Working of Patent in India - A Legal Overview

The aim of IPR is to promote the progress of science & technology for the benefit of mankind at large. One can understand this from the objectives of TRIPS, which states that the protection of IPR is to promote (I) technological innovations, and (ii) transfer of technology, for the mutual advantages of inventors and other mankind, and for social and economical welfare. In India, Section 83 of the Patents Act, 1970 (hereinafter the Act) sets out the rational behind grant of patents, which is inline with the above objectives set out by TRIPS. Protection is exclusive to the inventor/applicant, but the right is not absolute. This right comes with a responsibility to protect a much bigger picture ie., public interest. This balance between protecting Personal interest vs Public interest has been the bone of contention of various patent disputes in recent times. Courts have been vary to ensure that the protected IPR is not misused and is worked as per the provisions to the benefit of the public.

In India, Section 146 of the Act, and Rule 131 of the Patent Rules, 2003 (hereinafter the Rule), provides solution for monitoring the misuse of granted patents by mandating the patentee/ licensee to submit statement (Form 27) regarding working of their patented invention on a commercial scale in India. This statement should be filed every calendar year within three months from the end of the year i.e. before March 31 of the following year for the previous year.

Following are the mandatory details needed to be submitted in Form 27 along with other details:

  1. Whether the invention has been worked:
    • If not worked, the reason for not working and steps being taken for working.
    • If worked, the quantum and value (in Rupees) of the patented product
      • Manufactured in India,
      • Imported from other countries, giving details of the countries concerned.
  2. Licences and sub-licences granted during the year.
  3. Whether the public requirement has been met, at a reasonable price either partially, adequately or to the fullest extent.

Failure to submit Form 27 is a punishable offence and may incur a fine which may extend upto 10 lakh Rupees. Additionally furnishing false information is also punishable with an imprisonment of upto 6 months, or fine, or both. Further, failure to submit Form 27 creates a presumption of non-working, and according to Section 84 and 85 of the Act, such non-working of patent can be a good ground for grant of compulsory licences or revocation of the patent by the Controller.

Section 84 of the Act states that compulsory license may be granted if the patented invention has not been worked in the territory of India. Although, the term "working" or "worked" has not been defined in the Act, sections 83 (a), 83(b), 84(7)(d) and 84(7)(e) of the Act refers to working of patent and helps in interpreting the term "working" or "worked" in India. Section 83(a) states the importance of commercial working of patent in India. Section 83(b) states that patents are not granted for enjoying monopoly rights for importing the patented article. Further, sections 84(7)(d) and section 84(7)(e) state that the reasonable requirements of the public shall not be met if the patented invention is not being worked in the territory of India on a commercial scale to the fullest extent that is practically possible and that patented invention is being prevented or hindered by the importation from abroad of the patented article.

The Controller's decision in NATCO Vs BAYER provides valuable interpretation for the term "working". In his decision, the Controller states that "worked in the territory of India" implies manufactured in India to a reasonable extent so that the principles enumerated in section 83 can be brought into effect; In the absence of manufacturing in India, section 83 will be dead letter.

IPAB's decision on the same NATCO Vs BAYER case provides another interpretation for the term "working". In its judgement, the IPAB states that "the word worked must be decided on a case to case basis and it may be proved in a given case, that working can be done only by way of import, but that cannot apply to all other cases; the patentee must show why it could not be locally manufactured. A mere statement to that effect is not sufficient, there must be evidence". "Working could mean local manufacture entirely and working in some cases could mean only importation; It would depend on the facts and evidence of each case".

In light of the above discussion, we could conclude that the term "working or worked" shall normally be interpreted as local manufacturing. However, in few exceptional cases it can also be interpreted as importation. In such exceptional cases, the patentee needs to submit a statement containing the reasons for not manufacturing in India with concrete evidence. It remains to be seen whether this interpretation is retained by the Bombay High Court in the ongoing appeal by BAYER against the decision of the IPAB.


PRK




Ramesh Kannan. P
Patent Analyst
M.Sc., M.Phil.,(Physics)
Surana and Surana International Attorneys