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Utilization of Patents by MSMEs

Jigyasa Vohra is a Law Student at Amity Law School, Amity University, Madhya Pradesh

Published onNov 27, 2020
Utilization of Patents by MSMEs


Intellectual Property is emerging from one's thought, musings and scholarly impact. Today, the administration and legislators, distinguishing its capacity and wide activity, gave it lawful security as far as licenses, brand names, copyrights, mechanical plans and geological signs. IP can help MSMEs become worldwide as large as their rivals in all parts of their business. IP will help MSMEs to build up their industry and forceful administration strategy. The little scope area has assumed a more prominent job in the financial advancement of the nation during the previous fifty years. The MSMEs are of huge vital significance to the Indian Economy as a result of its their commitment regarding yield, send out, business, adaptability, intensity, advancement, offering efficient arrangements and advancement of supportable turn of events. The prime aim of this paper is concentrate how IP helps Micro, Small and Medium Enterprises also status of use of patents by MSMEs.

Keywords: intellectual property, MSME, patents,



Intellectual Property(IP) alludes to manifestations of the psyche, for example, developments; scholarly and aesthetic works; plans; and images, names and pictures utilised in business.

IP is secured in law by, for instance, patents, copyright and brand names, which empower individuals to procure acknowledgment or money related profit by what they design or make. By finding some kind of harmony between the interests of pioneers and the more extensive open intrigue, the IP framework plans to cultivate a situation in which inventiveness and development can prosper.

The foundation of WTO and India additionally being signatory to the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), numerous new enactments were passed for the security of licensed innovation rights to meet the commitments globally.

Patents Act, 1970

India subsequent to consenting to the TRIPS arrangement and shaping piece of the Agreement setting up the World Trade Organization (WTO) with the end goal of decrease of contortions and weaknesses to global exchange and advancement of successful assurance of licensed innovation rights, became signatory, the Patent go about as corrected chance to time in the year 1995, 1999, 2002 and 2005 to meet its commitments under the TRIPS understanding. Further, it has been corrected to help the different mechanical advancements in India, to coordinate with the improvement of the International protected innovation laws, India has additionally made alterations in the Intellectual property rights. The corrections were additionally planned for making the Act a cutting edge, orchestrated and easy to understand enactment for security of national and open interests alongside satisfying India's worldwide commitments under the TRIPS Agreement.

Accordingly the guidelines under the Patent Act have likewise been revised and these got compelling from May 2003. These standards have been additionally corrected by Patents (Amendment) Rules 2005 w.e.f 01.01.2005. Along these lines, the Patent Amendment Act, 2005 is currently completely in power and usable.


The Government of India has been creating approaches and emotionally supportive networks for miniaturised scale, little also, medium ventures since the Indian freedom.

The initial segment of this procedure, which was exceptionally since quite a while ago, was towards making bolster measures for this significant area of industry. Numerous approach choices were taken and incorporated for viably upgrading work openings, helping fair appropriation of national pay and encouraging compelling preparation of private division assets of capital and aptitudes. Small Industries Development Organisation (SIDO) was set up in 1954. SIDO has now been formed into the Micro, Small and Medium Enterprises Development Organisation. SIDO was a peak body for continued and composed development of this class of industry. The Industrial Policy of 1956, just because underscored the job of little scope enterprises in the advancement of national economy. The strategy in this manner suggested the improvement of subordinate enterprises in zones where huge businesses were to be set up.

The push of the Industrial Policy proclamation of December 1977 was on successful advancement of bungalow and little ventures broadly scattered in provincial zones and modest communities. The point of convergence of improvement of little scale ventures was moved away from enormous urban communities to the areas. The idea of District Industries Focus was presented just because the second piece of the procedure concurred with the opening of the Indian economy beginning from 1991 and might be considered to have kept going up to 1999.

Another arrangement for little, small and town endeavours was brought out in August 1991 and set up an overhauled outline work with regards to advancement, this basically planned for changing the assurance philosophy to seriousness in this manner imbuing imperativeness and development. Steady estimates included improvement of framework, innovation furthermore, quality. Testing focuses were made for quality confirmation and Sub-contracting Exchanges were built up. The Small Industries Development Bank of India (SIDBI) and a Technology Development also, Modernisation subsidise were made to quicken money related and specialised administrations to the division. A Deferred Payment Act was sanctioned to encourage brief instalment of levy to MSME.

From 1999 onwards, which might be known as the third period of the proceeded with development of strategy outline work, centred consideration has been paid to improvement of this part. The Ministry prior known as Ministry of Small Scale Industries and Agro and Rural Industries was rearranged and the present Service of Micro, Small and Medium Enterprises was made in 1999. Another strategy bundle was reported in August 2000 to deliver continuing issues identifying with credit, foundation, innovation what's more, advertising. A credit connected Capital Subsidy Scheme and a Credit Guarantee Scheme were propelled to energise innovation up-degree and security free credits. The Micro, Small and Medium Enterprises Development Act 2006 (MSMED Act) appeared after broad discussions with partners. Some vital estimates taken by the administration through this Act are incorporation of medium endeavours in the general arranging, new definitions for every one of the areas of MSME and a change in the roof for Foreign Direct Investment. The Act accommodates the principal ever legitimate structure for acknowledgment of the idea of big business, which contains both assembling and administrations.


As opposed to the regular conviction that mindfulness about IPR among MSMEs is totally absent, some MSMEs have all the earmarks of being mindful of IPRs and grasp the requirement for securing IPR. The mindfulness is by all accounts increasingly about brand name and plans when contrasted with licenses. Notwithstanding, the number of MSME occupied with IPR exercises is still little considering the huge size of the MSME segment in India.

Patents don't appear to draw in the consideration of numerous MSMEs. The reasons could be differing –

  • Insufficient information about licenses,

  • Cost engaged with age, assurance and

  • Upkeep of licenses and insufficient trial/testing offices.

Notwithstanding, in the zone of biotechnology the thinking is by all accounts distinctive as these MSME give main goal to licenses. There are a few plans of the Government of India which expect to make mindfulness about IPRs among MSMEs, lead preparing, and give specialised and money related help to ensuring IPRs. While it might create the impression that an over the top number of projects are being held, for a nation like India with such an enormous populace of MSMEs even these endeavours are still underneath the basic level.

IPR databases in India, for example, of patent, brand names and structures don't demonstrate if the proprietor of an IPR is a MSME or not, as this data isn't looked for in the documenting application. It is at that point exceptionally hard to know and comprehend the IPR arrangement of MSME. This comes in the manner of strategy arranging and execution. The undertaking of realising the change isn't basic for different reasons including different partners who might likewise want to be recognised in the database.

So as to make the errand somewhat simpler, the pharmaceutical and ICT MSMEs can be incorporated to start with. IPR databases are still not easy to use, don't address the issues of various clients nor are they effectively available. There is no digitised accessible database in regard of plan and copyrights.

As enrolment of MSMEs isn't required, the vast majority of them are not enlisted, further the database of the enrolled organisations isn't digitised making it hard to utilise the data. In the long run it comes in the method of getting ready approaches and activity plans dependent on the requirements of MSME.

There is overemphasis on patents for the sake of IPR in the nation. There is little acknowledgment that different types of IPR exist and some of them might be a higher priority than licenses for the time being, or on the other hand even over the long haul for explicit exercises. Consequently mindfulness made among MSME ought to be balanced and the points in such projects ought to be painstakingly picked and pondered.

The mindfulness programs must proceed with the help of the administration. IPFCs and MSME-DI should assume a main job in this undertaking.


The Government of India has been effectively advancing and supporting production of mindfulness about IPR among every single imaginable player in the nation going from scholastics, government, enterprises, research establishments and NGOs. This subject has been trailed by numerous administration organisations, for example, the Ministries of Science and Technology, Communication and Information Technology, Commerce what's more, Industry, Human Resource Development, Micro, Small and Medium Enterprises; as likewise by industry affiliations and scholastic and examination foundations. The Ministry of Commerce and Industry which is the nodal service for strategy plan, law making and conceding rights in regard of creations (licenses), structures, brand names and geological signs has made all the underlying strides in directing mindfulness projects, workshops and meetings in this field with the assistance of specialists from India and WIPO.

The Department of Science and Technology took a significant activity by setting up the PFC in 1995 for making mindfulness about IPR among researchers and strategy producers, broadening specialised and monetary assistance for securing the imaginative work of Indian researchers, and advancing the way of life of utilising patent data in innovative work. PFC has from that point forward sorted out more than 400 workshops and preparing programs on IPR the nation over. Keeping in see the huge size of the nation and the need to have encouraging frameworks spread over the nation, in excess of twenty Patent Data Centres (PICs) have been set up in the same number of States to address the nearby needs of IPR.

Because of this activity, many State Governments have given a different spending line for IPR exercises in their yearly spending plans. The PFC model has been trailed by numerous legislature offices for making mindfulness and offering help for IPR exercises. PICs have now become the point of convergence in the State governments for managing IPR matters. The money related and specialised support gave to the Indian colleges to securing their creative work has been effective also, PFC has documented in excess of 500 patent applications so far for the benefit of instructive and exploration foundations. The specialised help incorporates patentability investigation utilising patent inquiries, decision of locale, indictment, interviews with legal counsellors and related exercises. The money related help incorporates instalment of all costs towards ensuring an IP, and keeping up it on account of licenses, counting attorneys' expenses and authority charges.

A World Bank group while contemplating the advancement framework in India had the accompanying to state about the PFC- "India could consider diminishing household documenting expenses for individual and SME by financing them on needs premise. This could be a focal point of extended help to the PFC of TIFAC. In expansion the inside or another patent administration enterprise, worked as an open private organisation ought to give functional vital and practical IP exhortation to firms particularly SMEs and grassroots trailblazers in enhancing their patent methodologies for developments."

The Ministry of Human Resource Development has been supporting mindfulness programs for a long time now and assets are given to government offices, scholarly foundations and NGO for leading such projects. It has additionally been directing specific workshops for creating course material on IPR for instructing in colleges.

IPR mindfulness programs are directed by the workplace of CGPDTG every once in a while at various areas notwithstanding their preparation programs at the National Institute of Intellectual Property Management in Nagpur. The workplace likewise leads sharpening programs on security of Geographical Indications.

The Ministry of MSME has propelled a significant activity for supporting mindfulness workshops, short and long haul preparing programs on IPR to assist MSME everywhere throughout the nation. Different plans of the service are clarified in detail somewhere else in this report.

The Ministry of Telecommunication and Information Technology through its Department of Gadgets and Information Technology has been sorting out mindfulness and preparing programs on IPR with an attention on gadgets and ICT. All the while, it has taken scholastic and examination establishments what's more, enterprises ready.

Industries have contributed significantly in awareness creation throughout heir various affiliations. The noticeable ones among them are CII, FICCI and ASSOCHAM. They have been occupied with this practice for a long time. Huge numbers of these projects are held with the money related help from the Administration of India. A portion of the Intellectual Property Facilitation Centres (IPFC) have been set up by CII and FICCI with the monetary help from Ministry of MSME for making mindfulness among MSME and stretching out help to the business for securing their IPR.

A few relationship of MSME have additionally been arranging mindfulness programs for MSME in various pieces of the nation. This exertion is being enhanced by other IPFC set up at State S&T offices.

Scientific agencies such as CSIR, ICAR and ICMR have been leading mindfulness and higher level projects for their researchers and strategy creators. This exertion has gotten a social change furthermore, prompted increment in IPR exercises in these associations particularly as far as patent recording.1


The government has been giving various motivating forces to businesses for investing energy, cash and different assets in R&D and making lawfully protectable IP. A portion of these are clarified underneath.

1. Extract obligation waiver on licensed items

All merchandise falling under the Schedule to the Central Excise Tariff 1985 are absolved from extract obligation for a time of 3 years from the date of beginning of business creation given such products are made by a completely claimed Indian organisation and such merchandise are planned and created by such Indian organisation and the merchandise so structured are protected in any two nations outside India to be specific, USA, Japan and any nation of the European Union.

2. Exclusion from Drug Price Control Order

Mass medications dependent on indigenous R&D are absolved from tranquillise value control for a time of 5 a long time from the date of initiation of business creation given that they are created from the fundamental stage by a procedure of assembling created by the unit through its own Research and development endeavours.

3. Weighted duty derivation on R&D use

Weighted duty derivation @ 150 percent on R&D use is accessible to organisations locked in in the matter of biotechnology, or the matter of assembling or creation of medications, pharmaceuticals, electronic gear, PCs, media transmission hardware, synthetic concoctions and production of airplane and helicopters.

4. Quickened devaluation recompense

Devaluation recompense at a higher rate is accessible in regard of plant and apparatus introduced for fabricating merchandise dependent on indigenous innovation created in perceived in-house R&D units, Government R&D organisations, national labs and Scientific and Industrial Research Associations (SIRO). The current pace of devaluation for plant and apparatus is 40 percent as against 25 percent for different plants and apparatus.

6. Annual expense help on R&D consumption

Under Section 35(1)(i) of the Income Tax Act 1961, the income consumption on logical examination, by perceived R&D units, on exercises identified with the matter of the organisation is permitted full conclusion. Under Section 35(1)(iv) costs of capital nature could be deducted absolutely from the salary of the year in which the costs have been caused.

7. Expense derivation for supporting exploration

Section 35(2AA) of the IT Act 1961 accommodates a weighted assessment derivation of 125 percent for costs on supporting examination programs at national research facilities working under ICAR, CSIR, ICMR, Department of Biotechnology, Department of Atomic Energy, Department of Hardware; IIT and colleges.

There are not really any revealed cases in the initial two classes identified with the utilisation of licenses also, indigenous advancements. The business has been exploiting different plans such as weighted expense reasoning. Extract obligation exclusion is a major favourable position for getting a serious advantage yet the enterprises have not exploited the equivalent. In any case, the state of getting remote licenses is very unrealistic for MSMEs as they dislike to contribute assets for getting remote licenses. All things considered, businesses may not know about the plans as the government has not made mindfulness about the branch of knowledge. Simultaneously the ventures may do not have the aptitude of thinking of patentable developments and placing them into creation.2


The rationale behind choosing sole candidates depended on the presumption that little enterprises were to a great extent ownership organisations and a few proprietors may have been slanted to document applications in their names. The suspicion ended up being incompletely right once the topped off surveys were gotten.

The responses acquired in the survey have been taken along with the discoveries and a further investigation currently done. It is seen that 68 of the 136 respondents own their little scope businesses. Two respondents didn't give total data and accordingly are excluded from the investigation. In this way it might be sheltered to deduce that about 48.5 percent candidates in the class of people had their SSIs.

These 66 people had 174 licenses allowed to them. Thirty five of 174 applications were acknowledged for award, henceforth the quantity of uses in regard of these people acknowledged for award subject to instalment of charges and no restriction pending was 139 during the chosen enough said. It is deduced that every one of the 66 people on normal were allowed more than two licenses i.e., 2.106 licenses per person.3

Without definite information, careful data on patents conceded to the MSME division can't be resolved. Estimations dependent on the accessible information created during the studies would be the most ideal decision at this stage. The investigation takes a gander at the base and the conceivable most extreme degree of protecting action. It might be reviewed that 139 applications were acknowledged for the benefit of people and 21 applications for the benefit of certain enterprises. Along these lines we have 160 applications acknowledged for award of licenses in regard of MSME which works out to be 2.8 percent of all the licenses allowed to Indian occupants during the period. At the end of the day we can express that in any event 2.8 percent of the licenses have been conceded to MSME and this can be taken as the base degree of protecting action.


There would be numerous examples of overcoming adversity where entrepreneurs have utilised IPR for their potential benefit. As these have not been recorded appropriately, it is hard to gain admittance to such stories. The examples of overcoming adversity beneath have been caught demonstrating how some MSMEs are utilising their IPR for their potential benefit.

  1. Jyoti Cero Rubber

Jyoti Cero Rubber (JCR), a small organisation based close to Jamshedpur, the mother town of steel businesses in India, began by a couple group as an extremely little outfit has arrived at a degree of having a turnover of about Rs 650 million in around 5 years time. The spouse Mr Manoj is a designer also, the wife is a scientific expert. They have been doing their own examination and came out with inventive items for giving explicit answers for industry. The organisation was granted the National Award in 2009 for exceptional Entrepreneurship and Research and Development by the Government of India, Ministry of MSME.

  1. Fermenta Biotech Limited

Fermenta Biotech Limited is a biotech organisation which began its tasks in 1986 with the assembling of Penicillin G Amidas proteins in India. Its assembling offices are WHO GMP affirmed. Today it is the main producer of Vitamin D3 in India. The organisation had purchased this business from Duphar Inteferan Ltd. in 2004. Fermenta has six Indian licenses shockingly and one application is in pipeline. All the applications were recorded in 2005 or later.

  1. Flexitron

Flexitron, a Bangalore based organisation, began in 1987 as an exclusive show primarily in the field of elective vitality items. The CEO of the organisation Mr R S Hire-math, an alumni engineer built up a procedure of dicing sun powered cells physically which was utilised in assembling exceptionally little photovoltaic (PV) boards. He produced sun powered battery chargers utilising waste PV cells for hearing helps utilising this procedure. The item has been an incredible achievement. The organisation has documented nine patent applications in India; created items dependent on these developments and propelled these items in the market.


As opposed to the regular conviction that mindfulness about IPR among MSMEs is totally absent, some MSMEs give off an impression of being mindful of IPRs and appreciate the requirement for ensuring IPR. The mindfulness is by all accounts increasingly about brand name and plans when contrasted with licenses. Be that as it may, the number of MSME occupied with IPR exercises is still little considering the huge size of the MSME part in India.

Brand names, structures and copyrights appear to bode well and have more noteworthy importance furthermore, handiness to most MSMEs and satisfactory accentuation ought to be given to these zones while directing mindfulness programs.

Patents don't appear to draw in the consideration of numerous MSMEs. The reasons could be differing – insufficient information about licenses, cost associated with age, insurance and support of licenses and insufficient test/testing offices. Be that as it may, in the zone of biotechnology the thinking is by all accounts diverse as these MSME give the main goal to licenses. There are a few plans of the Government of India which intend to make mindfulness about IPRs among MSMEs, direct preparing, and give specialised and money related help to ensuring IPRs. While it might give the idea that an unreasonable number of projects are being held, for a nation like India with such an enormous populace of MSMEs even these endeavours are still underneath the basic level.

A cautious evaluated approach might be required to recognise the type of IPR which might be underlined while making mindfulness and giving supporting instruments. For instance, the conventional smaller scale undertakings may not be keen on licenses since they may not be occupied with exercises prompting licenses. Be that as it may, licenses may get significant for start - ups in IT and biotechnology.

Medium undertakings are acceptable contender for mindfulness in licenses and different types of IPR as they can bolster formal research and spend on IPR security and the executives. Numerous enterprises feel that costs associated with acquiring and keeping up a patent over a sensible timeframe are very high particularly when the advantages are not unmistakably known. There is no conspire which gives forthright monetary assistance to this reason.

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