Innovation Patent

Patent Working in India: Delhi HC issues notice in Shamnad Basheer v. Union of India & Ors. – III

[* Long Post]

Significance of ‘patent working’ norms

I have already set the factual and theoretical background for this discussion. Patents are not ‘inherent’ rights enjoyed by an inventor. Whatever be the justifying rationale, it is a framework intended to result in ‘net’ benefits to the society. The Writ Petition rightly called it a “social bargain” wherein the benefits are expected to exceed the costs incurred by the society (in the form of a monopoly). As per the Patents Act, 1970, the patentee will have to ‘work’ the patented invention for the public benefit, by ensuring that patented goods are available in adequate quantities and for a reasonable price. If the patentees do not abide by their end of the bargain, the Indian legal framework provides for penalties in the form of compulsory licensing and revocation of patent. Section 83 of Patents Act, 1970 encapsulates the foundational philosophy of Indian patent regime.

The Indian Patent Act, 1970 contains several sui generis provisions. While TRIPS sets minimum safeguards for intellectual property protection, it also incorporates certain flexibilities. The Indian Patents Act, 1970 has evidently used some of these flexibilities. Section 3(d) is one such instance. I don’t know who drafted this provision. But I do know and can vouch that it is an excellent output of prescient and conceptually sound mind(s). Developed nations may argue that the Indian patent law framework is weak. At this juncture, considering our growing economy, status of S&T and pharmaceutical industry, India cannot have a patent law framework similar to United States. Indeed we have a patent law framework which has made use of TRIPS flexibilities and at the same time TRIPS compliant. The unhappiness of several developed countries especially United States is well known in this regard. But has anyone gone to the WTO arguing that our patent law is not TRIPS compliant in spite of all these pressure tactics?


I shall analyse the significance of ‘patent working’ norms. Candidly speaking, the Writ Petition has brought this out well and I don’t have anything different to offer. I shall make some observations in the second half of this post. In the light of arguments presented here, I believe that the effects of indecisiveness and inefficiencies of the Indian Patent Office will ipso facto unravel before you. Ideally speaking, on a matter like this which is a classic example of flagrant violation of statutory provisions, one should not have been pushed to file a Writ Petition. I shall restrain myself here with a brief note on ‘institutional ethics’.

Safeguards in Patents Act, 1970

The Patents Act, 1970 authorizes the Union of India to issue a compulsory licence against any patent in force. Compulsory licence can inter alia be issued if the following conditions are satisfied:

(a)  the reasonable requirements of the public with respect to the  patented invention has not been satisfied; or

(b)  the patented invention is not available to the public at a reasonably affordable price; or

(c)  the patented invention is not worked within the territory of India.

Furthermore, as per section 85 of the Patents Act, 1970, the Controller can go to the extent of revoking a patent if the patented invention has not been worked in India even after two (2) years from the  date of grant of the compulsory licence. Other safeguard provisions include compulsory licensing provisions, parallel import provisions and Bolar provisions.

PrintThe Writ Petition made some compelling arguments in this regard: “It is humbly submitted that without full and complete patent working data, the compulsory licensing and revocation provisions will come to naught. It bears noting that NATCO relied significantly on Bayer’s Form 27 submissions for Nexavar® in order to demonstrate that Bayer was not able to satisfy the reasonable requirements of the drug in so far as the public were concerned. It also relied on the FORM-27 submissions to demonstrate that the patent was not being “worked” (manufactured) in India, an argument that the Controller of Patents agreed with. Thus, patent working data is critical for triggering the compulsory licensing and revocation provisions. If this trigger is made more difficult by keeping the data secret and opaque, it will ultimately affect consumers by denying them potentially more affordable technologies and goods, a concern most starkly felt in the area of life saving/extending medicines, such as Bayer’s Nexavar.”

Patent troll

Form – 27 acts as an effective check against patent trolls. As the Writ Petition noted, “a patent troll also known as a Patent Assertion Entity (PAE) or a Non-Practicing Entity (NPE), refers commonly to a Patentee who is uninterested in working the patent by translating  it into an innovative product or technology that will benefit society at large. The sole purpose of a Patent Troll is to use the patent as a rent-seeking instrument from legitimate innovators who undertake product development and are prone to accidentally stepping on the toes of the troll patentee.” The Writ Petition rightly cited the case of Ramkumar’s patent in this regard and the subsequent revocation of that patent by IPAB. [We have extensively covered Ramkumar’s patent before.]

Competition Law and Abuse of Dominance

As I noted earlier, in case of patents, there is a thin line of difference between serving public interest and undermining public interest. Section 4 of the Competition Act, 2003 Section 4 of the Act prohibits a dominant player in the market (eg., a patentee with a clear dominant share of the market) from engaging in any of the following practices:

(a)  imposing unfair or discriminatory conditions for sale or price to access the patented product;

(b)  limiting or restricting production or development of the patented product thereby causing prejudice to consumers;

(c)  denial of market access;

(d)  Leveraging dominance in one market to enter or protect other relevant markets;

As the Writ Petition noted, “the Competition Commission of India (‘CCI’) has, in the recent past, initiated investigations against Ericsson Inc., on allegations of abuse of dominant position in their patent licensing practices covering AMR, 3G and EDGE technologies. Needless to state, the public disclosure of working information is absolutely critical for the CCI’s investigation and assessment of the full extent to which Ericsson has used and worked the patents till date. The Petitioner was, however, shocked to find out that Ericsson refused to disclose the details of  patent working and licensing practices  under the garb of confidentiality.  In other words, Ericsson did not include any of these details in its FORM-27 filings.

Reading down of statutory provisions & Defective E-filing facility

The Writ Petition highlighted the unjustified reading down of statutory provisions and thereby not insisting on filings by Licensees. It also highlighted the defective e-filing facility wherein the very statutory mandate is diluted by the Respondent authorities – as it doesn’t provide for filing certain information. In the light of above mentioned facts, the Writ Petition sought a writ of mandamus to compel Respondent authorities to perform their statutory duty and constitute an expert committee to improve the current format for ‘patent working’ disclosure.


As evident from this post, Form – 27 is not just another form. It is sine qua non for an effective patent law framework. As the regulator seems to be ‘sleeping’, the patentees have clearly forgotten / neglected their legal obligations. As the Writ Petition rightly argued, Form – 27 is highly defective. The e-filing facility doesn’t require the declaration of all relevant particulars mandated by law. It must be noted that the Writ Petition presented all the arguments based on verifiable data. As to summarise the findings in additional affidavit:

F-27s %
QUANTITY     Undisclosed 79 38.3
Indeterminate Units 71 58.1
VALUE Undisclosed 84 38.3
Foreign Denomination 4 0.1
MANUFACTURE Location Undisclosed 109 50.3
Undisclosed Details 33 50.4
NON-WORKING Reasons Undisclosed 28 66.7

This statistical analysis was prepared after examining the Form – 27s issued in response to RTI applications (for the period 2008 – 12). Kindly note that the statistical analysis is based on all three sectors; pharmaceutical industry (2008-2013), telecom (2012 & 2013) and public funded research (2012 & 2013).

As to make things clearer, consider the case of drug titled “Delamanid”.  Presently, Drug Resistant TB and Extreme Drug Resistant TB are serious public health challenges faced by the nation. Delamanid is one of the two new anti-tuberculosis drugs to be discovered in decades. It is extremely crucial for a country like India. The concerned company Otsuka (patentee) already enjoys three patents in India relating to the drug. Three seem to be under examination. As per their Form – 27s, their patents are not being worked as “market research is in progress”. (600/KOLNP/2005, 1647/KOLNP/2007, 9790/DELNP/2007, 1255/KOLNP/2008, 7240/DELNP/2012, 824/KOLNP/2006). As per Form – 27, 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. A mere statement that “market research is in progress” is an evasive response; another instance of defective compliance vis-à-vis Form – 27 requirements. This may be a case that can attract ‘safeguard provisions’.

The Indian Patent Office: an office shrouded in mystery and inefficiency

ethicsDr. B.R. Ambedkar, the chief architect of Indian Constitution observed as follows in the Constitutional Assembly Debates: “I feel that the constitution is workable, it is flexible and it is strong enough to hold the country together both in peacetime and in wartime. Indeed, if I may say so, if things go wrong under the new Constitution, the reason will not be that we had a bad Constitution. What we will have to say is that man was vile.”  Prof. Amartya Sen in ‘The Idea of Justice’ echoed the same sentiment, in the following words: “…There is no automatic guarantee of success by the mere existence of democratic institutions…The success of democracy is not merely a matter of having the most perfect institutional structure that we can think of. It depends inescapably on our actual behaviour patterns and the working of political and social interactions. There is no chance of resting the matter in the ‘safe’ hands of purely institutional virtuosity. The working of democratic institutions, like all other institutions, depends on the activities of human agents in utilizing opportunities for reasonable realization…” In other words, both ‘institutional virtuosity’ and ‘individual virtuosity’ are equally important and one cannot replace the other.

Prof. Basheer, while releasing the Spicy IP report titled “RTI Applications and “Working” of foreign drugs in India?” noted the  painstaking RTI process in his post on 07 April 2011: “The RTI process was a very arduous one, with the patent office refusing information or claiming missing files in some cases. We had to resort to the appellate procedure in almost all cases. However despite the passage of a good 6 months (we began the RTI process in September 2010), we are yet to receive the complete information!

If seasoned IP lawyers could not procure this information with ease, one can only imagine the plight of the common man! The Patents Act provides the Controller with the authority to publish such information on a regular basis on the patent office website. In the interests of transparency and to help avoid arduous RTI routes in future, SpicyIP requests the CG to do take steps to digitise and publish this information.” It is to be noted that RTIs filed by Prof. Basheer were initially rejected. Appeals were filed and subsequently, information was provided. Based on the information provided, the aforesaid report was prepared in 2011.

Later, the Patent Office prepared a publicly accessible electronic database of Form – 27s which contains data for the period 2012-13. RTIs were filed for seeking information on Form – 27s during the period 2008 – 12. Chennai IPO provided the information under RTI. Bombay IPO & Calcutta IPO provided the information under Patents Rules. Delhi IPO rejected the application stating that RTI is inapplicable. A writ was filed in 2014 challenging the aforesaid rejection of Delhi IPO. In 2014, we reported that Delhi HC issued notice regarding the same. The chart mentioned above is based on the information provided by Chennai, Bombay and Calcutta IPOs. As to expand the scope of compliance, the team identified key players and their patents in Telecom and Public Funded Units and examined their compliances vis-à-vis Form – 27s for the period 2012-13 using the electronic database mentioned above.

In short, the system is made deliberately difficult and rigid. It seems transparency is anathema to the Indian Patent Office. The information is not forthcoming. There is a law in place. And there is a statutory body in place. But the body refuses to enforce the law. If the case falls on the fringes of law, it is an altogether different matter. But that is not the case here. The great jurist Austin would have definitely gasped over his definition of “law” viz., law is a command of the sovereign backed by sanction!!! Where is the sanction here? Just in theory, not in practice.

 As stated earlier, the instant fact situation should not have even led to a Writ Petition which sought the intervention of High Court to compel the Respondents to fulfill their statutory duties. Is this (only) sheer inefficiency? It may be noted that in response to an RTI application filed by the Petitioner, pertaining to certain pharmaceutical inventions, the Respondents admitted that no action has been taken against any patentee or licensee for non-compliance with the Form-27 disclosure mandate. Without making any imputation, I intend to reiterate the observations made by Prof. Amartya Sen on ‘individual virtuosity’ and ‘institutional virtuosity’. I hope this case leads to its ‘logical’ conclusion and act as a deterrent. There is an emerging school of thought in Indian public administration discourse favouring an “outcome-oriented” performance to that of “process-oriented” one. I guess its high time we introspect and debate in this regard.

Note that India is emerging as a major leader of developing world in IP arena. India is trying to give a ‘developing world’ narrative to the IP discourse and rightly so. Failure in this regard will not just be an India-specific one. The significance of IP discourse will only enhance in the coming years especially in the context of climate change negotiations and public health challenges. ‘Patent working’ is quite important in this regard. And hence, the significance of Form-27 and this Writ Petition.

Mathews P. George

Mathews P. George

Mathews is a graduate of National University of Juridical Sciences, Kolkata. His interest in intellectual property was kindled when he bagged the second position in his second year of Law School (in the prestigious Nani Palkhiwala Essay Competition on Intellectual Property). His stint as a student of Prof. Shamnad Basheer further accentuated his interest in intellectual property. Winner of almost a dozen essay competitions in his Law School days, he was involved in various research and policy initiatives relating to intellectual property. Mathews is, currently, based out of Munich, Germany. He had earlier done his LLM in 'IP and Competition Law' from Munich Intellectual Property Law Centre (jointly run by Max Plank Institute for Innovation and Competition, University of Augsburg, Technical University of Munich and George Washington University, Washington).


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