Name – Shivani Gaur
College - UILS Chandigarh University
We are living in the era of technology, over the past few decades there has been a drastic rise in the sector of technology. Over Sixty Five thousand startups have been recognised by the Indian Government in FY 2021-22 which branch out into 56 different sectors such as IT Services, FinTech, Hardware technology, Artificial Intelligence and Nanotechnology.[1]
With this rise in the startup culture litigation has also grown beyond measure. Every smart business owner chooses to hire a lawyer to sort out all the complex paperwork beforehand, because not doing so may simply mean that the business is heading towards the path of self-sabotage.
What is a Tech Startup?
“The STartup – Owner’s manual Strategy guide.” It defines startup this way: “A startup is a temporary organization in search of a scalable, repeatable, profitable business model.[2]
A Tech startup is a young company started by one or more entrepreneurs with initial funding on their own risk.These are scalable business models that may or may not get funded by bigger companies. These startups bring new technologies or services to the market. The chances of success are slim to the cut throat competition. It is crucial to make wise decisions from early on. It is also said to be a third type of market that has both invention and market risk
Why do we need Lawyers?
Legalities can be confusing, from registering your firm to drafting privacy policies a lawyer is needed each step of the way for the journey of a budding startup. New rules and regulations are introduced every other day which makes it very difficult for the business owner to focus on their company and also keep all the legalities in order. Having a lawyer is a huge burden off the shoulders of the entrepreneur which gives him room to focus on his aim.
Lawyers are essential when developing new technological solutions. They help you protect your product from lawsuits and competing businesses. They can also assist in sorting out any legitimate action that may arise.
Intellectual property law can be complicated. As a result, it's critical that your lawyer understands your company and what you do. Software licences pose a legal quandary. If you make mistakes in your Agreements and Licences it can pose a great threat in the future.
GOVERNMENT INITIATIVE
The Government of India has launched the Startup India Scheme in an attempt to generate wealth and jobs. The creation and invention of new goods and services as well as a rise in employment levels in India are the two main objectives of Startup India. Benefits of the Startup India Scheme include possibilities for networking, financial support, and government contracts. On January 16, 2016, Prime Minister Shri. Narendra Modi introduced Startup India.[3]
LAWS DEALING WITH A STARTUP
SETTING UP A COMPANY
Business structure formalisation is crucial since different structure will have different applications. Hence the laws will also be different. A lawyer can provide guidance in deciding the corporate structure that is most appropriate for the company. Regardless of whether it is a sole proprietorship, public limited company, private limited company, limited liability partnership (LLP), or collection of firms.
PROTECTION OF INTELLECTUAL PROPERTY RIGHTS
Every start up starts with a unique vision and innovative idea which makes it different froom the others it is their USP. This USP is protected by the Intellectual Property Rights. The protecting of new startups in india is covered under the startup India program. Under this scheme the government reduced the patnt fees upto Eighty percent.
“Intellectual property (IP) refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce”[2] Intellectual property rights are protected by law by way of patents, trademarks and copyrights.
Patent is a right that is given for invention. The owner can decide whether or how his invention can be used by others. In exchange for this right the owner makes technical information about the invention publicly available in a published patent document.
Trademark is a sign or symbol that can be used to differentiate the products and services of one brand from those of other companies. This right is given so the owner can protect his sign, symbol or logo from being forged.
The legal term "copyright" is used to refer to the ownership rights that authors and artists have over their creative works. The types of works protected by copyright include computer programmes, databases, ads, maps, and technical drawings in addition to books, music, paintings, sculptures, and films.
LICENSING THE BUSINESS
Before launching any business in the market appropriate licenses should be issued. Every business needs to have a licence according to the business which it will be carrying out.
TAX LAWS
The startup India programmes provides exemption of Tax for startups. Different policies are appliedto different business models. The first seven years of a startup's existence can be used to obtain tax benefits. The business or limited liability partnership needs to be registered. For the initial years, the annual total turnover cannot exceed 25 crores.
LABOUR LAWS
As with every business, labour is provided daily to ensure appropriate and effective operation. There are numerous labour regulations, such as the Minimum Wage Act, gratuities, Provident Funds Payment, Paid Holidays for Employees, Maternity Benefits, Harassment at Workplace, Bonus Payment, etc to protect the rights of the employees.
FORIEGN INVESTMENT
If a startup is formed as a partnership firm or an LLP, the investment can be made in the form of capital or through any profit-sharing agreement which is in place. The host countries gain access to resources ranging from financial, capital, entrepreneurship, technological know-how, and managerial skills, which assist them in supplementing their domestic savings and foreign exchange.
Under the automatic route, the Ministry of Commerce and Industry of the Government of India has permitted FVCIs to subsidise up to 100 % of the capital of startups regardless of the sector in which they are associated.
PRIVACY AND DATA PROTECTION LAWS
Privacy and protection laws in India are covered under the IT Act and are somewhat ambiguous and outdated. Initiatives has been taken to update Indian Privacy Protection Laws however, there are no comprehensive laws yet.
These are some basic laws that are associated with startups in India. It is essential keep a startup legally apt at all times. having legal knowledge helps to maintain and grow by availing the benefits provided by the Government of India.
References
Number of recognised startups in India rises to 65,861 says the government, Business Standard, March 25,2022 at A1
Steve Blank and Bob Dorf, The Strarup Owner’s Mannual, pg.16
https://www.startupindia.gov.in/content/sih/en/startup-scheme.html
Ankita Singla, FDI of Startups,Corporate Law, Articles, Tax Guru 09 Sept 2018
The need of lawyers and presence of protection laws are given in respective legislations for different businesses, it is important that the essentials stated in this article are not considered as general pointers for any start up. The tech start-ups need a robust system of privacy and data laws, which as the article mentions are outdated. The laws need to be tech-forward because, compared to any other business, the dynamics of a tech-start change frequently.
ReplyDeleteSuch a cutting edge topic! Definitely worth the read.
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