In a case that will have major repercussions on the future of the patent and innovation ecosystem in India, the Delhi HC recently issued notice to the Union of India in Shamnad Basheer v. Union of India & Others. The case deals with the failure to enforce statutory provisions relating to the disclosure as to how patentees have worked their inventions. This is a unique provision in the Indian Patents Act, 1970 (section 146(2)), and year after year, patentees are mandated to submit information (through Form 27) on the extent to which they’ve worked their patent i.e converted it to an innovative product and supplied the product to the market in a manner that satisfies the reasonable requirements of the public.
Scheme of posts
Prof. Shamnad Basheer has already given a brief background in his recent post available here. I intend to go into this issue in greater detail. In this first post, I intend to provide a brief summary of the Writ Petition to highlight some of the crucial issues raised by it. In the subsequent post, I shall discuss the jurisprudential justifications of IPR. In this context, I shall analyse the significance of ‘patent working’ norms in later posts.
My intention is to address the issue holistically keeping in mind the jurisprudential underpinnings and ramifications of the issue at hand. Though my second post on jurisprudential justifications of IPRs may appear to be off-the track on first glance, I am of the view that it is essential for understanding and appreciating this Public Interest Litigation to its fullest sense. It is important to understand and appreciate that patent is not an ‘inherent’ right enjoyed by the inventor. The natural law justification is, in fact, a weak justification in this regard. As one understands this issue holistically (especially that patent is a ‘social bargain’ and not an ‘inherent’ right), one will be able to appreciate the significance of toil and hard work which went into the drafting of this Writ Petition.
On an objective note, I would request all to go through this Writ Petition. It is a high quality work product based on cogent and verifiable data. This is purely an “academic” observation from an “uninterested” party to this Writ Petition.
The Writ Petition deals with the ‘commercial working’ of certain patented inventions in India, particularly in relation to three key areas, namely: (i) pharmaceutical drugs (particularly life-saving drugs for fatal diseases such as Cancer, AIDS, Diabetes and Hepatitis); (ii) telecommunication technology and; (iii) inventions stemming from public sponsored research and development.
The Petitioner examined the statements on commercial working submitted by patentees and licensees every year, in accordance with the prescribed format specified as ‘FORM-27’ under Schedule II of the Patent Rules (in short “Form-27 filings”). It is to be noted that Form – 27 filings inter alia require the following information: (a) whether the patented invention has been worked on a commercial scale within India for the year in question; and (b) if the patented invention is not worked, the reasons for such non-working. Form-27 disclosures have taken centre stage in several patent litigations including the Bayer v. Natco compulsory licensing dispute wherein Natco used Form-27 (working data) submissions of Bayer to demonstrate that Bayer’s drug was reaching just 2% of the patient population.
Section 122(1)(b) authorizes the Respondent authorities to impose fines which may extend upto INR 10,00,000 (Ten Lakh Rupees) against errant patentees and licensees for failure to comply with the mandate provided under Section 146 of the Patents Act and Rules thereunder.
Massive discrepancies with Patent Working Disclosure
The Writ Petition highlights massive discrepancies in the light of verifiable data. The errant patentees include Allergan Inc, Bayer Corporation, Bristol-Myers Squibb, Merck Sharp & Dohme Corp, Novartis AG and Samsung Electronics Co. Ltd. Despite the repeated reminders by Respondent authorities, patentees and licensees failed to make the relevant disclosures and ignored this important statutory mandate with impunity. The Petition highlights the following discrepancies in the light of requirements mandated by Form-27 filings:
- Non-Compliance: Approximately 35% of patentees did not bother to disclose any working information for the years 2009 to 2012.
- Defective Compliance
- Refusal to declare: Citing the example of Ericsson, the Writ Petition cites the practice of refusal to declare commercial working of patents.
- Quantum and value: If a patent has been worked in a certain year, the Form-27 declaration requires the Patentee to provide particulars, such as the quantity and value of the patented product imported or manufactured in India. Close to half of all patentees surveyed by the Petitioner (40% approximately) failed to disclose these particulars.
- Non-working: If the patent has not been worked in a certain year, the Form-27 requires the Patentees to provide reasons for such non-working and the steps being taken to redress this non-working. Over 65% (i.e., 28 out of 42) of such Form-27 filings either failed to address this query or provide a satisfactory explanation thereof. A small fraction of patentees have callously ignored this question and left the column blank.
- Mentioning Indeterminate quantity of the product
- Non-mentioning of place of manufacture
- Non-mentioning of licensing information
- Statement on reasonable requirements of the public: If the patent has been worked in a particular year, Form-27 requires the patentees to indicate whether or not the reasonable requirement of public have been met, either partly, adequately or to the fullest extent, at a reasonable price. A vast majority of Form-27 filings indicated that public requirements have been met, but failed to provide any factual data or evidence in support of such assertions. At least three patentees claimed that they met this requirement through their various Patient Assistance Programs. These patentees, however, failed to disclose the specific extent of assistance provided to patients.
In the light of aforesaid data, it was rightly noted that “the defective disclosures make a mockery of an important statutory obligation enshrined in Section 146 and Rule 131 of the Patents Act. If this practice is allowed to continue, the entire objective behind the working requirement stands defeated, thereby causing prejudice to innovation imperatives and the right of the public in ensuring that the patent is being worked for their benefit.”
Non-Compliance by Licensees
Despite the clear statutory mandate, the Writ Petition highlights the unjustified and illegal reading down of statutory provisions and thereby not insisting on Form-27 filings by Licensees.
Defects in E-filing facility
It highlights the defective e-filing facility wherein the very statutory mandate is diluted by the Respondent authorities as the e-filing facility doesn’t require the declaration of all relevant particulars under FORM-27.
Objective of the Writ Petition
Citing responses to RTI filed by the Petitioner, it highlights that despite evidence of widespread contravention of statutory provisions, the Respondent authorities have simply failed to initiate any action against errant patentees and their licensees. It is to be noted that the blatant non-compliance was already brought to the notice of the government four years ago through a similar investigation conducted by the Petitioner in a public report titled “The ‘Non-Working’ of the Patent Office ‘Working’ Requirement”. The non-disclosure of ‘commercial working’ of patents was, therefore, allowed to continue with the tacit approval of Respondent authorities.
The instant Writ Petition is, therefore, filed in public interest under Article 226 of the Constitution of India seeking a writ of mandamus or any other appropriate writ or directions, to compel Respondent authorities to perform their statutory duty under the Patents Act, 1970 and constitute an expert committee to improve the current format for patent working disclosure.