IPR for startups — Part II Patents

Remember the time Gavin Belson decides to license his patents to Pied Piper? Or all the times the question ‘do you have any patents’ came up on Shark Tank? If IPR was Destiny’s Child then Patents would definitely be Beyonce. Although patents are not unknown to people in tech, there might be a few things that you need to know about them as IPRs.

This is a four-part series where I explain certain key points on Intellectual Property Rights (IPRs). You can read the first version of the series where I discuss trademarks, here.

What are patents?

Patents are limited monopoly rights given to new and novel inventions. In India and in most countries patents are granted for a period of 20 years from the date of filing of the application. Once granted the patentee (or the owner of the patent) has the right to manufacture, use, sell, or import the patented product.

What can be patented?

As stated, patents can be granted for products as well as processes that are new, novel and capable of industrial application. An example of a product patent can be a” low-tack, reusable, pressure-sensitive adhesive used with paper”, popularly known as Post-it. You’ll be surprised to know how many everyday items have a patent behind them.

Merely satisfying all the three conditions does not guarantee the grant of a patent. There are other conditions that act as checks throughout the journey of a patent application that might result in the patent being revoked; such as the scrutiny by the Patent Office, Opposition by competitors etc.

What about Software?

There has been some ambiguity regarding whether software could be patented in India. The Indian Patents Act excludes mathematical or business methods, algorithms and “computer programs per se” from the scope of the patentable subject matter. The pervious guidelines had clearly stated that to qualify for a patent the software was to be in conjunction with a novel hardware. Thus allowing for a number of apps performing the same function to co-exist. However, the 2017 Guidelines contain no mention of the ‘hardware’ provision. It has also been noticed that a few purely software/ business method patents haven being granted in India, recently.

Although in any dispute between the provisions of the Act or the Guidelines, the Act would be given prominence.

The new pro-startup patent policy

To encourage innovation and entrepreneurship, the Patent Rules have been synced with the Startup- India program. The amended Rules now define a startup as an entity, which is less than 5 years old and has an annual turnover of less than INR 25 crores, in addition, the entity must be working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property. The Rules also provides for a system of speeding up the granting process by including startups into the list of entities that could apply for the expedited examination. Expedited examination reduces the time taken by the examiner to make his report from any time between one to two months. The fees for requesting an expedited examination are INR 8000 for a startup. Hence if you are a startup it’s best to keep the timelines for qualifying as a startup in mind and planning the patent application accordingly.

How soon should I file a patent?

The more the patent is kept a secret before filing the better. Patents are granted for new and novel inventions hence it is best to keep it under wraps until application. As any disclosure of the patent could work against it as prior art or prior publication. Though this does not mean that once the invention is discussed or presented it cannot be patented, there are safe guards in the form of a grace period. In India, the Patent’s Act provides for a grace period of twelve months from the publication of the invention in front of a learned society or the working of the invention for reasonable trial. Hence as soon as the invention is displayed or disclosed the clock starts ticking.

Patent Licensing and Patent Infringement

A patent can be used by someone other than the owner, lawfully, by means of a license. You could be a licensee and use the patent by entering into a licensing agreement with the patent owner and paying the royalty fee. The licensee of a patent would have the same rights as the owner of the patent.

The use of a patent without the authorization of the owner is called infringement. The patent gives the owner and or the licensee the authority to sue the entity using the patent without their authorization. The Apple versus Samsung saga is one of the classic examples of patent infringement.

Organizations such as Tesla and more recently Google have put their patents on an open license, hence breaking down the patent wall. This does not mean that these innovation giants are keeping a free for all patent buffet, these patents are available on entering into an agreement with a non-assertion pledge (simply put, as long as you do not misuse the patent or try to sue me I will not sue you).

Hence it is always wise to look into the plethora of open license patents before venturing into seeking a licensing deal. Given the ambiguity regarding software patents also, it is better to see if the startup is not infringing on any existing patents. Thus to sum up patents are a limited monopoly right granted to new and novel inventions. These rights are granted after careful scrutiny. The owner of the patent or a licensee can use the patents, and the unauthorized use by a third party would qualify as infringement.

The views expressed in this article do not constitute legal advice.

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