India: Discussion On Government Of India's Proposal On Patents In Its Startup Action Plan

There has been a significant increase in the number of start-ups originating from India. Several companies, which could be termed as "start-ups" a few years back, have grown into multi-million dollar companies, resulting in job creation. College graduates with technical education and experienced professionals alike are more than willing to bet on start-ups. The Indian government is not far behind in betting on start-ups to shape the future of India.

The intent of the government to encourage start-ups has been indicated by the unveiling of the "Startup Action Plan" on January 16, 2016. The plan relates to a wide array of topics that have significant impact on start-ups. Among these topics, Intellectual Property, and specifically the patent regime has been given prominence. The plan makes three key promises with regards to the patent regime, which are listed below, and we shall try to comment on these promises.

  1. 80% cut in the patent application fee for start-ups
  2. Panel of facilitators to provide legal support and assist in filing of patent applications
  3. Patent applications of start-ups to be fast tracked

80% cut in the patent application fee for start-ups

The plan suggests 80% cut in the patent application fee for start-ups as compared to fees typically applicable to other companies. An understanding of the current fee structure will help us understand the fee reduction that has been proposed.

Currently there are three categories of applicants, viz. individuals, small entity and other than small entity (large entity). At present there is a 50% cut in the fees for small entities as compared to large entities. Typically, a start-up would be considered a small entity unless they have made significant investment and cannot be registered under the MSMED Act, 2006. Hence, it appears that a further 30% reduction in fee is being proposed. Hence, if the proposal were to be implemented, then the fee applicable to start-ups would be same as the fee currently applicable to individuals.

The fees that an applicant typically incurs while filing a patent application is considered to provide a comparison of the fees that a typical start-up would be entitled to at present and the proposed fee for start-ups.

No Description Patent Office Fee (INR) Comments
Current Fee - Small Entity Proposed Fee – Start-ups
1 Application for grant of patent 4000 1600 Mandatory
2 Early publication fee 6250 2500 Optional
3 Request for examination of patent application 10000 4000 Mandatory
  Total 20250 8100  

Hence, it shall be noted that a typical start-up might save around INR 12150 in fees at the time of filing, although an 80% fee cut appears to be a large discount.

Panel of facilitators to provide legal support and assist in filing of patent applications

Anyone involved in the patent process would be aware that professional fee accounts for the majority of the expense involved in patent application filing. The plan suggests setting up a panel of facilitators who would enable start-ups file patent applications. It appears that the facilitators would conduct prior art searches, draft patent applications, file patent applications and prosecute the applications, and the fees of the facilitators would be borne by the government.

It shall be noted that a patent facilitation centre already exists. However, at present the centre entertains requests from a certain kind of applicants. Therefore, by altering the parameters considered by the centre to accept requests, start-ups may be enabled to explore the option of using the services of the facilitation centre.

While availing the services of the facilitators may reduce the expenses involved in the patenting process, cost consideration is not the only factor considered by patent applicants while selecting service providers. Patent portfolio being a core asset of any technology company, quality and expertise a service provider brings to the table are key considerations while engaging with service providers.

At present, several institutes who qualify to avail services of the patent facilitation centre choose to work with other service providers to have their patent applications filed, which is a vindication of the forgoing assessment.

Patent applications of start-ups to be fast tracked

One of the major concerns of applicants filing patent applications in India relates to the time taken to eventually have a patent granted. Currently, the patents that are granted are for applications that were filed 5 or 6 years back, or maybe even before that. Therefore, any step that is taken to reduce the delay is a welcome step.

The patent office was significantly understaffed till recent times, which resulted in substantial backlogs and resulted in uncomfortable timelines in having a patent granted. However, steps have been taken to overcome the instant shortcoming by recruiting a large number of patent examiners. It is our assessment that the mass recruitment of examiners will enable reduction of backlogs significantly and will reduce the time required to have patents granted.

In addition to recruiting patent examiners, backlogs and the work load on the patent examiners can be reduced to a great extent if India becomes part of what is called "Patent Prosecution Highway" (PPH). Considering the fact that majority of the applications filed in India originate from developed countries, most of who are part of PPH, joining the PPH is in India's interest. The Indian patent office will be able to dispose off a substantial chunk of pending patent applications quickly and use fewer resources to deal with future applications originating from some of the key countries (which account for a large percentage of applications filed in India) by joining the PPH.

It shall be noted that the key to fast tracking of the patent application may not be by way of amending The Patent Act and Rule, but by reducing backlogs using strategies discussed above and by building capacity to deal by incoming patent applications. As such, The Patent Rules at present prescribes a surprisingly quick process; it is just that the patent office is simply not equipped to comply with prescribed rules.

(2) (i) The period within which the Controller shall refer the application and specification and other documents to the examiner in respect of the applications where the request for examination has been received shall ordinarily be one month from the date its publication or one month from the date of the request for examination whichever is later:

Provided that such reference shall be made in order in which the request is filed under sub-rule (1).

(ii) The period within which the examiner shall make the report under sub-section (2) of section 12, shall ordinarily be one month but not exceeding three months from the date of reference of the application to him by the Controller;

(iii) the period within which the Controller shall dispose off the report of the examiner shall ordinarily be one month from the date of the receipt of the such report by the Controller.

(3) A first examination report along with the application and specification shall be sent to the applicant or his authorised agent ordinarily within six months from the date of the request for examination or six months from date of publication whichever is later. In case other interested person files the request, for examination, an intimation of such examination may be sent to such interested person.

As quoted above, the time line mentioned in the rules, if complied with, then Indian patenting process would probably the fastest. However, the term "ordinarily" in the rules quoted above has come to the rescue of the under staffed patent office. Therefore, it would be advisable to address the root cause (backlogs and capacity issues) of the delay in the patenting process rather than making rules that may not be complied with, as is the case at present.

We hope that this article provides a perspective to the points mentioned in the "Startup Action Plan".

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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