Innovation through Collaboration

Different stakeholders need to collaborate to take innovations from the lab to market. Entities such as universities, startups, large corporations, incubators and accelerators need to leverage each other’s strengths since they have different capabilities that are required at different stages of the Innovation and IP Lifecycle. Tech London Advocates India’s “Innovation in Tech” working group was formed with the objective of breaking barriers and making Innovation happen to reach global markets!

Indian Govt announces lower tax on patent income

The finance minister proposed special patent regime with a 10% rate of tax on income from worldwide commercialization of patents which are developed and registered in India. For the purpose of this concessional tax regime, an eligible assessee means a person resident in India, who is the true and first inventor of the invention and whose name is entered on the patent register as the patentee in accordance with Patents Act, 1970. These amendments will take effect from April 1, 2017 and will, accordingly, apply in relation to the assessment year 2017-18 and subsequent years, the proposal says. Accordingly, it is proposed to insert a new section 115BBF to provide that where the total income of the eligible assessee income includes any income by way of royalty in respect of a patent developed and registered in India, then such royalty shall be taxable at the rate of ten per cent (plus applicable surcharge and cess) on the gross amount of royalty.”

Who will benefit ?

Those who develop, patent, as well as out-license Indian patents. Those who perform research and development in India, apply for Indian patents, get the patents granted, and successfully license the patents to earn royalty on them will benefit. To get a registered patent, the technology has to meet the criteria of being novel, inventive, and capable of industrial application. For it to be licensed, it must have commercial potential to be applied in the industry.

Some tips to make the most of this legislation:

1) Plan ahead:  A patent grant in India may take over 5 years from the filing date. Expedite the grant by filing request for early publication and request for examination at the time of filing or soon after.

2) Optimize R & D: by focusing on developing patentable technologies which meet the needs of the industry and solve problems for the industry.

3) Don’t just file:  thinking you will get tax benefit by merely filing. The patent applications have to be drafted so as to not only get patent grants, but to be licensable.  Only granted patents can generate revenue liable for tax benefit. The focus should be on obtaining quality patents which provide adequate protection for the technology so that they will get licensed instead of reverse engineered.

4) Patent lifecycle management- it’s important to manage and maintain the patents over their complete term to incur maximum benefits. Put in place a system that track the various activities and their due dates such as responding to examination reports, paying maintenance fees, submitting information etc.

5) Build a patent portfolio- whereas one patent might have limited commercial potential on its own, multiple patents in the same domain may be easier to license as a portfolio.


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Lean patenting for lean startups

The lean philosophy was initially developed for manufacturing. It considers as waste the expenditure of resources for any goal other than the creation of value for the end customer and seeks ways to eliminate such waste.  For non-tech businesses, the product is typically the only source of revenue, however for an innovative technology company, the ‘customer’ can not only be a customer of its product but also a customer of its IP, through licensing.  For current generation innovation and technology driven businesses, IP is one of the most valuable assets and drivers for the company valuation. Businesses are initially focused on developing a product that customers are willing to buy, getting customer feedback and refining the product accordingly.

Whereas developing a product that customers are willing to pay for is critical in the initial stage, in order to develop a successful business, the product has to offer unique value, and also be differentiated from competition. If there are multiple competitors who offer a similar and undifferentiated product, there is a price war sparked that leads to discounts for the consumer but losses for the startup and its investors. After building a unique and differentiated product that customers are willing to pay for, it is also important to sustain the differentiation and create competitive advantage to sustain growth and profitability.

Intellectual Property Rights such as Trademarks (for brands), Patents (for technology), and Trade secrets (for know-how or secret sauce) build and sustain competitive advantage. Whereas for lean startups, since both time and money are valuable resources, the cost versus benefit of registering IP has to be determined. But when the IP that is created and protected is strategic and aligned to the company’s business strategy, the benefit far outweighs the costs. A core component of Lean Startup methodology is the build-measure-learn feedback loop. The first step is figuring out the problem that needs to be solved and then developing a minimum viable product (MVP) to begin the process of learning as quickly as possible. Once the MVP is established, a startup can work on tuning the engine. This will involve measurement and learning. The same build-measure-learn feedback loop can be applied to create a minimum viable patent. 

The minimum viable patent tries to protect not just an idea or a technology, but the unique value proposition of the startup’s MVP and the technology behind it. The minimum viable patent can be filed as a provisional patent application to give the startup ‘patent pending’ status for a year. Once the provisional application is filed, the startup can go through the ‘build-measure-learn’ cycle in order to convert the minimum viable patent into a strategic and valuable patent. This ‘build-measure-learn’ cycle involves distinguishing it from ‘prior art’ which include publications and patents as well as competing products, and also positioning the patent by writing claims that cover strategic variants of the product that competitors are likely to come up with. The feedback comes through prior art searches that are conducted for different versions of the product as well as changes made based on customer feedback and competitor activity.

A career in Patents – My Journey

One of the questions that I am asked often when I introduce myself is, “why and how did I choose a career in Intellectual Property (IP)?” Perhaps the origins of my interest in IP lie in my interests in law. While at college, I noticed that while my skills in my subject of specialization (Chemistry) were about average in class, my other skills such as written and oral communication, debating, making presentations, intrapersonal and interpersonal skills etc were substantially better than average.

Among the various specializations in law, Patent law was perhaps the only one in which a degree in science or technology would be a major advantage, and not just an additional qualification. Typical choices that were available to me on graduation included further studies in the same subject (e.g., in the USA), a job through campus placements, and further studies in management by appearing for entrance exams. I consciously chose not to opt for either of them. Instead, based on a recommendation from my guide who I worked with on my Masters thesis (the convener of the patent committee), I joined the division that handles IP (among other things) at the university. As such, I did not get much training on IP (or salary), but the job gave me some confidence (that I could learn on my own) and exposure.

As a student from a reputed institution where grads are assured of jobs with high salaries, working as a research assistant (very much like an intern) was not easy for me to digest, especially when my (less talented) peers were earning much more. But I told myself that I could either have a sustainable career in my chosen field (Intellectual Property) OR a high-paying job, but not both (at least not right away).

There are some fields that require analytical skills, not much specialized knowledge, and minimal training. Fresh graduates from reputed institutions can easily find high paying jobs in such fields and continue to grow further (just based on their analytical skills or on newly acquired management skills) without investing in acquiring specialized knowledge, however IP is not one of those fields. Without specialized knowledge, one can get a job (even a high paying one) related to IP, but not sustain a career, as the lack of specialized knowledge leads to stagnation in the (initially) high-paying job.

Some of the requirements to build a sustainable career in patents include:

1) The ability to grasp new technologies and applications quickly
2) Excellent written communication skills
3) Ability to understand laws, read bare acts and rules and apply them in practical situations
4) Interpretation of techno-legal documents
5) Thinking and reasoning like a patent professional (which is different from thinking like a scientist or engineer)
6) Analytical skills (particularly in patent analytics)
7) Reading comprehension (including ability to discriminate between relevant and irrelevant)
8) Attention to detail
9) Training by an experienced patent professional
10) Practical experience to realize and internalize the training

Among these requirements, the ones that can make the maximum amount of difference to an IP career are 9 & 10, namely training by an experienced patent professional and practical experience to realize and internalize the training. 9 & 10 can save several years of struggle for entrants to a career in patents, and even help cultivate 1 to 8 quickly. So, if you aspire for a career in patent law, choose a firm that will give you the right training, opportunities and exposure.


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