Starting a new business can be a daunting experience and new entrepreneurs find themselves having to deal with several competing responsibilities and tasks at the same time.

Intellectual Property (“IP”) protection is one of those tasks and it is often ignored by start-ups. This is largely due to misconceptions in relation to the process of IP registration, namely that the costs are too high or that there is too much paper work involved or a belief that it can be dealt with later in the process or that it is not as important as other things that need to be done for a new business.

Here, we break down these misconceptions:

Why is IP protection important for Start-ups?

  1. Presumption of ownership: IP registration by a start-up creates a presumption in the eyes of the law that the IP belongs to the start-up. From a practical standpoint, this means that in an infringement claim, the courts will presume that the IP registered in the name of the start-up belongs to the start-up, unless the other party proves otherwise.
  2. Discourages copying: IP registration in the name of a start-up acts a notice of ownership and prevents other parties from successfully copying or infringing the IP owned by the start-up.
  3. Reduces the risk of infringement claims: Prior to filing for IP registration, usually a search is done to check if any other parties already have rights over the same or similar IP. This process can save start-ups from wasting considerable time and money in developing and promoting IP, only to have to change it later because of infringement claims.
  1. Rise in valuation: IP protection directly contributes to a rise in the valuation of a start-up. Start-ups with a well-protected IP portfolio are more attractive from an investor’s point of view as the business possess less risk. Therefore, start-ups should focus on identifying and protecting their IP at an early stage.
  1. Schemes to reduce fees for start-ups: Another reason to invest in IP protection is that the Indian government has come up with several initiatives to support start-ups. One of these is reducing the IP application fees for qualifying start-ups under the Start-up India scheme of DIPP. Application fees for start-ups has come down 80% for patents and 50% for trademarks. Furthermore, start-ups can also avail of an expedited examination facility for patent applications.

What are some of the common mistakes made by start-ups with respect to IP?

The following are some of the mistakes made by start-ups in the early stages of starting their businesses:

  1. Not having a have a clear IP strategy: It is important for start-ups to have well-defined IP strategy and take steps to protect their IP in the initial stages of launching their business, for the reasons mentioned above.
  1. Not maintaining confidentiality:It’s pertinent for start-ups to enter into non-disclosure agreements with employees, contractors, suppliers to protect their trade secrets, inventions, and other IP. Start-ups should also be restrictive whilst sharing information and giving access to documents to employees and other parties.
  1. Failure to conduct a trademark search:Its important to conduct a thorough trademark availability search for a company name or brand name prior to using it to determine whether it is already being used or applied for registration by another party.

Checklist for Start-ups:

  • Get in touch with an IP lawyer
  • Develop a well-defined IP strategy
  • Enter into NDAs with any employees, contractors, suppliers
  • Conduct a trademark availability search for the company name and/or brand name
  • Identify and file applications to protect IP

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