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India Patent Office (IPO) has called for comments from the stakeholders as a precursor to a meeting and possibly revision of applicable rules/forms, regarding working statements practice. The working statements practice (under the Patents Act 1970) requires patentees to report to the patent office the extent to which the patented invention has been worked. This note explains the related issues starting with the examination of the governing law.

Section 146 of the Patent Act 1970 governs the working statements practice and is reproduced below first:

146. Power of Controller to call for information from patentees.

(1) The Controller may, at any time during the continuance of the patent, by notice in writing, require a patentee or a licensee, exclusive or otherwise, to furnish to him within two months from the date of such notice or within such further time as the Controller may allow, such information or such periodical statements as to the extent to which the patented invention has been commercially worked in India as may be specified in the notice.

(2) Without prejudice to the provisions of sub-section (1), every patentee and every licensee (whether exclusive or otherwise) shall furnish in such manner and form and at such intervals (not being less than six months) as may be prescribed statements as to the extent to which the patented invention has been worked on a commercial scale in India.

(3) The Controller may publish the information received by him under sub-section (1) or sub-section (2) in such manner as may be prescribed. (Emphasis Added)

Section 146 of the Patents Act 1970 replaced clause 105 of the Patents Bill 1953 (which did not become law), which reads as follows:

105. Power of Controller to call for information from patentee.—

The Controller may, at any time during the continuance of the patent, by notice in writing, require a patentee or a licensee, exclusive or otherwise, to furnish to him within two months from the date of such notice or within such further time as the Controller may allow, such information or such periodical statements as to the extent to which the patented invention has been commercially worked in India as may be specified in the notice.”

The absence of sub-sections 2 and 3 in clause 105 is noteworthy and supports the interpretation of the Author based on plain meaning of the law explained below.

The plain language of sub-section (1) authorizes the Controller/Government to seek specific information from individual patentees/licensees on the extent to which the patented invention has been worked in India. Sub-section (2) similarly authorizes the Controller to prescribe forms (now Form-27) and intervals (now yearly) and every patentee is thereafter required to provide the information requested in the form.

The Patent Office has called for comments in view of conflicting requests received from various corners. Specifically, the patentees and patent agents over the past several years have sought simplification and reduced burden in terms of form-27 practice, in particular requesting avoidance of mandatory questions: (i) that are legally impossible or practically difficult to be answered in their technological/ business context; and (ii) also those unrelated to the statutory objectives sought to be achieved, as a matter of good governance. The requests are made primarily in view of the Patent Office having designed detailed questions suitable for pharmaceutical segment in 2003 (when India had relatively few patent practitioners to offer constructive inputs), while requiring that patentees of other engineering/science domains also to answer these questions every year thereafter by operation of sub-section (2).

On the other hand, the petitioner in pending (ongoing as on March 2018) Public Interest Litigation WP 5590/2015 Shamnad Basheer vs. UOI at Delhi High Court seeks strict enforcement of form-27 related provisions, including criminal penalties for non-complying patentees. The petitioner also asks for formation of a committee to relook the design of Form-27 with a view to possibly further expanding the information to be collected under section 146. The Petitioner there makes a case relying substantially on non-compliance of some specific patentees related to (a) medicines/drugs; and (b) standard essential patents in the telecom sector.

The author of the subject article is an intervenor/ respondent in that case, and has placed the above noted general concerns of several years from patentees’ perspective in front of the Hon’ble Court. The Hon’ble Court there has directed the Government to provide a timeline for effecting modification to the prescribed forms/rules and the scheduled stakeholders’ meeting takes further importance in that context.

Close examination of the statutory provisions and objects, legislative history and policy considerations provides guidance on the various options at the disposal of the Patent Office in formulating the appropriate forms/rules under section 146 of the Patents Act.

It is unquestionable that Patents Act 1970 seeks to ensure that the patents are not used as instruments to block the fruits of inventions from reaching the public (section 83 of the Patents Act), even though there is clearly no burden on the patentees to work the invention when market demands are not there. The Patents Act expressly contemplates ‘compulsory licenses’ if the reasonable requirements of public are not met timely. Patents Act contemplates that the information gathered under section 146 serves as an aid for the government to administer compulsory licenses and licenses of right.

A relevant enquiry in that respect is the extent to which public also has extensive right over all or some of the information gathered under section 146. Sub-section 146(3) expressly states that the Controller ‘may’ (contrasted with the use of ‘shall’ in the same section and shown emphasized in the text of section 146 reproduced above) publish the information received under sub-sections (1) and (2) noted above. The use of word ‘may’ clearly expresses an intent that the Patents Act does not confer at least a broad right for the general public to know the information collected under section 146. Thus, the primary purpose of section 146 should be understood to be to aid the Patent Office/government, particularly in expeditiously and justly disposing requests for compulsory licenses.

A consequential question is whether the Controller should, in fulfilling the statutory duties, be asking for the same level of detail in all areas of science and technology, which in turn depends on whether the Patents Act places all such areas on equal footing for purpose of compulsory licenses. The answer is a clear no. The Patents Act, confirmed by legislative history and case law, clearly puts areas of ‘public health and nutrition’ (section 83(d) of Patents Act) in a more important plane than other areas.

On the other hand, it is pertinent to note that section 90(viii) of the Patents Act expressly limits any compulsory licenses to “public non-commercial use only” in case of semi-conductor technology. Thus, viewing from the purpose of administering compulsory licenses, the working statement information may be relevant only when one wishes to use the patented technology for public non-commercial use in case of semi-conductor technology.

Therefore, Patents Act 1970 itself discriminates between areas of technologies/ sciences in terms of compulsory licenses (and therefore in the criticality of information to be collected under subsection 146 of the Patents Act 1970). One needs to examine if the discrimination under law is justified by policy considerations, in particular how the patents system interplays with the corresponding segments of science/technology.

The pharmaceutical segments is at one extreme end of such examination in that the subject matter touches on a core societal interest (health and life) and the patent alone is de facto ‘necessary and sufficient’ for blocking or making available the solution/cure to the people. To clarify, interplay of patent law with pharmaceutical industry is characterized in that the subject matter disclosed in the patent document alone is ‘sufficient’ for many able chemists to make the medicine and provide it to people. The monopoly granted under the single patent granted to cover the medicine, is the only impediment (with patent right being the only ‘necessary condition’).

Engineering space (including semi-conductor technology, which is contrasted with pharma/science space) represents the other extreme end in that the ‘patented improvements’ there often touch on non-essential aspects or are optional features in products (in life or product offering) that cannot be viewed with similar public interest as public health. As an example, it is hard to justify public interest in a patented improvement to a camera directed to high-end photography, when many low-cost alternative cameras are available to the public at affordable prices.

In addition to being related to less important segment of public interest, no individual patent most times satisfies the combination of ‘necessary and sufficient’ condition noted above. In other words, a single product reaching the public is normally necessarily covered by a lot more technology (some covered by many other patents, some in trade secret domain and some not patented, etc.) than the patented invention. This understanding diminishes the need for information for individual patents under section 146 in corresponding circumstances.

The standard essential patents (SEPs) noted above fall somewhere in between in that they satisfy the ‘necessary’ (being termed as essential) condition but not the ‘sufficiency’ condition. The sufficiency condition is not satisfied because a single product in related engineering space is covered by many other patents and trade secrets. The criticality of working information is diminished in view of the attributes shared with the engineering space noted above and also perhaps the evolving understanding of remedies (in terms of injunction and damages) in case of infringement of SEPs.

Therefore, policy and practical considerations align with the Patents Act in placing different areas of science/technology in different planes of importance from the perspective of compulsory licenses (and consequently with respect to the need for information to be collected under section 146 to aid the Controller).

With the consonance of such differentiated importance under the Patents Act and policy/practical considerations confirmed, it is appropriate to examine the options in front of the Central Government in shaping the practice under section 146. These options are numbered (first one, most favorable) in the order favoring the patentees.

In considering the option, one needs to first understand that both subsections (1) and (2) of section 146 are discretionary/optional practices (as confirmed by the use of the word ‘may’ in those sub-sections). Specifically, subsection (2) makes it discretionary for the government to prescribe the form/interval (see specifically, “… in such manner and form and at such intervals … as may be prescribed…”), and the Government could very well choose to not exercise this option. Thus, it is within the prerogative of the Patent Office to now formulate rules to use neither, either or both the sub-sections to the extent they consider necessary and proper.

The first option with least burden for patentees is for the Patent Office to not require any information under either of the two subsections. Such a stand would be justified, for example, if the Government reaches a considered conclusion that the inter partes nature of compulsory licensing procedures and/or public inputs from social media/Patent Office Website, etc., are enough for the Controller to be equipped with sufficient information to fulfil the duties under Chapter XVI. Given the various developments such as maturing pharmaceutical industry in India (since 1970), globalization of industries in terms of subject matter expertise/employment and ownership, prevalence of less formal channels of communication with the government (e.g., social media, email, website), easy availability of patent information/tools, existence of other statutory bodies (TRAI, Competition Commission of India, etc.), may very well justify the first option.

The second option is to ask no more information than needed to confirm existence of specific public interest under subsection (2), and thereafter have an appropriate procedure to require more detailed data from specific patentees under sub-section (1) (along the lines currently sought under sub-section (2) using form-27). Such an option would clearly meet the statutory objectives and yet not cause unneeded burden on patentees when not required, as a matter of good governance and consistent with the intent behind introduction of section 146(2) compared to clause 50 reproduced above.

In this respect, it should be remembered that the number of patents related to public health/nutrition or even SEPs areas noted above is only a very small fraction of the overall pool of patents in force. In addition, for reasons explained above, it would be incorrect to be as concerned about patents in non-pharma area compared to those in pharma areas. Good governance obviously requires avoidance of reporting burden (for a substantial portion of patentee pool) when there is no public interest determined in accordance with the Patents Act and the second option may find justification under such a reasoning.

The third option is to ask for similar or more information compared to the current form-27 under sub-section (2) of section 146. This clearly has the effect of continuing to discourage (and keep away) potential applicants from applying for a patent in India, possibly to the delight of those opposed to patents as a matter of philosophy/policy, or who find advantage in non-existence of patents covering their space of operation. Discretionary provisions under the Act (which further provides less intrusive workable options noted above for the patentees) cannot (legally or otherwise) be a permissible instrument for preventing access to patent protection.

More fundamentally, the resulting non-availability of access to patent protection to patentees thwarts other objects noted in section 83 itself. Some of such thwarted objects include, “to encourage inventions” (everyone has a stake in inventions because they add incrementally to our life), “inventions are worked in India” (e.g., a niche player may avoid India markets due to absence of access to patent protection), “promotion of technological innovation and to the transfer and dissemination of technology” in India, “international transfer of technology” (global corporations are more likely to have high end research work performed in countries offering better patent protection), etc.

It is no surprise accordingly that resistance to Form-27 practice finds more voice in Bangalore (where the author is also placed), which is at the cutting edge of inventions. It will be interesting to see which path the Government will choose after considering the viewpoints of various stakeholders at the meeting of March 21 2018!

Naren Thappeta is a Bangalore based patent practitioner registered as an Advocate in India, as an Attorney with the bar of Washington DC, and as a patent agent with both India and US. He has a BTech degree in Computer Science from Andhra University (1985), and a JD/law degree from Santa Clara University, California.


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