In a recent order passed by the Intellectual Property Appellate Board (‘IPAB’), the IPAB recapitulated the significance of the principles of procedural fairness and natural justice in judicial, quasi-judicial, and administrative decisions. In Hawar Technologies Ltd. v. The Assistant Controller of Patents,[1] Hawar Technologies Ltd. (‘Appellant’) appealed under Section 117A of the Patents Act, 1970 (‘the Act’) against the order passed by the Assistant Controller of Patents (‘Respondent’), wherein the Respondent refused to grant the Appellant’s patent under Section 15 of the Act.
First Examination Report
The Appellant filed Patent Application No. 2089/DELNP/2009 for its invention titled, ‘APPARATUS TO IMPROVE THE EFFICIENCY OF INTERNAL COMBUSTION ENGINES AND METHOD THEREFORE,’ on March 30, 2009, as a National Phase application, claiming priority from its UK application no. GB 0617226.5 dated September 8, 2006. The Respondent issued the First Examination Report (‘FER’) on February 20, 2017, wherein it found the invention to be novel but objected to it on grounds of ‘inventive step’, ‘unity of invention’, ‘sufficiency of disclosures’, ‘clarity and conciseness’, and ‘definitiveness.’
The FER stated that claims 1-21 of the patent application lacked inventive step, being obvious in view of the cited prior art documents, and was thus not compliant with Section 2(1)(ja) of the Act. The Respondent cited four (4) prior art documents in the FER under the inventive step objection.
The Appellant submitted its response to the FER on November 17, 2017. Thereafter, the Respondent issued a hearing notice on July 5, 2018, fixing the date of hearing on October 4, 2018. The hearing notice cited four (4) prior art documents and contained objections related to inventive step, clarity and conciseness, and definitiveness. The Respondent refused the Appellant’s application vide an ex-parte order on September 26, 2019, as the Appellant failed to attend the hearing. Subsequently, the Appellant filed a review petition under Section 77(1)(g) of the Act, justifying its absence at the hearing due to the non-receipt of the hearing notice; the Respondent admitted to non-delivery of the hearing notice to the Appellant and thereby allowed the hearing of the review petition on January 29, 2020.
The hearing took place as scheduled, and the Appellant filed its written submissions on February 3, 2020, as per Rule 28(3) of the Patents Rules, 2003 (‘the Rules’). However, it came to the Appellant’s attention that the Respondent had issued an order on January 29, 2020 i.e., the date of hearing (‘impugned order’), without having waited for the Appellant’s written submissions, and refused the patent grant. Aggrieved by this order, the Appellant preferred an appeal to the IPAB.
The Appellant submitted that while the Respondent had cited four (4) prior art documents in the FER, in the subsequent hearing notice, the Respondent dropped two documents viz., D1: US20060027208A1 and D4: JP2004218522A, retained and renamed the remaining two prior art documents (D2: EP1630392A2 and D3: WO1998007973A1 became D1 and D2, respectively), and added two new prior art documents, D3: EP1363002A1 and D4: EP1541849A1 (D3 and D4, respectively). Additionally, during the course of the hearing, the Respondent further added two new Japanese prior art documents, namely, JP60230549 and JP02040056.
The prior art documents referred to by the Respondent had not been mentioned in the hearing notice, but copies of the Japanese prior art documents were given to the Appellant during the hearing, without translation or any time for the Appellant to respond to the same.
Although the Appellant had complied with the Respondent’s objections in the FER and proposed an amended set of claims 1-13 at the hearing, the impugned order passed by the Respondent yet again objected to the Appellant’s claims for the lack of inventive step. Despite the Appellant’s proof of technical advantage in its invention and deletion of certain claims, the Respondent opined that the improvements were obvious to a person skilled in the art and refused the Appellant’s application for the lack of inventive step under Section 2(1)(j) read with Section 2(1)(ja) of the Act.
Compliance with the principles of natural justice
The Appellant’s primary contention against the impugned order was that the prior art documents presented by the Respondent were shared with the Appellant for the first time during the hearing, without prior intimation to the Appellant or the opportunity to offer counter arguments. Moreover, the patent application was refused soon after the hearing was completed, without waiting for the Appellant to submit its written submissions, thus amounting to a serious violation of the rules laid down in the Patents Rules, 2003, and the principles of natural justice.
The IPAB agreed with the Appellant’s arguments and further noted that the Respondent’s failure to provide reasons as to why the Appellant’s invention was not inventive in light of the prior art documents, lack of any explanation as to how a person skilled in the art would be able to arrive at the present invention, and mere repetition of the Respondent’s objections in the FER, was a casual and mechanical manner of passing the order.
The IPAB referred to Bishwanath Prasad Radhey Shyam v. Hindustan Metal Industries,[2] wherein the Court held that the question of obviousness was a mixed question of law and fact. Both, scientific deductions from the prior art and determination of whether or not the invention in question was obvious to a person skilled in art are integral elements. In the present impugned order, the Respondent failed to justify its findings against the prior art documents. Additionally, the Respondent did not take into account the Appellant’s granted patent applications in the United States, Europe, Canada, and Korea.
The Court, in Santosh Hazari v. Purshottom Tiwari,[3] reiterated a settled principle of law that a statutory appeal grants the affected party the right to reopen a case and re-appreciate it on factual as well as legal grounds. Another settled principle is that courts/tribunals of judicial, quasi-judicial, or administrative nature can rectify errors of fact and law, as well as both, substantive and procedural errors.
Dharampal Satyapal v. Deputy Commissioner of Central Excise
The ability to correct procedural errors is to ensure that the due process of law has been followed, and this emphasis on procedural fairness was accentuated in Dharampal Satyapal Ltd. v. Deputy Commissioner of Central Excise.[4] The Court in this case stated that those with the duty to decide had to act judicially without bias, and offer the parties the chance to adequately make their case, i.e., the attributes of natural justice. In addition to the two fundamental principles of natural justice (rule against bias and opportunity of being heard), a third principle was added which was the duty to give reasons to support a decision i.e., a reasoned order. These principles prevent the miscarriage of justice.
In the aforementioned case, the Court also made reference to two scholars, D.J. Galligan and T.R.S. Allan, and their interpretation of the principles of natural justice. According to Galligan, the right to a fair hearing mandated ‘the right to hear the other side.’ The arrival at a correct decision would not be possible without adopting the principles of natural justice, and when the law was applied accurately, social good would also be realised.[5] Galligan further stated that fair treatment involved the distribution of benefits and burdens, and the principles of natural justice constituted the subject matter of fair treatment. Allan, on the other hand, justified procedural fairness to be the basis of good governance. [6]
Relying on this precedent, the IPAB also asserted that the principles of natural justice were grounded in procedural fairness, which is also why courts have consistently insisted that such procedural fairness must be adhered to when making a decision. The IPAB further added that the applicability of the principles of natural justice was not dependant on statutory provisions and should be applied irrespective of the presence of such provisions.
IPAB’s decision
In sum, the IPAB concluded that (i) the value of procedural fairness – as a statutory instrument and for social good – cannot be undermined; (ii) judicial and quasi-judicial authorities are subject to the principles of procedural fairness; (iii) the right to be heard is not an empty formality and the hearing principle can be expanded or curtailed depending on the nature of the statute, importance of the decision, impact on parties, etc., (iv) where a statute does not provide for procedural fairness, it is the implied duty of courts and tribunals to provide the same; and (v) procedural fairness has legal and social significance.
Since the process of determining whether or not an invention can be patented is a long and arduous process, the rules of procedural fairness, as per the Patents Act and Rules, do not end with the hearing, but rather continue until the filing of written submissions. As per Rule 28(7) of the Rules, the written submissions ought to be filled within fifteen (15) days from the date of hearing. The IPAB found the impugned order passed by the Respondent to be in violation of both, the hearing principle and the reasoned decision principle, since the Respondent failed to wait for the prescribed period to take into account the Appellant’s written submissions before passing its order.
In the present case, the IPAB found the last minute addition of the Japanese prior art documents and issuing a refusal order without giving a chance to the Appellant to submit counter arguments to be in blatant violation of the principles of natural justice and of the Act and Rules. Further, no reasoning was given for the lack of inventive step in the impugned order. The IPAB surmised that the order passed by the Respondent was arbitrary and unsustainable in the eyes of law. It remanded the case to the Respondent to be decided on its merit within six (6) months from the IPAB’s order. The IPAB further instructed the Respondent to place the matter before a different Controller as per Section 73(4) of the Act, in the interest of justice.
[1] OA/56/2020/PT/DEL, decided on October 12, 2020.
[2] (1979) 2 S.C.C. 511.
[3] (2001) 3 S.C.C. 179
[4] MANU/SC/0615/2015.
[5] D.J. Galligan, Procedural Fairness – the Frontiers of Liability (Vol. 1) (Oxford 1994).
[6] T.R.S. Allan, Procedural Fairness and the Duty of Respect, (198) 18 O.J.L.S. 497.