Patent

Contd…Delhi High Court rules on Section 47: Provides the Indian Railways a carte blanche to bust patents


Continuing from the last post on Justice Murlidhar’s Order, this post will attempt to understand the Delhi High Court’s interpretation of Section 47 of the Patents Act. As already explained in the earlier post one of the primary arguments of the Defendants was that Defendants 2,3 & 4 were manufacturing the infringing product on behalf of Defendant No. 1 (The Ministry of Railways) who had supplied the drawings of the product.

Defendants Arguments: It was argued by the Defendants that Section 47(1) which states that the grant of a patent under the Patent Act shall be subject to the condition that any machine appartus etc. may be imported or made by or on behalf of the Government for the purpose merely of its own use exempts the Railways and its agents from being held liable for infringement under Section 48 of the Patent Act.

Plaintiffs Arguments: The Plaintiffs decided to counter this by repeatedly stating the contents of Section 156 of the Patent Act i.e. the patent shall bind the Government. They also seemed to have put up a feeble defence on the basis of the Bombay High Court decision in the Garware Wall Ropes Ltd. Case. This case is discussed below.

The Delhi High Court’s ruling: In its Order the Delhi High Court sided with the Defendants by ruling that Section 47(1) would bar the Plaintiff from “seeking to prevent Defendants 2 to 4 from making the subject device since it is going to be manufactured and supplied only to the Railways for its own use”. The Court therefore concluded that the Ministry of Railways was the ‘Government’ as understood by Section 47 of the Act and that the infringing products in question were being manufactured on behalf of the Government and for the use of the Government itself. Going by this interpretation of the Delhi High Court one would have to conclude that the Government and its undertakings are completely exempt from infringement proceedings thereby implying that the Government and its agents are not required to pay a single penny in royalties to any patentee.
Clearly the above interpretation is a very suspicious, if not alarming interpretation, of the Patents Act. The Delhi High Court has basically given the Government and its undertakings a carte blanche to bust any patents that they so desire.

I’m still scratching my head trying to understand how and why, both, the Plaintiffs and the Delhi High Court failed to make the obvious distinction between Section 47 and Section 100 of the Patent Act. This distinction was made in an excellent order of the Bombay High Court in the case of Garware Wall Ropes Ltd. v. A.I.Chopra 2009 (111) Bom LR 479.
Sai had covered this Order in an equally excellent post that can be accessed here.
The Order itself can be accessed here.
The most crucial distinction between Section 47 and Section 100 is that while Section 47 does not requires the payment of any royalty, Section 100 requires the Government to pay a certain royalty for the use of a patent.
The Garware Decision: In its Order the Bombay High Court distinguished between these provisions on the grounds that while Section 47 allowed the Government to use a a patent ‘merely of its own use’, Section 100 of the Act uses the term ‘for the purposes of Government’. As per the Bombay High Court the former implies the use of the invention directly by the Government or its Departments in performance of the duties assigned to them. The Bombay High Court reasoned that Section 47, was limited to sovereign functions and would not cover the Railways or its contractors. Although the Judge does not clearly support this aspect of its Order with enough reasoning I think he was trying to imply that the Railways was not part of the Government but was instead a Government undertaking which was carrying out a non-sovereign function. Moreover it is also important to note that while Section 99 extends the ‘Government use’ to even Government Undertakings, Section 47 uses only the word ‘Government’. As per this interpretation of the Bombay High Court, Section 100 ensured that the Railways had to pay a royalty for exploiting a patent.
If this aspect of the Order is not overturned the Indian Railways is free to bust as many patents as it wants and the same will be highly detrimental to investment in innovation in the railway sector in the country.
Prashant Reddy

Prashant Reddy

T. Prashant Reddy graduated from the National Law School of India University, Bangalore, with a B.A.LLB (Hons.) degree in 2008. He later graduated with a LLM degree (Law, Science & Technology) from the Stanford Law School in 2013. Prashant has worked with law firms in Delhi and in academia in India and Singapore. He is also co-author of the book Create, Copy, Disrupt: India's Intellectual Property Dilemmas (OUP).

4 comments.

  1. Avatarmnbvcxzaq1

    well, my only comment: in the last 2 years, the d h c has delivered a series of judgments, based on imperfect understanding of the law/principles in patent matters. i just wish it matures faster! also, even the purfunctory application of mind (in not being able to see the distinction between svoereign n non-sovereign functions of govt.) is beyond my comprehension. i wonder whether it is the sheer workload that is leading to such shallow judgments (due to lacj of time)!!
    -aditya kant

    Reply
  2. AvatarJ. Sai Deepak

    Hi Prashant,
    Great post! If one were to extend the Delhi High Court’s interpretation, it would mean that every invention which is capable of being put to use by the Government or any of its undertakings in every sector, would be available for “Government Use” and that too at a national scale, without the patentee getting a shilling. This would have the effect of bringing a great number of all the patents granted within the scope of “Government Use” which defeats the very purpose of S.156. I think the Court must be asked to clarify that if the use by railways amounts to “government use”, what uses would fall under the scope of “for the purposes of government” under S.100. It would probably help us stem future litigations on these sections if were to be clarified that S.47 refers to use of inventions as aids of governance or administration, but not to provision of services or infrastructure to the public.

    Bests,
    Sai.

    Reply
  3. Avatarshambu

    Great to see this post , i was wondering if anyone would like to introduce any products / improvements to the normal rail commuters which could benefit the traveller – how and where to be approached ? i have some recommendations which i believe can give some good betterment for the traveller , but i wonder the effort will that be given any importance ? if the concept is not new , but then the concept is not in use and can give some importance will Indian Railway listen to adopt the same ? will they safeguard and get business to their wellwishers for every time or as a person who is giving the idea will be treated as an inventor of the same and will be benefitted with any kind or Royalty income or the rights for manufacturing and implementing ??? just wondering as every patent / idea if for government use will be no benefit for the person who introduce the concept >> ???

    Reply
  4. Avatarsrinivasa rao

    Great post. I was surprised by the decision of delhi high court.The idea behind section 47 of law makers may be strengthen the hands of govt in case innovations related to medical and defence.when contractors copy the patented products through for govt and make profits in the contracts directly and indirectly how they are exempted from paying royalties. govt directly manufacturing shall also be not exempted this will be a great blow to innovators making innovations for the Govt. Infact the govt has to take over the patents and pay royalty to the innovators working for the govt to see india to prosper

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