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Patent Discounted Cost for MSMEs and Start-Ups India

April 8, 2021

By Lucy Rana and Saroj Kumari

Introduction

The Indian Government has always been providing benefits and support to the Micro, Small, and Medium Enterprise or MSMEs. There are a numerous advantages of obtaining MSME registration in India, which can only be availed by an enterprise if the same has registered as an MSME under MSMED Act.[1]

Also read Benefits of MSME Registration in India

The Micro, Small and Medium Enterprises Development Act, 2006[2], classifies the MSMEs on the basis of investment in:

(i) plant and machinery, for enterprises engaged in the manufacturing or production of goods, and

(ii) equipment, for enterprises providing services.

However, the MSME Development Act, 2006 was redefined by virtue of The Micro, Small and Medium Enterprises Development (Amendment) Bill, 2018 by the Minister of State, which uniformly classifies the industries based on their annual turnover irrespective of their kind i.e. manufacturing or service-providing enterprises[3]. The below illustrates the changes in the classification of MSMEs:

 

micre-enterprise

Table 1: Classification of enterprises as micro, small and medium enterprises (in Rs)[4]

Importance of MSME Registration and Intellectual property (IP)

Manufacturing and service industries both can obtain the MSME registration under MSMED Act. Although MSME registration is not compulsory but can be voluntarily registered in order to avail various benefits, incentives, or support by the Central or State government.

Intellectual property has assumed substantial special importance in the road to success for startups and MSMEs in India, as IP enhances the competitiveness of evolving new technologies and provides a path for bringing the technology to the market. A survey found that patents granted to MSMEs are expected to be between 2.8 per cent to 23.4 per cent of all the patents granted to Indian residents by the IPO. Out of which 7.3 per cent of pharmaceutical MSMEs have been successful in obtaining patents. Regarding filing of patents, MSMEs engaged in pharmaceutical products are on the rise that is about 16 per cent of such MSMEs are engaged in the patent filing. Also, it can be seen that 61 per cent of pharmaceutical MSMEs are having trademarks and only 16 per cent are active in patenting[5]. Hence, IPR awareness and importance of IPR protection requires greater attention and understanding by the MSME sector in India.

IPR Awareness amongst MSMEs and Startups

To upgrade the awareness of IPR in the MSME several programmes have been announced such as National Manufacturing Competitiveness Programme (NMCP) which aims at “Building Awareness on Intellectual Property Rights (IPR)” for the MSME. The main activity and funding limits proposed under said scheme cover the following broad areas of interventions[6]:

 ent2

Funding support for MSMEs and Start-Ups[7]

  • Conducting awareness/sensitisation programmes on IPR (Applicants – MSME organisations and expert agencies)
  • Conducting pilot studies for selected clusters/groups of industries (Applicants – MSME organisations, competent agencies and expert agencies)
  • Funding support for conducting interactive seminars/workshops (Applicants – MSME organisations and expert agencies)
  • Funding support for conducting specialised training on IPR (Applicants – Expert agencies)
  • Funding support in the form of Grant on Patent/GI Registration (Applicants – MSME units and MSME organisations)
  • Funding support for setting up IP Facilitation Centre (IPFC) for MSME (Applicants – MSME organisations and IPR facilitating agencies)
  • Funding support for organising interaction with international agencies (Applicants – MSME organisations and IPR facilitating agencies)
  • Government assistance of Rs.1 lakh per awareness programme
  • Government assistance of Rs.2.5 lakh per pilot study
  • Government assistance of Rs.2 lakh per programme of interactive seminar
  • Government assistance of Rs.6 lakh per short term training programme and Rs.45 lakh per long term training programme For registered Indian MSMEs, one time financial support limited up to Rs.25,000 on grant of domestic patent and Rs.2 lakh for foreign patent; for registering under Geographical Indications of Goods Act, one time financial support limited up to Rs.1 lakh
  • A total financial support by Government up to Rs.65 lakh each for establishing IPFCs which will include one-time grant of Rs.45 lakh and Rs.18 lakh as recurring expenses for 3 years, and Rs.2 lakh as miscellaneous charges.
  • Financial support by Government up to Rs.5 lakh and Rs.7.50 per event for domestic interventions and international exchange programme respectively.

 Following are the advantages of MSME registration in India:

  • Subsidy on Patent Registration
  • Tender preference to MSME
  • 100% tax exemption for innovation startups
  • Loans without collaterals
  • Government Schemes to reimburse the money spent on patent[8]

Scheme for facilitating Startups Intellectual Property Protection (SIPP)

Government to endure facilitation cost: Under this scheme, the Central Government shall bear the entire fees of the facilitators for any number of patents, trademarks or designs that a Startup may file, and the Startups shall bear the cost of only the statutory fees payable.

Discounted Official fee for Patent Filing by MSMEs and Start-Ups in India**

siepet

**Please note that the above fees does not include the professional fee
  • Support International Patent Protection In Electronics And IT (SIPEIT)

Expenses incurred in International Patent Protection will be reimbursed (total reimbursement will not exceed Rs 15 Lakhs or 50% of the total expenses, whichever is less) will be in installments and will be reimbursed as listed below:

Applications filed directly in a foreign country after satisfying the requirements of Section 39:

  • 25% of the expenses incurred in Filing for a patent application in respect of foreign geography will be reimbursed.
  • 75% of the expenses incurred after filing up to grant will be reimbursed after the grant of the patent.

Applications filed in a foreign country within 12 months of filing a patent application in India:

  • 25% of the expenses incurred in the Filing of patent applications in respective foreign geography will be reimbursed.
  • 75% of the expenses incurred after filing up to grant will be reimbursed after the grant of the patent.

Hence, the government is making endeavors and bringing about changes in the regulatory framework to protect ideas, technological innovation and business strategies developed by MSMEs and such industries are showing significant growth with support from the Indian Government. Hence, considering the various advantages and incentives being conferred by the Government in the event of patent filing, the MSMEs and Start-Ups shall actively protect and safeguard their Intellectual property rights in India.

[1] https://www.fundstiger.com/benefits-msme-registration/

[2] https://legislative.gov.in/sites/default/files/A2006-27.pdf

[3] https://prsindia.org/billtrack/the-micro-small-and-medium-enterprises-development-amendment-bill-2018

[4] Ibid

[5] https://www.wipo.int/edocs/pubdocs/en/wipo_natstudy_sme_india.pdf

[6] https://msme.gov.in/sites/default/files/Revised%20IPR%20Guidelines_5.pdf

[7]  https://my.msme.gov.in/MyMsmeMob/MsmeScheme/Pages/ssub_3.html

[8] https://www.origiin.com/2020/05/15/schemes-of-government-to-reimburse-the-cost-of-patents/#:~:text=An%20organization%2C%20unit%2C%20individual%2C,obtain%20assistance%20for%20patent%20registration.&text=The%20assistance%20of%20up%20to,operative%20period%20of%20the%20scheme.

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Importance Of IPR for Start-ups

Benefits of MSME Registration in India

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