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The Working of Patents in India

12 November 2012

The Working of Patents in India
Patents give a negative monopolistic right to patentees to exploit their invention, and play an important role in technology transfer as well as in the technological and economical growth of a country. One of the indicators of technological growth is the number of patent applications filed and/or granted in the country.

However, patents do not contribute to economical growth unless the patented invention is commercially worked in the country. Accordingly, a requirement to furnish information about the working of patented inventions on a commercial scale has been set out in the Indian Patents Act, 1970.

According to the Indian Patents Act, every patentee (or licensee of the patentee) is required to file a statement of working of the patented invention every calendar year on Form 27. This form must be filed within three months of the end of each year throughout the term of the patent. The patentee or his/her licensee can also provide pertinent information to a patent agent and authorise the agent to prepare, execute and submit Form 27 at the Indian Patent Office.

If the patentee or licensee fails to submit Form 27, it may be fined. The fine for not filing Form 27 was previously Rs1,000 (approximately US$20), which was increased to Rs20,000 (approximately US$400) by Amendments carried out in 2003.

In the most recent amendments, the fine has been increased further to Rs1 million, or approximately US$25,000. The sharp rise in the penalty emphasises the importance of working a patented invention and the obligation to submit information for the same at the patent office.

Knowingly providing false information is punishable by imprisonment of up to six months with or without a fine. Further, non-filing of a statement of working also creates a presumption of not working of patented invention, which may attract the process of grant of compulsory license after expiration three years from the date of the grant.

The information required to be submitted on Form 27 includes whether the patented invention is worked or not in India. If not worked, the reasons for not working and steps being taken for working of the invention in India must be explained. If worked, the quantum and value of the patented product manufactured in India and/or imported in India from other countries (along with country details) are required to be disclosed in the statement.

Further, the patentee is also required to provide details of local licenses and sub-licenses granted during the year and to state whether public requirements have been met.

Though the details to be provided on Form 27 are self-explanatory, certain requirements of the statement of working are ambiguous and not clear.

In Form 27, the patentee is required to state whether the patented product is imported into India, along details of the country of origin. This reflects that importation amounts to local working of a patented invention. However, Section 83(b) of the Patents Act states that mere importation does not amount to the working of a patented invention in India. Since India is under the TRIPs obligation to consider importation of patented articles as a local working, such ambiguity needs to be clarified either by defining working of patented invention or by judicial scrutiny.

Another ambiguity is that the patentee is required to state whether public requirements have been met partly or adequately or to the fullest extent at a reasonable price. Such information cannot be answered clearly, as patented products are not always a standalone product or vice-versa. Further, words such as partly, adequately and fullest extent are vague and need to be defined.

Further, some requirements of Form 27 may be sensitive in nature as the quantum and value may relate to confidential information. The Indian Patents Act specifies that the Controller of Patents may publish the information as may be prescribed, but unfortunately the Patents Act as well as Rules fails to provide any clue as to what extent the information given in Form 27 shall be published.

Further, Form 27 is also silent about the patented inventions relating to a process or a technology.

Recently, the Controller General of Patents has categorised the patent office procedures (except administrative ones) and assigned them to five sections, which came into effect from July 1, 2009, according to which, the General Patent Matters Section will be responsible for matters regarding statements of working of patented inventions and will send notices seeking information on Form 27 to all patentees, compile and publish the information.

Patent practice in India, which was earlier extensively focused up to the grant of the patents, now has been extended beyond the grant of Patents by giving significant importance to the commercial working of patented inventions. Though there may be certain ambiguities in the statement of working of the patented invention, patentees and licensees must fulfill their obligation by submitting their statement annually to avoid harsh penalties and any unsolicited compulsory licensing.


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