Intellectual property (IP) is an intangible asset created by human minds and is the result of concepts, data, and knowledge. In essence, it is a mental attribute. Intellectual property (IP) can offer a company a distinct competitive advantage in the marketplace, but if it isn’t safeguarded, it can be stolen or imitated by competitors. IP is therefore considered to have worth in both the moral and financial spheres. The four categories of intellectual property that startups should take into account are patents, trademarks, copyrights, and trade secrets.
Reasons why Startups need to take Intellectual Property seriously:
Perhaps a startup’s most valuable asset is its intellectual property (IP). Consequently, shouldn’t it be apparent that a company ought to think about IP protection? You should protect its intellectual property in the same manner that you insure your actual assets and intangible assets like your brand and logo. These are some justifications for why intellectual property can help your startup.
- IP Commercializes Your Inventions and Trade Secrets
IP can assist you in commercializing your goods and making money off of them. In place of royalties, you might choose to license the rights to someone or sell the products directly.
- IP Establishes Brand Name
IP helps your startup stand out in the eyes of potential clients. Increased market value is correlated with better brand value.
- IP Provides a First-Mover Benefit
With intellectual property (IP), you can produce, market, and sell your goods without worrying that a rival will steal or infringe upon your ideas. You have the advantage of entering the market far sooner than your rivals and even commanding higher prices.
- IP Increases Investor Interest
In contrast to other physical assets, which are subject to market changes and depreciation, intellectual property typically appreciates in value over time. Additionally, IP makes other revenue streams possible, such franchising and licensing. These two elements complement one other well in drawing in investors for the firm.
- IP Provides Monetary Security
Intellectual property can be sold for a high price via exits, mergers, or acquisitions, or it can be pledged as security for loan financing. IP can provide you an advantage when applying for a government loan, grant, or subsidy.
Things to Consider with Regard to Intellectual Property for Startups
- Identifying the IP
This is how you start safeguarding your intellectual property. Make a list of everything you believe to be protected by a patent, copyright, trademark, or trade secret. To assist you with this procedure, it would be ideal if you hired an IP lawyer.
- Ownership of IP
Knowing who will hold intellectual property (IP)—founders, staff members, investors, or any other party—is crucial. If one of the company’s founders—who owns the intellectual property—left, he may start a rival company. Investors may choose to own intellectual property if they have contributed to its creation. Unless otherwise specified, the corporation usually owns the intellectual property created by its personnel. When a startup hires independent freelancers or agencies to handle its software development, product design, or other related activities, third parties become involved. The third party might then wish to be the owner. Resolving ownership and usage rights issues might prevent legal difficulties in the future.
- Confidentiality of Agreement
Make sure that all parties involved in the creation of intellectual property sign a mutual non-disclosure agreement while you are working on it. It is advisable to engage into appropriate confidentiality agreements with all parties involved in intellectual property and to maintain a written record of them all.
- Understanding IP laws
The Copyright Act (1957), the Patents Act (1970) and its modifications (1999, 2002, and 2005), the Trademarks Act (1999), and the Designs Act (2000) are the main pieces of legislation that govern intellectual property in India. In May 2016, the National Intellectual Property Rights (IPR) Policy was approved by the Union Cabinet of India. By implementing the best worldwide practices, the policy seeks to unify all intellectual property rights (IPRs) and establish an institutional framework for their implementation, oversight, and evaluation.
To help businesses safeguard their patents and trademarks, the central government also unveiled the Startups Intellectual Property Protection (SIPP) program in 2016. With the help of this program, startups will be able to obtain top-notch intellectual property services. As of right now, this program is in effect till March 2020.
However, the Department for Promotion of Industry and Internal Trade (DIPP) released the draft Patent (Amendment) Rules 2018 in December of the same year in an effort to make the policy more inclusive and clear for more businesses. The proposed policy supports the following: creating an opposition board to handle pre-grant opposition; expanding the beneficiary list to speed up the review of patent applications; reviewing IPR costs; and applying papers for overseas applications online.
- Registration of IP
A startup can electronically file for a patent on www.ipindia.nic.in, the official website of the Patent Office in India, or at the Patent Office within its territorial authority. If startups intend to operate abroad, they need also think about safeguarding their intellectual property (IP) under international regulations. IP laws typically vary from nation to nation.
Despite the benefits that intellectual property protection offers, most companies rank it as a middle-tier concern. Startups must recognize the critical role that intellectual property strategy plays in their overall business plan. They must prioritize protecting what they regard to be their own property.
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