Indian Government Significantly Dilutes Patent Working Disclosure Norms

As our readers may recall, in June last year, the Government had published a draft amendment to Form 27 for comments. The amendment exercise was undertaken pursuant to the patent working PIL filed before the Delhi High Court by Prof. Basheer in 2015. The Court had disposed of the PIL in April 2018, directing the Government to complete all steps towards effectuating necessary amendments to optimise the patent working provisions within strict timelines. As per its undertaking, the Government had agreed to publish the amended version of Form 27 as approved by the competent authority (DIPP) on or before September 6, 2018. After an enormous delay of almost two years, the Government finally published the revised version of the Form last month, as part of the Patent (Amendment) Rules, 2020.

Although the revised Form is better than the draft one published last year, it is unfortunately worse than the previous Form. Instead of strengthening the patent working disclosure norms, the new Form significantly dilutes these norms further and kills the spirit of what Form 27 is meant to achieve, thereby defeating the entire point of this amendment exercise.

A table comparing the amended Form 27 with the proposed Form and the previous Form can be viewed here.

Background

Importance of patent working disclosure requirement and Form 27

A law firm representative at one of the Form 27 stakeholder consultations I attended earlier this year, vehemently asserted that the purpose of granting patents is to incentivise innovation and not to ensure that patented inventions meets the requirements of the public at reasonable prices. However, contrary to this belief that many others may also hold, the purpose of Indian law in granting patent monopoly is not only to encourage innovation, but also to ensure that the benefit of the innovation reaches the public. This is clear from the ‘General principles applicable to working of patented inventions’ enshrined under Section 83 of Patents Act, 1970 (in particular, see sub-sections (a) and (g)).

Accordingly, the law imposes on patentees/licensees the duty to work the patented invention in India and ensures that it is accessible to the public, both in terms of availability and affordability. The failure to fulfil this duty can trigger a penalty in form of compulsory licensing (under section 84) or even revocation of the patent (under section 85). It can also result in refusal of an interim injunction in favour of the patentee in an infringement suit. The disclosure of information on patent working and access to it thus holds critical importance for public interest. Accordingly, Section 146(2) of the Act r/w Rule 131 of the Patents Rules, 2003, uniquely, requires every patentee and every licensee to submit an annual statement disclosing the extent to which they have commercially worked the patented invention in India to the Patent Office, in the format specified in Form 27. ­­

Blatant non-compliance and Prof. Basheer’s PIL seeking strengthening and stricter enforcement of norms

However, as revealed by an RTI investigation conducted by Prof. Basheer along with Sai Vinod in 2011 and also an extensive­­­­ survey conducted by him later, this important statutory mandate has been blatantly disregarded by patentees/licensees and the Patent Office has failed to initiate any action against them.

There’s also been considerable pressure from US Government and MNCs to effectively do away with this requirement, as can be seen from USTR Special 301 reports and the submissions made by the USPTO and various industry associations to the Indian Government.

In 2015, Prof. Basheer filed a PIL before the Delhi High Court in 2015 seeking a stricter enforcement of patent working disclosure norms. The PIL also suggested critical changes to the Form 27 format and sought appropriate directions from the Court to strengthen these disclosure norms. For more on the background of the PIL and the role of patent working disclosure norms, please read Prof. Basheer’s article ‘Making patents work: of IP duties and deficient disclosures’ published in the Queen Mary Journal of IP and our previous posts here.

Stakeholder consultation and amendment of Form 27

During the course of the court proceedings, the Central Government acknowledged that the existing Form 27 was woefully inadequate to serve the purpose and objectives of the Patents Act (see here and here). In view of a categorical undertaking by the Government to effect appropriate amendments to Form 27 and allied provisions within a period of 1 year, the Court disposed of the matter in April 2018.

As part of the amendment exercise, the Government had invited comments from stakeholders in March 2018 and also held a consultation meeting in April that year. The comments received were published on the Patent Office’s website pursuant to an order passed by the Court directing it to do so in order to allow the stakeholders to participate in the process effectively. (All comments submitted can be viewed here and here. The submission by Prof. Basheer, Sai and me along with the suggested Form 27 format sent by us later can be viewed here and here). After a huge delay of 8 months, the Government published the draft amendment to Form 27 in May last year, inviting objections and suggestions from the public. However, unfortunately, it did not publish the comments it received this time. (Our submission on the proposed changes to Form 27 can be viewed here.)

Subsequently, in February this year, the Government held a meeting with selected stakeholders for further consultation. The meeting was attended by representatives from various law firms, companies and industry associations. Strangely and worryingly, however, I couldn’t spot any other representatives from civil society. Not even any of those who had earlier submitted comments and also attended previous stakeholder consultations. Since the names of the invited stakeholders were not made public, one can’t say whether they were not invited or they chose to not attend. Nor can one say whether any of them had even submitted comments on the proposed amendment, since the comments were also not made public as mentioned above. The consultation was thus predominantly focused on the interests and concerns of the patent holders. During the meeting, we’d requested the Government to publish the comments online and we were assured that they’ll soon be uploaded. However, despite the assurance, the comments haven’t been published on Patent Office’s website till date.

Finally, after an inexplicable delay of around 2 years, the Government notified the amended Form last month.

New Form Seeks Even Lesser Information than the Previous Form

The new Form is certainly an improvement over the Form proposed by the draft amendment last year, as it has reinstated the requirement to state the reasons for not working the invention and steps being taken towards working the invention (with an arbitrary word limit of 500 words though as discussed later in the post). The proposed Form had replaced this requirement with that of stating only the “justification for not working”.

However, apart from this, it continues to suffer from the same problems as that we’d pointed out in an earlier post on the proposed Form. Instead of seeking more elaborate details in respect of the information that the previous Form called for (as suggested in the PIL), it has done away with the requirement of proving a lot of such important information altogether, thereby damaging the core essence of the patent working requirement and the Form 27 format.

The patentees and licensees are no longer required to submit any of the following information under the new Form:

1. Quantum of the patented product manufactured in India or imported into India;
2. Country wise details of the value and quantum of the patented product imported into India;
3. The licenses and sub-licenses granted during the year; and
4. Statement on whether public requirement has been met at a reasonable price.

Quantum of the invention

There is no justified rationale to exclude the information on the quantity or the total units of the patented invention manufactured and imported in India. This data is critical in ascertaining the extent of the working of the patent and plays a significant role in enabling the compulsory licensing regime. For instance, Natco was able to present a persuasive case for grant of a compulsory license largely because of Bayer’s disclosures through Form 27. Without the information on the actual quantity of Sorafenib (Nexavar) drug manufactured and imported by Bayer,­­ it would have been impossible to ascertain whether the patent had been worked in India and whether it had satisfied the reasonable requirements of the public or not. Exclusion of the requirement to submit this information defeats the entire purpose of seeking submission of this Form. And indicates that the Government isn’t taking patent working disclosure seriously and leaning towards interests of patent holders.

Extent of meeting the public requirement at a reasonable price

Instead of calling for more particular information in this regard (such as estimated demand of the patented invention or product, extent to which the demand has been met, and the details of any special schemes or steps undertaken by the patentee to satisfy the demand) as suggested in the PIL, the new Form has omitted this requirement altogether. Without such information, it would be impossible to determine if the invention has been sufficiently made available and is affordable to the public.

Licenses and sub-licenses granted during the year

Again, instead of seeking more specific and elaborate details­­­ in this regard (such as names of licensees and broad terms of the licenses) as suggested in the PIL, the new Form has done away with this requirement altogether. Now, the patentees/licensees are not required to even disclose the very existence of licenses/sub-licenses in the Form. This is despite the Court having clarified that a patentee could not, under the guise of confidentiality, refuse to disclose the existence of licenses and licensees’ names as public disclosure of this information is anyway mandated under Section 67 r/w Section 72 of the Act. In fact even the licensing terms are to be disclosed to the Patent Office under Section 69, though they can be requested to be not disclosed to the public except under a court order.

The removal of the requirement to disclose licensing details means that the patentees and licensees will merely be self-certifying that they have ‘worked’ the patent without backing the claim by data on how they have worked the patent, including through a set of licenses/sub-licenses.

Without disclosure of information on the public requirement of the invention, the quantity manufactured/imported, and the quantity available in India, details of the licences granted etc., it would be impossible to objectively determine whether the patented invention has been worked in India and whether it is sufficiently available to the public at a reasonable price. Disclosure of merely the information on approximate revenue or value accrued from the invention that the new Form solely requires, particularly in the absence of the disclosure of its per-unit price, will not enable this assessment. This renders Form 27 meaningless and our patent working disclosure norms redundant.

Word limit offers an additional escape route!

In addition to requiring lesser information, the new Form restricts the amount of even the little information that it seeks. Like the proposed Form, it has prescribed an arbitrary word limit of 500 words for the statement on reasons for nor working and the steps taken towards working the patent. There’s no rationale for imposing a word limit. As discussed in the earlier post, this will prevent “the patentees/licensees from submitting all information that may be necessary for explaining why they have not worked the patent and what steps they have taken (if any) towards working the patent. Further, it may also allow crafty patentees to supply minimal obscure information and then claim that they couldn’t ‘tell it all’ owing to the word limit.”

Other Changes

1. As discussed in the post on proposed Form, the critical part of the previous Form 27 i.e. Paragraph 3, which included even the question on whether the patent has been worked or not, merely asked the patentees/licensees to “Give whatever details are available”. In the revised Form, the words “Give whatever details are available” have been removed (see paras 3, 4 and 5). While this may appear to be a mere change in format, it does, to some extent, mandate disclosure of the information sought in slightly stronger terms.

2. The previous Form asked for the ‘value of the patented product’ manufactured in India and imported from other countries, but it failed to capture the actual sale of the product in India as it was not clear what is meant by ‘value’ of the product. The revised version brings in clarity by instead asking for the ‘approximate revenue/value accrued in India to the patentee/licensee from the patent through manufacturing in India and importing into India. This is, however, just a slight improvement and still does not address the concerns raised in the PIL. For instance, the Form still does not mandate disclosure of the per-unit price of the invention and has done away with even the disclosure of the quantum of the invention manufactured/imported. This renders the sole information on revenue/value accrued insufficient to assess whether the invention has been made sufficiently available to the public at a reasonable price.

In addition to the statement of revenue/value accrued, the new Form also asks for a ‘brief’ to be given in respect of it. However, it is unclear as to what is meant by it and what information is exactly sought in this newly added section.

Furthermore, unlike the previous Form, the revised Form calls for working information not only in respect of product patents but also process patents. Instead of the ‘value of the patented product’, the new Form asks for ‘revenue/value accrued in India to the patentee/licensee from patent number(s)’, thereby requiring information in respect of both patented products and patented processes.

3. Unlike the previous Form, the new version allows a single Form to be filed in respect of all related patents (owned by the same patentee/s) to be made in the same Form, where the revenue/value accrued from a particular patented invention cannot be derived separately from the revenue/value accrued from related patents. Disclosure of all related patents for each patent is critical especially in the telecommunications and other technology sectors where often there are multiple patents covering the same product. Non-disclosure of this information adversely impacts innovation and competitors significantly, as it unduly increases their search costs in all cases where there are potentially multiple patents covering the same product. However, unlike as urged in the PIL, the Form does not mandate such disclosure and only gives patentees/licensees an option to do so, that too only in cases where the value accrued from a patented invention cannot be derived separately. This makes the filing easier for patentees/licensees, but fails to reduce the undue search costs for othe­­­­rs.

The Form also doesn’t specifically require the patentees/licensees to disclose all products, technologies and applications where the same patent is embedded, as is often the case in the high technology sector. Due to this, as pointed out the PIL, patentees typically disclose information only in respect of one of them, making it difficult to ascertain the true extent of the working of the invention.

4. The amended Form categorically states the Form is required to be filed by both the patentee/s as well as the licensee/s (exclusive or otherwise). If there are two or more patentees, they may file the Form jointly; however, each licensee is required to file the Form individually. Although Section 146(2) of the Act clearly requires every patentee and every licensee to file Form 27, this clarification is important in light of the confidentiality claim made by Ericsson in 2018.

5. Instead of every calendar year, Form 27 is now required to be filed in respect of every financial year, as per the amendment to Rule 131(2) of the Patent Rules. The amendment, puzzlingly, also gives patentees/licensees an additional 3 months to file the Form. They can now submit the Form within 6 months from the expiry of the year instead of within 3 months as required earlier. The need for giving more time is not clear and again reflects a leaning towards the interests of patentees/licensees.

Conclusion

Pursuant to Prof. Basheer’s PIL, the Government had undertaken before the Delhi High Court to effect appropriate amendments to Form 27 in order to strengthen it. However, as explained above, it has shockingly weakened the Form further, thereby defeating the entire purpose of amending it. Instead of seeking more detailed information as suggested in the PIL, the new Form has unjustifiably done away with the disclosure of important information on quantum of the invention manufactured/imported in India and licenses/sub-licenses granted, which was mandated by the earlier Form. The only information that the Form now seeks is (a) whether the patented invention has been worked or not; (b) the value/revenue accrued in India from the invention, if it has been worked; and (c) the reasons for not working and steps being taken towards working, if the invention has not been worked. This information is grossly insufficient to determine the extent to which the invention has been worked in India and whether it is available to the public in sufficient quantity at an affordable price.

The amended Form, therefore, renders the statutory public interest measures of compulsory licensing and revocation, which are triggered by non-working of the patent, ineffective and defeats the purpose of India’s unique patent working disclosure requirement. The inability to invoke these measures in appropriate cases due to lack of full disclosure of patent working information would ultimately prevent the public from accessing patented inventions and benefiting from them. Particularly, in the cases of patented medicines, such lack of access induced by a weak Form 27 would cause an adverse impact on public health. The Government must thus reconsider the amendments made and revise the Form again to restore and further strengthen the effectiveness of the patent working and disclosure norms.