New Indian Patent Rules offer benefits to startups and small entities

India’s latest series of amendments to its Patent Rules are likely to hugely benefit startups and small entities seeking patent protection for their inventions. With these amendments, overall filing and prosecution fees for startups and small entities have been significantly reduced. While the fees applicable for small entities have been reduced outright, startups can retain their “startup” status for up to ten years, thus allowing them the benefit of favourable fees, etc. for an extended period from what was earlier available.

These amendments are in line with various initiatives taken by the government to promote entrepreneurship, and in particular, startups in India. Earlier this year, the Scheme for Facilitating Startups Intellectual Property Protection (SIPP) that was initially launched as a pilot project to assist startups in developing and protecting their intellectual property has been extended for a further period of three years from April 01, 2020 to March 31, 2023.

The first set of amendments – the Patents (Amendment) Rules, 2020, notified on 19 October 2020 – simplify the procedure relating to the submission of priority applications and their translations, as well as the filing of working statements (Form 27). These amendments will reduce both compliance and prosecution costs for applicants.

The second set of amendments –  the Patents (Second Amendment) Rules, 2020 (“2020 Second Rules”),  notified on 04 November 2020 – further reduce the filing and prosecution costs for applicants that are startups and small entities. These amendments will cumulatively make intellectual property protection affordable as well as accessible to various classes of business, and will likely also boost patent filings.

Fees for Small Entities

The Patent Rules, 2003 previously allowed a 50% reduction in the fees payable by a small entity, compared to that payable by other entities. The amendments reduce this further: now, the fee payable by a small entity is down to 20% of that payable by other entities. This makes the fee payable by a small entity at par with that payable by a natural person and a startup.

Change in the status of startups

The Patent Rules, 2003 previously provided that an entity would no longer be able to claim the status of a startup after a period of “five years” from the date of its incorporation or registration. The amendments substitute this period of five years by a “period during which it is recognised by the competent authority”.

At present, an entity ceases to be recognized as a startup by the Department for Promotion of Industry and Internal Trade (DPIIT) on the completion of ten years from the date of its incorporation/ registration or if its turnover for any previous year exceeds 100 crore rupees (see G.S.R. notification 127 (E), available at https://www.startupindia.gov.in/content/dam/investindia/Templates/public/198117.pdf)

Certain benefits to prevail even if the status of startups/ small entity ceases 

In an important procedural clarification, the 2020 Second Rules clarify that even if applicant’s status of startup/ small entity ceases after filing a request for expedited examination, the request made for expedited examination will not be questioned.