Why Indian Companies and Startups Set-up Offshore Entities To Protect their IP ?

Imagine you write a hit song . Every time the song is played on the radio or streamed online, you deserve a cut, right? That’s where royalties come in! Royalties are like a small thank you payment someone makes for using your creative work, like a song, book, or even a design for a cool new phone case.

Now, let’s say you want a company to manufacture and sell that phone case with your design. You can grant them a license, which basically gives them permission to use your intellectual property (IP) for a set period. In return, they pay you a licensing/Royalty fee.

This concept is gold for Indian companies creating innovative products! But here’s the interesting part: sometimes, they might set up a company in another country like USA for this. Why?

Think of IP protection like a fortress for your ideas. Some countries have stricter laws and better enforcement to guard your creations. You must be aware of how difficult it is to take an order against infringement of your IP in India Right ? So it attracts companies if they feel that Indian Laws doesn’t offer the same level of security.

For example, let’s say you invent a revolutionary new solar panel design. You want to license it to a company (can be your own here in India) for mass production. By setting up an offshore entity in a country known for strong IP protection(like USA, UK, Europe) , You can feel more confident that your IP like designs won’t be easily copied.

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