FILING OF PATENTS BY STARTUPS AND SMALL ENTITIES IN INDIA
Start ups and Small Entities in India have been contributing significantly to development of economy. They often provide support to large scale industries and many other organizations by contributing innovative ideas, solutions, raw materials thereby forming an integral part of value chain for building a conducive environment for innovation, development and entrepreneurship which is the backbone of any economy. Recently, it has been revealed that India has 88 startup unicorns with a total valuation of $295.99 Bn. The government recognizes the importance of the Startups for the development of the nation, and as a result of which many schemes and initiatives have been launched to facilitate their growth. Start ups and Small entities are thus crucial for filing of patents in various innovative domains of technology that can create value in society.
In India, patent application can be filed by any individual by himself or jointly who claim themselves to be the first and true inventor or by assignee or even by legal representative of deceased person. Thus applicants can be start ups and small entities as well. In case of filing of patents in India, both startups and small entities are being given benefits in terms of reduction in filing fee. To avail the benefits, a startup must be recognised as a startup by the competent authority under Startup India initiative, whereas in case of small entities the recognition for availability of benefits are subjected to the Micro, Small and Medium Enterprises Development Act, 2006. Knowledgentia Consultants is recognised as a start up facilitator in India by the Government and over the years we have provided advice and legal opinion to varied start ups and small entities playing an instrumental role in their growth and development.
CRITERIA FOR ‘STARTUP’ AND ‘SMALL ENTITY’ UNDER THE INDIAN PATENTS LAW
As per the Patents Rules, 2003, the Rule 2 (fa) defines ‘small entity’. The criteria for an entity to be specified as a medium enterprise (under Micro, Small and Medium Enterprises Development Act, 2006) is that its Investment in Plant and Machinery or Equipment should not be in excess of Rs.50 crore and Annual Turnover should not be in excess of Rs. 250 crores.
The definition of startup was introduced by a notification published on 1st December, 2017. In case of a startup, if it’s a domestic startup it is required to be recognized under Startup India Initiative, whereas in case of foreign startup it is required to fulfill the criteria for turnover and period of incorporation only. One thing which should be noted that as per the revised guidelines for recognition of startups ‘Entities incorporated outside India will be ineligible for recognition’.
Therefore, to clearly understand the criteria for eligibility in case of foreign startups we are required to refer the notification published on 19th February, 2019 by the Department for Promotion of Industry and Internal Trade, the notification provides us the criteria for an entity to be considered as a startup,
(a) An entity shall be considered as a Startup:
- Upto a period of ten years from the date of incorporation/ registration, if it is incorporated as a private limited company (as defined in the Companies Act, 2013) or registered as a partnership firm (registered under section 59 of the Partnership Act, 1932) or a limited liability partnership (under the Limited Liability Partnership Act, 2008) in India.
- Turnover of the entity for any of the financial years since incorporation/ registration has not exceeded one hundred crore rupees.
- Entity is working towards innovation, development or improvement of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation.
All start ups are eligible for 80% rebate in patent filing fees .
A foreign startup is classified under the category of ‘small entity’ in India and can claim the benefits of a small entity during the filing of patent. It is required to fulfill the required criteria, subsequent to which it will be eligible for;
- A fast-track patent application/expedited examination of patent;
- Panel of facilitators to assist in filing IP applications, government to bear facilitation costs; and
- 80% rebate in filing of patents.
Although, a foreign entity can’t be recognised as a ‘Startup’ in India, it only needs to fulfil the criteria, to claim the fee benefits provided by the government. A foreign entity needs to submit at least a copy of Certificate of Incorporation or Registration or any other document that can verify its date of incorporation, and a copy of document that can verify their financial details along with Form-28 under the Patents Act, 2003.
The ecosystem provided by the authorities for encouraging the startups and small entities to file patents has been very conducive for the applicants. Although the number of filings in India have been tripled in last five years, there’s still a long way to go as the number of patent filings in China and USA are way higher. At Knowledgentia Consultants, we have one of the best patent consultants in India, who offer advice regarding filing and procedure with respect to patent applications fro start ups and small entities. We are your one-stop solution for all kinds of legal, compliance and supplemental matters concerning patents. In case of any query regarding this matter you may email us at firstname.lastname@example.org or visit our website –https://knowledgentia.com/.
PUBLISHED BY MS. HARINDER NARVAN, MS. APARNA JAIN, MS. AASHRIKA AHUJA AND MR. ABHISHEK PARMAR ON 24.03.2022