By Prof (Dr) Unnat P Pandit, CGDPTM and RoC & GI, Government of India
In the rapidly evolving business environment of the 21st century, startups often represent the cutting edge of innovation and technology. Startups are one of the pillars to drive the vision of an Innovation-driven economy at the forefront of technological and creative advancements.
However, the creative glow of the products and services demands strategic attention is the management and utilization of Intellectual Property (IP). The strategic harnessing of IP can be a pivotal factor in their long-term success. This article examines the strategic utilization of intellectual Property by Startups, including its various forms, the importance of IP strategy, steps for effective management, and real-world case studies and also focuses on strategically managing and leveraging their IP assets for competitive advantage and sustainable growth for the society with few illustrations.
Recent Developments in Intellectual Property Regime
Intellectual Property, often called industrial Property, involves creations by the intellect of humans that are legally protected for exploring commercial and business advantages. It encompasses several categories wherein mainly the given categories are most explored till now,
- Patents: The Patent rights grant exclusive rights to inventors or assignees/applicants for their inventions, preventing others from manufacturing, selling, or using them without permission. The patent is a territorial IP right granted for 20 Yrs term from the filing date. The commercial use of patent rights leverages monetization's benefits, discussed later in this article. Patent rights are the most explored IP Rights in the last few decades. In 2005, India was granted about 1200 patents in a year, whereas in 2015, it grew to 5900 patents granted, and suddenly, in the last 09 years, it jumped to 1.03 Lakh…the revolution in scientific research leading to IP protection brought the country among the top 5 Patent domains in the world. The foundation of an innovation-driven economy is driven through IP rights, and it has set the tone of up-brining IP rights toward economic benefits in India.
- Trademarks: Trademarks protect symbols, names, slogans, and logos used to identify goods or services. They help establish brand identity in the marketplace. In a way, this IP right is touching every Indian in the country and overseas markets. In a decade, we have more than doubled the TM Protection. The trademarks are the most effective IP rights which signify the identity of the products and services. The government has always emphasized using technology in administration. India is among the top 4 countries using advanced AI and ML algorithms to analyze trademark identification, streamlined search processes and enhanced trademark protection capabilities. Embedding AI and ML in IP Administration will leverage the emerging technologies to expedite trademark registration processes, improve the overall user experience for IP stakeholders and foster international collaboration in IP system development.
- Copyrights: Copyrights protect original creative works as authorship for literary and artistic works, music, and software. They provide creators with exclusive rights to use and distribute their creations. Commercial exploitation of original artistic or literary works is much discussed nowadays, and technology like AI and copyright law will be a potential field to look after. Several high-level disputes are also under dispute internationally between AI companies and media giants in journalism and entertainment. The harmonization in the standard practices among the WIPO member states is very much needed, and hopefully, with the interventions of technology in the copyrights, it will be a much-needed reform.
- Design: The design protection allows the proprietor to prevent others from producing, importing, selling or distributing products having an identical appearance or a fraudulent or obvious imitation. The proprietary designs of the products offer a competitive edge, so the protection by legal means fair commercial exploitation. India recorded 80% growth in Design protection. Sectors like Medical Devices, Automobile, Electronics, etc., are positioning India as Asia's fourth-largest Design sector with high potential to place our quality goods to compete in the emerging sectors like the medical devices market (behind Japan, China, and South Korea).
IP-Innovation as game changer Toward Rise of Indian Startup Ecosystem
The rise of a dynamic startup ecosystem driving IP-Innovation across different sectors with over 1.28 lakh Startups in April 2024, compared to just 450 in 2016, India proudly hosts the world’s third-largest Startup ecosystem. The credit for such unparalleled growth of the ecosystem results from the current government's vision for digitalization efforts and supportive policies; this ecosystem in India is ready to witness YoY growth of 12-15% in the coming years, contributing significantly to the country's GDP. The startups and their commercial assets are critical to securing market position, attracting investment, and enabling strategic partnerships. The youth has taken up the IP–Innovation challenge in offering unique solutions and utilized it for economic value creation. The effective management and utilization of IPs bring numerous strategic benefits to startups.
- Competitive Advantage: By protecting IP-driven innovations through patents, Startups can prevent competitors from using similar technologies, thus maintaining a unique market position.
- Revenue Generation: Licensing IPs can create additional revenue streams. Startups can enter into licensing agreements with other companies, receiving royalties.
- Market Positioning: Creating well-reputed brands and ensuring strong protected trademarks resonate with consumers, helping Startups build trust and loyalty more effectively than their competitors.
- Attracting Investors: A robust IP portfolio can make Startups more attractive to investors, as it can signal innovation potential and reduce risk by safeguarding innovations.
- Facilitating Collaboration: Protected IP can be a foundation for strategic partnerships or joint ventures, enabling Startups to leverage third-party resources and expertise.
The strategic management of IP can yield numerous advantages for Startups. The National Stock Exchange of India (NSE) offers a listing of startups to amplify the value and get public funds for growth and strategic utilization of IP-Innovation, yielding benefits even amid global macroeconomic pressures. The Indian startups are driving through their growth in IP-Innovation trajectory as the cornerstone for building a robust foundation of the knowledge economy in Amrit Kaal. The new-age tech startup companies listed on the exchanges have witnessed eye catching monetization benefits through IP-Innovation protection and strategically utilizing their IP Strategy. Herein, for clarity of the readers, the IP-linked monetization is presented for a few startups.
In collaboration with the Institute for Plasma Research, a young startup company, Inox India Ltd, which is now the world's leading provider of customized cryogenic equipment provider, received Patent Rights through Indian Patent IN502670 (Granted on 24 January 2024) for “Displacement Decoupling Arrangement For Piping Systems. The NSE-listed Startup Company Inox India Ltd updated the regulator about this grant and its share price upon the grant of this patent with a 2.22% rise from the previous close. Now, the technology company has built an IP portfolio with a series of patents, such as IN492614 (Granted on 01 January 2024) for a method and an apparatus for dispensing LNG as Fuel; IN503868 (Granted on 28 January 2024) for a Sliding spacer and its assembly to support the internal cryogenic process pipe cryoline; IN530403 (Date of Grant 26 March 2024) for a method of suspending inner vessels of DEWAR type container to store Cryogenic Fluid; IN549870 (Granted on 09 September 2024) for Cryogenic liquid based variable temperature cold storage unit. The strategic use of IP fencing has strengthened the company's technology base and innovation portfolio. Based on unconfirmed sources, the company has a reported surge in their market price in the range of 2.2-4.8%, and as of Sept 2024, the company has a capitalization of ₹ Rs. 11,102.7 Cr.
Similarly, Arrow Greentech, a startup company listed on NSE stock engaged in developing biodegradable and high-tech products, gained nearly 4.52 percent on receiving patent protection for their flagship product. Yet another small-cap company, Best Agrolife Ltd, reported in Q2 of 2024, jumped by ~4-6.4% in the stock price after receiving a patent for a synergistic pesticide composition that combines a plant growth regulator with a neonicotinoid insecticide. The Shakti Pumps shares jumped 4% upon receiving the granted patent for grid-connected motors. An IP-driven research has begun to realize the value of creation; a well-reputed consumer electronics brand Crompton Greaves, offering fans, air coolers, pumps, solar pumps, and many more, jumped 2% in their stocks upon receiving a Patent Number 537920 for its invention titled Powerline Failure Detection Mechanism for Emergency Lighting System in Consumer Products.
Recently released Economic Survey 2024 highlights the vibrant startup ecosystem of India wherein the report stated that over 45% of the startups emerged from Tier 2 and Tier 3 cities. The number speaks to the growth story of startups in India, wherein DPIIT-recognised startups increased to more than 1.25 lakh by March 2024 from 300 in 2016. The report found that Indian startups filed over 12,000 patents from 2016 to March 2024. Over 13,000 startups work in diverse thematic areas like AI, ML, IoT, Robotics, Health care, pharmaceuticals and nanotechnology.
KareXpert, a healthcare startup, highlights the rapid evolution of India's B2B enterprise healthcare software ecosystem. The startup journey demonstrated accelerated post-pandemic trends like increased focus on preventive healthcare and rising disposable incomes. KareXpert, through strategically positioning the IP portfolio, raised over USD 33 billion invested since 2000.
Sequoia Insilico was founded by Dr Anupama Singh, a women-run startup who is a DBT –Innovation venture awardee and also got a prestigious awardee of BMGF- GCE III for LifeBack. The startup aims to offer preventive and predictive health AI amalgamating the analytics using cutting-edge IP Driven solutions for Big data, Health Informatics and Mental health. The growth extends beyond India because of the country's passionate youth who are influencing global healthcare dynamics and sectors like pharmaceuticals, hospitals, and medical supplies have seen substantial growth, fostering a demand for scalable and flexible digital solutions.
The world is witnessing the IP driven growth; the Director General of WIPO, Mr Daren Tang, said in a general assembly that “The work of transforming the global IP ecosystem is beginning to show results, not just shaping global IP standards and gaining the attention of leaders, but also reaching deeper to the ground, and touching the lives of more people than ever.” It’s high time for India to unlock the economic potential of creativity and innovation through strategic knowledge management and leveranging IPR for the world to put in place the right practices norms while realizing the value of IP in setting the standards, policies and projects so that we can make IP as part of our journey in Amrit Kaal to build the Vikshit Bharat engaging with innovator and creator, and make IP a catalyst for growth and development of products for India and offer them to the world.
In the realm of creative endeavours, ideas sparkle like stardust, inviting dreamers to weave them into the tapesty of imagination, blending inspiration with knowledge to give birth to intellectual creation. Young India has time to pave the way for sustainable problem solving through IP & Innovation and translating their dream into the entrepreneurial journey, showing that Young minds enable the IP Giri...!
IP Round-up
A British couple was denied a passport for their son, Loki Skywalker Mowbray, due to his middle name. Born on May 4, 2017, "Star Wars Day," he was named after the iconic character. However, the Home Office informed the family that "Skywalker" is copyrighted by Disney, advising them to seek Disney's permission or change his name. Despite the unexpected situation, the issue was eventually resolved, and their son received his passport. Similarly, another UK family encountered a similar problem when trying to get a passport for their daughter named "Khaleesi," due to Warner Brothers' trademark. (Source: WionNews)
The 13th China Intellectual Property Annual Conference held in Beijing showcased an array of geographical indication (GI) products, transforming the exhibition hall into a vibrant marketplace filled with the scents of black tea, mooncakes, and spicy rice noodles. GIs signify the origin and unique qualities of products, with notable examples including Champagne. As of August, China has approved 2,523 GI products and registered 7,385 GI trademarks. These products, such as Zhashui fungus from Shaanxi province, have become popular consumer choices and significantly boosted regional economies, with the annual output value of GIs exceeding 961 billion yuan ($139.1 billion) last year. (Source: China Daily)
The Directorate General of Goods and Services Tax Intelligence (DGGI) has issued show cause notices to over a dozen food and beverage companies, seeking approximately ₹3,000 crore in taxes for trademark usage by their franchises and outlets located outside their home states. According to the DGGI, franchises and outlets in other states, being registered separately, are liable to pay GST on the use of trademarks from the parent company. Despite franchise holders paying fees for brand usage, GST was not being paid on these transactions. Tax authorities have classified the use of a trademark by franchisees or branch offices in different states as a taxable service provided by the head office. (The Economic Times)
Union Minister Piyush Goyal unveiled AI and ML-based Trademark Search Technology and the IP Saarthi Chatbot, aiming to streamline India’s intellectual property management. This advanced search technology will enhance trademark application processing and conflict resolution, with a future goal to include official languages. Goyal emphasized the importance of AI tools in improving patent and design approvals. He also noted a rise in patent filings by women, supported by fee reductions for startups, MSMEs, and entrepreneurs. This initiative reflects India’s commitment to innovation and ease of doing business. (Source: PIB)
A Texas jury awarded Lashify $30.5 million in lost profits after finding that Qingdao Lashbeauty Cosmetic Co., Ltd. (Worldbeauty) willfully infringed several patents related to Lashify’s lash extension system. The jury also imposed a 30 percent royalty rate on future sales of the infringing products. Lashify accused Worldbeauty of copying its patented Gossamer lash system without authorization and selling knock-off versions. The jury’s finding of willful infringement could result in increased damages. This verdict strengthens Lashify’s broader efforts to protect its intellectual property in multiple courts and before the International Trade Commission. (Source: thefashionlaw)
Reference:
TFL. (2024, September 24). Lashify awarded $30.5M in case against Chinese copycat Co. The Fashion Law. https://www.thefashionlaw.com/lashify-awarded-305m-in-case-against-chinese-copycat-co/
Press Information Bureau. (2024, September 18). Union Minister Piyush Goyal unveils AI and ML-based Trademark Search Technology and IP Saarthi Chatbot. PIB Delhi. https://pib.gov.in/PressReleaseIframePage.aspx?PRID=2056435
Singh, A. (2024, September 20). Boy named Loki Skywalker denied passport because of a Disney copyright. WION News. https://www.wionews.com/world/boy-named-loki-skywalker-denied-passport-because-of-a-disney-copyright-760334
Shukla, A. (2024, September 23). Over a dozen food & beverage companies get notice over trademark usage. The Economic Times. https://economictimes.indiatimes.com/industry/cons-products/food/over-a-dozen-food-beverage-companies-get-notice-over-trademark-usage/articleshow/113577357.cms
Xinhua. (2024, September 20). Geographical indication booms on Chinese market. China Daily. https://www.chinadaily.com.cn/a/202409/20/WS66eca3cda3103711928a8bc3.html