Let’s Start
If you are here then chances are that you have heard about Shark Tank India, the TV Reality Show. It is distributed by Sony Pictures Networks India.
There are similar shows around the world based on a franchise model. The format of the show includes entrepreneurs looking to raise money from investors by pitching their business ideas.
If you are an entrepreneur appearing on the show to pitch your idea, you should be aware that there is probably a potential copycat waiting to copy your idea. The fact that the show is aired all over, the chances of potential knockoffs increase manifold.
Naturally, there comes a discussion of tools through which you can protect your ideas. These tools are nothing but intellectual property rights. These rights include patents, copyrights, trademarks & design registrations.
Geographical indications also figure as a part of intellectual property rights.
The Patents
It’s highly likely that you have heard about copyrights and to some extent about trademarks. But whenever the discussion of patents comes up in real life or in Shark Tank, you may not be having that much idea about patents.
In brief, patents are given to you in exchange for disclosing your invention and contributing to technical advancement. It grants you monopoly rights over your invention. So, you will be the only one deciding who can make, sell, use, market, or manufacture your invention or patented product.
Patents are given for a limited period of time, 20 years in India for example.
Now that you have got a little idea about patents, it will be apparent to you that before you present your product or idea in Shark Tank, you better protect it first with a patent or with other forms of intellectual property so as to stop others from copying your idea.
Patents not only protect your invention, but they also help bring you much-needed investment. Because investors also want to be confident that their investment is protected from copycats.
We’ll see 3 case studies from Shark Tank India to give you an idea about the role of patents in a business.
More specifically, the studies will relate to startups which is obvious as Shark Tank is mainly about startups.
The Pattern
But before we delve into case studies from Shark Tank India, let’s first see what is it that Sharks or any other investor looks into an idea before getting on board.
We have observed a pattern and we were able to pinpoint it to the following 2 criteria:
1) Your idea has the potential to thrive in the market: This is clear by itself. No business can run without a good product. If your product can prove to be a good seller, who would not want to invest in your business?
2) Your idea is protected: Once, the investors are sure that your product is good, the fear of knock-offs gets in. Good knock-offs can destroy the market of any good product. Especially when a big company decides to copy your idea and sell it, you as a startup won’t be able to compete with it. However, if you have protected your product through intellectual property tools (be it utility patents, design patents, copyrights, or trademarks) then you have something to scare off the copycats.
The video right below consists of a compilation of clips where the Sharks are discussing patents and other forms of intellectual property (IP) before investing in the products.
In it, we see the pattern confirming both of the criteria required for funding that we have discussed just above.
Now without further ado, let’s look at the case studies from Shark Tank India.
Case Study 1
Although the product owners from QZense failed to raise money due to the high valuation that they demanded, the concern of Sharks about potential product theft was addressed in the very first minute of the presentation.
They made their position strong by announcing that their technology is patented.
Their product fulfilled both criteria which are 1) Potential to thrive in the market and, 2) good IP protection against copycats.
Since their product fulfilled both criteria, we can clearly observe that the Sharks couldn’t dismiss the offer from QZense at once despite the fact that they found the valuation too high.
Moreover, at least one Shark tried to make a counter-offer but at a modified valuation.
Had Qzense failed at least on one criterion, the decision to stay out would have been much easier for the Sharks.
Case Study 2
This case study gives an indication that having not-so-useful patents won’t help your cause.
In it, the first criterion i.e. potential to thrive in the market isn’t met. So, can fulfilling only the second criterion fetch the investment?
we can observe that the person looking for investment holds multiple patents.
However, the product fails to impress the Sharks in terms of market potential. And the result is as expected. No shark makes any offer.
This scenario signals that hoarding patents that are not useful and commercially viable will be of no help to your business. In fact, they may be detrimental to your business.
So to sum it up, you should have a great product or idea first. Then only you should worry about its theft and subsequent IP protection.
Check out the video below.
Case Study 3
Our next case is even more interesting. It is about Julaa Automation.
Brief: Founders of Julaa automation made an automatic cradle with Bluetooth connectivity and they named it Julaa. Further, they added modular features like a fan, weighing system, wet alert system, lullaby singing system, etc.
When they presented their pitch, at first, all sharks showed positive signs about the potential of the product. Till now, everything was going great.
Next, Julaa guys disclosed that they have secured a patent for it so it was comforting to the sharks from the theft point of view otherwise anyone could make it.’
So, the offer from Julaa Automation seemed to fulfill both criteria.
But in the end, no shark came on board with the Julaa guys as an investor. The reason for it was the pricing of the product which was so high according to the Sharks that very few would buy the product Julaa.
You may be wondering, why was the selling price as high as 80k to 100k rupees? well, It was the manufacturing cost to be blamed for.
The logic sharks gave was that why would they want to invest in a product which would be out of the reach of most people and wouldn’t fetch enough buyers.
So, high manufacturing price leading to high selling price would stop the product from thriving in the market. In other words, the product failed to meet the first criteria. It explains the stand that the Sharks took in this case.
However, the Sharks were respectful to the Julaa guys when they came to know that Julaa guys had invested all of their savings and 7 years of their life into it.
Further, the Sharks decided to land a few pieces of advice to Julaa guys in order to help them out. I have listed those pieces of advice below which could be helpful for you also as a reader & entrepreneur. The Sharks advised:
- To bring the cost of product somehow down.
- To consider factors like why anyone buying the product at such a high price would want a fan in it.
- Because most likely the person who can afford a high-priced product like Julaa would keep his baby in an air conditioner.
- So, functionality in the product should make sense.
- To contact and negotiate deals with big companies who had the means to manufacture and sell the product. Here, the Sharks told them that all is not lost because they have the patent. Either (1) they could get a one-time payment in exchange for the patent rights or (2) some royalty arrangements could be made. This way Julaa guys could recover their investment and move on with the next project.
- At last, One Shark, Mr. Peyush the founder of Lenskart offered his own contacts to help them so as to license the patent for the product.
How much the Sharks helped the Julaa Automation, what investments they bagged after appearing in Shark Tank and how much potential their patent had, we don’t know.
There are various factors involved in it. For example, how much part of the product was covered in the patent as an invention, how much value does the patent hold, what were the demands from the inventors and offers from the investors, etc.
Based on this case, we can draw one conclusion that a strong patent is your asset and can help you in a tough time just like a property would.
Check out the video below to understand the case.
Apart from Shark Tank India, let’s see one more case from Shark Tank Australia, which we thought would interest you.
Shark Tank Australia:
This time, product of our discussion is a two-wheel board that has many in one functionality. The inventor seeks $100,000 dollar for 20% equity at the valuation of half a million dollars.
Further, the inventor discloses that the product has a patent.
The product looked promising to the Sharks because so far it seemed to meet both criteria. Naturally, they all started to show interest and suddenly a shocker happens.
In response to the question, of who owns the patent, the inventor replied that “a company in America owns the patent and he has his name on the patent as an inventor. As per the contract, he currently has the liberty to enjoy patent rights in Australia and receives a royalty of $10 dollars per board from the company in USA.”
Not only this, he further told the Sharks that he plans to rewrite the contract with the company in regard to the patent.
After hearing all of this, all except one called themselves out.
That last Shark who stayed in also didn’t invest money for the equity, instead, she offered a loan of $100,000 which later could be converted into equity if the contract regarding the patent with the company in America can be sorted out.
Had the inventor of the board held patent rights in big markets all by himself, the chances of the Sharks coming on board would have been much higher.
Have a look at the video below:
Conclusion
Based on the previous discussion, it can be concluded that a product with great market potential but unprotected against copycats will have a hard time bringing investors on board.
We also saw a formula of success in getting investors on board. This formula is nothing but meeting two criteria by a product i.e. great potential to thrive in the market and protection by intellectual property rights.
It is important to stress explicitly that you shouldn’t run after patents that can’t be used commercially because that will be a waste of resources unless you just want to build a resume or has some other purpose where only owning a patent would matter.
At last, we came across a case where the inventor himself lost the rights to his patent in big markets like America due to his lack of legal knowledge.
FAQ
There are many terms that we come across while watching the Shark Tank TV Show. For example, if the Shark asks the entrepreneur, do you hold any patent for your product? Often we have heard in reply from entrepreneurs that they have provisional patent or Patent Pending or patent granted or Patent Published, etc. Therefore, we decided to explain these small queries in FAQ format.
Provisional Patent
If you have got an idea and want to secure priority date for your invention then you file a provisional patent application. Specification you file in this phase is called provisional specification.
You can further work upon your idea and come up with complete specification within a year of filing the provisional patent application.
So, when someone claims that he/ she holds a provisional patent, it simply means that he/ she has filed a provisional patent application for his/ her idea.
Provisional patent application expires in 12 months and no rights except the priority date for the invention.
Filing a provisional patent application doesn’t guarantee patent rights. But it indicates that you have taken first step towards getting a patent.
Patent Pending
Patent pending simply refers to a stage that starts after filing a patent application and ends with the grant of the patent.
If someone claims that he/ she has a patent pending for his/ her invention then it simply means that he/ she has filed a patent application.
This is a great way to market your product. For example, you can market your bicycle as ” The world’s best patent pending bicycle”.
Published Patent
Except a few cases, most patent applications are published after some time automatically. The act of publication gives you the publication number and it’s verifiable at the patent office website and at other databases.
Therefore, people use the publication number to market their products and services. Most people don’t even know the difference between a published patent and a granted patent. They see a number (i.e. publication number) in an advertising campaign and they confuse it with number of a patent.
Let’s take a US patent application, for example. US20200100012A1 is a publication number and US10694275B2 is granted patent number for a patent application. People use application publication number for marketing all the time and it often works as common people are not aware of the difference.
Granted Patent
When your patent application fulfills all the patentability criteria laid down by the law of the land, a certificate is issued to you granting exclusive rights over your invention. Once the certificate is issued, you can claim that you have a granted patent.
Can I Copy The Products From Shark Tank India?
However immoral it may seem, this question is often asked. Because following the already successful formula appears to be a shortcut to success. So, can you copy the products from shark Tank India?
Legally, whether you can copy or not depends upon whether the product you are trying to copy is protected through intellectual property tools like patents, copyrights, and trademarks. If the product is protected then you should probably stay away. If not then go ahead.
If you really want to make the protected product then you better strike a deal with the owner of the intellectual property of the product.
Note: Contrary to your belief, it is important to note that idea is not that important. What matters the most is the execution of the idea.
Is Shark Tank Patented?
No. Shark Tank is a TV show. Such shows are protected under trademark and copyright law.
For a patent, there has to be an invention that contributes to the technical advancement of the technology and meets the patentability criteria laid down by the law of the land.