Let’s know more about it from Raddhika Singh, Managing Partner, and Founder, Aletheiaa Legal. It is a law firm specializing in IP, media & entertainment, commercial contracts & IT Law that has advised 300+ startups.

Here’s what we’ll cover in this discussion.

What is an IP?

IP is called Intellectual Property. It is the mind’s creation that’s used commercially. Examples, Inventions, literary and artistic works, designs, names, and images.

Different Types of IP

There are four main types of IPs:

Trademark

Brands claim trademarks as an IP for their products, services, company name, business, slogans, taglines, or domain names.

Copyright

Any business that creates original literary, dramatic, artistic, musical works, sound recording & cinematograph films claims to copyright as an IP.

Designs

Manufacturing companies come up with their own innovative designs and unique aesthetic features on a product, unique products over which they can claim the design as an IP.

Patents

A novel innovative idea having an inventive step is patented and claimed as an IP.

How to Commercialize an IP?

We commercialize an IP in three ways:

• You keep it for your personal use.
• You use it commercially and earn revenue by leasing it to a third party. The third party pays you a royalty. The IP’s ownership stays with you (IP creator).
• You can assign it for a value to a third party or sell it to a third party.

How to Generate Income by Licensing Your IP?

The basic licensing allows a third party to use your brand’s information that pays you a royalty in return for it. Nuances of each IP agreement will be different depending upon the understanding between the parties. There are different modes of licensing your IP. Let’s know about all of them one by one.

Trademark

You can generate income by a trademark in three ways:

Trademark licensing by a parent company to its subsidiaries:

If a company situated in Singapore needs to use the same product in India, their parent company needs to license the brand trademark to the Indian company. The parent company and its subsidiaries enter a licensing agreement that has all the important clauses clearly mentioned.

Trademark licensing by a franchisor to franchisees:

It is the most famous form of licensing trademark. There are several restaurants, they all look the same. A famous food joint, restaurant, or salon license the right to use their brand to entities that are willing to use it. They license it to a third party. They have different models of licensing of franchising basis which they permit the third party to use their brand name. There are certain conditions in respect of that & there’s a royalty & franchise fee that’s payable to the franchisor.

Trademark licensing to facilitate a sponsorship:

A brand sponsoring an event permits the event organizers to use logos. Two brands can have a co-branding agreement. They permit each other to use their brands & they have a licensing agreement amongst each other.

Copyright

You generate income by copyright in two ways:

Copyright licensing by authors of a book via movie contracts & book publishing contracts:

There are authors who write a book & they enter into an agreement with a publisher to publish their books. They license the right to publish a book to a publishing house and keep its ownership with themselves.

Copyright licensing in a software:

One of the most common forms of copyright. Companies that develop software, generate income by giving users the right to download the software/app. In turn, users pay a certain royalty or a certain amount to the owner of the software in the form of a subscription or a fee depending on the arrangement between the parties.

Designs

Design companies design products that are aesthetic. They design it and license it to a manufacturer. The manufacturer takes it and designs it on their own. For every product they manufacture based on the design created by the designer, they give a certain revenue per piece to the designer.

Patents

Entrepreneurs file a patent for their exemplary ideas. They find manufacturers and permit them to manufacture the design. Manufacturers pay a royalty to the designer per piece.

Important Clauses in an IP Licensing Agreement

If you have to license your IP to a third party, here’s what you need to keep in mind:

Nature of IP

Identify the nature of IP if its software’s code, literary work, or trade’s name, etc. There could be different IPs for any tech startup. You need to give the right to use a software’s feature if it’s patentable. This makes the nature of IP is important.

Ownership of IP

The licensor should mention that they’re the owner of the IP they’re licensing to the licensee. It is important for the licensees to get the representation of it. This can lead to a legal battle if there’s no such representation from the owner’s end. The agreement should identify that ownership stays with the licensor to avoid any confusion.

Scope of license

The scope of the license can be exclusive & non-exclusive. The owner of the IP has the right to license it to one person or multiple people. The license’s scope should be non-exclusive if several customers have to use your IP. If you give exclusive rights to a customer, only that person has a right to use that IP even to your exclusion. This will exclude the owner from using it.

Term of the license

IP’s time period is an important clause to consider. You’ll need to mention the consequences for it after the term is over. On expiring of the term, the IP rights must go back to the owner.

Territory

The license’s territorial limits are important. This can range from specific states, countries, or worldwide. It is important for a franchising agreement. Franchisees need to understand the territory where they can use the products. The licensor must mention it.

Consideration (Royalty)

The licensee pays royalty in different ways. Here’s more about it:

• A single up-front payment
  Licensee gives a single upfront payment to the licensor. Licensor does not track the number of sales that happened.
• Periodic payment of pre-determined amount
  The franchisee pays royalty to the franchisor for net revenue made every month. It is a pre-determined percentage of the net revenue. You can find it commonly in copyright and design licensing.
• An amount periodically paid based on ancillary conditions
  This agreement allows you to use an IP royalty free and pay royalty if a big client signs up. It depends on basic negotiations between the party.

Permitted use of IP 

A license agreement must mention IP’s use and the restrictions if any. There may be restrictions on reverse engineering or creating something similar.

Indemnification

IP misuse or agreement breaching consequences needs to be clearly mentioned.

Advantages of IP Licensing

Below are the advantages of IP licensing you must know:

• Generates a passive income for the IP owner, without any significant overheads
• Creates new business opportunities for licensor & licensee
• Enables businesses to enter new markets or industries & expand their business
• Provides the potential for better marketing

The post A Complete Guide to IP Licensing and its Advantages appeared first on PayU Blog.

What Is A Patent? 

A patent is a legal document given by the state or national government, depending on the national standards. It grants an inventor the exclusive right to create, use, and sell their product for a set length of time. The primary concept behind this method is to encourage innovators to protect their innovations. Books, movies, and specific works of art are not patentable. However, you can protect these items under copyright law. Patent law is a subset of the broader legal area known as intellectual property, encompassing trademark and copyright law. Let’s take a look at how to get a patent in India.

What Inventions Are Patentable? 

Any asset or idea must fulfil three fundamental conditions to qualify for a patent: 

• The innovation must be novel and leave no traces of its predecessors. 
• An individual’s advancement in current technology cannot be patented. 
• It must be beneficial. It should bring value to the ordinary man’s life and must not profit or promote the usage of illicit substances or be utilized for any unethical purpose. 

How To Register A Patent In India? 

Let’s look at tips for applying for a patent in India:

Determine whether your innovation is patentable

Before you begin the patent registration procedure, you must first determine if your idea is patentable. It implies you should check whether anybody else has filed a patent for a similar technique to the one you’re proposing.  

An in-depth patentability search will assist you in determining whether you have a probability of obtaining a patent. While this stage is optional, it can help you save time and decide whether you should register for a patent in the first place. 

Draft the patent application

• You may now start working on your patent application.  
• Indian applicants must complete the Indian Patent Application Form 1. You must submit a Form 2 patent specification with each patent application.  
• Depending on the stage of innovation, you can file a provisional or complete patent application. You must file a provisional patent application if you are still testing your creation.  
• You have 12 months to finish the innovation and submit for a full patent. 
• When creating your patent application, you must pay close attention. Your patent application should include detailed language about usability and the consequence of the innovation.  
• You should also add the essential provisions, such as your plan to license your idea and prohibit competitors from utilizing and benefitting from it.  
• When creating your patent application, employ caution, be precise, and include provisions restricting competitors from exploiting your technology. 

Filling Out The Application For Grant Of Patent In India

Multiple forms accompany any patent application. According to the patent filing method in India, you must submit all the paperwork listed below. There are links to all forms, as well as an application fee. 

• Form 1: For Patent grant application 
• Form 2: For patent specification. It could be provisional or complete
• Form 3: Section 8 undertaking and declaration about foreign applications. It’s mandatory only in case you file a corresponding application for a patent in a foreign country) 
• Form 5: To file an invention declaration. It needs to be submitted with the whole application. 
• Form 26: Form granting patent agent authority (applicable only if you opt for an agent to help file the patent) 
• Form 28: Only if the applicant is claiming a small entity or start-up status is this required. 
• Priority Documents: You only need to produce priority papers if you claim priority from a foreign patent claim or application. 

Publishing Your Patent Application

The Indian Patent Office secures your patent application when you submit all the required paperwork. After around 18 months, they publish the patent in an official patent journal. However, inventors who want their patent application published sooner than the 18-month period might file Form 9. 

The above is a routine procedure, but if an investor wants his application published sooner, he must submit Form 9 (an early publishing request). The authorities will then publish the application in the official patent journal within one month of the request.  

However, there are several cases when they may not publish your patent application. Examples include: 

• Incomplete applications  
• Withdrawal requests filed by the individual submitting the patent  
• Confidentiality orders are enforced under the Patent Act if the innovation is detrimental to the nation’s interests 

Investigating The Patent Application

Before your patent issuance process gets complete, the concerned authorities will review it simultaneously. They investigate your patent extensively. It is examined on the merits of your invention which you have claimed and stated in the patent specification form. Also, they do verify it as per the norms of the patent application procedure in India. 

Unlike the publishing process, this is not an automated procedure. The applicant must file Form 18 to request that their patent application is pending for examination. Once you submit a formal request for examination. The patent office place the application in the queue for inspection. 

You can also speed up the process by completing and submitting Form 18(A). While reviewing your application, the patent examiner will take a few measures of their own. They are as follows: 

• When an application reaches an examiner’s desk, they inspect it by the Patent Act and underlying guidelines. 
• To guarantee that the invention meets patentability standards, the patent examiner searches for related technology. 
• After evaluating the application, you will get a first examination report (FER). This document outlines any grounds for objections. 

• The examiner goes into great depth about his complaints, adding another 6 to 9 months to the application process. Remember that the examiner’s objections are rather typical in the case of patents. 
• If the inventor wants to revise their objection, they can submit Form 4 to request a time extension. 

Patent Granting Decision

Once the examiner finds no objections in the patent application, the patent office will grant the patent. After that, they publish the patent in the official patent gazette. 

Renewal Of The Patent

In addition, the patent holder must renew his patent by paying an annual renewal fee. In India, you can renew your patent for a maximum of 20 years from the submission date. 

Although the patent application procedure is lengthy and difficult, it is critical in the long run. The entire procedure might take anything from 3 to 5 years. However, the Indian Patent Office employs more examiners and renovates its offices to process patent applications on time. The procedure is designed to ensure that the innovator receives credit for his idea. It also assures that no one else may claim ownership of the innovation. The legal rights you obtain with your patent can prohibit rivals from profiting financially from your creation. You can even sue such people and seek compensation for exploiting your idea without your permission. 

Conclusion 

Patents can protect innovation in India. A patent is a government-granted legal right that bans others from manufacturing, using, selling or importing a patented product or process without permission or authorization. This patent filing is a crucial step an inventor takes because he/she wants to protect their invention from exploitation. Patent application in India is lengthy, but it may finish quickly with the correct advice and assistance. Anybody who wants to get a patent should consult a professional patent attorney. 

A comprehensive study is done before getting a patent registration. It is because they need to verify that the product is original or unique, as well as industrially valuable. A person can search the intellectual property authority of India’s database to check whether there is an object or invention that is the same or comparable to the applicant’s work. 

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