Abstract
In modern day know-how-driven financial system, startups face severe opposition and growing threats to their modern ideas. Intellectual Property Rights (IPRs) play an essential role in safeguarding startups’ intellectual assets, fostering growth, and riding success. This article explores the significance of IPRs for startups, highlighting their impact on credibility, competitiveness, sales era, and funding appeal. This article takes a look at the demanding situations startups face in protecting their IPRs and provide actionable strategies for overcoming those limitations. Through case research and expert insights, we reveal how effective IPR management can guard startups’ innovative aspect, decorate valuation, and make certain lengthy-time period sustainability.
Keywords: Intellectual Property Rights, Startups, Innovation, Entrepreneurship, Competitive Advantage, Revenue.
Introduction
More often we have heard the meaning of intellectual property rights with the term “creation of their minds”, but what exactly are these? Basically, intellectual property rights means the protection given to the creators over something they had created which is non-tangible in nature.
Hence, these are the rights bestowed upon the people for their creation of minds.
When we talk about the startups, intellectual property rights play a pivotal role in the growth of these small funded businesses. Startups actually are the newly established ventures being devoid of a structured business model or capital and are mostly relied upon the singular product or services sought to be introduced in a market. As the startups are in the early stages of business, neglecting intellectual property rights could be detrimental for their businesses as they provide a structured process to ensure that their services and products that they hold very unique, are preserved.
Types Of Intellectual Property
Intellectual Property also has its kinds, and it is divided into four parts:
Copyright
Copyrights encompasses with works of the original creator, relating to the abstract ideas such as music, dance, artistic expressions, print, software and anything which comes under the category of literary works. One good thing about copyright is that it vests upon the creation, but a simple registration is advisable to avoid any discrepancies in the legal dispute which may arise.
2)Patent
Patent is the right given to the new Innovations, ideas, and any new inventive process revealed by the individuals. Patents are further subdivided into Utility, plant and design patents. In India it is governed by the Indian Patent Act,1970. It encompasses various provisions with regards to the Patent rights. 20years is the term of the Patent in India from the date of filing the patent. It gives the creator the discretion whether anyone can utilise their idea or not.
3) Trademarks
More often, we have seen various brands have their own logos and symbols and we recognise each brands by seeing the logos solely.
These are the trademarks, it is created to ensure that the company’s logos are unique and distinct to avoid any confusion.
The tenure of a trademark is indefinite and as per the wish of the holder but the renewal of trademark is very much required after every 10 years,
4)Trade Secrets
The exclusive information about the business are known as trade secrets. These are kept confidential from other rival companies to ensure the competition is fair.
The trade secrets includes: new recipes, product specifications, process of manufacture and so on.
Reasons Intellectual Property Rights are important for startups:
1)Preserving Ideas
Intellectual property rights helps to preserve and protect the various innovation and ideas which the stakeholders come across. This, as a result tend to create a monopolistic Business for goods and services which creates a competitive environment among the companies.
2)Creation of Revenues
Revenues can be earned by the startups through intellectual properties by licensing it to third parties and this creates revenues without them involving in the processes itself.
Moreover, a Study conducted by the European Union revealed that the Patent ownership of the small enterprises have 36% higher revenue per employee and wages being 53% higher. SMEs with Registered trademarks too have 21% and 17% higher revenue and wages respectively. Seeing the registered design, it was also seen 32% higher revenue and 30% higher wages. Revenue and wages are the two important factors determining the companies growth.
3)Promotion and Marketing
Intellectual Property Rights helps to promote the certain products with their help. The products and the services are advertised as IP serving as the catalyst. For instance, trademarks are used to create an unique identify for the products and services.
4)Reduced operational risks
When the markets involve in Intellectual Property, the risk for legal infringements associated with them also diminishes and thus they are protected from the long, arduous litigation processes.
As the new startups are vulnerable to a more risky business environment it is suggested to get their intellectual properties to get protected to avoid any hindrance during the initial years.
5)Startups with Intellectual Property Rights are more favourable
It is observed that the companies with the intellectual properties protected are more likely to be selected by the potential business investors and businesses partners. Companies having been registered to the following intellectual property act are seen more sincere and more efficient than the ones who are unregistered. This showcases their seriousness in business and also shows their intention to be in this for a long run.
Drawbacks to implement the intellectual property rights
•Awareness
The one of the main challenge to implement the IP rights is the lack of awareness among the startups themselves. They undermine the provisions associated with them and hence, remain unregistered. Majority feels that it is unlikely for their patents to be infringed.
•Complicated procedure
The process of registering the companies on its own is very complex and lengthy. Moreover, they lack expertise to complete the procedure which can be fulfilled by the assistance of attorneys and services of firms.
•Expensive
The registration process for the patents or any other trademarks are not economical at all. The starts-ups are not in a position to provide for such hefty amounts at the initial stage of their business. As their access to funds are constricted, they cannot focus to provide for the registration.
•Could lead to losses
If the startups are unaware about the technique to make money out of their IP, they can suffer losses out of it. For the creation of profit they must know the ways to commercialise their IP.
Conclusion
As we now have the faint idea that world of Intellectual property rights is quite complex especially for the infant business who are participating in the area of business recently. But there is a constant development of technology and innovations in various fields, whose development rate is never not increasing; it is quite pertinent that the startups register their IP for safeguarding and preserving their ideas. The unregistered startups are often trapped by other businesses and are helpless from their deception.
In India, there is national IPR policy which acts like a document to guide the companies about the IPRs and their development in the country which has led awareness about the advantages from the IPRs. But government efforts are not enough for the IPRs to thrive in India and it is high time that the companies on their own opt for these.
References
G Sudipta, Relevance For Intellectual Property For start-ups
https://www.wipro.com/blogs/sudipta-ghosh/relevance-of-intellectual-property-for-startups
S Nilanshu, Role of intellectual property in attracting investing for start-ups
S Vaibhav, The Role of Intellectual Property Right In the Success and Growth of Startups
R Sara, Protecting Intellectual Property
https://www.svb.com/startup-insights/startup-strategy/protecting-intellectual-property-startups
Swati Mishra
Ramaiah College of Law