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New Patent Amendment, 2016: How can they Benefit Startups?

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New Patent (Amendment) Rules, 2016 introduced Startups or Start-ups as a new entity which means a new, young and working towards innovation, development, deployment or commercialization of new products and processes or services driven by technology or intellectual property. The aim is to develop and commercialize a new product or services or process, or a significantly improved existing product or service or process that will create or add values for customers or workflow.

Also, the meaning of entity will be the 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 Limited Liability Partnership Act, 2002.

Very first time Patent (Amendment) Rules, 2016 has defined Startups under Rule 2(fb), so according to the rule “Startups” means an entity, where :

(i) More than five years have not lapsed from the date of its incorporation or registration

(ii) The turnover for any of the financial years, out of the aforementioned five years, did not exceed rupees twenty-five crores and

(iii) It is working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property

Some of the exceptions are also introduced under the Rules which as follows :
  • An entity formed by splitting up or reconstruction of a business already existence shall not be considered as a startup
  • Products or services or processes which do not have the potential for commercialization shall not be considered as a startup
  • Product or services or processes with no or limited incremental value for customers or workflow shall not be considered as a startup

Now Patents (Amendment) Rules, 2016 has given certain benefits to the startups as follows :

1. Cost reduction in a filing of patent application :

Startups are considered as an individual person instead of small company/large company so the fees will be same as of individual person i.e. 1600 Rs. for physical filing and 1750 for E- filing of a patent application.

2. Expedited or faster examination system or expedited prosecution or less acceptance period :
An applicant can seek expedited or fast-track examination system on the ground that :
  • The applicant India has been indicated as the competent International Searching Authority or elected as an International Preliminary Examination Authority in the corresponding international application; or
  • That the applicant is a startup.

A request for expedited examination can be filed by paying the relevant fees, i.e, Rs. 8,000 for a Natural person/startup; Rs. 25,000 for the small entity and Rs. 60,000 for the others.

Also, form for the conversion of a request for examination to expedited examination is possible by paying applicable fees i.e. Rs. 4000 for a Natural person/startup; Rs. 15,000 for a small entity and Rs. 40,000 for others.

Faster or expedited time frame has been introduced :
  • Making of a report by the examiner for the application shall be one month but shall not exceed two months from the date of reference of application to him by the controller
  • The controller shall dispose of the report of examiner shall be one month from the date of receipt of such report
  • Issuance of the first statement of objection shall be 15 days from the disposal of the report of an examiner by the controller
  • Disposal of an application within three months from the date of receipt of the last reply to the first statement of objections or within a period of three months from the last date to put the application for the grant

So, the government has taken a new milestone to foster the development of startup in India, and new Patent Amendment Rules will encourage the new and young minds to come up with new ideas and take the benefits given by the government.