Patent Working Disclosure Norms : Need for the Amendment of the Amended form?

ILE Legal Blog

7 Jul, 2022

Patent Working Disclosure Norms : Need for the Amendment of the Amended form?

Author – Ritu Amarnarayan, Student from Christ (Deemed to be University), Bangalore

ABSTRACT

Idea and Innovation are the backbone of a country, specifically in a developing one like India. To secure any innovation of the human mind or the intellectual creativity of the creator, the Intellectual property laws were brought in as legal rights. Amongst the cut-throat competition around the world, there is a potent need to stand out, and innovation is one such key concept that India has looked into for the last few decades. Patents are among the few kinds of Intellectual Property rights that has played a significant role in improving the national and global landscape. The Patents Act, 1970 is an important legislation that was passed, which rampantly encouraged innovation which in turn resulted in technological development. Recently, an amendment was brought in under The Patent (Amendment) Rules, 2020 which emphasized on the requirements relating to the filing of Form 27 and the flexibility brought in force under this provision, but as it turns out, instead of curbing the flaws of the Form, the proposed amendment weakened it further by sabotaging the main purpose of the said amendment. The aim of this paper is to look into the Implications of the patent working disclosure rule and the tampering of the same with effectiveness of India’s Compulsory licensing regime.

Keywords: Innovation, intellectual property law, patents, amendment, disclosure rule.

INTRODUCTION

‘A patent is an intellectual property right relating to inventions and is the grant of an exclusive right, for a limited period, which is provided by the Government to the patentee in return for full disclosure of his/her invention, for excluding others, from making, using, selling, importing the patented product or process producing that product for those purposes’[i] . The patent law in India grants a 20-year monopoly to the inventor. The sole purpose of this system is to encourage inventions by promoting their protection and utilization in order to contribute to the development of industries, which in turn, adds to the advancement of technological innovation and supports the transfer and dissemination of technology. The Patent Law in India is governed by the various provisions given under the Patent Act, 1970, which has gone through various amendments in order to have a powerful insight of the patent laws and to develop a stronger regime. Internationally, the World Intellectual Property Organization protects and promotes the intellectual property throughout the world.  Patents are known to ensure property rights and provide a legal title for the invention to which the patent has been  granted , which might be incredibly significant to an individual or to an organization as a rule, hence one should make the fullest conceivable utilization of the Patent System and the advantages it gives. Patent Rights are territorial in nature and a patent obtained in one country is not enforceable in other country and the inventors are required to file separate patent applications in different countries to procure the patent in those countries. The invention to be patentable should be technical in nature and should meet the following three conditions for the grant of a patent:

  1. Novelty: The said matter disclosed in the specification is not published in India or anywhere else before the date of filing of the patent application in India
  2. Inventive Step: The invention is not obvious to a person skilled in the art in the light of the prior publication/knowledge/document.
  3. Industrially applicable: Invention should possess utility, so that it can be made or used in the industry.

Even the TRIPS (Trade Related Aspects of the Intellectual Property Rights) Agreement mandates the member states to make the patents available for any inventions, in all technological fields without any discrimination, subject to the tests of Novelty, Inventiveness and Industrial Applicability.

Under Indian Patent Law, every patentee having been granted a patent is required to file a statement regarding the working of the patented invention on a commercial scale in India and the said statement of the working of the patented invention in India needs to be furnished to the Indian Patent Office. According to Section 146 of the Indian Patents Act, 1970 and Rule 131(1) of the Indian Patent Rules, 2003, a patentee or licensee of an invention that is patented in India is required to adhere to the said rules and furnish a statement regarding the working of the patented invention on commercial scale in India. It is also necessary to ensure that the statement needs to be furnished in Form 27 either in hard copy or by soft copy electronically, which could either be done on their own or through a Patent Agent/Patent Attorney.

WHAT DOES FORM 27 SAY?

Form 27 paves way for protecting the patented invention if provided with all the information required, without failing the duty to fill the said form. In simple terms, the Quid pro Quo for acquiring patent monopoly is patent disclosure. Although it is not mandatory to fill out the form, by not filling out the said form the inventor might face the risk of partially or completely losing the rights of their invention, including the revocation of the said patent of continuously failing to furnish the required information on the working of Patents. Indian Patent Laws allow the grant of compulsory license of Indian Patents to the third parties under certain conditions, the first one being the failure of the working of the patented invention in India. This could also mean an opportunity to the third parties to seek compulsory license if the statement is not filed. Section 122 of the Patents Act, 1970 lays down punishment of fine up to Rs 10 lakhs, which can be imposed provided there is a failure to furnish the information., this can also extend to imprisonment up to six months or with fine or both, when false information is provided in the statement of the working of the patent in India.

‘As mentioned earlier Form 27 is essential for examining the necessity for invoking compulsory licensing and  revocation provisions’[ii], as the failure of working of the innovations leads to invoking a demand for compulsory license by a third party. This form requires certain details to be mentioned in it, including the fact if the statement of working the patent is in India or not, and if it is in India, then the inventor is obligated to mention the reasons for not working and the steps that are initiated for the effective working of the invention. The form also requires the inventor to elaborately furnish the commercial details which include the value and quality of the patented product which are manufactured or imported, along with the details of licenses and the sub-licenses granted during that year. It is also required to mention if the public requirement for working the patent in India has been met, at a reasonable price either partially, adequately, or completely.

WHY WAS THERE A NEED FOR AN AMENDMENT ?

Section 146 (2) of the Patents Act, 1970 is a unique provision which is not found in the legislation of patent laws of the other countries. This section requires the patentee to submit an annual statement to the Patent Office explaining the extent to which they have worked their invention in India, so the said information helps the patent office and the potential competitors to determine if the inventor has actually worked the invention in India and made it available to the public at large in reasonable prices. This compulsion makes it burdensome to the patentee’s or the licensee’s and invites cost charges on them as well. Moreover, the format that was being followed before the amendment required detailed information which is clearly impossible to procure for most technology areas because it is based on a false presumption that each product is covered by a patent[iii].

Original Form 27 Amended Form 27
Separate form to be filled for each patentAn option provided to file multiple patents in one form, if all of them are related patents
Statement of the Calendar year, relating to the working statementStatement of the Financial year, relating to the working statement
If the invention has been worked then the quantum and value of the patented product to be statedThis requires the approximate revenue to the patentee’s furnishing the statement from the patented inventions to be stated, if the invention is said to have been worked
Country wise details need to be given, if the invention is being exported from another countryThere is no necessity to provide country wise details.
The disclosure of licenses and sub-licenses of the patented product to be granted in a year Does not require the disclosure of licenses and sub-licenses of the patented product to be granted in a year
Did not make in mandatory for every patentee or licensee to file this form, as given in Section 146 of the Patents Act, 1970 and Section 131 (1) of the Patent Rules, 2003Made it mandatory for every patentee or licensee to file this form as given in Section 146 of the Patent Act, 1970 and Section 131(1) of the Patent Rules, 2003

TABLE 1.1

The original form 27 did not provide clarity as to  whether the multiple owners of a patent could file the form jointly and if each licensee were bound to file the form individually. But the amended form comprehensively tried to do away with the earlier uncertainty by giving the multiple owners of the patent an option to file the form jointly, but however makes it clear that each licensee shall be bound to file the form individually. Another positive side of the Amended rules is for the newly granted patents, wherein the working of such patents becomes due from the financial year following the one in which they were granted.

AMENDED FORM : BOON OR BANE TO THE PATENTEES/LICENSEES

A PIL was filed by Shamnad Basheer before the Delhi High Court where he brought to the Court’s attention the non-filing and defective filing of Form 27 and requested the Court to take stringent action to enforce the rules of patent working disclosure and take action against the violators. The Public Interest Litigation brought forth the need to call for a reform of Form 27 mentioning that the information it sought was insufficient to ascertain the extent of the working of the patent. But the amended form bypasses the actual measures that were to be taken by defeating the entire purpose of brining in the said amendment. It can be argued that the said amendment weakened the form significantly instead of strengthening it.

According to the Amended form, as shown in table 1.1 it can be seen that it is no longer a requirement A) To provide any information regarding the quantum of the invention manufactured/imported to India. B) To provide the licenses and the sub-licenses that are granted during the year and the meeting of public requirement at a reasonable price

The amendment to this part of the disclosure is not well thought and can also be said the focus on the ‘value’ in Form 27 can potentially be ultra vires and the backing for this is the requirement to file an annual statement as given under Section 146 (2) of the Patents Act, 1970, and the main question to be addressed here is, if the phrase ‘worked on a commercial scale’ covers value or not, and ‘if it does not then the said Form is said to be ultra vires, especially noting the report of the Ayyangar Committee’[iv], which suggests that the phrase intends to cover the quantum rather than pricing, which basically means the availability of the product, and not the price at which it is available. Another context of the term ‘on a commercial scale’ suggests on the intent to estimate, if the product is being made available is large scale for it to be commercial in nature, rather than a sample or specimen. This contextual reference in turn again denotes quantum and not pricing. By focusing on value, the said from is headed in a wrong direction , as the focus on quantum would suffice to get an estimate of whether the patented invention is being worked and to what extent.

To put in a broader view there were four main concerns regarding the amended form, them being:

  1. The Steps that were taken towards the working of the patent, that is in case the patent has not been worked
  2. More importance given to the ‘value’ over the ‘quantum’ of the product.
  3. No requirement of the licenses and the sub-licenses that were being granted in a year
  4. The country wise details of the value and the quantum of the product not required 

The amendment of the disclosure format is a shot at the wrong direction, especially noting the fact that the disclosure of this data by Bayer in Form 7 is what that played a significant role in the grant of India’s first compulsory license to Natco for the anti-cancer drug Sorafenib/Nexavar.  The removal of the said requirement of providing the licensing information, along with the disclosure of the existence of licenses means that the patentees/licensees have the free hand to self-certify that they have worked the patent in India, without actually providing the complete information if they actually have. The need to provide the said data must be a requirement on the working of the patent, including the set of licenses. Without this, Form 27 becomes meaningless and the norms of patent working disclosure will be rendered redundant. The said requirement would not pose as such a burden on the patentees, as they were either way made to submit such information to the tax authorities. Another downside to this is the fact that the licensee are still mandated to file the statement of commercial working, while the patentees have an option to file the form of commercial working jointly. Altogether, the omission of mandating the disclosure of details makes it impossible to ascertain if the invention has been made available to the public at large in sufficient quantity at a reasonable prize

CONCLUSION 

There were various issues with the Patents Act, 1970 which were addressed and resolved by bringing in appropriate and stringent provisions for the betterment of the industry requirements and the technological developments which have occurred over the years. Henceforth, the amendments are brought into effect in order to do away the dubious and obsolete provisions which have been harming the procedure of patent filing in India. An attempt for the same was made by bringing in the Patent (Amendment Rules), 2020 to look into the non-filing and the defective filing of the Form 27  and to ensure the patent working disclosure rules and take necessary action against the violators. But instead of subduing the obsolete provisions, the amended form sought to remove the quantum of the invention manufactured into India, as well as removed the requirement of the licenses and the sub licenses granted during the year and the meeting of the public requirement at a reasonable price. The government though sought to bring in provisions to strengthen the form of the Act but ended up weakening the duty that is imposed by the law on the patentees/licensees to disclose their patent working information. Therefore, the government must consider reviewing the said amendment made to the form by taking in the views and the recommendations that were made in the Public Interest Litigation and re amend the said Amended form, in order to restore and strengthen its spirit

REFERENCES

  •  [i] The Patents Act, 1970, General Information, No. 39, Acts of Parliament, 1970 (India)