Apr 20, 2016 | Indian Patents Act 1970
Patent valuation can be defined as a method to determine the real market value of patents. It is important as it plays a crucial role during many transactions such as negotiating deals, procuring investments, identifying strengths and weaknesses of the enterprise, technology transfers etc.
Important elements used to determine the value of a patent are –
- NPV (Net Present Value);
- Forecast of future value (growth options);
- Financial model to estimate cash flows from the patent.
The market today provides for three main approaches to value patents as provided in the table above. However, it has been acknowledged that factors such as the nature of the transaction (whether by assignment or licensing), desired result, realistic growth opportunities and the expenditure on research and development of the patent must be kept in mind while selecting which approach is most suitable.
The two broad classifications of valuing patents are through the quantitative and qualitative approach where one uses numeric and economic data. The other analyses the opportunities and the risks associated with the patent. A mixture of the two, or popularly known as the hybrid model of patent valuation, is in much demand. It provides for a holistic approach to understand all the aspects of income generation from a patent. The same will be discussed towards the end of this article.
The popular methods to assess value of the patent are as below:
- Market Approach Method
As the name suggests, this approach takes into consideration the amount of money that a buyer is willing to pay for a similar patent in an already existing market. This method is also known as the comparable transaction approach. The assumption that this approach is based upon which the value of the patent is equal to the amount that a buyer is willing pay to a seller of a similar patented product. The shortcomings of this approach are finding a comparable patent in the market and the ability of such a comparable patent in income generation would not be the same as the patent being valued.
The following components are required to use this approach of patent valuation –
- An active marketplace with available price information;
- An identical or a group of identical patents in the market;
- A method to control the variables or differences.
2. Income Approach Method
The income approach is also known as the Discounted Cash Flow (DCF) approach. It estimates the overall profit that a patent can generate. Most commonly, the value of the patent is based on company-specific profit projections and the use of a risk premium. The projected revenue inflow of the patented technology is discounted by variables such as the risk premium to ascertain the present value of the patent. The value attainted is considered to be the market value of the patent. The drawback of this approach is that the values used in the first place to derive at final market value can be clouded by subjective bias and manipulation.
The following components are essential to this approach:
- An estimate of the revenue inflows generated by the patent during its useful life;
- Measuring direct costs relating to the patent which are to be deducted against the revenue inflows;
- The amount of risk associated with the patent must be discounted or deducted from the present-day value of the patent.
3. Cost Approach Method
In this approach a patent is valued based on the amount of cost incurred to develop a similar patent either internally or externally. The historical rates trending in the market or the estimate of the cost of creation (based on current market conditions) serve as a basis to come up with the required cost estimate. It seeks to determine the value of a patent at a particular point in time by summing up the direct expenditures and opportunity costs involved in the development of the patent and considering its obsolescence. The most obvious shortcoming of this approach is that it does not consider the income-generating nature of a patent, which can and in most cases, is the primary reason to create a patent.
The following are the components required to carry out this approach:
- An estimate valuation of the cost of development of a patent;
- Value of expenditures, opportunity costs, inflation etc. at a particular point of time;
- Costs related to obsolescence of patent over a period of time.
4. Hybrid Model
A hybrid model would consist of factors envisaged in all of the above approaches. It included features of both qualitative and quantitative nature. This model aims to customize the patent valuation to the exact nature of the transaction that it aims to participate in. This approach has also been known to have the most practical use and has become an upcoming in the current market.
The following elements are essential to this model:
- The size of the market and the share of the technology concerned;
- The annual turnover that is generated by the patented technology;
- The profit derived after applying tax and other duties;
- The risk value that should be discounted;
- If the patent is a part of a product, then the value of how essential it is to the product.
Conclusion
No method of valuation can predict the value of a patent with 100% accuracy but valuing patents have become crucial to companies due to their ability to generate capital, attract profitable partners, enabling licensing and franchising business models and their relevance in solving disputes. Thus whichever mode of valuation that a company uses should have a nexus with the ultimate objective that the company has for the patent. Many companies often use two approaches together such as the income approach and the cost approach to obtain a more holistic view; further customization is possible and should be incorporated for such valuations in the future.
By: Aryashree Kunhambu, Shri Dharmasthala Manjunatheshwara Law College, Mangalore.
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Dec 11, 2015 | General, Patent
Patents are statutory negative rights granted for a limited period of time for 20 years. The patent right conferred is the right to exclude others from making, using, selling or offering for sale the patented invention in any jurisdiction or from importing into the specific jurisdiction. Patents are granted only for the inventions that are novel i.e. new. It is crucial to check the state of art before filing a patent to avoid anticipation.
The state of art includes patent applications, patents and non-patent literature such as publications, articles, books, thesis, conference proceedings etc. Patent databases are the source of patent applications, publications etc. and helps in identifying the relevant state of art.
Patent database is a collection of technical information that is organized so that it can easily be accessed, managed and updated. Across the globe, there are approx. 180 Patent offices in different countries operating in different languages. Thus, it is important for any database to timely cover the documents of all possible jurisdictions.
About 600,000 patents are granted globally each year covering almost every field of technology. As patent applications disclose a new technology, it is important for the innovators to track the development in the field.
Patent databases are classified into free patent databases and commercial patent databases. The free patent databases are further classified into Government databases and Non-Government databases. The Government databases are generally maintained by the respective Intellectual Property Offices. Each patent database may differ in terms of use of keywords, search strategies, use of special operators, collection of patents, time periods, languages etc.
Free Patent Databases
Free patent databases are available for free access without any subscription and can be accessed directly. This include
- Government Database
- Non-government Database
Government Databases are maintained by the respective patent offices of the country. They include the details of the patent applications only restricted to the respective jurisdiction or globally. Government databases are as follows:
- Patentscope
- Espacenet
- JPO IPDL
- PatFT/AppFT
- INPASS
The non-government databases include Google Patents, Freepatentsonline, Patent Lens etc.
- Google Patents indexes more than 87 million patents and patent applications with full text from 17 patent offices including the USPTO, the EPO and databases from China, Japan and Korea.
- Freepatentsonline has search fields similar to PATFT. It allows for searches including U.S., EP, (European), JP (Japanese), and WO (PCT) patents. Alerts, portfolios, and PDF downloading are available with free registration.
- Patent Lens, created by CAMBIA, an independent, international non-profit has a structured search and good range of coverage. It provides full text of PCT (1978-present), USPTO (AppFT, and PATFT (1976-present), EPO (1980-present) and IP Australia (applications and patents 1998-present).
Commercial Patent Databases
Commercial Patent databases are available for search analytics only upon subscription. The subscription tariffs vary from one database to the other. The coverage and the provision of search strategies and flexibility of operators also vary from one database to the other. The following are the few commercial patent databases:
- TotalPatentOne from LexisNexis
- Patbase from minesoft
- Dialog from ProQuest
- Orbit from Questal
- STN
- Thomson Innovation from Thomson Reuters
- WIPS Global from WIPS
The commercial Patent databases are associated with few advantages such as:
- Value added data: Corrected bibliographic data, improved classification or indexing and timely update
- Sophisticated search and analysis tools: Chemical formula/Structure, sequence searches, patent topographical tools, citation analysis, machine translation
- Integrated access to non-patent literature
- Export of data into multiple formats
- Cost based on preferential access cost
To summarize, no single patent database may not comprehensively cover all relevant information as required and the search services and databases differ in the features offered by them and a combined search and analysis from of commercial and free patent database may be more beneficial.
Author: Deepa Sai
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Mar 13, 2015 | Indian Patents Act 1970, Patent
A patent is a type of intellectual property right (IPR) that gives its owner, the legal right to exclude others from making, using, or selling, offering for sale or importing the patented invention in the territory where patent is granted. Patent rights are granted for a limited period of time, generally 20 years from the date of filing application. As provided in, Section 2(1)(j), an invention must fulfil certain requirements known as conditions of patentability, such as, novelty, inventive step and industrial applicability.
Section 6 of the Indian Patents Act 1970, prescribes for the person who are entitled to file for patents, any person who is a first and true inventor of an invention, by any person being the assignee of the person claiming to be true and first inventor of the invention, by legal representative of any deceased person who immediately before his death was entitled to make such an application can file for patent.
A. Steps to register a Patent
- Filing a Patent Application
In India, the patent registration process starts with filing of patent application in the respective patent office branch. Section 7, dealing with form of application requires every application for a patent to be made for one invention only. In order to obtain a patent, an applicant must fully and particularly describe the invention therein claimed in a patent specification. The Patent Specification, thus, forms a crucial part of the Patent Application. It is mandatory on the part of an applicant to disclose fully and particularly various features constituting the invention. The specification may be filed either as a provisional or as a complete specification.
- Publication of Application
Section 11A(1) provides that no application for patents shall ordinarily be open to the public before expiry of eighteen months from the date of filing of the application or the date of priority of the application, whichever is earlier. Every application for patent shall be published on expiry of the period specified in sub-section (1) except those applications in which;
a. secrecy direction is imposed under Section 35;
b. application has been abandoned under section 9(1);
c. application has been withdrawn three months prior as specified under section 11A(3).
The publication of a patent application is an opportunity for the public or any third party to put forward any opposition with respect to the grant of patent. The opposition filed after publication of application and before grant of a patent is called as pre-grant opposition.
- Examination of Application
After publication, the application is examined by the examiner of patents and first statement of objections is sent to the applicant, to be replied within 6 months from the date of issuance. There may be a hearing also before patent is granted. After examination, the patent is granted.
- Grant of Patent
According to Section 43(1) of the Act, the patent shall be granted as expeditiously as possible to the applicant or, in the case of a joint application, to the applicants jointly, with the seal of the patent office and the date on which the patent is granted shall be entered in the register, where an application for a patent has been found to be in order for grant of the patent and either:
(a) the application has not been refused by the Controller by virtue of any power vested in him by this Act; or
(b) the application has not been found to be in contravention of any of the provisions of this Act,
Further, Section 43(2), specifies that on the grant of patent, controller shall publish the fact that patent has been granted and thereupon it is open for public inspection.
- Renewal of the Patent
Under section 53, the term of every patent granted, shall be twenty years from the date of filing of the application for the patent. Rule 80 requires that to keep a patent in force, the renewal fees specified in the First Schedule should be paid at the expiration of the second year from the date of the patent or of any succeeding year and the same should be remitted to the patent office before the expiration of the second or the succeeding year. The annual renewal fees payable in respect of two or more years may be paid in advance.
Opposition to the Patent
The Indian Patents Act 1970 provides two types of opposition, “pre-grant and post-grant” opposition, which allow third parties flexibility to contest the validity of a patent. There are various grounds mentioned in the Act, on the basis of which a patent application may be opposed. Pre-grant opposition is the first opportunity for the opponent to challenge grant of the patent.
Once the application is published, it is kept open for a particular period of time for any opposition. The opposition of a patent that takes place before grant of the patent but after publication is called as “Pre-grant opposition”. There are various grounds mentioned in the Act, on the basis of which a patent application may be opposed. Pre-grant opposition is the first opportunity for the opponent to challenge grant of the patent.
However, even after grant of the patent, the patent is kept open for one year for any opposition called as “post-grant opposition”. The patent may be opposed within 12 months from the date of publication of the grant of the patent. There can be various grounds on the basis of which the application can be opposed. The main purpose of the opposition proceedings is to give opponents the opportunity to challenge the validity before as well as after grant of the patent.
Pre-grant Opposition
Under, Section 25(1), where an application for a patent has been published but a patent has not been granted, any person may, in writing, represent by way of opposition to the Controller against the grant of patent. This opposition is called as Pre-grant opposition and it can be filed under certain grounds, which are as follows:
- wrongfully obtained the invention or any part thereof
- anticipation by prior publication, anticipation by prior date, prior claiming in India
- anticipation by prior claiming in India
- public knowledge or public use in India before the priority date
- invention is obvious and lack inventive step
- subject of any claim of the complete specification is not an invention
- specification does not clearly specify the invention, the method of invention
- providing materially false information by the applicant
- application for patent not filed within 12 months of filing the first application in a convention country
- non-disclosure or wrong information about the source of biological matter and
- invention anticipated with regard to traditional knowledge of any community, anywhere in the world.
Post Grant Opposition
Post-grant Opposition can be filed by any “person interested” within one year from the date of publication of the grant of a patent, as laid down in Section 25(2) of the aforesaid Act. A post-grant opposition can be filed on a number of grounds as specified under Section 25(2)(a) to (k), such as:
- wrongfully obtained the invention or any part thereof
- anticipation by prior publication, anticipation by prior date
- anticipation by prior claiming in India
- public knowledge or public use in India before the priority date
- invention is obvious and lack inventive step
- subject of any claim of the complete specification is not an invention
- specification does not clearly specify the invention, the method of invention
- providing materially false information by the applicant
- application for patent not filed within 12 months of filing the first application in a convention country
- non-disclosure or wrong information about the source of biological matter
- invention anticipated with regard to traditional knowledge of any community, anywhere in the world
On receiving the notice of opposition (post-grant opposition), the Controller shall constitute an “Opposition Board” to deal with the opposition proceedings. The board consists of such officers as the Controller may determine and refer such notice of opposition along with the documents to that Board for examination. The board examines the opposition proceedings and submits of its recommendations to the Controller. Every Opposition Board shall conduct the examination in accordance with prescribed procedures as mentioned in the Act.
Author: Yashwi Singh, K.L.E Society’s Law College, Bengaluru
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Nov 7, 2014 | General
It is a great honour for Origiin to bring out the story of Paper Boat as a company “Ahead of the Curve”. Reviving traditional Indian beverages and foods produced and marketed by Hector Beverages, which is headquartered in Bengaluru, India, Paper Boat is one of the most popular and trendy brands today in beverages.
Name of company
HECTOR BEVERAGES PRIVATE LIMITED
Date of incorporation
13th October, 2009
Founding members
Source: www.startuptalky.com
- Neeraj Kakkar
https://www.linkedin.com/in/neeraj-kakkar-2410839/
- James Nuttall
https://www.linkedin.com/in/jpnuttall/
- Suhas Mishra
https://www.linkedin.com/in/neerajbiyani/
- Neeraj Biyani
https://www.linkedin.com/in/suhas-misra-6143245/
Seed capital – Not Available
Place of business
Registered Address – Plot No. 132, Sector 3, IMT Manesar Manesar Gurgaon Gurgaon HR 122050 IN
Core products
Paper boat currently manufactures over 12 varieties of Indian ethnic drinks such as: Thandai, Serbet-e-khaas, Rose tamarind, Chilli guava, Jaljeera, Anaar, Kokum, Aam panna, Ginger-lemon tea, Jamun, Aamras, Neer more and Panakam. Panakam and Sherbet are seasonal drinks as they are made available during Navami and Eid, respectively.
Paper boat also makes Indian snacks and delicacies like Chikki bar, peanut bar, Aam pappad, sesame peanut bar, coconut water, Pani puri pellets etc.
Journey
Although Hector Beverages was found in the year 2009, the Company was into producing an energy drink called Tzinga and another protein-based drink at this time. Paper boat was born only towards the end of 2012. Paper boat became a comprehensive effort towards bringing authentic Indian tastes into the market, in an organized fashion. Paper boat, along with its name has a tagline that says drinks and memories. This itself is the driving force behind the initiative. The Company tries to restore old memories by re-introducing authentic Indian tastes to our tastebuds. That too in a fresh new way. An old taste in a modern is quite the oxymoron, but that is what gives the Company its own space. Paper boat currently has more than 300 employees and has a revenue of over 100 crores.
Success mantra
Paper boat’s success comes from many factors. Firstly, the Company makes it imperative that they use no preservatives in their products. The Company not only makes tasty drinks but also prioritises our health. Secondly, the brand offers a good variety. Paper boat began with only 2 flavours and currently, they have more than 10 varieties of Indian drinks. Thirdly, the funding and investments of the Company is carried out dynamically. Paper boat was able to raise capital from various investors like Sequoia Capital, Trifecta Capital Advisors, Catamaran Ventures, A91 partners etc. The Company has grown vehemently with a steady increase in sales over the years. Their efficient marketing strategy is also commendable. Keeping in touch with customers through networking, innovative advertising techniques, information and feedback collection etc. truly make them winners. Lastly and most importantly, Paper boat has successfully evoked nostalgia in a lot of people and reinstated their bond with the lost tastes from their childhood.
Intellectual Properties
Hector Beverages owns several trademarks. The first mark PAPERBOAT (DEVICE) was applied for on 5th July 2012 and the same was granted on 11th July 2016. This was under Class 32. Similarly, an application for wordmark PAPER BOAT was made in 2013 and was granted in 2018. Similarly, marks like TOP SECRET (valid since 2016), Paper Boat Swing Label (valid since 2019) and PAPER BOAT DRINKS AND MEMORIES (valid since 2018) are registered under Class 32. Paper Boat also owns the mark PAPER BOAT FOOD AND MEMORIES under Class 29. This was granted in October 2018. PAPER BOAT SUPER NATIVE is another mark Hector Beverages owns under Class 29. PAPER BOAT DRINKS AND MEMORIES, PAPER BOATS FOODS AND MEMORIES are also granted protection under Class 30. On March 1st 2021, an application for Trademark registration of PAPER BOAT SUPER NATIVE was made under Class 30 and the same is marked for exam.
Other than these trademarks, Hector Beverages also owns a registered Design for the cap used on their products. The Design registration application was made on 24th November 2015 and was granted on 24th February 2017. The article name is provided as ‘Cap for Pouch’ and is registered under Class 09-07-closing means and attachments.
Innovation in business
To ensure hygiene and safety, Paper boat ensures optimum conditions of temperature and pressure in their production units. The packaging used for their drinks is unique and helps the products remain fresh without the help of preservatives. This unique packaging is also known to be more eco-friendly than other methods of packaging currently available in the market. Along with television Ads, Paper boat also has a collection of animated short films on themes like friendship, hope and nostalgia. These films are available on YouTube.
Paper boat has also ventured into the E-commerce business. Their products are now available on Amazon. The online sale has increased after the pandemic hit. Paper boat uses technology to improve their marketing. Customer feedbacks are collected on a large scale through surveys and is incorporated into the production process.
Problems of consumer they focused on
- Lack of availability of authentic Indian flavours
- increase in the intake of carbonated drinks
- lack of better alternatives for aerated soft-drinks
- ascending use of preservatives
Meaning of Trade Mark
The Company’s trademark contains the name ‘Paper boat’ along with a tagline drinks and memories. This represents the basic motive behind the company, that is, to bring back memories of your childhood through these authentic Indian flavoured drinks.
Source: www.paperboatdrinks.com
Awards
Contact Information
1860-425-4425
paperboat@hectorbeverages.com
neeraj@hectorbeverages.com
REFERRENCES
- http://www.paperboatdrinks.com/
- https://www.amazon.in/s?rh=n%3A2454178031%2Cp_4%3APaper+Boat&ref=bl_dp_s_web_2454178031
- http://www.mca.gov.in/mcafoportal/companyLLPMasterData.do#
- https://ipindiaonline.gov.in/tmrpublicsearch/tmsearch.aspx?tn=197889735&st=Wordmark
Author: Bhavana, School of Law, CHRIST, Bangalore
BALLB (Hons.)
Email: bhavanababu44@gmail.com
Phone: +91 9400840460
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Oct 13, 2014 | Patent
Technology transfer in simple words means a process wherein owner of the technology transfers its skills, knowledge, and know-how to another party. In return owner of the technology often gets royalty which is determined based on various parameters, such as, market value of the technology, the effort needed to implement technology and initial investment etc. However one of the extremely important parameter that is to be taken into consideration is whether the technology has legal protection in the form of patent or not, though there might be possibility of protection in the form of trademark, copyright, design as well.
If worked out well, technology transfer is an extremely effective way to commercialize the patented invention. It plays an important role as a catalyst for the further development of technology and patents play a very vital role in case of technology transfer because patent is one of the best ways to protect a technology. Technology transferred without even filed for a patent is a very risky affair. At least a patent application for the technology should have been filed before negotiating on technology transfer for the reason that after grant of the patent, the certificate obtained from the patent office serves as a proof of ownership. A Patent also confers certain statutory rights to the patent holder that the technology transfer process.
Technology transfer happens by means of executing an agreement between owner of technology or Patentee and the buyer. Practically speaking, taking a patent to the level of technology transfer is a very big challenge where strength and value of the patent shall be assessed vigilantly and at the same time it is important for the patent holder to examine capacity of the buyer to manufacture, market and sell his patented invention. Technology transfer is beneficial to the patentee because he gets a channel to commercialize his invention and still have ownership of the patent with him. For the buyer, getting access to patented technology can give him cutting edge over his competitors.
Though the process of technology transfer is not as simple as it sounds, there are various success stories. As reported by The Chronicle of Higher Education, in academic research in the 2011 fiscal year, Northwestern University earned the most of any institution reporting, with more than $191-million in licensing income. The revenue mainly came from the invention related to new breeds of wheat, a new drug for the treatment of HIV, and from longstanding arrangements over enduring products like Gatorade.
Having a patent is one of the essential pre-requisites before transfer of technology though there are several other factors that determine fate of the invention to be commercialized by means of technology transfer. Well negotiated agreement between patentee and buyer can lead to a real profitable and symbiotic relationship.
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