March 28, 2016     

 India: Lack of a solid legal foundation affecting the longevity of Start-ups?

 

Lack of a solid legal foundation affecting the longevity of Start-ups? Successfully running a business requires a lot of strategizing even before the first product is sold. With the proliferation of start-ups since the last couple of years, and especially with the governments’ recent initiative to boost entrepreneurship, interested people are usually aware of the practical steps to be taken to see their ideas become reality. If one is interested in an e-commerce start-up one has to first develop a solid proof of concept, find the right market for the product to fit, hire the first set of employees, etc. But, while these embryonic steps are key to establishing a solid base to structure your business upon, there are a few crucial areas which entrepreneurs tend to over-look.

 

For startups, particularly in the B2B online delivery sectors, along with finances and logistics, establishing a solid legal foundation is a fundamental area which does not get the attention it deserves. It is important because even though without it a company can look very good in theory, it cannot carry on its day to day activities if it does not comply with all the regulatory requirements. One of the primaries of establishing a solid legal foundation, along with choosing the right legal entity to function as, is the protection of intellectual property at the outset. Intellectual property (IP) is a startup’s most valuable asset. Trademarks, patents, copyrights and designs, etc. are the essential components of IP. It is essential to get a proper clearance of one’s intellectual property before using it. Entrepreneurs, in most cases not being aware, neglect the selection and protection of IP and suffer later. Due to working on a shoestring budget in the nascent stages, entrepreneurs in most cases do not spend a dime on professional legal advice for managing their business, and this lack of oversight in due course of time tends to become their Achilles-heal.

 

This was the reality that B2B delivery platform ‘Roadrunnr’, owned and managed by Carthero Technologies Pvt. Ltd., faced one fine morning, when they realized that they were trending all over popular media for reasons beyond their operational issues. As recently as last week, several media channels reported that the Bengaluru-based company has landed in legal trouble over some intellectual property rights infringement for its name from an unknown company. Even though nothing has been publicly admitted by the management with one particular report of its Co-Founder Mr. Mohit Kumar, denying any such legal confrontation , the company did in fact immediately change its name in the aftermath of the news. If one visits the original website www.roadrunnr.in, they are displayed with the following message:

 

 

The link of the webpage redirects the user to www.Runnr.co.in under which domain name (having dropped the word “Road”) the company is currently running its operations. The following is the ‘Whois report’ of both the domain names –

 

 

As a kneejerk response, the management of the Company has commented on the sudden change of its name as an act of experimenting with the brand name. However, a brief search has revealed that the company recently applied for the trademark registration of its earlier trade name ‘ROADRUNNR’. A public trademark search of the word ‘roadrunnr’ from the records of the Trade Marks Registry, brought the following results–

 

Our research team has also compiled a list of trademark applications registered/filed for the mark “RoadRunner” and variations thereof by various entities–

 

 

In light of this trend of start-ups being on the receiving end of Intellectual Property violations, it is important to point out how lack of legal awareness and professional legal advice can be an impediment to running a company which is otherwise sound on its ideas and its target market.

 

      

 

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