[Guest Post] Foreign Start-Ups Now Eligible for Patent Fee Reduction and Expedited Examination

This post has been contributed by Ms. Aparna Kareer. She is a Principal Associate, Obhan & Associates. She oversees the Patent filing department of the Firm. She conducts searches, drafts patent specifications and prosecutes them at the Indian Patent Office. She also works on patent opposition proceedings, patent litigation matters and regularly advise clients on IP strategy.

In support of its start-up India plan, the Indian Patent Office had introduced expedited examinations and fee reductions for start-ups in 2016. To qualify as a start-up, a registration with the Department of Industrial Policy and Promotion (DIPP) was required. Foreign start-ups were however considered to be ineligible for these benefits.

The Patents (Amendment) Rules, 2017, however, have amended the definition of “start-ups” under the Patent Rules, 2003. The amended Rules have brought about the following changes:

  • clarified that Indian entities/companies will be considered as a start-up, only if they are recognized under the Start-up initiative by the competent authority
  • included foreign entities under the definition of a start-up.

Indian Companies

With this amendment, for an Indian entity, start-up means “an entity in India recognized as a start-up by the competent authority under Start-up initiative[1].This change has brought into the statute, the procedure that was being followed by the Indian Patent Office.

Any Indian entity, be it a private limited company[2], a partnership firm[3] or a limited liability partnership[4]can apply under the Start-up initiative for recognition as a start-up if it is:

  • incorporated or registered for not more than seven years, or 10 years in case of an entity in biotech sector;
  • has a turnover for any of the financial years since incorporation/ registration not exceeding Rupees 25 crores(approx. 4 million USD); and
  • is working towards innovation, development or improvement of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation.

However, an entity that is formed by splitting up or reconstruction of a business already in existence would not be considered as a start-up.

To be recognized as a ‘Start-up’ an entity is required to file an online application with the Department of Industrial Policy and Promotion[5], along with the following documents:

  • Certificate of Incorporation/ Registration;
  • other relevant details like details of the turnover, certificate by chartered accountants etc;.
  • a write-up about the nature of business highlighting how is it working towards innovation, development or improvement of products or processes or services, or its scalability in terms of employment generation or wealth creation[6].

Foreign Companies

Under these rules “In case of a foreign entity, an entity fulfilling the criteria for turnover and period of incorporation/registration as per Start-up India Initiative and submitting a declaration to that effect would be considered as a start-up.”[7]. A foreign entity shall be considered as a Start-up if it is incorporated or registered for not more than seven years, (for entities in the biotechnology sector not more than ten years), and has an annual turnover not exceeding INR 25 crore (approx. 4 million USD) in any preceding financial year[8].

Thus, under the amended rules a foreign entity can also now take the benefit of a Start-up. These benefits include a reduced official fee. The official fee for an applicant that is a Start-up is 1/5th of the fee applicable to corporates. With these amendments in the rules, foreign applicants that are start-ups can now obtain patents expeditiously as they will now be eligible to file a request for expedited examination.

Image from here.

[1]Patents (Amendment) Rules, 2017.

[2] as defined in the Companies Act, 2013.

[3] registered under section 59 of the Partnership Act, 1932.

[4] under the Limited Liability Partnership Act, 2008).

[5]http://www.startupindia.gov.in/registration.php.

[6]Notification G.S.R. 501 (E), dated May 23rd May, 2017.

[7] Patents (Amendment) Rules, 2017.

[8] Notification G.S.R. 501 (E), dated May 23rd May 2017.

L&P Editorial Team

The Law & Practice Blog's editorial team.

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