NEW VENTURES : LEGAL REGISTRATION

SOLE PROPRIETOR
No registration of the business is needed for sole proprietor (individual business).License
may be needed from local govt. (panchayat, municipality, municipal corporation) if business
involves food, health etc. Registration of the firm may be needed under State shops and
establishments Act to regulate holidays, no. of working hours. Professional tax registration
may be needed if you have workers or rank and file employees.

PARTNERSHIP FIRM
Under the Indian Partnership Act 1932, registration of Partnership firm is legally not
compulsory but practically necessary. An unregistered firm cannot enforce contracts through
courts. Registration under Income Tax Act 1961 is not compulsory. But a firm registered with
IT authorities is charged at lesser tax rates. A partnership firm can be registered at any time.
Minimum no.of partners:2.
Maximum :for banking business:10; other businesses:20

LLP LIMITED LIABILITY PARTNERSHIP

LLP Act came into force in 2008.

Indian Partnership Act does not apply to LLP. Registration is compulsory .LLP is a
separate legal entity.
Changes in partners do not affect LLP.
Individual or Body corporate can be partners.
MINIMUM NO.OF PARTNERS: 2; MAXIMUM: NO LIMIT.
If number of partners falls below 2 for more than 6 months and the remaining
partners have knowledge of the same, then their liability is unlimited.
At least two designated partners (DP) who are liable to ensure compliance with LLP
Act. Only individuals can be DP.
At least one DP should be Indian resident. LLP to appoint DP within 30 days of
vacancy.
If no DP is appointed or at any time there is only one DP, all partners are deemed as
DP.
NAME OF LLP FIRM SHOULD END WITH LLP.

Procedure for formation of LLP

1. Check availability of chosen name on website :www.llp.gov.in
2. Get Digital Signature Certificate.
3. Apply in FORM 7 AND GET DPIN (DP Identification Number)
4. Apply in Form 1 for name.
5. Apply for Incorporation in Form 2 :
Enclose Form 3(agreement),Form4(list of partners),Form 9(consent to act as
partners),Form9(consent to act as DP).
6.Get Form 2(compliance with law)and Incorporation Certificate within 14 days.

Conversion of ordinary partnership into llp

Only original partners can be partners in LLP. For 1 year from the date of conversion, every
correspondence should indicate the fact of conversion.

Conversion of company into llp

Only unlisted company can be converted into LLP. Only ex-shareholders can be partners.

Audit of llp
Compulsory if turnover is more than rs.4o lakhs or capital more than rs.25 lakshs.

OPC ONE PERSON COMPANY

Introduced by Indian Companies Act 2013.Hybrid of Sole Proprietor and company. Only one
shareholder, one consenting nominee is mandatory. Only natural, resident and major Indian
citizen can be shareholder or nominee.
Minimum one director. Maximum 15 directors.
Not for profit company cannot be one man company .OPC cannot do non-banking financial
and investment activities
If paid up capital exceeds rs.50 lakhs or average annual turnover exceeds rs.2 crores ,opc
must convert into private or public company within 6 months. Otherwise, it cannot convert
into company for 2 years from incorporation.

Formation of private or public company

The promoters should get available name from ROC and apply for registration. They should
submit the following:
1.Memorandum of Association
2.Articles of Association.
3.List of Directors
4.Declaration that Company Law requirements for incorporation have been complied with.
5.Proof for payment of filing fees.
IF ROC IS SATISFIED, HE WILL ISSUE CERTIFICATE OF INCORPORATION.

CERTIFICATE OF INCORPORATION VS. CERTIFICATE OF

COMMENCEMENT
A private company can start business on receipt of certificate of incorporation.
A public company can start business only after getting one more certificate : Certificate of
commencement of business.

Certificate of commencement of business

A. If a prospectus (a document inviting public to contribute to share capital of the company)
has been issued (announced through advertisement), a declaration should be filed with ROC
by the CEO or one of the directors and the company secretary that the following conditions
have been satisfied
1.Minimum subscription: Minimum of share capital fixed in the prospectus expected to be
received to make allotment of shares has been received in cash.(If minimum amount not
received, allotment of shares cannot be made. The amount received should be refunded to the
share applicants.2.Every Director of the company has paid the full amount of the shares
payable in cash .3.No money is due to be refunded to share applicants. Thereafter, if ROC
(Registrar of Companies)is satisfied, he issues CERTIFICATE OF COMMENCEMENT OF
BUSINESS.
B. If no prospectus has been issued (i.e.share capital has not been invited from the public,
;private arrangements(placements)have been made for share capital),then the company
should file a statement in lieu of prospectus to get certificate of commencement of business

Intellectual Property Rights

Genesis
New ventures are mostly born out of new ideas, innovations, inventions, superior
performance and distinctions. Most of them succeed on the strength of the above. Intellectual
property rights (IFR) are indispensable for initial and continued success of new ventures.
This research finds out the concepts, principles means, methods and legal procedures and
practical actions needed to preserve and protect IPR for the success of Business Ventures. We
are analysing Patents, copy rights, Designs, Trade Marks, Geographical Indications.
Patents
The patents system adds the fuel of interest to the fire of Genius. Abraham Lincon is the only
American President to have been awarded a patent. Device for buoying vessels over shoals
in May 1849. Our unknown ancestor who first substituted iron for bronze to the head of an
axe is the first inventor. Though the history of modern, great and globally useful invention
began with the invention of the Wheel thousands of years ago, patents of inventions were
first granted in the 15th century in two Italian states. The patent law as in the modern law was
first introduced by the state of Venice [Italy] in 1474. It was given to anyone who created a
novel technic. The term patent is derived from the letters granted by Queen Elizabeth I.
Letters patent mean open letters. Patents were granted to be used by them as a monopoly. The
first patent Act called the statute of Monopolies was promulgated in 1624. In Liardet Vs
Johnson [1780], the first English case on patents, chief justice Manfield asked the jury if the
product was new and the specification had stated the proportions so that any other artist may
be able to make it, and it must be a lesson and direction to him by which to make it. If the
invention be of any other sort, to be done by mechanism, that must be described in a way the
artist must be able to make it. First comprehensive statute started with U.S patent Act.
France passed such a law in 1791. First international convention called the Paris convention
of 1883. The latest Revision was Stockholm convention 1979. Patent is granted not for an
idea, however, outstanding it may be, but for the novel, useful and inventive way of carrying
it out. The word patent generally has a common connotation in all jurisdictions. It means an
official instrument given in writing by a statutory authority to an inventor, granting him the
exclusive right to manufacture, use, sell or license his invention. Under Indian law, a patent is
an exclusive privilege granted to an inventor to exploit and market the fruit of his innovative
technical or scientific talent for a period of twenty years computed from the date of filling of
the application and during that term, prevent others from copying his invention, advertently
or inadvertently.

Essential Legal conditions for patent

1. Novelty, Non-obviousness, Utility.
2. Enablement : Sufficient and detailed information about the invention.
3. If prior or Public domain or public use : If the inventor has not bothered to apply for
patent within a reasonable time of invention he will not get it.
4. Non-obviousness : It should not be obvious to a person having ordinary skill in the
Art and there should be some inventive step.
New Method for Growing Business is accepted as patent in USA. But not in India. The India
patents Act 1970 permits product patent in pharmaceuticals. The Indian Law facilitates
compulsory licenses to companies to manufacture and export to countries having public
health issues and not having sufficient Manufacturing capacity and reasonable price.
Copyright
It protects the expression of idea and not the idea.
Its a legal statutory Right which acknowledge the natural right of a creative individuals. This
renders an infringer of others works civilly and criminally liable. The object protected by
copyright are literary, musical, dramatic works, choreographic works, pictorial, graphical,
architectural and sculptural works, motion pictures and other audio visual works and sound
recordings, rights of broadcasting organization and of performers, computer software, email
and a host of other features. Thus copyright means exclusive privilege of a creator of cultural
goods, for a stated period, to exercise and exploit various intangible rights (including the age
old right to make copies) in respect of his tangible works. This is the reward to the creator.
An important feature of copyright common to most nations is that as long as an author
established originality in his work, he has protection for his rights for a number of years. He
needs to do nothing, except if somebody plagiarizes it, he would have to file an infringement
action. His right lasts his lifetime and for sixty years after his death for published literary,
dramatic, musical and artistic works. Terms for other works vary, but a span of sixty years
since their publication is the normal protection.
Copyright is a statutory right
Though copyright is property and consists of intangible rights, it is the offspring of copyright
law. All the rights that the copyright holder gets are created by the statute namely copyright
Act and are therefore governed by the provisions of the Act. Copyright in any work does not
exist independent of the Act. In this regard the provisions of section 16 are absolutely clear. It
clearly states that there shall be no copyright except as provided by Indian Copyright Act.
The rights and obligations of the author are to be found within the four corners of the Act.
That is, they are not governed by common law (Judicial decisions, Trade Customs, Usage
etc).

International copyrights
Berne convention 1886 and Rome convention 1961 provide international copyright principles
: The principle of national treatment or assimilation, under which a country agrees to give
foreign authors the same protection it gives to its own authors. They are called similar rights,
related rights, neighborhood rights.
The copyright (Amendment) Act 2012 has brought copyright Act 1957 in conformity with
the two WIPO (World Intellectual Property Organization) Internet Treaties :
1. WIPO Copyright Treaty (WCT) 1996
2. WIPO performances & phonograms treaty (WPPT) 1996
The WCT protects literary and artistic works (writings, computer programs, original database, musical works, audio-visual work, works of fine art and photographs. The WPPT
protects related rights.

Copyright Vs Patent
Copyright is recognized if a work is original, it has to be authors own work that he has
created, without copying from another work. His copyright, if original on his part, would be
protected even if a closely similar work in existence prior to his work and he has not copied
from it.
In the case of patent, even if an inventor has invented something which is original & new,
invention will not get a patent if, even unknown to him, there was prior work from which his
invention could have been obviously made, though in fact he has not copied from it.

Validity period of copyright

If the rights holder is individual, it will be valid during his life & 60 years after his death. If
the rights holder is an Institution, it will be valid for 60 years from the date of creation.

Designs
Meaning & Scope : Design means only the features of shape, configuration, pattern,
ornament or composition of lines or colours applied to any article by any industrial process
or means whether manual, mechanical or chemical, separate or combined, which in the final
product appeal to and are judged solely by the eye.
Design is none of the following : (1) Trade Mark (2) Copyright (3) Mere Mechanical device
(4) Mode or principle of construction.

A customer buying an article is often influenced not only by its practical efficiency but also
by its appearance. A physical appearance really means as design. Its primary purpose is to
induce the customer into purchasing the article by its ornamentation.

Design Vs Article
Design does not mean the article. It means the features which form the conception or idea of
a shape. Combination & arrangements of lines constitute features. The design is protected
and not the article to which it is applied. But the design has to be part and parcel of the
article. A label put on a carton to be used as a container for an article is not design. Article
means an article of manufacture and any substance artificial or partly artificial and partly
natural.

Example for Design

Supercuts in Maths
Question : A sum of money doubles in 10 years
under simple interest. Find out of rate of interest
Answer :
Answer

100

100

Year
=

10%

10

Question : A sum
of money doubles in 12 years under simple
interest. In how many years, it will become 5
times.
Answer : 4 X 12 = 48 Answer

Question : A father told his daughter, I was of

your present age when you were born.
father

will

If

be 55 after 7 year find

daughters age 7 years before.

Designs Vs Copyright
A design as an original artistic work initially acquirets protection under copyrights Act. If a
product is created from the artistic work by virtue of its being industrially applied it will be
protected as design for any number of products. To get that right, it should be registered
under Designs Act. Else, only copyright will be available for the design but limited to the
application of design for 50 times only.

Compare & Contrast

Type of IPR

Patents

Copyrights

Designs

What is protected

Invention

Period of validity
In USA : 20 Years
In India : 5 to 7
Years

60 years from
creation for
Literary & Artistic
Institution. Till 60
work
years after death for
Individuals
Shape features to
article applied
10 years from the
industrially &
date of registration
appeal to or
Renewable for
judged solely by
further 5 years only
eye

Trademarks

Name Brand word

numeral etc

10 years from the

date of registration.
Renewable every
10 years no
maximum time
limit

GI

Quality &
Reputation of the
product of a place

Hereditary

Whether
Registration
is a must

Law Applicable

Yes

Indian Patents
Act 1970

No

Indian
copyrights Act
1957

Yes

Indian Design
Act 2000

No

Indian Trade
Marks Act
1999.

Yes

GI Act 1999

Trade Marks
Meaning & Legal Position : Trade Mark means a mark capable of being represented
graphically and which is capable of distinguishing the goods or services of one person from
those of others. It includes a device, brand, heading, label, ticket, name, signature, word,
letter, numeral, shape of goods, packaging or combination of colours or any combination
thereof, corporate names. Graphical Representation means representation of trademark in
paper form. It means that a trade mark should be capable of being put on the Register in the
physical from and also of being published in the journal. Thus a graphic representation would
facilitate registration of all trademarks including three-dimensional marks and even sound
marks, so long as they can be graphically represented. The graphical representation must be
realized on the application form itself. The quality of graphical representation must be such
as to enable the mark to be precisely identified solely on the basis of the graphical
representation.
Hindustan lever Vs Registar Trade Mark :
It is a principle of trademarks law that a party pleading confusion must first establish the
prior use of its trade mark in respect of his goods. The appellant having failed to do so, it
cannot plead confusion of it trade mark with that of the second respondent.
Categories of Trade Mark
(A) Associated Trade Mark :
This term means trademarks deemed to be or required to be, registered as associated
trademark under the Act. Associated trademarks are assignable and transmissible only in their
entirely; though for other purpose of the Act they will be deemed to have been registered as
separate trademarks. Association of trademark may be required where a trade mark applied
for is identical with another trademark registration in the name of some proprietor. The mark
so nearly resembles as to likely to deceived or cause confusion, if used by a person other than
the proprietor in respect of the same goods or description of goods or same services or
description of services.
(B) Certification Marks :
A certification trade mark means a mark capable of distinguishing the goods or services with
which it is used in the course of trade which are certified by the proprietor of the mark in
respect of origin, material mode of manufacture of goods or performance of services, quality,
accuracy or other characteristics from goods or services not so certified and registrable as
such under the Act in respect of goods of services in the name of that person as proprietor of
the certification mark.

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(C) Collective Marks :

A collective mark means a trade mark distinguishing the goods or services of members of an
association of persons (not being a partnership within the meaning of the Indian Partnership
Act, 1932) which is the proprietor of the mark from those of others.

(D) Jointly Owned Trade Mark :

Where the relation between two or more persons interested in a trade mark are such that no
one of them is entitled as between himself and the other or others of them to use it except :
On behalf of both or all of them, in relation to an article or service with which both or all of
them are connected in the course of trade. Those persons would be recognized as joint
proprietors of the trade mark.
(E) Honest concurrent use of Trade Marks :
The origin and development of this concept is explained in GEC Vs GEC Co Ltd.
The interest of the general public requires that they should not be deceived by the trademark.
It ought not to tell a lie about the goods. Two main kinds of deception had been subject of
consideration. These were misrepresentation (a) of the character of the goods to which the
trade mark was attached, and (b) as to their origin that they were the product of some other
manufacturer. But the interest of the public in not being deceived about the origin of goods
has to be accommodated with the vested right of property of traders in trademarks which they
have honestly adopted, and which by public use have attached valuable goodwill. Citing an
English case Re.Lyle and Kinahans Application (1907) 24 RPC 249 the Supreme Court in
London Rubber Co Vs Durex Products, AIR 1963 SC 1882, 1889 para 19 said : with respect
we agree with the learned judge that in ascertaining the volume of use it is relevant to
consider the capacity of the applicant to market his goods, and whether the use was
commercial or of other kind. In the English case it as observed that protection on the basis of
honest concurrent use was available to a small trader who sells goods under a particular mark
for a long time, though his sales are small compared to a big international trader.
(F) Well known Trade Marks :
To decide if a mark is a well known Trade Mark the authority should compulsarly consider
the following :
1. Knowledge or Recognition of the mark by part of actual or potential consumers of
goods are services, distributors and business circles.
2. Duration, extent and geographical area of use and promotion of the mark.
3. The record of successful enforcement of rights on the part of the owner of the mark.

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4. The duration and the geographical area of registration of the mark reflection the use
or recognition of the mark.
5. The record of successful enforcement of the rights in the trademark. The extent to
which the trademarks had been recognized as a well known trade mark by any court
or registrar.
6. If a mark is determined as well known, by even one section of the public in India, by
any court or registrar, it should be considered as well known for registration.
Effect of Registration :
Registration of a trade mark confers a very valuable right. The person in whose name the
trade mark has been registered may take action against any person for passing off the goods
as that of the registered owner. It confers an exclusive right of use of the trade mark in
relation to the goods in which the trade mark is registered. The same is an assignable right,
whereas an unregistered trade mark is not.
Unconventional trade marks
1.
2.
3.
4.
5.

Colour Trade Marks

Sound Marks
Shape of goods & Packaging
Smell Trade Marks
Holograms

Colour Trade Marks

Single Colour :
A single colour may be registerable as a trade mark if it is very unusual and peculiar in a
trade and is recognized by traders and consumers alike that it serves as a badge of origin for
that class of goods. See Dyson Ltds Trade Mark Application 2003 RPC47. It follows
therefore that a single colour will only in exceptional circumstances be capable of denoting
the origin of a product or service. The examination of single colour marks requires careful
analysis, because there is a public interest in not limiting the availability of colours for other
traders. Each case must be assessed individually.
Combination of colours :
Wherever the exclusive right to color is sought, weighty evidence should be necessary to
overcome objection under section 9(1)(a) of the Act [similar or deceptively similar or
identical to existing colour marks].

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Word Marks constituted by names of colours :

Word marks, which consist solely of names of single color lack the required inherent
distinctiveness for registrability unless the particular colour is unusual or unlikely to be
needed for use by competitors for the goods concerned. Names of some combination of
colours that appear fanciful in relation to goods, or more probably services may be inherently
registrable, for example, PEA-GREEN for travel services.
Sound Marks :
Graphical representation
The law does not explicitly exclude Sound Marks from registration nor does it say that a
trade mark must be visually perceptible. It only provides that the trade mark must be
Capable of being represented graphically besides capable of distinguishing. Sound marks,
in a trade mark sense, are extremely rare. Consequently applications to register whole or
large sections of classical pieces are likely to face objection on the grounds that they are not
likely to be taken as a trade mark.
Smell trade marks :
It has been held by the European court of Justice, an olfactory (smell) mark does not satisfy
the requirements of graphical representation if it is presented in the form of a chemical
formula, by a description in written words, or by the deposit of the odour sample or by a
combination of those elements.
Holograms :
There is nothing in principle, to prevent holograms from operating as trade marks, provided
they are capable of distinguishing the goods or services of one undertaking from those of
other undertakings and are capable of being represented graphically.
Shape of Goods & Packaging
The expression Trade Mark is defined to mean a mark capable of being represented
graphically and may include shape of goods and their packaging section 9(3) provides
that the trade mark shall not be registered if it consists exclusively of (a) the shape of goods
which results from the nature of goods themselves; or the shape of goods which is necessary
to obtain a technical result; or the shape of goods, which gives substantial value to the goods.
What is passing off :
When person passes off his goods as being those of another he commits the tort of passing
off. The fundamental rule is that no one has a right to market his goods for sale as the goods
of a rival trader and consequently he cannot be allowed to use names, marks, letter or other

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indicia by which he may induce purchasers to believe that the goods which he is selling are
the manufacture of another person. When a person passes off another persons goods as his
own, he commits the wrong of reverse passing off. No person may falsely claim that the
goods of another persons design and work are his own.
Difference between passing off and infringement of trade mark
That there is a marked difference between an action for infringement of a registered trade
mark and a passing off action is repeatedly pointed out by judicial decisions by stating that if
one of these actions fails, the other action may succeed on the same facts. An infringement
action is available where there is violation of a specific property right acquired under and
recognized by the statute. In a passing off action, however the plaintiffs right is independent
of such a statutory right to a trade mark and is against the conduct of the defendant which
leads to or is intended or calculated to lead to deception. Passing off is said to be a species of
unfair trade competition or of actionable unfair trading by which one person, through
deception, attempts to obtain an economic benefit of the reputation which another has
established for himself in a particular trade or business. The action is regarded as an action
for deceit. The tort of passing off involves a mis-representation made by a trader to his
prospective customers, which actually or probably causes damage to the business or good
will of the other trader.
Thapar Brothers Vs Tiger Balm, 1995 (2) IPLR 265, 337, 342
The defendant contended that as the trade mark Tiger Balm was registered in its name, the
plaintiff could not file a passing off action against him, though the plaintiff had been selling
the same product under the same trade name since many years earlier. This was negatived on
the basis that the Trade Marks Act states: Nothing in this Act shall be deemed to affect rights
of action against any person for passing off. or the remedies in respect thereof. On the
facts, the court held that the fact of registration of the trade name in the name of the
defendant did not disentitle the plaintiff to relief on the basis of passing off.
Passing off action available against a registered trade mark owner
Section 28(1) gives certain rights to the registered proprietor of a registered trade mark, but
subject to other provisions of the Act. Section 31 provides that registration is to be primafacie evidence of validity of the mark. Section 27(2) states that nothing in the Act shall be
deemed to affect rights of action against any person for passing off or remedies in respect
thereof. Section 33 saves vested rights of a prior user. Therefore, it is competent for a person
to file an action for passing off on that basis against a proprietor of a registered owner of the
same mark.

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