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START-UPS IN JAPAN

Keeping up its reputation as the land of true opportunities, Japan has always attracted potential entrepreneurs looking to expand their horizons in the field of technology and business. Japan has managed to turn themselves into a huge industrial and commercial hub. Japan is the centre of many companies like Honda, Sony, and Panasonic to jump-start their business and over the decades, turn into global giants.

The Japanese Government has continuously endeavored to relax business regulations in order to encourage citizens as well as non-residents to start-up their businesses in Japan. Foreign residents wanting to set-up a business in Japan are required to hold a manager visa, which serves as a legal permit for operating and starting commercial activities in the country.

Before 2013, foreign entrepreneurs were required to comply with various stringent norms, such as either employing minimum two full-time employees, or investing a minimum capital of ¥5 million in their business, and also, they had to secure office space in Japan. But, now, Tokyo Metropolitan Government (TMG) has started providing a six-month preliminary business visa, enabling foreign entrepreneurs to visit, explore and set up a base for starting up their businesses in Japan. This short-term permit provides sufficient time to complete the required paper work, get settled and grow businesses without any undue pressure while participants are in Japan. This visa is renewed at the end of the six months, provided the project is progressing smoothly and that all conditions have been successfully met.

Japanese government has established Special Business Zones in its metropolitan cities such as Tokyo, Osaka, and Nagoya. There are numerous benefits of starting up a business in Japan. Japan offers an exciting yet stable business market which is open to trade and foreign investment. Moreover, Japanese market is globally very competitive, especially in the fields of environment, healthcare, IT and automotives. Furthermore, Japan has a highly educated and affluent population which makes them discerning consumers. Loyalty and cooperation are valued by Japanese people over aggressiveness and competitiveness. Being a predominantly collective society, each individual often feels a strong sense of belonging and responsibility towards their work place.

Foreign companies wishing to set up a business in Japan have three choices regarding the modes of business operation; they can either open a representative office, a branch office or a subsidiary office.
Representative office doesn’t require any registration and is established for carrying out supplemental work only. A representative office, however, cannot ordinarily open bank accounts or lease real estate in its own name, so agreements for such purposes must instead be signed by the head office of the foreign company or the representative at the representative office in an individual capacity.

The branch office can begin its business operations as soon as an office location is secured. A branch office does not have its own legal corporate status. The foreign company is ultimately responsible for all debts and credits generated by the activities of its Japanese branch office. A Japanese branch office, however, may open bank accounts and lease real estate in its own name.

A foreign company establishing a subsidiary company in Japan has to establish such subsidiary company either as a joint-stock corporation, a limited liability company, or a similar entity stipulated by Japan’s Companies Act. But, owing to its unlimited liability, it is not a common preference of foreign entrepreneurs.

According to Japanese Market, foreign entrepreneurs are usually advised to set up a limited liability company, because it ensures equity participation.

Opening a local bank account is also a pre-requisite, for depositing the funds in Japan. Earlier, it used to be necessary to have a Japanese resident as a representative director of the company, but now, after the amendments made by the government, it is no longer required to have a representative director. Thus, it has become easier for the non-residents to start-up their business in Japan.

The Japanese Government has also been actively promoting foreign investment since the past few decades. Various treaties and deals have been signed by the Japanese government with other countries in order to provide subsidies and favorable work conditions to foreign start-ups. The government has also established “Tokyo One-Stop Business Establishment Centre” to provide one-stop services to start ups for complying with necessary procedures for starting up businesses in Tokyo.

To sum up, Japan has come a long way in recent years in order to ease the business of setting-up and to promote entrepreneurship.

Got Your Trademark Registered – Now What?

Applying for trademark registration is a simple but lengthy process. The real work behind brand protection actually begins when the trademark registration process ends and the owner receives the trademark Registration Certificate from the Trade Marks Registry. It is of utmost importance to ensure that once the trademark is registered, it retains all values and efforts that the owner has put into establishing it. Trademark protection requires sufficient planning and constant vigilance.

Here are a few tips that help in the proper use, maintenance and protection of a registered trademark –

  1. Renewal Date

    – A trademark will only be considered registered and active until it is timely renewed. It is important to notify the Registrar of Trade Marks that a trademark is valid and still in use. A trademark, once registered, is valid for a term of 10 years from the date of filing the trademark application. A request for trademark renewal can be filed within 6 months before the expiry of the said period of 10 years, and within 6 months after the expiry of the registration term of 10 years.  If the request to renew the trademark is not filed within this stipulated time period along with the requisite fee, then the trademark is removed by the authorities and is said to be abandoned due to non-renewal. Hence, on should keep a constant watch on the trademarks renewal dates as only timely renewal ensures trademark existence and brand protection.

  2. Using Correct Trademark Symbols­­

    As per the rules laid down by the Trade Marks Registry, a trademark owner is legally bound to use “TM” symbol with his mark till the time such mark is not registered. Once the trademark is successfully registered, the owner can use the small circled “R” symbol. This “R” is not just a symbol, but it is a public notice of registration and is certified as proper use of the trademark by the Registrar of Trademarks.

    Thus, after registration, the trademark owner, to ensure proper use of “R” symbol, must use this on his product packaging or label, marketing or advertising logo, website, etc.

  3. New Trademark Filings – A registered trademark owner has the complete authority to file opposition proceedings against any new trademark application which he may feels can, or is infringing his mark. To ensure non-infringement, a trademark owner must conduct a regular trademark check on the trademark journals published every week. This could also be done with the help of a Trademark Attorney.

    Undertaking regular trademark watch also ensures that the Trade Marks Registry does not        weaken or tarnish the value of a registered trademark by registering marks that could be too similar to existing trademarks.

  4. Monitor the Market – To ensure proper use and protection of the trademark, the owner should go beyond the Trade Marks Registry database and also be watchful of any suspicious entity operating in the market that may be illicitly using a mark which may be similar to his or her trademark.

    If the owner of a trademark does not oppose a similar infringing mark in a timely and prompt manner, it gives the infringing party an alibi to claim such a mark on the grounds that the latter mark has been strengthened enough to be legitimate or the infringer could challenge the earlier trademark on grounds of non-enforcement.

    So, to ensure proper protection of a registered trademark, one must act within the rights of enforcement and take proper legal advice before taking any action against an opposing party as professional consultation goes a long way in generating best practices for brand protection and efficient resolution of legal impediments.

     

Backing Up the Start-Up: Benefits of a Sound IPR Strategy

With the Indian horizon set ablaze with start-ups, the opportunity of building a full-fledged business out of a mere idea is much closer to reality now than it was a couple of decades ago. The rule of thumb in the entrepreneur industry is that two things are precious – time and money.

This is the reason why most start-ups leave it for later to develop an IPR strategy, thinking it to be the last step of setting-up shop. But, not only is it dangerous to float unprotected intellectual property in the market but it could also invite a lawsuit right at your doorstep. Start-Ups must solidify their Intellectual Property Rights Strategy in place while at a nascent stage, even if it takes a week of just reading up and educating the core team on IP.
Lately, majority of Start-Ups turn out to be innovation based ventures, their core idea being commercial exploitation of an innovative product or service, i.e., some form of intellectual property. Keeping this as the base, it then becomes mandatory for an idea based start-up to have a defined IP strategy in order to grow and reach out to the public without compromising their trade secrets.
Most Start-Ups struggle to define an IP Strategy because they do not understand it correctly. Put in simple words, an IP Strategy is coming up with a set course of action that enables a start-up to maximize the potential of their product/service, by the three-fold approach of:
  • maintaining lower costs than their competition by generating original cutting edge technology;
  • achieve higher selling prices due to uniqueness of the technology;
  • in turn, augment their market share.
An effective IP strategy ensures that the start-up maintains low cost prices as it is self-reliant in terms of technology and product creation. This leads to the conception of a unique product which will assure higher selling price as well as garner greater market share by cutting down competing products present in the market.
Taken the other way around, when a start-up holds an original product/service but does not adequately safeguard their respective IP; then markets such a potent product without developing a strong IPR strategy to monitor and back up sales, not only does it expose the product to plagiarism but also loses out on precious market share and boosted sales due to loss of originality.
Taken the other way around, when a start-up holds an original product/service but does not adequately safeguard their respective IP; then markets such a potent product without developing a strong IPR strategy to monitor and back up sales, not only does it expose the product to plagiarism but also loses out on precious market share and boosted sales due to loss of originality.
Securing Intellectual Property gives a Start-Up the freedom to operate in showcasing their unique products or technology. Google patented their Page Rank patent way back in 1998 when they didn’t even have a sustainable development plan to commercialize the patent. [Source: http://www.google.co.in/patents/US6285999].Had Google not thought of patenting this core idea of ranking pages as per their document citations, it would have been hit by copycats across the World diluting the service and capitalizing on Google’s ὰ la mode system.
Another significant pre-production aspect that is directly linked to intellectual property strategy is venture capital. Generally, Start-Ups are found bootstrapping their way into setting up and are on a constant look-out for capital investment. Here, a neat IP Strategy goes a long way in attracting sound investments, as investors tend to rely on patents and other IP in evaluating the potential of a start-up.
Investors mostly see patents and other intellectual property as valuable assets that can fetch future gains. To them, protected intellectual property equals the faith of a start-up founder in their product or service. This does not mean that a start-up must have granted patents under its sleeve to fare well at a VC funding, but must have made patent applications before looking for funding.
In the same breath, where a start-up has not taken any steps to secure Intellectual Property or have not formalized an IP strategy, the investor can be put off in pouring capital into such an unguarded product. Further, venture capitalists are known to pull out funding at the last moment as a result of unsecure IP, which can prove lethal for a start-up.
The brief history of Start-Ups has amply demonstrated that it is as valuable to develop an effective IP strategy for start-ups as it is to generate new and exciting technologies. Start-Ups have changed the face of corporate set-ups on an international level, but only with the help of safeguarding and protective measures that are no more just vague notions but solid and well-defined concepts.
Article By: Sonia Chauhan – Senior Attorney (Originally published in : Spicy IP)

 

Investing in Start-ups- Things to Look Out For

“I see startups, technology and innovation as exciting and effective instruments for India’s transformation.” ~ Shri Narendra Modi
Since the announcement of “Start-up India” scheme by Prime Minister Narendra Modi in his 2015 Independence Day Speech, there has been a lot of buzz among the small entrepreneurs, investors, VC’s, and management groups leading to a new era of startup evolution in India. To begin with, India is the world’s youngest start-up nation with 72% young founders who are less than 35 years old. The “Start-up India” campaign further shows the Indian government’s intent in understanding the value of startups and boosting innovation culture in a youthful and emerging economy. This thrust in the Indian startup systems holds great promise for every sector, especially for the crucial areas of education, healthcare, employment, and agriculture.
The action plan for start-up India promises an abundance of benefits to innovation driven ventures including funding support through corpus of INR 10,000 crore; credit guarantee fund for Startups by the govt.; tax exemption on capital gains of Start-Ups; complete tax exemption to Startups for their first 3 years; and further tax exemption on investments above fair market value. Besides the financial support “Start-up India” provides for the development of several Incubators and other support systems needed for start-ups to flourish.
India has come a long way from the initial days of bootstrapping when the major chunk of the initial investment for businesses came from the initiator’s personal saving, and support from friends and family. But with the advent of government initiatives promising incentives for start-ups to lay the company foundation, the role of the investors would also be extremely valuable. The actual impetus that propels a young enterprise forward is the infusion of necessary funds into its system either by the Angel Investors, venture capital funding, ultimately leading to generation of funds by private equity means and finally launching IPOs. Keeping the above in mind, the total funding in Indian startups was estimated to be close to $5 billion by the end of 2015.
Investing in startups is quite uncertain and can prove to be a risky affair, especially when the idea doesn’t take off as planned leaving the investor stranded and penniless. Having said that, there is absolutely no doubt that investing in a start-up can also be very incentivizing as well. The reason why an investor needs to be extra vigilant while pouring in his bit into a start-up is because such companies are saplings playing with ideas looking at a prospective product, which in most cases don’t have a commercially tested product or solid customer foundation. Therefore, the start-up investor must critically evaluate the business plan and the model for generating profits and growth in the future.
  • Broadly the essential things that must be pondered upon while looking to invest in start-ups should be: evaluation of suitable risk
  • likelihood of profitability
  • equity stake available in exchange for capital
  • market evaluation especially checking the viability of competitors
  • legal and regulatory compliances
Before investing in a start-up one must ascertain the domain of startups that they might be interested in and then zero down on the company that deserves the investor’s money.
Three aspects of a Start-Up must resound the philosophy of a start-up investor:
  • Idea;
  • Intellectual potential; and
  • Individuals contributing to the Start-up.
After deciding on what company to invest into, one must ascertain the timing and type of entry into the system. Depending on the equity share and willingness to be a part of the decision-making, types of participation can be grouped as angel investment, venture capitalist or crowd-funding. It is also important to evaluate the potential return on investment (ROI) and time frame needed to maximize the profits.
Taken the other way around, when a start-up holds an original product/service but does not adequately safeguard their respective IP; then markets such a potent product without developing a strong IPR strategy to monitor and back up sales, not only does it expose the product to plagiarism but also loses out on precious market share and boosted sales due to loss of originality.
Besides the above listed “diving in” investment considerations, an investor should also chalk out an exit plan. A healthy exit strategy is very important for an investor since it is imperative for them to known the time frame when one would be able to withdraw the initial investment and its related profits.
In the end, an investor must remember that investment demands patience and one should be more oriented on the long term prospects rather than short term gains in order to maximize output. Also, as they say, “Don’t put all your eggs in one basket”, the sound investor always focuses on having a diversified investment portfolio. The more the diversification of your startup investment, the greater are the chances of hitting gold in a relatively short time-frame.
~ Happy Investing!
Article By: Vineet Sharma – Vice President (Patent Analysis)

How To Trademark Your Logo

Imagine a person who have invested a huge amount of time, money and effort to build a brand, goodwill in an individual’s or a customer’s mind. One day, he finds out that his brand name or logo is already registered by another person and he no longer can use it. To avoid this situation and to protect the brand name or logo, its identity and goodwill one should get their logo registered as soon as they start using it. Well, the good news is – Getting a logo trademarked in India is a very simple process.
A registered trademark or logo is not restricted to just a brand name, but if used properly it can become the most valuable asset of a business. Any company, individual or a legal entity can apply for the Trademark Registration of his/her logo. The Trademark Registration process generally takes around 8 to 24 months. However, for the time being, an person who has made such application can use the symbol “TM” with his logo mark and later on when the logo is registered and the Registration certificate is issued, the symbol “R” may be used with the logo mark. As per the Trademark Act, a trademark once registered is valid for a period of 10 years, which can be renewed from time to time.
What is a Logo?
Before getting a logo registered, one should know what a logo actually is. In simple terms, a logo can be any signature, name, label, device, numerals or combination of colors and fonts used to represent his business, primarily to distinguish their brand from other similar goods or services operating in the same market domain.
In India, the process of getting a logo or Trademark Registered is governed by the Controller General of Patents Design and Trademarks, Ministry of Commerce and Industry, Government of India. A logo once registered gives the owner an exclusive right to sue for damages in case of any trademark infringement under the Trademarks Act, 1999. The Trademark Registry also have the power to refuse Trademark Registration if the mark or logo to be registered is deceptively similar with an existing registered mark or logo or is offensive or is likely to cause deception or confusion.
Getting the Logo Trademarked
      • 1st Step – Trademark Search: This search is conducted by a Trademark Attorney to check whether the logo is similar to an earlier registered logo. This search can be done by both ways, online and also offline. One should proceed to the next step only after the Trademark Attorney is satisfied that the logo is unique.
      • 2nd Step – Drafting a Trademark Application: Once the logo mark or brand name is found to be unique, the Trademark Attorney shall draft a Trademark Application, i.e. Form TM- 1. The Government Cost of the Application form is INR 4000 and is a one time fee for each class.
        Along with Form TM – 1, the following supporting documents are also needed:-
        I. An identity proof of the Director of the company along with address proof.
        II. A picture of a brand logo.
      • 3rd Step – Filing the Trademark Application: The Trademark Application can be filed by 2 ways, manual filling and e- filling. The Manual filling is done by personally going to any office of the Registrar of Trademarks located in Delhi, Mumbai, and Chennai. The acknowledgement of the application and the receipt in this process is received generally after 15-20 days from filling. The e filing process is more convenient and quicker, because here the acknowledgment receipt is received immediately. After the owner of the logo mark receives the acknowledgement, he is eligible to use the symbol “TM” along with his logo.
      • 4th Step – Examination of the Registration Application by the Registrar: After the Application is received by the Registry, the Registrar checks whether the logo is similar or deceptively similar to any registered logos or mark or any pending logos or marks.
      • 5th Step – Publication in the Indian Trademarks Journal: Once the logo mark is examined by the Registrar of Trademarks and no objection is found, the logo mark is then published in the Trademark Journal. A stipulated time period of three months is provided by the Trademark Registry if any third party wish to oppose the registration of the proposed logo mark.
      • 6th Step – Trademark Registration Certificate: If no objection is raised within a stipulated period of three months, a Registration Certificate is issued by the Trademark Registry. Now the owner of the logo mark can use the registered trademark symbol “R” along with his logo.

Getting the logo trademarked can be a lengthy process, but it is absolutely essential to get it registered to gain legal protection for one’s brand.

Article By: Sunchet Thareja – Legal Associate