28 September 2018TrademarksBaani Talwar

On the road to better IP protection

One of the major challenges for small businesses is inadequate capital, so the protection of IP is not their priority. This is despite the fact that IP helps smaller businesses in their day-to-day business developments through marketing, product development and raising financial capital with IP assignments, licensing and franchising.

Due to their lack of IP knowledge and desire for resources, micro, small and medium enterprises (MSMEs) are always at risk of exploitation by dishonest traders who can dilute the MSMEs’ rights by misrepresenting any form of IP as their own in the Indian market.

By lowering the trademark filings fees for individuals, start-ups and MSMEs under the Trademarks Rules, 2017 by 50%, the government has tried to encourage them to file applications for creation and protection of their brand on one hand, at the same time ensuring that the competitiveness level is maintained by curbing frivolous filings from larger businesses by increasing the fees for them. This increase also helps to maintain the government’s funds, as bigger companies are the main source of revenue for the government while it provides concessional fees to small businesses.

Importance of IP rights

MSMEs play a major role in creation of new innovations which are the result of their intellect. Optimal use of IP assets and portfolios along with brand value helps MSMEs to increase the market value of their business assets.

IP protection helps in acquiring venture capital, enhancing access to finance and preventing competitors copying or using deceptively similar brands/designs of a company’s products or services. -

The question of small businesses protecting their IP rights, including any unique products or services that they own, becomes more prominent, as they are at a particular disadvantage due to their lack of knowledge, expertise or resources necessary to prevent the theft of their ideas and products, and can become easy victims of piracy, counterfeiting, and patent infringement.

The consequences of not seeking statutory protection for IP can be fatal as other market players can take advantage and launch similar brands/products with a view to creating confusion among the buyers. It is necessary to stop the infringement so that the MSMEs who are the original investors or creators can reap the benefits of their IP by enhancing the value of their business assets. Therefore, sufficient protection of a company’s IP is a crucial step in deterring potential infringement and in turning ideas into business assets with a real market value.

Furthermore, IP rights may prove to be fruitful in increasing the brand value of the MSMEs in the eyes of potential investors/banks/licensees, etc, as IP is considered to be an invaluable and intangible asset and a powerful tool which, if used in the correct manner, can substantially add value and growth to an MSME’s brand name.

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