By Siddharth Sharma & Ranjan Matthew
Why the need? – A rational perspective
in order to understand the reasoning behind why a patentee or a licensee thereof
is required to furnish information regarding the working of patents in India,
it may be pertinent to study the Statutory provisions envisioned under Section
83 of the Patents Act, 1970 hereafter referred to as the Act.
83, under Chapter XVI, which is titled “Working of patents, compulsory
licences, and revocation”, teaches us the general principles applicable to the
working of patented inventions. Inter alia, this Section lays down the
reasoning or legislative scheme behind the granting of patents, including that
patents are granted to encourage inventions and to secure the working of the patented article in the
country (Section 83 (a)). Furthermore, from the broader perspective of the Act,
the patenting system ensures that a quid pro quo is maintained. In return for
the monopoly granted by the government over the patented article, the patentee
and the licensee are expected to disseminate this inventive knowledge to the
public (for example through the publishing of the patent), as well as work the
patented invention, and provide the patented invention to the public at a
reasonable cost. Even though Section 83 provides only guiding principles and
not rules by mandate, it is helpful in understanding the requirement of working
patented inventions in India.
the statement of working provided by patentees and licensees can also provide
useful insight into the effectiveness of the patenting system for various
industries and companies that utilize the patented inventions in their course of
Working of patents in India - Legal Overview
to Section 146 read with Rule 131, a patentee or a licensee, exclusive or
otherwise, of a granted patent, is required to submit a statement regarding the
working of the patented invention on a commercial scale in India in the
prescribed manner (Form 27).
the Controller of patents may issue a notice in writing, requiring the patentee
or a licensee to furnish such information related to working in Form 27 within
a period of two months from the date of issue of such notice (Section 146 (1)).
Form 27, amongst other details, requires the patentee or the licensee to
furnish the following relevant information:
Whether the invention has been worked;
(a) if not worked, the reasons for not working the
invention, and the steps being taken to work the invention;
(b) if worked, quantum and value (in rupees) of the
manufactured in India,
imported from other countries, giving details of the
Licences and sub-licences granted during the year;
Whether the public requirement has been met, at a
reasonable price either partly, adequately or to the fullest extent.
Rule 131, this information should be filed every calendar year, within three
months of the end of each year. Thus, the latest that a patentee or licensee
can file such information for a given calendar year is March 31st of the
Failure to oblige
to furnish such information creates a presumption of non-working, and may
assist the process of grant of compulsory licences. It is also a punishable
offence and may incur a fine which may extend to rupees ten lakh (i.e., INR one
million or USD sixteen thousand). Additionally, intentional furnishing of false
information is an offence punishable with imprisonment for up to six months, or
a fine, or both (S. 122).
Recent developments in India – The system works!
recent unprecedented move, the Indian Patent Office (IPO) made all the working
statements filed by patentees during the year 2012 publically available.
Section 146 (3) clearly provides this power to the Controller to publish the
information received by him under Sections 146 (1) and (2).
publishing of such a vast quantum of working statements by the IPO provides a
host of valuable information regarding the effectiveness of the patenting
system in India and can be utilized by various forums, such as academicians,
potential licensees, and law makers to improve or amend the law of Patents in
the country as well as to valuate the patents covered under these published
Compulsory licensing, revocation, and the working of
legal provisions relating to compulsory licences are closely interwoven with
the provisions relating to the working of patents. Section 84 states that an
interested person may, after the expiration three years after the grant of a
patent, apply to the Controller for a compulsory licence on the patent on
grounds that, inter alia, the patented invention is not worked in India (S. 84
(1)(a)). Occasionally, the Controller may also adjourn the application for a
compulsory licence, specifically to allow sufficient time for working in
certain conditions (S. 86). This includes a decision, by the Controller, whether
the patentee has taken adequate steps to at least begin working the invention
on a commercial scale in India.
two years after the grant of the first compulsory licence, anyone may apply to the
Controller to revoke the patent, if, inter alia, the patented invention has not
been worked in India. The onus lies on the applicant of the compulsory licence
to furnish the facts upon which such revocation is sought and the nature of the
applicant’s interest. Such an application must ordinarily be decided within one
year of its presentation to the Controller (Section 85).
encouraging development in the field of science and technology, the publishing
of working statements has other numerous advantages related to business and
trade. For instance, a working statement pertaining to a patent can help in
estimating the worth/value of a patent and thus may help a potential licensee
to negotiate the fee for obtaining a licence based on the value of the patent.
On the other hand, working statements may prove to be of significant importance
from a business merger or a business takeover perspective, as patents can form
a significant part of the intangible assets of a company, and a good patent
portfolio along with the information about its working may help companies in
small scale industries may customize resources spent in research and
development (R&D) according to the prospering technology pertaining to their
field, based on information gathered from available working statements. Thus,
data about working of inventions, inter-alia, gives an idea about the
effectiveness and commercial viability of inventions, for valuation of patent
portfolios and compulsory licensing.
[ The first author is an Associate and
the co - author was a Senior Associate, IPR Practice, Lakshmikumaran & Sridharan, New Delhi