Local working of a patent- inspector raj provision

It is mandatory under the (Indian) Patents Act, 1970 (“Act”) for every patentee and every licensee to file a statement as to the extent of commercial working of a granted patent in the Indian territory. This working statement is embodied in Form 27 of the Patents Rules, 2003 (“2003 Rules”). Non-compliance with the requirement of filing the working statement within the prescribed timelines as per the Rules may invite penalty of imprisonment which may extend to six months, or with fine, or with both, as provided under section 122(1) (b) of the Patents Act. Noncompliance is routine and public interest petition directions of High Court resulted in Patent Amendment 2020 streamlining the procedure. 

The question is  why not do away with this requirement of working of patent?

History of Local working

The first working requirements implemented by countries were consistent with the countries’ initial approaches to their patent systems, which were guided by the notion that patents were expected to serve domestic industry.The interest in promoting domestic industry also prompted countries to impose a working requirement to ensure that the patented invention was practiced locally. A patent owner who failed to work his patent in the country that granted  the patent faced a forfeiture of the patent, or later, when forfeiture was replaced by compulsory licensing, a compulsory license for the patent.

The United Kingdom tightened its working requirement in 1902 by allowing the revocation of a patent for nonworking not only if the patent was not being worked in the United Kingdom. It was prompted primarily by concerns about the influence of the German chemical industry in the United Kingdom and its monopolization of an entire industrial sector in the United Kingdom.The U.K. law prompted German companies to purchase chemical plants in the United Kingdom, and the companies did not suffer mass revocations of their U.K. chemical patents.

In India Intellectual Property Appellate Board in 2013, and the High Court of Judicature in the same year confirmed that “worked in India” does not have to “mean only manufactured in India.

It is clear threat of revocation of patent and compulsory license does not lead to local manufacture of innovative product with the patent granted. Why not abolish this inspector raj provision? 

Reference:

https://www.natlawreview.com/article/india-patent-amendment-rules-2020-streamlining-form-27-filings

http://nopr.niscair.res.in/bitstream/123456789/15742/1/JIPR%2018%281%29%2015-27.pdf

https://www.law.uci.edu/lawreview/vol6/no3/Trimble.pdf

 

The High Court of Delhi Rules Governing Patent Suits, 2020

The High Court of Delhi is in the process of framing Rules under Section 158 of the Patents Act, 1970. A draft of the proposed “The HighCourt of Delhi Rules Governing Patent Suits, 2020” was circulated.

In the last 10-15 years, the Delhi High Court has witnessed a high growth in the number of patent infringement actions filed before it related to various scientific and technological fields including pharmaceuticals, diagnostics, mechanical engineering, telecommunications, electrical/electronics, wind technology etc. The need for the present Rules has been felt due to the complexities that have arisen in dealing with patent suits and actions. The Delhi High Court Patent Rules, 2020 shall govern the procedure for adjudication of all patent suits. The substantive provisions governing patent suits are contained in The Patents Act, 1970. Patent suits being civil in nature are also governed by The Code of Civil Procedure, 1908 (CPC) as amended by The Commercial Courts Act, 2015. 

Documents to be filed along with the Plaint: The documents to be filed with the plaint shall include, inter alia,

i) certified copies of the certificate of grant of patent along with payment of annuities thereof. 

ii. complete patent specification including title and description of invention, claims, the abstract and drawings as granted. 

iii. a list of all corresponding patent applications/grants in various countries, if any, along with their current status in a tabulated form. A standard template for the said table is below. 

iv. If a decision has been given by any patent authority in another jurisdiction, a link to the same can be provided in the table. 

v. A summary of the technology shall be annexed either as a note or as a power point presentation printed with two slides per page. 

vi. Copies of any decisions of courts or patent offices in respect of the suit patent or any corresponding patent in any jurisdiction, including decisions in pre-grant, post-grant oppositions or revocation proceedings, shall also be annexed. 

vii. Any expert report relied upon for infringement analysis. 

viii. Copies of all relevant correspondence 

ix. In case of license agreements being relied upon, copies of the license agreements redacted or otherwise. Notes on justification for license fee, if claimed. 

x. Laboratory analysis reports, if any.

Patent amendment rules 2019

The Patents (Amendment) Rules, 2019 have now come into effect through a notification by the Central Government on the 18th of September 2019 in its official gazette. A major change brought about by the new rules is that now in addition to startups and applicants designating India as ISA or electing India as IPEA in their corresponding PCT applications, the option of seeking expedited examination is now available to a wide category of applicants. According to the Patents (Amendment) Rules, 2019 rule 24 C is substituted to read as follows:

“…(b) that the applicant is a startup; or

(c) that the applicant is a small entity; or

(d) that if the applicant is a natural person or in the case of joint applicants, all the applicants are natural persons, then the applicant or at least one of the applicants is a female; or

(e) that the applicant is a department of the Government; or

(f) that the applicant is an institution established by a Central, Provincial or State Act, which is owned or controlled by the Government; or

(g) that the applicant is a Government company as defined in clause (45) of section 2 of the Companies Act, 2013 (18 of 2013); or

(h) that the applicant is an institution wholly or substantially financed by the Government;

Explanation:- For the purpose of this clause, the term ‘substantially financed’ shall have the same meaning as in the Explanation to sub-section (1) of section 14 of the Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971(56 of 1971); or

(i) that the application pertains to a sector which is notified by the Central Government on the basis of a request from the head of a department of the Central Government.:

Provided that public comments are invited before any such notification; or

(j) that the applicant is eligible under an arrangement for processing a patent application pursuant to an agreement between Indian Patent Office and a foreign Patent Office.

Explanation:- The patentability of patent applications filed under clause (j) above will be in accordance with the relevant provisions of the Act.”

Source: banana IP

Patent Act amended in May 2016 with guidelines for startups.

India probably has become the first country to have exclusive provisions in Patent legislation for STARTUPS, This amendment defines startup and the promised speeding up process.
Startup‖ means an entity, where- 
(i) more than five years have not lapsed from the date of its incorporation or registration; 
(ii) the turnover for any of the financial years, out of the aforementioned five years, did not exceed rupees twenty-five crores; 
and it is working towards innovation, development, deployment or commercialisation of new products, processes or services driven by technology or intellectual property:
Provided further that the mere act of developing:
a. products or services or processes which do not have potential for commercialisation, or 
b. undifferentiated products or services or processes, or 
c. products or services or processes with no or limited incremental value for customers or workflow, would not be covered under this definition.
a. is about commercialisation, since no one can certify potential for commercialisation, it is reasonable to expect that a startup at pre-revenue stage is not eligible.
b. comes under innovative step, no issue on that,
c. incremental value to customer- this is entering totally new territory by the examiner.

Expedited examination of applications: it appears that in an expedited examination process the examiner has to prepare the examination report within two months, as opposed to three months taken in the ordinary process. The expediting option will be available for startups for a fee of INR 8000 as opposed to INR 4000, which is charged for ordinary examination. 

Proposal for expedited examination of Patent application

DIPP issued notification inviting comments on several amendments to patent law. One of the proposed change relates to expeditious processing of patent application when:

• the applicant in the international application designated Indian Patent office as International Searching Authority.
• the applicant, assignee or licensee already starting manufacturing the invention in India or
• undertakes to commence manufacturing in India within 2 years from the date of grant of aptent.

Read for Details

Export of an active pharmaceutical ingredient (API) is not an infringement under Section 107A of the Patents Act.

On November 5th, in Bayer Corporation (Bayer) v. Union of India & Ors (NPL), the High Court of Delhi (Court) examined the scope of India’s Bolar exemption. Specifically, the issue to be decided in this case was whether the exportation of an active pharmaceutical ingredient (API) constituted a defense to infringement under Section 107A of the Patents Act.
The decision:

After a review of the facts, the Court accepted that the product NPL sought to export was not for commercial purposes since the amount was only sufficient to make 1000 to 2000 tablets (which was approximately the single trial batch size required by the Chinese Regulatory Authorities). Thus, according to the Court, the only question that had to be addressed was whether Section 107A covered export of a patented product for use by an overseas importer to conduct studies and generate data for the purpose of seeking regulatory approval in that country. 

After reviewing the history of the Bolar exemption in the U.S., India’s accession to the TRIPS agreement, the introduction of Section 107A in the Patents Act in 2002 and its subsequent amendment in 2005, the Court stated that the exclusion to a patentee’s right as provided under Section 107A was wider than the exceptions provided by the laws of the U.S. Specifically, the Court stated: 

“India is one of the largest producers of generic versions of drugs around the world. Given the economic realities of our country, providing cheaper medicines is a necessity. The parliament in its wisdom has, thus couched the exclusion to a patent, as provided under Section 107A, in wide terms. The sweep of the plain language of Section 107A, thus, cannot be restricted in the manner as canvassed on behalf of Bayer. 

…Plainly, Section 107A of the Act takes within its fold any sale of a patented invention which is required for development and submission of information under any law in a country other than India that regulates the manufacture or sale of any product. Indisputably, under the Chinese Law, submission of studies and data related to bio-equivalence and bio-availability of API in a generic version, is required as discussed earlier and the sale of 1 kg. of Sorafenat to HPCL can be reasonably stated to be related to the studies that are required to be conducted by HPCL for obtained the regulatory approvals. 

…[t]he language of Section 107A of the Act is determinative of the question whether export as sought for by NPL is permissible within the exemption of Section 107A of the Act. The use of the expression ‘reasonably related to’ as used in Section 107A of the Act would plainly mean a reasonably nexus. Thus, the only question that needs to be answered is whether there is any reasonable nexus between the sale of Sorafenat by NPL to HPCL and submission of information under the law in force in China. In my view, the answer to this question is clearly in the affirmative. 

…It is also important to note that the language of Section 107A of the Act is materially different from the law as applicable in U.S. Whilst, the US Law restricts the safe harbour to a sale within United States and solely for purposes related to information under a Federal Law, Section 107A of the Act is circumscribed by no such conditions. Thus, a sale even outside India would fall within the sweep of Section 107A, provided it is reasonably related to development and submission of information as required under a law in force in India or outside India.”

The Court also rejected Bayer’s arguments that the language of Section 107A excluded “exports” because this term was not specifically recited. Specifically, the Court stated:

“I am not inclined to accept this contention for the reason that the expression ‘selling’ is wide enough to even include cross border sales (i.e. exports). If the Parliament intended to restrict the exception to only sales within India, the same would have been expressly stated as was done by the US Congress under 35 US Code 271(e)(1).”

Finally, the Court examined the question of whether Section 107A should be read to include only sales made “within” India. The Court answered the question in the negative for three reasons: 

1.  The plain language of the section did not support such an interpretation. Specifically, there were no “words or expressions” that allowed such a restriction to be read into this section. In fact, to the contrary, Section 107A expressly permits use for submission as required by the laws outside of India.

2.  Even if a purposive interpretation of Section 107A is attempted, such an interpretation favors permitting export. According to the Court: 

“[T]he purpose for excluding development activities and uses for regulatory approvals is to ensure that exploitation of patented invention is not restricted beyond the period or sphere of exclusivity granted to the patentee. Thus, although initiative and effort of an inventor must be rewarded, the protection is limited and should not stifle further development and restrict participation beyond the period of exclusivity. There is a strong case for enhancing availability of essential drugs at affordable prices and the safe harbor exception must extend to permit developing overseas sources also.” 

3.  National barriers offer only limited barriers to trade. As a result, confining the exclusion of Section 107A to sales within India would not aid the object of such exclusion. 

Source: Lisa Mueller