Introduction

The Indian Government has announced various initiatives to promote start-ups. One such initiative brings various benefits to start-ups in their patenting initiatives. The benefits primarily correspond to discounts in government fees and expediting of patent examination. The government fees charged for start-ups will be the same as that charged for natural persons (individuals). In this article, we discuss the criteria to be met by an entity, regardless of whether the entity is Indian or not, to qualify as a start-up.  

Note that at the time of writing this article the amended rules, under which these benefits are being provided, was released one day before (May 16, 2016). Hence, there could be changes in the way these rules are interpreted going forward.

Criteria to qualify as start-up

Most of the criteria are objective, with one criterion being subjective in nature. To begin with the objective criteria are listed as questions, and if the answer to each of the below listed questions is in the affirmative (yes), then the entity qualifies as a start-up.

1. The Startup should be incorporated as a private limited company or registered as a partnership firm or a limited liability partnership?
2. Has the entity been registered or incorporated within the last ten years?
3. Has the turnover of the entity in any of the financial years since its incorporation been less than INR Hundred crores (USD 13,614,409 at conversion rate of USD 1 = INR 73)?
4. Has the entity been formed without splitting up or reconstructing a business, which was already in existence?
5. Is the Startup working towards innovation/ improvement of existing products, services and processes and has the potential to generate employment/ create wealth?

The entity has to provide evidence in support of the above listed criteria to be recognized as start-up. The evidence for an Indian entity can include registration or incorporation certificate, and Balance sheet/Income tax acknowledgment for the corresponding years. Whether a declaration by a Chartered accountant regarding the income of the company be accepted is yet be determined. A foreign entity may provide equivalent documents as evidence.

Further, with regards to the subjective criterion, an entity to qualify as start-up should  be working towards innovation, development, deployment or commercialisation of new products, processes or services driven by technology or intellectual property. The criterion is considered to be met if the entity aims to develop and commercialise a new product or service or process, or a significantly improved existing product or service or process that will create or add value for customers or workflow. The entity may provide evidence supporting its claim to have met this criterion by providing a declaration mentioning that based on the patent application that is being currently filed they are working towards developing and commercializing a new product or service or process, or a significantly improved existing product or service or process that will create or add value for customers or workflow.

We hope this article helps patent applicants decide which type of entity they fall under. You may also read our article to know about how to claim small entity status. 

You may also download the article for your reference. 

Please feel free check our patent services page to find out if we can cater to your patent requirements. You can also contact us to explore the option of working together. 

Best regards – Team InvnTree   

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