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Changing paradigm of the patent working statement requirements in India

02nd May, 2018

The requirement to file an annual statement specifying whether a patented invention has been commercially worked in India or not and if so, to what extent, is a statutory one. The format in which such working requirement is required to be submitted is prescribed in “Form 27” of the Patent Act, 1970 (as amended). The Form also mandates that a patentee and/or its licensee ought to specify the quantum and value of working besides justifying whether the reasonable requirement of the public (in India) with respect to a particular invention has been met or not. The scariest part is that failure to file working statement or providing incorrect information can attract a penalty of Rs. 10 lakhs (approximately, US$ 16,000) and/or imprisonment.

The Indian working provision has been a point of contention, inter alia, for patentees, IP attorneys and licenses since time immemorial. However, what triggered the current mayhem is a writ petition [W.P.(C)  5590/2015] filed by an IP activist before the Delhi High Court alleging widespread non-compliance with the provision. The petitioner asserted that the Indian Patent Office (IPO) has not been enforcing compliance with the statutory requirement on working strictly. This, it was alleged, not only violated the statutory mandate but also deprived third parties of their right to apply for licenses based on the published working statements.

In reaction to the said writ petition, the (IPO) submitted before the Delhi High Court that they have initiated a consultation process with the stakeholders by inviting their comments on this requirement. In fact, the IPO received over fifty comments and/or suggestions from the stakeholders within a short span of time on this issue. FICPI, India deliberated upon this crucial issue and submitted pointed comments to the IPO along the following lines : 

  1. The disclosure requirement under Section 146 of Patents Act, 1970 is exceptionally burdensome and do not meet the statutory objectives. 
  2. It would appear that no such requirement exists in any other jurisdiction. In fact, such requirements are not even mandated under TRIPS Agreement. In view of the fact that adequate mechanism already exists in the Act for keeping a check on the patentee’s rights and obligations, the overall effectiveness of the working statement requirement is questionable. 
  3. If at all, this requirement is maintained, The IPO should consider reducing the frequency of filing Statement of Working to every two or three years instead of annually, which is quite burdensome. Section 146 does not make it mandatory to file such statement every year beyond stating that between two statements a difference of minimum six months should be there. 
  4. The word “and” in Section 146(2), should be read as “or” in view of the wording of Section 146(1) so that consistency in the language of the statute is maintained and the unnecessary burden to file statements by both the licensee and patentee is avoided. 
  5. Draconian measures such as imprisonment and monetary fine to the tune of INR 10, 00,000 prescribed under section 122 of the Patents Act should be completely abolished from the provisions of the Act. 
  6. Form 27 encroaches upon the “right to confidentiality” since under a Licensing model, IP owner is under an obligation to keep important business data concerning licensees as confidential. These requirements ought not to be asked for. 
  7. Published Form 27 details, for each patent in India can be accessed by anyone through IPO website, with no confidentiality for the business sensitive information submitted. Besides, current information may very easily be misused by third parties by initiating actions that are frivolous under various public interest provisions of the Patents Act. 
  8. Para 3(iii) of Form-27 reads: “State Whether public requirement has been met partly / adequately / to the fullest extent at reasonable price.” This reference in Form-27 ought to be deleted altogether since subjective evaluation of these criteria is unnecessary, fallacious and burdensome. 
  9. The nature of arbitrary questions asked in the Form 27 could lead to further misinterpretation if meeting the public requirement may be construed as a false statement which may lead to punishment with fine and/or imprisonment under Sec 122. 
  10.  Form 27 model is non-existent for inventions pertaining to ICT sectors and others, where on product is not based on one patent, but covered in portfolio of patents. The existing working statement is filed individually for each patent. 

After receiving the comments, the IPO held a stakeholders meeting at the Patent Office, Delhi on April 6, 2018 where representatives from Indian IP law firms, pharmaceutical and technology companies, non-profit organisations, research institutions etc participated. FICPI, India was represented in the said meeting through its representative. After a prolonged discussion, the Controller General (CG) summed up the meeting by observing that since the requirement to file the working statement is mandated by the statute, it can not be done away with at this stage, without legislative amendments by the Parliament. However, in recognition of the concerns of the stakeholders, the CG suggested that a revised format of “Form 27” may be proposed by the stakeholders which, in their opinion, may address most, if not all, of the concerns they have regarding the content and format of the Form. The CG also affirmed that after receipt of the revised format of Form 27, it may be discussed further and a final format may be decided upon. The deadline to submit such revised Form 27 was fixed to April 13, 2017.  

FICPI-India, in consultation with its members, prepared a revised Form 27 and submitted it to the IPO with a recommendation that a Form similar to such revised Form 27 may be adopted.

The revised Form submitted by FICPI-India may be accessed here: Changing paradigm of the patent working statement requirements in india.

Further update on this crucial issue follows

Author: Swarup Kumar

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