Patent (Amendment) Rules 2016: Benefits for Startups

The Indian startup ecosystem has been thriving, contributing significantly to the country’s economy and innovation landscape. Recognising the importance of intellectual property (IP) in fostering innovation, the Indian government introduced the Patent (Amendment) Rules 2016.

These amendments aim to streamline the patent application process and substantially benefit startups. In this blog, we will delve into the key features of the Patent (Amendment) Rules 2016 and how they benefit startups.

The Patents (Amendment) Rules, 2016 (“the Rules”) has been notified and hence, has come into force with effect from the date of its publication. no. G. S. R. 568 (E) dated 16th May, 2016, the central Government in the Ministry of Consumer affair 

In Part II Section 3 of the Department of Commerce and Industry, also known as the Department of Industrial Policy and Promotion.  Particular Gazette notification of the Government of India, for instance, Extraordinary, Part-II: Section 3: Sub-section (i). The draft Patents (Amendment) Rules, 2015, were published by the Ministry in October 2015 to receive suggestions and objections from the; stakeholders.

Key Features of the Patent (Amendment) Rules 2016

1. Defines a Startup

One of the significant changes introduced by the Patent (Amendment) Rules 2016 is the clear definition of a startup. According to the rules, a startup is an entity that:

• It has been incorporated or registered in India for less than seven years and, for biotechnology firms, up to ten years.
• Has an annual turnover not exceeding INR 25 crores in any preceding financial year.
• Is working towards innovation, development, deployment, or commercialisation of new products, processes, or services driven by technology or intellectual property.

The entities will not be considered as a startup if:  

• Which has been established either from the split-up or the reconstruction of an already existing business.
• Startup status will not be granted to goods, services, or procedures that are not potentially commercialised.
• Products, services, or workflow procedures that offer little to no additional value to customers or workflow should not be classified as startups.

2. Fast-Track Examination Process

The amendments introduce a fast-track examination process exclusively for startups. Under this process, startups can file a request for expedited examination by paying a reduced fee. This significantly reduces the time taken for the examination of patent applications, enabling startups to bring their innovations to market faster.

3. Reduced Fees for Startups

The Patent (Amendment) Rules 2016 offer a substantial reduction in patent application fees for startups. The fees for various patent-related services, including filing, examination, and maintenance, are considerably lower for startups compared to other entities. This reduction in fees eases the financial burden on startups, making it more feasible for them to protect their innovations.

4. Support for Filing International Patents

The amendments also help startups file international patents. The government provides financial assistance to startups for filing international patents through the Patent Cooperation Treaty (PCT). This assistance covers a significant portion of the costs involved, enabling startups to secure their IP rights globally.

5. Relaxation in Procedural Requirements

Startups benefit from simplified procedural requirements under the new rules. For instance, the requirement for submitting a statement and undertaking regarding the commercial working of the patented invention has been relaxed for startups. This reduces the administrative burden on startups, allowing them to focus more on innovation and growth.

6. Official fee payable by a startup

A startup’s fees are equal to those of a natural person and, for the most part, are 80% less than those of a large entity—that is, an entity other than a startup, small entity, or natural person. 

Expedite/Tatkal Patents 

With the introduction of Rule 24C, the process of expedited application has been introduced. Initially, the period for presenting such an application and thereby obtaining the Patent was around 5-7 years, but with the introduction of this Rule, the timeline to file the application and thereby obtaining the Patent has been shifted to 18 months. The application for an expedited application can be filed under FORM 18A

Applicability of this Rule:

For the applicability of this Rule, there are some requirements that the entity is required to follow and these are as follows:

1. The entity should have listed itself as an International Searching Authority or been elected as an International Preliminary Examining Authority. 
2. The entity that is a Startup. 

The benefit of Rule 24C is that it is available only electronically. Also, startups enjoy a deferred fee structure on Tatkal Patents. With the amendment to the Patent Rules in 2016, the government drastically reduced the fees on Patent Applications. 

Fee Schedule before and after the 2016 Amendment

With the help of the below table, the changes in the fee structure can be understood more closely. 

Type of Entity	Fee schedule before amendment	Fee schedule after amendment
Startups	Rs. 50, 000	Rs. 8,000
Small Entity	Rs. 1,25,000	Rs. 25, 000
Other than small entities	Rs. 2, 50,000	Rs. 60,000

Benefits for Startups

1. Enhanced Protection of Innovations

The primary benefit of the Patent (Amendment) Rules 2016 for startups is the enhanced protection of their innovations. With a streamlined and expedited patent application process, startups can secure their IP rights more quickly. This protection is crucial for startups to safeguard their innovative ideas from being copied or misused by competitors.

2. Cost-Effective IP Management

The reduced fees and financial assistance for filing international patents make IP management more cost-effective for startups. This cost efficiency encourages startups to invest in protecting their innovations without worrying about exorbitant expenses.

3. Increased Market Competitiveness

With quicker patent grants, startups can bring their products and services to market faster. This early market entry provides a competitive edge, enabling startups to establish themselves and capture market share before competitors can replicate their innovations.

4. Attracting Investments

A robust IP portfolio, supported by patents, is an attractive proposition for investors. Startups with patented innovations demonstrate their commitment to protecting their intellectual property and long-term business strategy. This can enhance their credibility and attract potential investors looking for innovative and secure investment opportunities.

5. Global Expansion Opportunities

The support for filing international patents opens doors for startups to expand their operations globally. By securing IP rights in multiple countries, startups can explore international markets with confidence, leveraging their patented technologies and innovations.

6. Opportunities for Expansion:  With the acknowledgement and the leverage provided to file international applications hence open the doors for them to work and expand their operations globally. 

• Protection: The recognition and reduction in the filing fees for startup Patents will give startups a greater sense of security and protection. This will also motivate them to work even harder to protect their IP. 

• Systematized IP Management: The reduction in patent filing fees allows for more systematized IP management, as more startups will be lured to opt for Patent registration. 

• Market Reach: Registering under the Patent Act fosters a good market reach for the product and its services. 

Investors: A good portfolio of Patents allows startups to attract more investors, as Patents act as a backing element in the investors’ eyes, causing them to invest more in the startup’s products/services. 

Leaving and Serving of Documents

The Patent (Amendment) Rules 2016 introduced several changes to streamline and modernise the patent application process in India. One critical area of amendment pertains to the leaving and serving of documents. This aspect is crucial for ensuring efficient communication between the patent office and applicants, thereby facilitating a smoother patent application process.

Key Changes in Leaving and Serving of Documents

1. Electronic Communication

The Patent (Amendment) Rules 2016 emphasise electronic communication for the submission and serving of documents. This shift towards digital methods aims to expedite the process and reduce delays associated with traditional paper-based communication.

• E-filing: Applicants can now file patent applications and related documents electronically through the Indian Patent Office’s online portal. This allows for quicker submission and acknowledgement of documents.
• Email Communication: Notices and documents can be served to applicants via email, ensuring faster and more reliable delivery.

2. Mandatory E-filing for Certain Categories

For specific categories of applicants, including startups and small entities, e-filing of patent applications and documents is mandatory. This requirement ensures that these entities can benefit from the efficiency and speed of electronic communication.

3. Physical Submission Options

While the focus is on electronic communication, the rules also provide options for the physical submission of documents. Applicants can leave documents at designated patent offices if electronic submission is not feasible.

• Courier/Registered Post: Applicants can send documents via courier or registered post to the appropriate patent office. The date of dispatch is considered the date of submission.
• Personal Delivery: Applicants can personally deliver documents to the patent office, where an acknowledgement receipt will be provided.

4. Acknowledgment of Receipt

The rules stipulate that the patent office must provide an acknowledgement of receipt for all documents submitted, whether electronically or physically. This acknowledgement serves as proof of submission and ensures transparency in the process.

Refund of Fee under Patent (Amendment) Rules 2016

The Patent (Amendment) Rules 2016 introduced several reforms aimed at making the patent process more accessible and efficient. Among these changes, the rules regarding the refund of fees are crucial for applicants, including startups and small entities. Understanding these provisions is essential for managing costs and ensuring compliance with the patent application process.

These policies have to be followed to ensure that the targets of spreading standards, which is the main reason for an SSO, are achieved. Thus, the licensing of SEP on FRAND terms raises a voluntary contract between the SSO and the SEP holder. However, the meaning of FRAND is not described by SSOs; it primarily depends on the type of transaction regarding the SEP holder or the licensor and the SEP implementer or the licensee.

Key Provisions for Refund of Fees

1. Conditions for Refund

Under the Patent (Amendment) Rules 2016, the refund of fees can be processed under specific conditions:

• Error in Fee Payment: If an applicant has paid an excess fee or made an error in the payment amount, a refund can be requested.
• Withdrawal of Application: If a patent application is withdrawn before the examination, the applicant may be eligible for a refund of the fee paid for the examination.
• Rejection of Application: If the Patent Office rejects a patent application and the applicant has not pursued any appeal or review, a refund may be available.

2. Application for Refund

To apply for a refund of fees, the following steps must be followed:

• Written Request: The applicant must submit a written request for a refund to the Patent Office. This request should include details of the payment, the reason for the refund, and any supporting documents.
• Refund Form: The Patent Office prescribes a specific form that must be completed and submitted along with the written request.
• Supporting Documents: Any additional documents required by the Patent Office, such as proof of payment or a copy of the withdrawal notice, must be provided.

3. Processing Time

The processing time for a refund request can vary depending on the complexity of the case and the workload of the Patent Office. Typically, the Patent Office will review the request and issue a refund within a reasonable timeframe.

4. Refund Amount

The amount eligible for a refund is usually based on the type of fee paid and the reason for the refund. The Patent Office will determine the exact amount of the refund in accordance with the rules and guidelines.

As provided by the Rules, an applicant can request a refund of 90% of the fees paid for a request for examination/expedited examination, provided that the request for withdrawal of the application is filed before a First Examination Report is issued. New form 29 is available for submitting a request for withdrawal of the application under the Rules. 

Time to Sort the Application so that it is Presentable for Grant

The time required to apply for the grant has been reduced to 6 months from the date of issuance of the First Examination Report, as opposed to 12 months in the previous regime. Thus the applicant is bound to reply to the objections raised in the First Examination Report within six months from the date of receipt of the First Examination Report. 

However, later after issuing the notification regarding the Rules, the Patent Office, through a public notice dated 18-05-2016, clarified that in cases where the First Examination Report have been issued by the Patent Office before 16-05-2016, the time for putting an application in order for a grant shall be restricted to maximum 12 months. But where for the First Examination Reports issued by the Office on or after 16-05-2016, the provisions of Rules shall be accordingly made applicable.

Reduced time for putting an application in order for a grant

The new Rule 24B subrule (6) states that the deadline for submitting an application for approval must be met within six months of the applicant receiving the FER if the FER is granted on or after May 16, 2016.

prerequisites. Before the six-month time frame expires, the time above period may be further extended for an additional three months by submitting a request in Form-4 and paying the required fee. 

In just 21 days, a foreign filing licensing request is issued: 

The request for the filing license, also known as the foreign filing license request, will be disposed of within twenty-one days from the date of its request when the applicant desires to file the patent application to a foreign country without applying in India.  

Therefore, startups will be in a position to register their patents far more easily and at a lower cost, as provided by the new patent amendment rules. The Indian government also wants to ensure that patents are granted in two and a half years, whereas they currently take five to seven years.

Filing of International applications designating India

Under subrule (1) of Rule 20, an international application as filed under PCT may be made in Form-1, including any revisions made by the applicant under Article 19 or subclause (b) of clause (2) of Article 34 of the PCT.

As long as the applicant follows Rule 14 and deletes a claim while applying Form-1.

Condonation for Delay in Submitting Documents Under the Patent (Amendment) Rules 2016

The Patent (Amendment) Rules 2016 introduced several provisions aimed at streamlining the patent application process and making it more accessible and efficient for applicants. One critical aspect of these rules is the provision for condonation of delay in submitting documents. This provision allows applicants to request an extension or condonation of delay in certain circumstances, thereby providing flexibility in the patent application process.

What is Condonation of Delay?

Condonation of delay refers to the acceptance of documents or responses submitted after the prescribed deadline, provided the delay is justified and falls within the allowable period. The Indian Patent Office may grant condonation of delay based on the merits of each case, ensuring that applicants have a fair opportunity to comply with procedural requirements.

Key Provisions for Condonation of Delay

1. Extension of Time Limits

The Patent (Amendment) Rules 2016 allow for the extension of time limits for submitting documents or responding to communications from the patent office. This includes:

• Extension Requests: Applicants can request an extension of time for various procedural actions, such as responding to examination reports, submitting necessary documents, or completing other required actions. The request for an extension must be made before the expiration of the initial deadline.
• Fee Payment: Extensions are typically granted upon payment of the prescribed fee, which varies depending on the nature of the extension and the type of applicant (individual, startup, small entity, or large entity).

2. Situations Eligible for Condonation

Condonation of delay can be requested in various situations, including but not limited to:

• Response to Examination Reports: If an applicant is unable to respond to an examination report within the prescribed time, they may request an extension.
• Submission of Priority Documents: In cases where priority documents or certified copies of earlier applications are required, applicants may seek condonation for delayed submission.
• Payment of Renewal Fees: If renewal fees for maintaining a patent are not paid within the prescribed period, applicants may request a condonation of delay to avoid the patent’s lapsing.

Process for Requesting Condonation of Delay

1. Submission of a Formal Request

Applicants must submit a formal request for condonation of delay to the Indian Patent Office. This request should include:

• Explanation for Delay: A detailed explanation of the reasons for the delay. Valid reasons might include administrative errors, unforeseen circumstances, or other justifiable causes.
• Supporting Evidence: Any relevant documents or evidence supporting the reasons for the delay.
• Prescribed Fee: Payment of the applicable fee for the extension or condonation request.

2. Review and Decision

The patent office reviews the request and supporting documentation to determine whether the delay is justified. The decision to grant or deny the condonation request is at the patent office’s discretion, based on the merits of each case.

• Grant of Condonation: If the request is approved, the applicant is granted additional time to complete the required actions.
• Denial of Condonation: If the request is denied, the applicant must adhere to the original deadlines, and failure to comply may result in adverse consequences, such as abandonment of the application.

Electronic submission of documents

 As per the provisions of Rule 6(1A), the documents that are required to be submitted by the Patent agent in original after filing them electronically are:  

• The Authorization of Patent Agent or Power of attorney(under Rule 135) 
• Proof of the right to make an application(under Rule 10)  
• Deed of assignment, a certificate regarding a change in the name of the applicant, license agreement, etc.(under Rule 91) 
• Declaration regarding inventorship (under Rule 13(6))
• Priority document (under Section 138 or Rule 21). 

Provided that the document/s above are submitted to the Patent Office within 15 days from the date of filing or electronically submitting them. 

Conclusion

The Patent (Amendment) Rules 2016 have been a game-changer for startups in India, providing them with a conducive environment to protect and capitalise on their innovations. The fast-track examination process, reduced fees, financial assistance for international patents, and relaxed procedural requirements collectively create a supportive ecosystem for startups. 

These benefits not only enhance the protection of innovations but also contribute to the overall growth and competitiveness of the Indian startup landscape. As startups continue to drive innovation, the Patent (Amendment) Rules 2016 stand as a testament to the government’s commitment to fostering a vibrant and innovative entrepreneurial ecosystem.

Frequently Asked Questions on Patent (Amendment) Rules 2016

Q1. What are the key features of the Patent (Amendment) Rules 2016 for startups?
Ans1. The key features of the Patent (Amendment) Rules 2016 for startups include the definition of a startup, a fast-track examination process, reduced fees for patent applications, support for filing international patents, and relaxation in procedural requirements.

Q2. How does the Patent (Amendment) Rules 2016 define a startup?
Ans2. According to the Patent (Amendment) Rules 2016, a startup is an entity that has been incorporated or registered in India for less than seven years (ten years for biotechnology firms), has an annual turnover not exceeding INR 25 crores in any preceding financial year, and works towards innovation, development, deployment, or commercialisation of new products, processes, or services driven by technology or intellectual property.

Q3. What benefits do startups receive from the fast-track examination process introduced in the Patent (Amendment) Rules 2016?
Ans3. Startups benefit from a significantly reduced examination time for patent applications, enabling them to bring their innovations to market faster by paying a reduced fee for expedited examination.

Q4. How do the reduced fees under the Patent (Amendment) Rules 2016 benefit startups?
Ans4. The reduced fees for patent applications and related services ease the financial burden on startups, making it more feasible for them to protect their innovations.

Q5. What kind of support do startups receive for filing international patents under the Patent (Amendment) Rules 2016?
Ans5. Startups receive financial assistance for filing international patents through the Patent Cooperation Treaty (PCT), covering a significant portion of the costs involved, enabling them to secure their IP rights globally.

Q6. How do the Patent (Amendment) Rules 2016 streamline the leaving and serving of documents?
Ans6. The rules emphasise electronic communication for submitting and serving documents, mandate e-filing for certain categories, provide options for physical submission, and ensure acknowledgement of receipt for all submitted documents.

Q7. What are the provisions for the refund of fees under the Patent (Amendment) Rules 2016?
Ans7. The rules allow for a refund of fees in specific conditions such as error in fee payment, withdrawal of application before the examination, and rejection of application without appeal. Applicants must submit a written request, complete a refund form, and provide supporting documents.

Q8. How have the time limits for putting an application in order for grant changed under the Patent (Amendment) Rules 2016?
Ans8. The time for putting an application in order for the grant has been reduced to six months from the date of issuance of the First Examination Report, compared to twelve months in the previous regime.

Q9. What is the process for requesting a condonation of delay under the Patent (Amendment) Rules 2016?
Ans9. Applicants must submit a formal request for condonation of delay to the Indian Patent Office, including an explanation for the delay, supporting evidence, and the prescribed fee. The patent office will review the request and decide based on the merits of each case.

Q10. What overall benefits do the Patent (Amendment) Rules 2016 provide to startups?
Ans10. The rules enhance the protection of innovations, make IP management cost-effective, increase market competitiveness, attract investments, and provide opportunities for global expansion by supporting startups in securing their intellectual property rights efficiently and effectively.