Jun 26,2020 | 8 min read

Why IP strategy determines the success of your Startup By Nishant Nigam

Startups are often able to displace incumbents in a market where the incumbents have the upper hand in critical aspects such as experience, visibility, existing market share, stable consumer base. Startups are able to do so as they have skill in identifying gaps in existing models and find a more convenient or innovative means to give the people what they didn’t even realise they wanted while incumbent companies try to cater to customers’ needs in the safest possible manner. One of the defining attributes of startups is that they are either disruptors (breaking out of existing strategies) or builders (building innovatively upon current strategies) in an otherwise conventional market.   As regards IP, most startups are driven by technology and software. If this technology isn’t protected, competitors are likely to violate it by using it illegally. It is by means of actively and innovatively protecting their innovations, designs and trademarks that startups are able to gain a level playing field with larger corporations that have been around for much longer.As a startup, there are four basic forms of IP that you need to know about:

Patents: Patents grant you a monopoly/exclusivity over your innovation or invention – provided you establish novelty, inventive step and industrial utility, and you steer clear of the statutory exemptions from the grant of patents for the subject matter. Patents need not be complicated – even the simplest of inventions often merit patent protection. To understand the complexities involved in the definitions of various terms used here and see if your design can be patented, the best recourse is to hire a legal consultant.

Trademarks: A Trademark must serve to distinguish the startup and its product from that of others in the fray, such that it acts as a source identifier for your brand – in that any reference to the trademark is synonymous with the startup itself. Any mark that is used in the course of trade or business for this purpose qualifies as a Trademark and can be protected under trademark laws. Trademark protection allows its owner various statutory rights, including, most valuably, the right to stop others from using the mark in commerce.

Copyrights: While ideas are not protected by copyright, their expression is. Copyright includes a wide range of expression of ideas. But with respect to startups, it’s relevant to know that computer programmes, tables, compilations and computer databases are protected under Copyright Laws, and registering ones copyright allows the startup to assert the said rights against third parties or even against its own employees who might have joined a competitor.

Designs: Design laws seek to protect the aesthetic features of products such as their shape, configuration patterns, or ornament applied to any article. Designs which are purely functional and have no aesthetic implications cannot be protected as a design.

Five Years As A Bootstrapped Edutech Startup
Protecting your intellectual property at the right time, and in the right manner, is a long-term and sustainable investment with high returns; a gift that keeps on giving. Here are a few ways in which IP Protection goes a long way in giving your startup the upper-hand:
Attracts More Investors: A robust IP portfolio forms an integral part of your startup’s asset pool. Consequently, the valuation of your business increases and investors are likely to acquire or invest in startups which possess intellectual property assets. It is now common knowledge that startups with the best of ideas, often fail to secure investments owing to lack of a sound IP portfolio. Therein lies the crucial relevance of IP protection for startups. 

Exclusive Access: Obtaining a patent for your innovation, provided it fits the criteria for the grant of a patent, means that your competitors are absolutely excluded from using your technology for the lifetime of the patent. This is a definite advantage. Trademarks ensure that your brand cannot be utilised by maligning third parties. Copyrights provide similar benefits of exclusivity for a very long period.

Cost of Obtaining IP Protection is Lesser Than Potential Cost of Unprotected IP: IP protection must be proactive and not an after-thought. Not protecting ones IP, only to find others have copied it – is a situation no startup would want to find itself in. The only logical deterrent to obtaining IP protection would be the costs involved and time spent in getting rights. Remember that it is better to pay a small price for protecting your IP at the right time than to lose significant in the long run. Intellectual Property protection creates a higher entry barrier. After you have successfully built your brand and a strong consumer base, you can consider licensing your IP to other businesses as an additional stream of revenue.

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Nishant Nigam

Highly experienced in the field of commercial litigation and arbitration. With a specialised LL.M. degree in the field of International Arbitration and Litigation has had exposure in the said field not only in India but also in the European market while handling Arbitrations pertaining to international commercial transactions. He is a member of the Chartered Institute of Arbitrators (CIArb.). Also specialises in labour and employment laws and intellectual property laws.