Patent Strategy for Startups in India and Why it Matters?
Learn why patent protection is crucial for Indian startups and discover effective strategies to secure your innovations and boost growth
A business or a startup might be operational by providing a service or a product. But at the core, any business stands on its innovations. Unique ideas and concepts that are materialized into products make money for the business, hence it is important to protect these ideas. But how can a company legally protect and claim ownership of something intangible? This is where Intellectual Properties and Patents come in.Â
An ‘Intellectual Property,’ as the name suggests, is an idea or invention that is intangible and is the property of a company that invested in its development. One great example is Kevlar, the popular bullet and heat-proof material. It was developed by the defense company DuPont. Since DuPont has the IP rights and patents for Kevlar, no other company can make it without their permission, even if the materials to make it are available without any issues.Â
Intellectual Properties are protected by patents which are official documents submitted to government agencies. These patents grant companies the right to make, use, or sell a product for a limited period of time. To get the patents, a company or startup must prove that their invention is unique.Â
So intellectual property is an idea or invention that a company has a legal right to, while a patent gives the owner of the IP to make, sell, or use products or services that are based on the Intellectual Property.Â
Importance of Patents for Startups
The following are some points to consider if you're wondering - Are patents worth it for startups?:Â
Lowers Competition:Â
Patents grant market exclusivity and exclusive rights to your invention, allowing you to capitalize without fear of competition. This competitive edge helps you establish a strong brand identity and distinctiveness. Essentially, a type of monopoly is created because only you can use the patented idea. This exclusivity enables you to maximize your market share and prevent others from copying your innovation, solidifying your position in the industry.
Multiple revenue streams:Â
Having a patented technology or invention opens up multiple revenue streams. You can license your patented ideas to other companies for royalties, generating consistent income. Another way is to enter into collaborations with other businesses to develop products and services using your intellectual property. These partnerships not only bring in money but also enhance your brand’s visibility. The ability to monetize your patents through various channels allows for a steady flow of revenue and strengthens your business's financial position.
Brand Identity:
Once you’ve patented your ideas, no one else can use them, making your technology or feature distinctive to your brand. Over time, this technology becomes synonymous with your brand name, reinforcing your brand identity. This exclusivity builds customer trust and loyalty, as they associate your brand with unique and innovative solutions. A strong brand identity, built on patented technology, improves your company’s reputation and can lead to increased market share and customer retention.
Attracts Investors:Â
Patents add credibility to your startup, reassuring investors that your company has a unique selling proposition (USP) or specialization that sets it apart from competitors. Patents reflect your expertise and technological understanding, making your business more attractive to potential investors. The security of a patented innovation provides investors with confidence in the long-term viability and potential profitability of your startup, increasing your chances of securing funding.
Law and security:Â
Once you have a patent, your idea is protected by law, safeguarding your startup from any unauthorized use of its patented ideas. If someone copies your idea or process, you can report them for infringement in a court of law. This legal protection is great for maintaining your competitive edge so that your innovations are not exploited by others. Patents provide a security framework that helps startups defend their intellectual property and maintain their market position.
There are some drawbacks to the patenting process in India. The first-to-file clause means that the first person to file a patent application will be granted the patent - and not the one who invents. This can be extremely challenging in a competitive environment.Â
Also, patents provide exclusive rights for a limited time frame, usually around 20 years. After this period, the patented technology enters the public domain, allowing others to use it freely. This time limitation requires startups to continuously innovate and develop new technologies to maintain their competitive edge.
Suggested Read - A Complete Guide on Early-Stage Startups in India
Patent Strategy for Startups
A patent strategy involves a well-coordinated plan to develop, manage, and utilize intellectual property rights to achieve a company's business goals, whether locally or globally. This strategy should be tailored to fit the unique aspects of the company's research, promotions, and overall business approach, as there is no one-size-fits-all solution. Each company needs a customized approach to its patent strategy.Â
Now that we have established patents are indeed important for a startup in India, let’s discuss some smart patent strategies so you can get the most out it:Â
Utilize government schemes:Â
The Indian government has launched several initiatives to make patent filing more accessible and affordable for startup owners. The "Make in India" initiative has significantly reduced the costs associated with patent filing, registration, and processing, allowing more startups to protect their intellectual property.Â
The Scheme for Facilitating Start-ups Intellectual Property Protection (SIPP) provides assistance in filing and processing patent, design, or trademark applications. This scheme offers expert guidance and covers the facilitation fees incurred during the patent application process for selected industries. Utilizing these government schemes can help startups secure their innovations while minimizing costs, making it easier for them to focus on growth and development.
Market Research:Â
Conducting thorough market research is essential when considering a patent. Startups need to identify potential users or customers for their technology and assess how much these customers would be willing to pay. It's also important to study the distribution methods and their costs to reach the target market.Â
This analysis helps determine whether the investment in obtaining a patent will be profitable. By understanding the market demand and potential revenue, startups can make informed decisions about whether to proceed with the patent process, so that their investment yields significant returns.
Make the Process Faster:
The government of India has introduced the "Tatkal" clause to expedite the patent filing process for first-time applicants. Typically, the patent process can take 5-7 years to complete. However, with the Tatkal scheme, this duration is shortened to about 2.5 years. The pricing for this fast-track service is quite affordable, ranging between 1600 and 8800 INR. This expedited process allows startups to protect their innovations more quickly, allowing them to bring their products to market faster and gain a competitive edge.
With the YNOS startup database, you can access a comprehensive list of businesses in your industry that have filed patents. To explore our database of over 200,000 startups, go to the startup product on the homepage, select the performance tab, and click on patents. Use the dropdown menu to filter startups by the number of patents they have filed. After clicking refresh, you will get a complete list of startups with patents in your area of interest. This tool helps you stay informed about industry trends and potential competitors.
Is a Patent more profitable?:Â
Before filing for a patent, startups need to evaluate whether the innovation has enough merit to justify the work and expenses involved. Consider whether sharing the patent with others in the industry through licensing alliances or commercialization would be more profitable. It's important to assess if the patent will significantly contribute to long-term profits. Additionally, the maintenance fees required to keep the patent valid throughout its lifetime should be factored into this decision. A comprehensive evaluation of these aspects will help determine if pursuing a patent is the best financial strategy for the startup.
A good patent strategy:Â
Every business has unique needs, and a strategic patent should cater to these specific requirements to yield the best results. Characteristics of a good patent strategy include:
Aligning with overall business objectives based on market and industry research.
Providing strong legal protection for the business and its intellectual property.
Ensuring the patent does not infringe on the rights of third parties.
Preserving the company’s right to further develop the patented innovation.
All these factors must be tailored to the specific business type, industry, competitors, company goals, and market research. It's also important to remain open to the possibility of abandoning the patent if it loses value, such as when the technology becomes outdated. In such cases, selling or abandoning the patent can save on maintenance fees and reallocate resources more effectively.
Final WordsÂ
Things are already tough for a new startup with hundreds of things to take care of. This is why it's so important to develop a strong and effective patent strategy if your startup aims to have one or multiple IPs. Getting patents granted can completely change the game for your startup, making it successful sooner than you can imagine.Â
So it is recommended that you develop a great patent strategy and ensure that everything goes smoothly. This is just as important as hiring the right people for your company or getting funding. An informed entrepreneur is an investable entrepreneur.