipkart, Zomato, Mintra software companies and the like. In these kind of industries even if they have an innovate idea, these business models or the softwares cannot be protected under patent law/protection in India. Copyright can be filed but it gives very narrow protection. Therefore, you may see rise in companies with similar concept. E.g. Amazon-Flipkart-Snapdeal, Grofers-Bigbasket- BaniyaBabu-Amazon. These companies largely survive on aggressive marketing supported by good funding. Larger is the funding it’s easier to do business and pass on benefits to the customers and thereby creating a database of loyal customers, which even can be sold with the brand later on.
- Technology based Start-ups generally have an innovative product, which can be protected under patent. A start-up requires production facility, marketing and sales team. As the product is protected by patent, it’s very difficult for any competitor to enter this market by making minor modifications. Patent gives a border protection, provided that it’s drafted at least correctly. Number of start-ups in these domain are very less. We can see many companies which are presently large corporation but initially starts ups with IP savvy strategies like QUALCOMM, Agrima Infotech, Huawei, Lenovo and like.
Innovative product can be protected under “Patent” and or “Design Registration”. Patent provides protection for the technology and “Design Registration” also referred as “Design Patent” for outer aesthetics. Under normal process 4-7 years are required for getting a grant for “Patent” and for getting Design registered/approved 03 months to 2year. Filing does not mean it is registered. After registration/grant, a certificate is issued and the status is accessible to all on ipindia.nic.in website only.
Most of the first time investors invest in a company, which has filed a patent application. But, filing of a patent application is the first step, which does not guarantee grant or protection or monopoly in the defined jurisdiction. Anyone can file anything with the patent office and still an application number will be issued. Which is a very normal process. There is no restriction on filing of a patent application, but there are criteria for grant of the patent application. Before filing or after filing the patent application a patentability search will also reveal the possibility of grant.
Normally, after filing a patent application, it’s published in the patent journal, giving an opportunity to any interested person/party to oppose the grant of the patent. In most of the case opposition (pre-grant oppositions) are not filed. Still the patent application is examined to check whether the invention that is applied for patent is patentable or not.
- Novelty – The invention should be new world wide,
- Invention Step – even if the invention is new, it should not be obvious modification (E.g.: new application of the known machine, composition etc., mere change in material, replacing one technology with other know technology and the like)
- Industrial application.
Examiners do a thorough search to find relevant citations for negating grant of the patent application based on the write-up submitted to the patent office and then try to negate the patent based on inventive step with combination of documents. This sent as an examination report. Thereafter, a hearing may be called for resolving any pending queries and thereafter the patent application is granted. After grant, one can file patent infringement cases and claim retrospective damages if any.
Even if the patent is granted there may be a possibility, that the invention (a portion) may be infringing a live patent. Which may cause major financial problem. This search is generally referred as Freedom to Operate (FTO) search in general done by patent professionals.
At last valuation of the patent should be done before doing any transaction.
Thereafter, it would be good to go ahead with any contracts and financial transactions.
Therefore, before investing into any patent application, it would be recommended to check the quality of the draft, patentability, infringement, and then decided to make the investment. Additionally, valuation will give approximate estimation of expected profits.
Suneet Sabale – Founder & CEO Brainiac IP Solutions,
Mechanical Engineer, Patent Agent, Visiting Faculty @ RGIIPM and Savitri Bai Phule Pune University.