The Patent (Amendment) Rules, 2016 (hereinafter as “new rules”) incorporate various provisions that provide cheaper and faster means to Startups for obtaining a patent. To start with, a Startup is treated as a natural person and not as a company. Therefore, the fees for startups as well as an individual are the same (Schedule I of the new rules has categorized startups and natural person under the same head). If a startup qualifies the definiton of Rule 2 (fb) of the new rules, it shall be eligible for an 80% rebate on patent filing fees and shall also be eligible for filing Tatkal Patent.
Startups defined –
Rule 2 (fb) of the new rules defines a Startup as an entity, where –
- more than five years have not lapsed from the date of its incorporation or registration;
- the turnover for any of the financial years, out of the aforementioned five years, did not exceed rupees twenty-five crores; and
- it is working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property.
According to Rule 2 (fb), an entity shall cease to be a startup on completion of five years from the date of its incorporation/ or registration or if its turnover for any previous year exceeds rupees twenty-five crores.
According to Rule 2 (fb) a Startup must be either be–
- a private limited company (as defined in the Companies Act, 2013); or
- a registered partnership firm registered under section 59 of the Partnership Act, 1932; or
- a limited liability partnership under the Limited Liability Partnership Act, 2002.
What are not Startups?
Rule 2 (fb) also provides that – Any entity formed by splitting up or reconstruction of a business already in existence shall not be considered as a startup;
The mere act of developing – products or services or processes which do not have potential for commercialization; or undifferentiated products or services or processes; or products or services or processes with no or limited incremental value for customers or workflow, would not be covered under the definition of Startups.
Benefits for Startups
The amended rules seek to cut the time period for grant of patents from five-seven years to two and a half years immediately and one and a half years by March 2018.
- Expedited examination: Section 11B r/w Rule 24C; FORM 18A
The new rules allow applicants to put applications on a fast-track mode if they select India as International Search Authority or International Preliminary Examining Authorities and file applications in India first. Besides, all startups are also eligible to use of this facility of expedited examination.
Under the faster clearance route, application fee for individuals and startups is Rs. 8,000 while for companies it is Rs 60,000. (Schedule I Article 14A of the new rules)
Rule 24C (3) requires that where a request for expedited examination has been filed by an applicant, the same shall be accompanied by a request for expedited publication under Rule 24A.
- Expedited publication: Section 11A (2) r/w Rule 24A; FORM 9
The e-filing fee for a Startup for expedited publication is prescribed under Article 12 of Schedule I of the new rules as Rs. 2500 whereas, for companies it is Rs. 12500.
The Controller on request for expedited publication and on payment of prescribed fees shall publish the application within one month from the date of such request.
How can an entity claim the benefits? Art. 51 of Schedule I of the new rules prescribe no fees for claiming to be a Startup. Any entity (Indian or foreign) that qualifies the definition of Startups as per Rule 2 (fb) of the Patent Rules has to file a duly verified FORM 28 along with their patent application in order to claim the benefits for Startups. Furthermore, such an entity is required to attach any document(s), attach any document as evidence of eligibility, as defined in Rule 2 (fb) of the new rules, before the Controller along with FORM 28
- Startups are now separately covered as per DIPP definition.
- Global Startups which meet India’s definition can also apply.
- Startups are charged lesser fees and are treated as individuals.
- Startups are eligible to apply for expedited examination and publication procedure.
- Refund of fees is now possible (in case of withdrawal of application before FER).
- No extra fees for withdrawal of application.
- Patent facilitators designated by DIPP will provide pro bono legal consultancy for startups and their fees will be borne by DIPP.
With all of that said, obtaining a patent within 10 months or less depends upon the nature of invention, prima facie. Furthermore, it is the result of a comprehensive search and meticulous drafting that overcomes any unexpected hurdles during prosecution.
The post first appeared on my LinkedIn page here.
Image from here.