Earlier in the year 2016, the Department of Industrial Policy and Promotion released the Patent (amendment) rules, 2016 modifying the existing Patent rules, 2003. The amended rules are supposed to make Patent registration process more easy and convenient. Patent registration generally is a wearisome and cumbersome process. In order to simplify and accelerate the process the government has introduced a new option to “expedite the examination” of Patent applications, which is popularly known as the “Tatkal Scheme” for Patent registration. According to the new rules, an applicant who chooses India as the competent International Searching Authority or International Preliminary Examining Authority in their PCT (Patent Cooperation Treaty) application, and file their applications first in India or is a startup may file a request for expedited examination of application.
As a key component of its new tatkal scheme, the Government, in the amended rules has also included the definition of ‘Startup’ which means an entity, where more than five years have not lapsed from the date of its incorporation or registration and the turnover for any of the financial years did not exceed rupees twenty-five crores and is working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property.
Benefits to Startups
A new entrant in the marketplace has no control over the market conditions and has to compete with the existing giant players. For startups, initial years are very crucial as they struggle to establish a scalable business model and try to secure a substantial position in the market. The faster a company acquires a patent, the sooner it is able to create a standing in the competition. In furtherance to its “Startup India” action plan, the government has introduced various measures to ease out the process for the startups. The main objective of this new scheme is to make the filing process faster and cheaper for the new entrepreneurial ventures in the market. This will encourage more companies to apply for patent registration which would ultimately strengthen their position in the marketplace.
Under the new rules, startups have been qualified as individual persons instead of companies, which made them eligible for 80% rebate according to the startup action plan. For tatkal scheme, startups have to pay a nominal sum of Rs.8,000 while the cost for Companies is as high as Rs.60,000. Application fees for filings through the normal route has been cut down by 80% which varies between Rs.1,600-Rs. 8,800 whereas the tatkal option would cost about 3 times the original price.
As per the existing framework, the registration process takes 5-7 long years which will now be reduced to 2.5 years and an even lesser period for those applying under the tatkal scheme. Wherein a request for expedited examination of an application has been made, the controller shall refer such application to the examiner and he shall issue the report ordinarily within one month but not exceeding two months from the date of reference. The controller shall dispose of such report within one month of its receipt. The time limit for putting an application in order for grant is six months which may be further extended for a period of three months. The Controller has to dispose of the applications within 3 months from the date of receipt of last reply to the first statement of objection, or within 3 months from the last date to put the application in order for grant, whichever is earlier. This will ensure speedy disposal of applications.
Another noteworthy amendment made by the government includes refund of 90% of the fees upon withdrawal of an application in respect of which a request for examination has been filed, but before issuance of first statement of objection, the amount may be refunded. It has not only made the entry easy for the startups but has also made the exit option available through withdrawal of application without paying any penalty fee, if the company has changed its mind and wants to pull out its product from the market.
The request for permission for foreign filing of patent application shall be disposed of within 21 days from the date of request. This will enable the startups to flourish their business globally.
In India, the Patent office grants patent on a “first come, first served” basis. Thus, under the new tatkal option the startups can obtain a patent faster and need not wait for the delayed and complex approvals. Stimulation of new entrepreneurial ventures and promotion of innovation by creating a business environment that is conducive for the growth of startups is the forefront of the new policy. The new rules are surely to bring happy days for the startups and hence they are highly embraced.