Intellectual Property (IP) rights play a significantly important role for startups in a country to thrive and sustain. For a new entrepreneur, IP rights can help his business get going as well as the monopoly and exclusivity can aid in gaining a market advantage over others. India is known as the third best technology startup hub in the world, as per a study conducted by ASSOCHAM in association with Thought Arbitrage Research Institute. The Indian government more focused on developing the startup ecosystem with the launch of several action plans, schemes and several recent amendments in various legislative frameworks. It realizes the importance of innovation as a key factor in the growth of the economy which is strengthened by a startup-friendly IP regime in the country.
Over the last couple of years, “startup” has become a buzzword in the Indian commerce environment. In 2016, with the launch of “Startup India” and “Make in India” action plans, the focus has been shifted to encourage creativity and innovation by protecting and promoting IP rights of start-ups.
The startup ecosystem with respect to protecting their IP rights in India is friendlier now. Earlier, an entrepreneur had to await the confirmation from Inter-Ministerial Board (IMB), which used to be time-consuming, in order to reap the IP related benefits. Now, this requirement by the DIPP has been streamlined and expedited by substituting with the requirement of a Certification of Recognition from DIPP without having to go through the tedious examination process by IMB. For availing the certificate, a startup has to register itself on the official website of Startup India.
Upto April, 2017, 798 start-up applications have been recognized as start-ups by DIPP and 10 have been approved for availing tax benefits by the IMB.
Some IP related Government Schemes for Start-Ups and their relevant provisions have been discussed below:
- Start-up Intellectual Property Protection (Startup India) Scheme 
Any business entity registered in India, which is less than 5 years old, whose annual turnover is less than Rs. 25 crore in any of the preceding financial year, which is “working towards innovation, development, deployment or commercialization of new products, processes or service driven by technology or intellectual property”, certified by the Startup Promotion Board can avail the benefits under this scheme.
IP related benefits:
- Fast track examination and disposal of Patent applications.
- Setting up a panel of “Facilitators” who will advise on different Intellectual Property Rights (currently, there are 423 facilitators for patent and 596 facilitators for trademark) and also provide advice on promoting and protection of IPRs in overseas jurisdictions. Such Facilitators will also provide end-to-end advisory from making applications till the stage of final disposal of the IPR application.
- A rebate of 80% on patent filing fees vis-à-vis other companies. As per the latest Status Report till April 2017, 179 Patent applications have received the benefit of up to 80% rebate in patent fees and free legal assistance. 32 Startups have availed benefit of fees rebate in expedited examination filing fees (Form 18(A)).
- Trademark facilitation has been extended to 52 Startups. Recent amendment to Trademark Rules, 2017 provides 50% rebate in Trademarks filing fee to Startups.
- Support International Patent Protection in Electronics and IT (SIP-EIT) – Scheme related to supporting International patent Protection by SMEs and Technology Start up Units.
- Micro, Small and Medium enterprises should be registered in India.
- Enterprises engaged in the manufacture or production of goods where the investment in plant and machinery does not exceed Rs.10 Cr, or
- Providing or rendering of services the scheme will be restricted to enterprises where the investment in plant and machinery does not exceed Rs.5 Cr.
- In-house R&D Certification by DSIR, or
- Technology Incubation enterprises registered as companies with support under some government scheme
IP related benefits:
Up to 50% of the total patent cost. The support will be in form of reimbursement of expenses in actual to the applicant. Support will be limited to Rs.15 lakhs or 50% of the total expenses incurred on filing each invention whichever is less. These costs include Attorneys’ Fees, Patent Office filing fees, Examination Fees, Patent Search cost, Additional cost for entering National Phase up to grant/issue. Subsequently after the grant, the cost will be borne by the industry.
- Make In India:
IP related benefits:
- 10% rebate/refund on online filing.
- 50% fee reduction has been provided for MSMEs.
- Miscellaneous MSME Schemes:
- Registered MSME Units.
- MSME organizations – like industry association, societies, cooperatives, firms, trusts, NGOs, institutions and universities with a track record of assisting MSMEs.
- Competent agencies – like consultancy organizations, research institutes, individual experts or agencies having sound technical and financial capabilities to conduct pilot studies with at least five years of previous experience.
- Expert agencies – like TIFAC, Patent Facilitation Centre, NRDC, Indian Patent Office, Registrar of Trademark, Registrar of Geographical Indication, D.B.T., Registrar of Copyright, MHRD, NIIPM, IITs, Law Schools, Patent Attorneys, individual IPR expert, WIPO, EU-TIDP, USPTO, KIPO/KIPA, IIFT, DIT, MEF, Ministry of MSME, DSIR and other such bodies.
- Quasi-Government or Government Aided bodies.
- Private units provided it is sponsored by MSME.
- Industry Associations.
IP related benefits:
- Registered Indian MSME will be provided one-time financial support limited up to Rs. 25,000 for on grant of domestic patent and Rs. 2 lakh for foreign patent. For registering under Geographical Indications of Goods Act, one time financial support will be limited up to Rs.1 lakh.
- Government of India will provide a total financial support up to 65.00 lakh each for establishing IP facilitation centers, which will include one-time grant of Rupees 45 lakhs and Rupees 18 lakhs as recurring expenses for 3 years, Rupees 2 lakhs will be provided as miscellaneous charges.
- Tax-related Benefits:
- The Finance Act, 2016 has made provision for Startups to get income tax exemption for 3 years in a block of 5 years, if they are incorporated between 1st April 2016 and 31st March 2019. In the Union Budget 2017-18, the Government has increased this period of profit-linked deductions available to the eligible startups to 7 years. To avail these benefits one must get a Certificate of Eligibility from the Inter-Ministerial Board of DIPP.
- Benefits under the Union Budget 2017-18:
- Proposal to reduce the Income Tax rate for companies with an annual turnover of upto INR 50 crore to 25%. This would provide MSMEs a reduction of 5% from the current applicable rate of 30%.
- The Government has announced that a Startup would be able to avail income tax exemption for 3 consecutive assessment years out of a block of 7 years