There is great brand value associated with a company’s IP address. It gives investors, customers, and other stakeholders tremendous confidence in the company. Each type of intellectual property rights carries its own importance to startups as explained below.
Today, nearly a third of all funded technology companies have patent applications, while nearly 19% of these startups have applied for a patent even before they can be funded. There are many examples that show how intellectual property has played a crucial role in some companies. Canada’s Valeant Pharmaceuticals recently acquired Sprout Pharmaceuticals essentially a single drug patent (FLIBANSERIN) from Sprout Pharmaceuticals. It’s just days since FDA approval Valeant Pharmaceuticals hit the $1 billion cash jackpot to buy Sprout Pharmaceuticals.
A startup’s negligence in securing an invention can end up as a costly lesson for their business. For example, Xerox PARC did not patent the computer mouse and its graphical user interface, and later companies such as Apple Computer Inc. building its companies primarily on its innovative technologies, without paying a single penny to Xerox.
Roadblock for the emerging company in the investment of intellectual property
The main hurdle faced by the startup in investing in IP is the lengthy court process and weak IP enforcement mechanism in India. Delays in processing applications and other formalities in IPOs are one of the major reasons for the short enjoyment of patent rights by patent holders in India. It takes 6 to 7 years to get a grant for a patent which greatly shortens the life of the patent. Given that limiting the term of a patent to 20 years from the date of filing the patent application regardless of any delay in processing, this greatly shortens the term of the patent and puts applicants at a loss. Although the Indian Patent Office has taken initiatives by modernizing the infrastructure and promoting electronic filing in the recent past, all the efforts will be of little use if the registration process is not completed in a timely manner.
In addition, an equally strong enforcement mechanism is needed to support strong intellectual property laws. Weak enforcement of intellectual property rights fails to provide relief against imitators and free users, and thus serves as a major barrier to trade, investment in research and development, and the overall growth of a country’s economy. On the contrary, fair, robust and non-discriminatory enforcement of intellectual property rights creates economic incentives that encourage innovation and help attract new investments. It is often claimed that India’s intellectual property policy despite its compliance with the international standards set out in the TRIPS Agreement is weak and ineffective, particularly with regard to patent protection. According to the latest GIPC Index released by the American Chamber of Commerce in 2015, India ranks second in the ranking. “Enforcement of patent laws in India is very disappointing and hurts India’s global image as an investment climate.”
government initiatives
Recently, the concept of patent protection has received a wave of attention with the announcement of the Indian startup business plan which also acknowledged the role of intellectual property rights. “India’s future lies in innovation and creativity.” Prime Minister of India Narendra Modi said while addressing the Start-up India event. To encourage startups, new rules have been introduced to accelerate innovations including express examination, appointment of a legal facilitator, financing of intellectual property rights and patents, and reduction of patent fees. The Indian government has also taken initiatives to enhance bilateral cooperation with other countries to improve the efficiency of the Indian Patent Office. This initiative may incentivize Indian investors and innovators to create IP assets in India and utilize them for industrialization, but having said that, no startup can benefit from IP once the IP assets are created.
How can you combat poor IP enforcement?
Some recommendations could be:
Fast judicial track
Specialized training in intellectual property for judges, customs and police officials
Increase the number of IPR cells prioritizing enforcement
Increase the number of independent investigations into intellectual property rights
Adoption of statutory compensation in the civil lawsuit
Giving political priority to intellectual property rights crimes
Creating awareness: It is important to create awareness of intellectual property among stakeholders and the public at large regarding intellectual property rights and their enforcement. This will not only help intellectual property owners fully enjoy their rights, but also encourage others to create more and deter violators from violating the rights of others.
Conclusion
The invention or creation of an entrepreneur has no value unless it is properly protected and preserved. Only then will foreign companies be encouraged to invest their intellectual property-protected inventions and establish manufacturing, R&D and outsourcing bases in India. Startup India is a welcome step to boost innovation and credibility in global markets, but if India wants to project itself as a global superpower, we should not only modernize patent offices but also have fair, robust and non-discriminatory IPR enforcement mechanism.