LexGyaan Startup Series

Series 1 – Co-Founders’ Agreement and other legalities when starting up

Have an idea? Thinking of Starting Up? Or just testing the waters? You might be reaching out to consultants, developers, manufacturers etc. to improve upon your idea. Have you ensured that your idea is protected and you are not losing ownership of your idea or your brand for that matter? Further, as your founding team comes together, it is important to put down expectations on contribution and ownership in a Co-Founder’s Agreement. You then need to decide what kind of entity you want to house your team in. Its also important you take certain precautions. What if the idea materializes into something big? You don’t want to regret not having your developer bound by obligations to hand over the cool product that you conceptualized! This workshop helps you navigate each of these crucial decisions.

This workshop will cover the key issues an entrepreneur needs to tackle at the very outset, including:

– Co-Founders’ Agreement

– NDAs

– Hiring a web developer

– Deciding on incorporating an entity for the business,

– When to quit your current job

– Protecting your idea and your brand through trademark

Coming up:
Series 2: Starting Up
Once you have decided to proceed with you startup idea? What next? Just setting up an entity is not enough. There is hiring to do, NDAs to be signed, IP to be protected, and so on. In this second workshop in the LexStart Startup series, we will be discussing:
– Legal Cheat Sheet – Basic compliances required under the law

– Startup India – How to register? What are the benefits?

–  Hiring: HR agreements, policies and processes,

– Terms of Service and Privacy Policy

– Protecting your intellectual property

Series 3: Legalities of Structuring Incentive Plan for Employees and Advisors

 

ESOPs, Advisor Equity, Mentor Stock, these are the terms you hear a lot these days. But do you understand how each one of these work?In our third workshop of the LexStart Startup Series, we will be discussing legalities of Structuring Incentive Plan for Employees, Advisors and Mentors, including:– What exactly do each of these terms mean – ESOP, Advisory Equity, Mentor Stock

– How do they work and answer questions like – Does the employee have to pay money? Can they get shares upfront? What happens if they leave the company?

– Most commonly used structures, mechanisms and terms

– Tax consequences

Series 4: Fundraising for your Startup
In the last and most important workshop of the LexStart series, we will be discussing the various nuances of the fundraising process, including:

– Overview of process of fundraise

– Structures for fundraise – Convertible Note, Loan, Equity, CCPS!

– Term sheet and the various terms of investment – how to effectively handle negotiations with investors

– Due diligence – what does it mean and what does the process entail

– Share purchase agreement, share subscription agreement, Shareholders’ agreement – understanding the various documents

– What all do you need to do to get money in bank!

Applying for Trademark? Here is how you can get a proprietor code

Before creating a Proprietor Code you need to ensure that you have a valid Class III Digital Signature Certificate and the same is installed on your computer.

Proprietor Code can be created online on the Trademarks Registry’s Website. To create a Proprietor Code you need follow the below steps.

  1. Go to http://www.ipindia.nic.in/
  2. Click on Trademarks;
  3. On the next page, click on Comprehensive eFiling Services for Trade Marks;
  4. On the next page, click on No Account? Sign Up;
  5. On the page, click on Proceed for Registration;
  6. The Next Page will display the New User Registration Form; on this page, select “Proprietor” in the type of Applicant and in the Enter Code box, type your (applicant’s) name and click on Search;
  7. On the next page, type your (applicant’s) name in the box and click on Submit;
  8. On the next page, click on Add New;
  9. On the next page, select the Proprietor Category and fill up the form, the form requires basic details like:
    • Name;
    • Address;
    • Nationality;
    • Service Address (where you want all notices to be served);
    • Telephone:
    • Fax;
    • E-mail;
    • Trade Description (Brief description of your business);
    • Trading As (Business Name);
    • Legal Status (Company, LLP, Partnership Firm, Trust, etc.).
  10. Once you have filled the form, click on Submit and a Proprietor Code will be generated.

You need to mention the same Proprietor Code, for all applications made under the same name.

Deterred by prohibitive expense for filing patents in India?

What are the benefits for startups?

A startup can now select from a list of about 280 facilitators listed on the website www.ipindia.nic.in for the purpose of getting advise on patent regitsration.

In the event a startup is unable to decide on the right facilitator, it can seek assistance from head of office of the appropriate Patent Office (as per jurisdiction) which will suggest 3 facilitators for the startup to choose from.

While the fee for the patent application and other statutory fees payable will be borne by the start-up, the fees for the facilitator shall be borne by the Government.

What is the role of a facilitator?

A facilitator will assist the startup with all steps required for filing a patent application including provide responses to any query raised by a Patent Office, attend hearings, etc. The facilitator will file all required documents to the Patent Office on time on behalf of the startup.

Protecting your Brand

brand label

Like most companies, when we came up with our name, we were convinced that it is an unique name and getting a trademark registration for the same should be a cakewalk! But this was not to be. When we applied for a trademark, the registry raised an objection stating that the name was not unique enough! But how, I wondered! We don’t have generic terms in our name like “bharat” or “coastal”. And we had also conducted a trademark search before applying for the same. Everything was clear. Then how come this objection?

Well, the Trademark Registry can, on its own raise an objection if the name sounds generic. Does that mean, you cannot protect such a name?

Get a Name Availability Search done for Free!

Not exactly! You can always get a little creative. One way to still protect your brand is by clubbing your name and logo and registering the two as a single label. Do make sure your logo is unique. Also, if your logo is a coloured one, then you may consider registering the logo in black and white. How does it help? Well, registering a label in black and white protects the logo and the label from being replicated in any colour as opposed to registering the logo/label in one particular colour, in which case the logo in that colour gets protected, thus exposing it to the risk of being replicated in a different colour.

Therefore, before applying for registration of trademark, check with your trademark consultant on whether you should apply only for registration of the name of your company or logo or both. It is important you take this call before making applications, and spending on registration fees. After all when you are bootstrapping, every penny counts!

What’s in a name? A lot!

What is in a Name

The first thing I did once we had finalized the name for our start-up was to check if the name was available or if someone had already come up with (what we thought) a brilliant name. When convinced that we actually had come up with a unique name, we proceeded to register it.

We did not wait to register our entity or start the business.

Why in such a hurry? Well your brand/entity name is like your personal name, it’s the identity of your start up. You don’t want to be in a situation where you start with a name, work hard to create a brand and then suddenly midway you have to change it because someone else claims to have the right to use it.

Get a Name Availability Search done for Free!

Heaven forbid, if by that time, your company is profitable and you cannot afford to change your brand name, you may have to shell out a lot of money to get rights to the name. Rights to a name, which became valuable, courtesy your business! I know of a start-up that set up its business, even got enrolled with a prestigious accelerator. At the time of fundraise, the investors insisted on registration of the brand name. That’s when the start-up realized that the brand name they were trading under was already registered to another company. Imagine the pain of rebranding…How do you justify it to your customers, you are anyway in a phase where you are trying to gain their trust and now you have to change your name because of a technicality! Ignorance is not always bliss, you see!

Remember “Intellectual Property” does not mean only a technology or an invention. It also is your brand name or your company’s name. And your priority should be to protect it.

 

Trademark registration cost – INR 6000 – INR 10,000

How to go about it? As soon as you have finalized your name, check on the MCA and IP Registry website, if the name is available. Don’t want to go through the pain of doing it yourself? No problem, just click on this link and leave your details, we will check for availability of your name for free!

Once you have confirmed that the name is available, you can proceed to apply for registration of trademark. Trademark registration can be done online or through a lawyer/law firm or any trademark agent. Registering trademark is not expensive, it will cost you in the range of INR 6000/- to INR 10,000/- per trademark registration (including the statutory fees of INR 4000/-). It is a painless process and requires probably just a couple of hours of your time once you have identified the right consultant!

In my next post, I will share with you some valuable considerations for trademark registrations. Till then, I hope you all have double checked and ensured that you “own” your names!