We live in a world where our mind is our crown. As all kings have done since times immemorial, we must protect our crown. Creations of the mind, such as inventions, literary and artistic works, designs, symbols, names and images used in commerce are referred to as Intellectual Property (IP). IP for the purpose of business is commonly in the form of a patent, trademark and copyright. Of these, patents protect unique product ideas for the purpose of monetization.
Across the world, we are witnessing a consistently positive trend in the number of patents filed and granted by startups and large companies. There is a clear indication of this trend across diagnostics, medical devices, biotech, pharmaceuticals, telecommunication and software. Newer areas such as blockchain and greentech are seeing a smaller comparable increase. This trend holds equally true for India.
While large companies and nimble startups have clear differentiators for creativity and innovation, they also follow different trajectories to file an IP, regardless of the size of the company. On one hand, large companies like Xerox and Amazon India can afford to start R&D labs and hire lab leaders to facilitate a culture of ideating. On the other, startups with deeptech ideas and paucity of funds have to think deeper on how to consolidate their IP into a legally sound and investible structure.
C-Camp has been a catalyst in entrepreneurship and incubation, having worked with 1,000+ startups and funded 200 startups through various schemes. With a front row seat to this trend, Dr Taslim of C-Camp believes that there is a clear need for startups to build an IP based on genuine discovery and innovation if they want to build a global play. This is truly critical at the early stages or else it will be akin to ploughing the field without knowing what seeds to sow. Entrepreneurs must clearly define what they want to build, whether it’s a product or technology or service, and file for patents.
Geetha Manjunath, CEO/CTO and Founder of Niramai (an Ankur investee) sheds light on various facets of founding an IP-heavy startup. She set up Niramai in 2016, coming from a background in leading science labs at HP and Xerox, companies that are synonymous with technological advancement. Propelled by two consecutive tragedies close to home, her vision is to provide large scale, non-contact, non-invasive manner of detecting early stage breast cancer. Geetha’s groundbreaking AI/ML based thermal imaging screening methodology has won her 15 US patents, as well as patents in many other countries.
Recounting Niramai’s journey, Geetha observes that “patenting has become a way of life”. At some stages in Niramai’s journey, she had to abandon a few filings as the costs became burdensome and discouraged eager scientists in her team from publishing papers (which could kill the patent). She had to strategize on creating a technology moat/family of IP to fully protect her existing work. When it came to jurisdictions, Geetha made some compromises to save filing costs, but covered all geographies where she envisioned operating or manufacturing. She encourages startups to avail of government schemes such as fast tracking, reimbursement of application fee (with caveats), filing under the Patent Cooperation Treaty, scrutinizing NDAs properly and availing grants for research. Since every patent (which comes with a freedom to operate) bumps up the valuation of a startup and differentiates it from the crowd, founders can be falsely lured into mining for patents. Therein, sanity checks need to be self-driven and imposed.
Ravi Bhola, Partner at K&S Partners, an eminent law firm for IP related matters, has filed thousands of IP applications. He assists eager inventors with the pertinent question on whether to patent or not, and how. According to him, the heart of a patent, analogous to the heart of a man, lies in the claims. He dwells on the claims to govern the real value of a patent and its true essence. Ravi has seen several patterns of successful IP development — from a large company spinning off an invention into a smaller separate legal entity, or a large company buying a patent, to a group of people with a deep knowledge of a field coming together to start a business.
Ravi has been a first hand witness to the improvement at the Indian Patent Office. It has hired 10x more examiners to expedite the filing process and fast-tracked the application to under a year for startups. While these are all steps in the right direction, a lot still remains to be done for India to be at par with other jurisdictions. Notable areas of improvement include consistency in interpreting the law, added rigour to examination and in some cases, allowing what is patentable and what is not. For example, diagnostics kits and drugs are patentable by Indian Law whereas the method of diagnosis and the specific manner of treatment of drugs is not. Ravi would like to see India adopt parts of the Bayh-Dole Act of 1980 (amended in 1984 and 86). It encourages cooperation between industry and academia, so that government resources can be directed towards R&D while still giving companies the incentive of owning the innovation.
Given certain conditions, IP can be invaluable to a company. There are abundant examples of successful monetization of Indian IP. We at Ankur Capital have led groundbreaking investments in IP heavy startups much before they were revenue ready. We continue to scout companies built around intellectual property. The strategic significance that Ankur gives to IP gives us confidence. Our portfolio companies are well positioned to benefit the next billion Indians while generating good financial returns. Heavy does not lie the head that wears the crown!