The very foundation of the patent system is a quid pro quo – a set of exclusive rights granted to a patentee in exchange for inter alia the patentee’s duty to fulfil the society’s reasonable requirements in relation to the invention (including the ‘working’ of the said invention within the jurisdiction). The Indian Patents Act (the ‘Act’) outlines a fairly distinctive mechanism to ensure that patentees discharge this duty. Relevant extracts from the Act which set out the general principles in relation to this mechanism (commonly referred to as ‘Patent Working’) are set out below:
“Section 83
……regard shall be had to the following general considerations, namely;—
(a) that patents are granted to encourage inventions and to secure that the inventions are worked in India on a commercial scale and to the fullest extent that is reasonably practicable without undue delay;
…………..
(f) that the patent right is not abused by the patentee or person deriving title or interest on patent from the patentee, and the patentee or a person deriving title or interest on patent from the patentee does not resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology;
………….
Section 146(2)
……..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.” (Emphasis added)
In practice, patentees (and licensees) are required to file a Patent Working Statement [in Form 27, as prescribed in the Patents Rules (the ‘Rules’)], annually, by 31st March of every year. Refusal or failure to file the said Statement shall be punishable by a fine of up to Indian Rupees Ten Lakhs (i.e. approximately USD 16,000, at the prevailing exchange rate).
Further, furnishing false information in the Statement shall be punishable by imprisonment (which may extend to six months), by fine or both. A host of leading patent practitioners and scholars have consistently argued that this is an absolutely critical mechanism that ought to be implemented in letter and spirit. Be that as it may, multinational corporations have often criticized the Patent Working requirement and have attempted to circumvent it, skating on thin ice in the process.
One mode of attempted circumvention often adopted by patentees is as follows: to argue that – where a patent has been licensed out, and the relevant licenses are ‘confidential’ in nature – details enclosed within should not be provided to the Patent Office; consequently, Form 27 cannot be filed!
This issue, amongst others, came up for consideration before the Delhi High Court in Shamnad Basheer v. Union of India and others W.P.(C) 5590/2015. In its decision dated 10th January 2018, the Court held as follows: in the given context, all that patentees are required to set out in Form 27 are details of any licenses and sub-licenses. Consequently, this information certainly cannot be termed as ‘confidential’ and therefore, the Patent Office has to treat suppression of such information as failure to comply with the requirements of Section 146 of the Act. Further, the Court directed the Patent Office to take action against patentees who do not furnish the required information.
While an appeal may be filed against this decision to the Supreme Court, the current position has been set out clearly – it is mandatory for patentees to promptly file the annual Working Statement with the Patent Office. Indeed, it is advisable for patentees to file the said Working Statement with the assistance of Patent Agents to ensure that all local requirements and formalities are duly adhered to and complied with.