In-house counsel foretell the key issues and developments that will shape the country’s business and legal environment in the year ahead
India’s ‘start-up boom’ has seen a considerable decline over the last year especially with investments from big-ticket venture capitalists (VC) falling across the sector. It was hoped that a major revival would be assisted by programmes like the Start-up India plan, and indeed 2018 brings to light two major issues regarding intellectual property (IP) and brand protection. One, on trademarks, a slew of changes have been recently incorporated in the 2017 trademark rules. Changes accrue both in terms of expanding trademarkable material (India now expressly recognizes 3D trademarks and has laid down a procedure for registering well known trademarks) and in terms of expediting the registration process for start-ups.
Two, the government in 2018 is expected to finally lend some clarity to the quagmire that is the registration of software patents in India. Many pressure groups continue to cite section 3(k) of the Patents Act to argue that software patents cannot be (and should not be) granted in India. In the era of online start-ups, a final adjudication of this issue will have massive connotations for all interested players.
Start-ups by their very nature are dynamic brands. Through their lifecycle, they often change drastically in character, and thereby in the products they offer. This posits unique challenges for brand protection, especially with respect to traditional IP mechanisms.
On one hand, one may suggest that start-ups begin filing for relevant registrations early in their lifecycle. This has two main problems. First, most start-ups lack specific business direction early in their business and therefore may end up filling a plethora of registrations for brands that are ultimately abandoned. For example, Flipkart started out as a website primarily geared towards buying and selling of books online, and then developed into the mega online retailer we know it today. On the other hand, if one waits for too long to file for relevant registrations, it may become too late to protect the brand. A logo or a tagline becomes unprotectable due to the existence of competitors and copycat brands which move quickly and get registrations on a prior date. The problem is even bigger when it comes to patents as technology that a start-up creates is often its unique selling point, and if competitors obtain patents in the field before, we are looking at a long drawn legal battle which, while affordable for Samsung and Apple, is wholly out of budget for any young company still reliant on either bootstrapped funds or VC funding. Not to mention that most investors dislike the thought of their funds being used to fight legal battles (especially if said battles are to happen in Indian courts).
Added to the above dilemma is the huge challenge facing start-ups when more established players with much deeper pockets decide to get into the game of obtaining brands or filing patents to undercut a young brand. Every start-up founder working in the artificial intelligence/machine learning space will admit to spending more than her/his fair share of time worrying whether the next breakthrough the company achieves will survive the challenge of proving they have something new over the tons of existing and filed patents in the area by big players like Google.