A jump start in IP protection in India

India is home to some world-renowned organisations, such as Tata Motors (which owns Jaguar Land Rover); Indian Oil Corporation, an oil and gas company; and Reliance Industries, which claims to be the largest polyester yarn and fibre producer in the world.

While these companies may have established themselves on an international level as dominant forces in their markets, what about the smaller companies that India has to offer?

As do their larger brothers, smaller businesses need a strong grasp of IP if they want to establish themselves among their competition.

However, a lack of understanding of the importance of IP protection can hinder smaller businesses in India from finding success.

“Startups have been recognised as a source of innovation, technology and ideas,” Ranjan Narula, managing partner at RNA, Technology and IP Attorneys tells WIPR.

Despite this, he says, startups often need guidance on how to reap the benefits of their IP.

“At the early stage, startups ignore investment in IP protection and focus more on customer acquisition,” he explains. “Thus, it is important to educate them on the importance of IP and how they can leverage their IP for raising funds and retaining competitive advantage.”

New rules

Answering this call for more education, the Indian government addressed the knowledge gap in its Trade Mark Rules, 2017, published by the country’s Department of Industrial Policy & Promotion on March 6, 2017.

The rules were designed to streamline India’s IP regime and improve the ease of doing business.

The rules have substantially increased standard application fees (in some cases up to double), but they offer financial relief to individuals, small enterprises and startups, in an effort to incentivise filings among these categories. Small companies now have to pay only 50% of the amount they were paying before the amendment.

Vikrant Rana, managing partner at SS Rana & Co, explains that the official trademark filing fees for these entities is INR 5,000 ($73).

Rana describes smaller businesses as those that are “fresh into an industry or trying to make their efforts count”.

“Usually, these businesses revolve entirely around creative content (which can be protected as copyright) or an invention (which can be protected as a patent),” he explains.

“So, the choice becomes either to protect and strengthen their above-mentioned critical assets so that they can focus on making a mark through their business, or to give it all up for others to misuse their invention, technology or mark in the way they want to.”

One of the crucial benefits of protecting a brand is to make it look more attractive to investors, which will favour the business in the long run, Shailendra Bhandare, counsel at Khaitan & Co, tells WIPR.

“With protection, smaller businesses are in a position to invite funding, monetise transactions, generate employment and promote India’s development and self-sufficiency,” he says.

“Further, the protection and monetisation eventually encourage innovation.”

An example of this, says Bhandare, is Walmart’s acquisition of Flipkart (a well-known Indian startup) in May this year. At $16 billion, it was the world biggest e-commerce acquisition, adds Bhandare.

He says that although not all startups succeed, the general feeling in India towards such enterprises has been encouraging due to success stories such as Flipkart.

More incentives

Reducing filing fees is just one way that the government is incentivising smaller entities to register trademarks.

“Expedited registration procedures, simplification of forms for filing applications, electronic filing and communications, and awareness of IP through government agencies are some of the additional aspects which have encouraged smaller businesses,” says Bhandare.

Aside from the new rules, the Indian government, under Prime Minister Narendra Modi, also introduced a project called the Scheme for Facilitating Startups Intellectual Property Protection (SIPP). This system, which is part of the ‘pStartup India’ initiative, was introduced in 2016 and is designed to promote innovation and IP registration among startups.

Under the initiative, a number of key ‘Action Points’ are provided for, with the SIPP system falling under ‘Action Point 4’.

To help achieve this, the government has assigned registered trademark agents as facilitators.

“The startups will receive IP-related services from the facilitators, without paying any professional fee,” says Rana.

“Their services could include information and assistance related to filing trademark applications, filing responses to examination reports from the trademark registry, and appearing on behalf of startups at hearings.”

In addition, while the advisory services are to be rendered pro bono, the facilitator will be paid INR 5,000 ($72) by the Indian government at the time of filing the trademark application.

“The government certainly needs a round of applause for this novel and forward-looking initiative,” comments Rana. “Nevertheless, a few tweaks could make the scheme even better.”

Even if the application is abandoned or withdrawn, the facilitator will be paid the fee for filing the application. But, as Rana explains, facilitators can claim they filed applications just to earn the fee.

“The scheme does not provide any mechanism to check the filing of applications which are frivolous,” he says.

“Thus, a provision needs to be incorporated which mandates the need to record in writing the reason for advising on prosecuting in the first place.”

Number crunching

Before the rules were introduced, trademark filings in India were on the increase. According to the World Intellectual Property Organization (WIPO), there were 313,623 applications filed in 2016, compared to 289,713 in the previous year.

With the exception of 2012 when the number of applications dropped slightly compared to the year before, filings have been on the increase since 2007.