For investors, intellectual property is no longer a side note. It is often the core asset that drives valuation, negotiation leverage, and exit potential.
A company with a clear, well-managed IP strategy signals that it understands its own innovation, is protecting it, and knows how to monetise it through licensing, partnerships or defensibility against competitors.
In technology-driven sectors especially, companies with strong patent and trademark portfolios are often more attractive to investors. Patents can be monetised through licensing and collaborations, or used defensively against competitors. Trademarks and designs protect brand value and market presence. Together, a coherent IP strategy reassures investors that the company understands its own assets and is actively protecting them.
However, the IP landscape in India presents several structural and practical challenges. These challenges affect both IP protection and IP-focused investment decisions. This article outlines the key pain points that businesses and investors face in India’s IP market, and suggests practical ways to navigate them.
PART A
A. Challenges in IP Protection in India: Pain Points and Emerging Responses
1. Counterfeiting and Piracy
Counterfeiting and piracy remain a major global concern. Available estimates suggest that in 2018 the international counterfeit market was worth between US$400 billion and US$600 billion, making it larger than the GDP of more than 150 countries and accounting for around 2% of global trade.
India has also borne a heavy share of this burden. It has faced losses of over US$7 billion in 2019–2020 alone and an estimated 3 million jobs lost due to the cascading effects of the counterfeit industry. Broader assessments peg the impact of counterfeiting on the Indian economy at around US$150 billion annually.
Sectors such as fashion, electronics, FMCG and pharmaceuticals are particularly exposed. Counterfeiting leads to:
- direct financial losses,
- brand erosion and reputational harm, and
- potential risks to public health and safety, especially where medicines and critical products are involved.
For investors, large-scale counterfeiting erodes confidence in the enforceability and practical value of IP rights.
What’s improving and what can be done
Rights holders and investors can look for companies that are not passive victims but have a structured anti-counterfeit systems, for example:
- Regularly monitoring online marketplaces such as Amazon, Flipkart, Meesho and Indiamart for infringing listings, and using notice-and-takedown mechanisms.
- Trademark Watch to monitor newly filed marks and flag confusingly similar marks, enabling prompt oppositions under Section 21 of the Trade Marks Act, 1999.
- Using customs recordals, civil enforcement actions and police complaints strategically in key markets.
- Deploying technology such as QR codes, track-and-trace, blockchain or serialisation to help consumers and distributors verify genuine products.
For investors, a positive signal is when a company can show a documented brand protection and watch strategy, not just isolated enforcement actions.
2. Inefficient and Unpredictable Legal Processes
India’s IP office and courts have historically been criticised for delays and inconsistency. Divergent decisions such as those seen in litigation around software and telecom patents can create uncertainty over what is patentable and how long grant may take.
Why this worries investors
Difficulty in valuing patent-heavy businesses.
Confusion about enforcement timelines and success rates.
Perception of regulatory and legal uncertainty.
Where the system is moving and how to mitigate risk
- The system is gradually improving through digitisation, e-filings and specialised IP benches in some courts.
- Companies can reduce risk and improve predictability by:
- Working with specialised counsel to created IP Strategy at early.
- Conducting prior art searches and freedom-to-operate (FTO) checks before filing or launching new products, so that filings are realistic and enforceable.
- Using layered protection (patents + trade secrets + contracts + trademarks) so that value does not hinge on a single right.
Investors are reassured when they see not just granted rights, but a clear, documented strategy behind how those rights were pursued.
3. Limited Awareness of IP Rights
Among SMEs, startups and individual creators, awareness of IP is still uneven. Many businesses:
- do not recognise that they already have protectable IP (software, brand names, designs, packaging, proprietary processes, confidential know-how), and
- do not integrate IP into early business decisions (naming, product roadmap, market entry).
This often leads to missed filing opportunities, premature public disclosures and avoidable disputes.
Practical response: start with an IP audit
A simple but powerful step is to conduct an IP audit of all business assets, including products, branding, technology, packaging, and confidential know-how, to identify what can and should be protected.
An audit helps founders and investors see, in one place:
- what is already registered,
- what is protectable but unregistered, and
- where there are gaps or risks (for example, unprotected key brands or uncleared names).
When investors see that a portfolio company has undertaken a basic IP audit and follow-up actions, it signals maturity and seriousness, even if the company is still early stage.
4. High Cost of IP Protection and How to Treat It as an Investment
Cost is one of the most cited reasons why startups avoid or delay formal IP protection. A 2023 report by NASSCOM highlighted that nearly 70% of Indian startups forgo formal IP protection due to high costs, exposing themselves to infringement, copycats and loss of market share.
Registration fees, attorney costs and continuing maintenance obligations can look daunting on a tight budget. Moreover, a lack of integrated IP strategies such as prior art searches or comprehensive patenting can leave gaps that competitors exploit, further deterring potential investors.
Managing IP budgets strategically
Instead of treating IP as an open-ended cost centre, businesses can:
Prioritise protection in main revenue and growth markets, rather than filing everywhere at once.
Use provisional patent filings to secure an early priority date while buying time to refine the invention and raise funds.
Use the Madrid Protocol for international trademarks to manage multi-country filings more efficiently.
Adopt a phased filing strategy, where core assets are protected first and secondary assets follow as the business scales.
For investors, the real question is not ‘how many filings?’ but ‘are the filings we see strategic, prioritised, and aligned with where the business is going?’
5. Limited Access to Specialised Legal Expertise
Not every startup can afford an in-house IP team. Without specialised support, companies risk:
- filing narrow or poorly drafted patents,
- overlooking freedom-to-operate analysis, or
- missing competitive filings in critical markets.
They may also mishandle ownership and confidentiality, which can be fatal in due diligence.
Strengthening legal foundations
Even without a full legal team, companies can significantly reduce risk by:
Engaging specialised IP counsel on a retainer or project basis to handle strategy, filings, and key disputes.
Drafting robust contracts with employees, consultants, and vendors under the Indian Contract Act, 1872, with clear IP assignment clauses, robust confidentiality clauses, and appropriate non-compete and non-solicit provisions to the extent enforceable, so that the company and not individuals owns the IP.
Protecting trade secrets and sensitive information through NDAs and internal IP policies, especially when pitching to investors or collaborating with third parties. India does not have a standalone trade secrets statute, so contractual protection is critical.
From an investor’s perspective, clean IP ownership and trade secret hygiene are often as important as the registrations themselves.
PART B
B. Challenges in IP Investment -Seen Through an Investor Lens
1. Budgetary Constraints and Competing Priorities
Startups typically juggle product development, hiring, marketing and compliance with limited funds. In this juggling act, IP can get pushed down the priority list.
This leads to:
- unprotected innovations,
- reactive rather than proactive enforcement, and
- portfolios that do not reflect the true value of the business.
Bridging the gap
Founders and investors can:
Treat IP as a planned capital allocation with a clear annual or per-round IP budget rather than ad-hoc legal spend.
Tie IP outlay to milestones, for example MVP completion, market launch, international expansion, or key funding rounds.
Use cost-saving tools and phased filing to ensure that at least the core IP is not left exposed.
When IP is explicitly discussed in funding conversations and built into the financial plan, it stops being an afterthought and becomes a shared priority.
2. Overlooked Gaps in IP Strategy
Many companies do file some IP, but without an integrated strategy. Common gaps include:
- no prior art search before filing,
- filing only in the home country and ignoring key export markets,
- not protecting improvements and follow-on inventions, and
- misalignment between what is core to the business and what is being patented or branded.
Patent disputes, including those involving companies like BlackBerry, show how the technical framing of claims can make the difference between grant and rejection, especially in software-heavy fields.
Moving from ad-hoc filings to strategy
To build an investment-grade IP strategy, companies should:
Begin with an IP audit and mapping exercise to identify what IP exists, what is core, and where the gaps are.
Conduct prior art and freedom-to-operate searches, for example through InPASS and other databases, before filing or launching, to avoid dead-end patents and infringement risk.
Decide where protection is really needed: India only, or India plus specific foreign markets.
Plan for continuations, divisionals, or downstream filings where technology is evolving.
Maintain a centralised IP register capturing application and registration numbers, renewal dates, licence and assignment agreements, and jurisdiction coverage.
Being able to present this IP register cleanly to investors not only makes due diligence smoother, it also signals professional IP management and governance.
3. Lack of Internal IP Culture
Even with good external advisors, an organisation that does not think about IP internally will underutilise its intangible assets.
When founders and teams:
- see IP purely as a compliance tick-box,
- do not document inventions or brand decisions, and
- do not align IP with product and market strategy,
they leave strategic value on the table.
Building an IP-aware culture
Some practical steps can change this:
Having a structured invention disclosure process so engineers and product teams can flag new ideas early for evaluation and filing.
Embedding IP checkpoints in product launch and branding workflows, for example clearance searches before finalising names or packaging.
Using NDAs and internal policies as a default practice when sharing sensitive information externally.
Showcasing the IP portfolio in investor decks, highlighting granted patents, pending applications, trademark registrations, design registrations, and any enforcement wins, so that IP is seen as part of the company’s story, not a footnote.
Investors strongly associate visible, well-governed IP with reduced legal risk and higher long-term valuation.
Conclusion: From Challenges to Investable Opportunities
India’s IP environment is still evolving. There are real challenges counterfeiting, delays, uneven awareness, cost pressures and expertise gaps. But none of these are insurmountable, and many are already being addressed through stronger processes, better technology and increasing sophistication among founders and investors.
When IP protection and investment strategy talk to each other, India’s innovation story becomes not just legally safer but commercially far more compelling.
For businesses, the message is clear:
- Recognise your IP early through audits and internal processes,
- Protect what truly matters using a mix of registration, contracts and trade secret protection, and
- Manage and present your IP professionally through registers, watch services and clear investor communication.
For investors, the opportunity lies in backing companies that are deliberate about their IP even if they are at the beginning of the journey and in helping them put the right structures in place.
When IP protection and investment strategy talk to each other, India’s innovation story becomes not just legally safer, but commercially far more compelling.
Governing Law
Trade Marks Act, 1999 | Patents Act, 1970 | Copyright Act, 1957 | Indian Contract Act, 1872 | Designs Act, 2000 | Geographical Indications of Goods (Registration and Protection) Act, 1999 | Information Technology Act, 2000
