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!

Did you know that there is a mandatory 1 year cliff on ESOPs?

CLiff (3)

A cliff or a moratorium is the time period between grant of ESOPs to an employee and vesting of the ESOPs. Under the Indian Companies Act, 2013, there has to be a mandatory one year gap between granting and vesting of ESOPs by companies in India. Why does it matter?

It matters because in most start-ups, the promoters tend to offer ESOPs to employee as part of the compensation in the offer letter. It is one of the primary benefits to employees used by start-ups. However, a promise to give ESOPs in an offer letter is not “granting” of ESOP. The 1 year cliff does not start from the date of the offer letter. An ESOP is said to have been “granted” only once the company has taken steps to put in place an ESOP Policy, such ESOP Policy is approved by the Board and Shareholders of the Company and then the company issues a Grant Letter summarizing terms of the ESOP Policy and specifying the details of the ESOP grant to the employee.

Take a scenario where you worked really hard to get Swati Pandey, a super sharp programmer who has the makings of a future leader onboard your startup, wrestling her away for competitive offers from other companies and startups. Swati joined your company in March 2015 with a promise of ESOPs with 1 year vesting. Swati would, therefore, have been entitled to buy shares against the ESOPs upon them being vested in March 2016. However, like most start ups, you delayed putting in place the ESOP Policy and finally issued a grant letter to Swati only in November 2015. As a result, the vesting of Swati’s ESOP would now get delayed to November 2016. You would ask, why can’t the vesting be accelerated, after all the delay in vesting was because of you, so you should have the discretion to accelerate the vesting. Unfortunately, due to the one year mandatory cliff period under the law, the vesting of ESOP cannot be accelerated to less than a year from the grant of the ESOPs.

It is, therefore, important that if as an employer you are bringing employees on board with a promise to grant ESOPs, do not delay granting of the ESOPs. By doing so, you would effectively be delaying the vesting timeline for your employee, who is anyway working hard for you from Day 1.

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