[This post is co-authored with Praharsh.]
Last week, the DPIIT published amendments to the Patent Rules, 2003, bringing changes to amongst other things, some important patent policy levers like working statement requirements, disclosure about corresponding foreign applications, pre-grant oppositions, etc. While there has been much vocal praise over the Rules in general, there has been surprisingly very little nuanced or analytical discussion of what these changes mean to the Indian Patent Eco-system as a whole (which includes more than just patentees!)
Though some of the amendments (like fixed deadlines for different procedures) appear to be useful changes that can quicken the patent prosecution timeline, some other changes are concerning. These concerns stem from both, the apparent lack of evidence-based justifications for bringing about those changes, as well as the apparent (mis)understanding that patent applicants are the only relevant stakeholder in the patent eco-system! We have previously discussed some of these amendments in a quick post here, and in this two part piece, we’ll focus only on some of the amendments we believe require much more analytical thoughts and discussion, and their impact on the functioning of the overall Indian patent regime. The first part discusses relevant changes and their implications on patentee’s obligation to disclose working statements and information about foreign applications corresponding to their Indian applications. In the second part, we look at the implications of these amendments on pre-grant oppositions.
A good patent system’s prime purpose is to ensure a strong innovation system in the country, where the benefits increase net societal welfare. One method they use to reach this goal is by granting time limited patent rights to deserving inventions. Simply focusing on increasing the number of patents does not automatically increase innovation in the country. Otherwise, why not make the patent application process a registration process instead of requiring any scrutiny!
Historically, India’s patent legislation came as the result of much careful thought and deliberation, with historic events like the Ayyangar Committee Report and India’s tough stances at the WTO TRIPS negotiations acting as torch bearers. As a result, our patent laws have sought to incentivize inventors for their novel, non-obvious, industrially applicable inventions by assuring them patent exclusivities in exchange for bringing their inventions out to society. And they do this while simultaneously prescribing certain carefully thought out safeguards ensuring societal welfare by preventing unworthy or undeserving patents, so that state sanctioned market interference power is not granted for inventions that do not contribute to this above mentioned calculus. Has this balance been maintained in these latest Rules?
Diluting the Patent Bargain
The patent bargain refers to the quid pro quo between the patentee and society, on the grant of a patent. That is that a ‘societal cost’ is allowed (by permitting monopoly rights), with the understanding that the net benefit to society will be greater than these costs (in terms of the invention being brought forward and the benefits of such innovation coming to society). What happens when this bargain is forgotten? In the context of ‘working’ the patent, the Indian Patent Act answers this clearly, by providing remedies for such patent abuse in the form of a compulsory license (Section 84(7)(d) whether patent has been worked commercially), or even a revocation (Section 85: Revocation for non-working) in limited circumstances. Indian IP jurisprudence also shows that the extent of enforcement of patentee rights are also framed by their observation of this bargain, with courts refusing interim injunctions upon evidence of this bargain being broken when a patent holder is not working their invention in India, and also not allowing others to work it in India. Section 83 of the Patents Act in particular highlights these general principles.
And Section 146(2) specifically requires “ …. 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.”
Therefore, it must be asked, why the new Patent Rules have tried to gut a provision that is central to scrutinising this patent bargain? (Note: Rules cannot legally supersede legislation)
Despite the law clearly stating that there is a requirement for statements showing ‘the extent to which the patented invention’ has been worked, the amended patent rules remove the obligation to file any information concerning commercial value/ revenue accrued to them. Instead, there is a mere yes/no approach to “if” it is being worked at all. Does importing a single product count as being worked? There’s no way of knowing, because the extent of working has been removed from the Form. And there is not even a placeholder usage of the phrase ‘commercially worked’, as required by the Act. (see image below).
While there have been discussions on what the appropriate method of checking the working of a patent, (commercial value / revenue / quantum, etc), the present amendment now simply removes all the obligations to give any data to actually show the working of the patent! Further, the requirement which used to be annual, is now changed to once in three years. So, technically, there is no reason why the importation of one cancer drug pill, once in three years, is not sufficient to say “yes, we worked our product in India!”. Is this what we want of our patent system? Remember this information was crucial in allowing the one compulsory license we have had so far, where Bayer was working “only an insignificant quantum” (as per the order) of the cancer drug Sorafenib Tosylate.
The ‘explanations’ for not working the patent also similarly show no intention of holding patentees responsible for upholding their end of the patent bargain, as the form includes a vague “exploring commercial licensing” as a reason for not working!
In case only ticking vague responses is too much of a task for a party, it must be remembered that in case any party defaults in filing this information the Jan Vishwas (Amendment) Act has substantially reduced the penalty for this by ten fold already. Therefore, one will not be wrong to argue that the present set of amendments make it even harder for anyone to take this obligation seriously anymore.
Removing Obligation to Disclose Complete Patent Information
Another safeguard that the amendment dilutes is the obligation of patentees to furnish information about the processing of their corresponding foreign patent applications. Previously, the Rules expressly stated that the Controller can require the patentee to furnish information about objections on novelty and patentability against foreign applications that correspond to their current Indian application. However, the present set of amendments removes the ability of Controllers to require this specific information. Instead, it puts the burden on them to find this information from publicly available sources, or to ask for a fresh Form 3 – and Form 3 merely asks for Country Name, Date of Application, Application No., Status of Application, Date of Publication, and Date of Disposal. In other words, the rule allowing the Controller to furnish information on novelty and patentability has been removed. Why has this been removed? Prashant Reddy has pointed out the obvious imbalance, in his post here, when he says:
“If powerful corporations with their armies of lawyers are finding this requirement “burdensome,” how are over-burdened Patent Controllers going to have the time to access this information by themselves just because it is available on public databases?
Which is more important to the Indian patent ecosystem? Ensuring that only deserving patents are granted by ensuring controllers have all the relevant information? Or ensuring that businesses that have patents in foreign jurisdictions find it easier not to disclose information that their lawyers already have, or at the least, are the ones with quickest access to this information? To be noted: there was also no requirement for this to be a black and white change. If indeed there was a difficulty that companies were facing, the discretion could’ve been toggled, rather than removed altogether.
Once again, this is something that was also discussed in the Ayyangar Committee Report (see below):
In a similar vein, the IPAB in Fresenius Kabi Oncology Limited v. Glaxo Group Limited, explained that the obligation on the applicant to disclose the information about its corresponding foreign applications is to keep a check on the activities of the Applicant. In the past, the patent office has relied on the information about foreign patent applications to reject a patent and the courts have also refused to grant interim reliefs in cases where the patentee suppressed information about foreign applications (see here).
The news has been filled with celebrations of the rising number of patent applications. Is it not relevant to ensure that Controllers are well equipped to handle this? It is noted and appreciated that the patent office is increasing its staff, but by its own admission the rate of patent applications are growing exponentially. The new arrangement increases the workload of an already overburdened patent office, it also contravenes the scheme envisaged under precedents like Tata Chemicals- HUL dispute, where the IPAB categorically refused to entertain the plea that the Examiner should itself rely on publicly available information.
In part 2, we continue the discussion, looking at the implications of these amendments on pre-grant oppositions.
Thank you, you have addressed the major changes in the new patent rules amendment. I have a slightly different take as a professional working in this field prosecuting patent applications in front of the Indian patent office and closely following the Indian patent law. As a practitioner, I cannot be more thankful for the latest changes in the Patent Rules. It reduces not just the bureaucratic burden for the Applicants, it saves so much time for the professionals like us working in the field to do the “real” work and not keep filing rudimentary instructions given by our foreign counterparts. At some point in time, the workings of the Indian patent office have to move up in the value chain and the latest amendment to the Patent Rules is a positive change in that direction. This allows the Indian patent agents to add value outside the area of merely complying with the formal requirements in front of the Indian patent office.
You have rightly pointed out in the initial phase of the blog stating that the simple focus on the increasing the number of patents or patent applications is clearly not enough. Further, the registration process without examination like what France has, is also not an ideal solution. Thus, I am with the author when he says that the grants of the patents should be for the “deserving” inventions. So how does one get to that point?
Such clarity comes from the language of the legal framework in the form of Patents Act and Patent Rules. It is the responsibility of the officials from both the Indian Patent Office and DPIIT to remove any sort of unambiguity existing in the language. The stakeholders like private practitioners should constantly be engaged with the government of India officials from DPIIT to table new statutory amendments, depending on the feedback from the practitioners’ world and taking the socioeconomic and political reality of India into account. In the absence of this, it is responsibility of the Indian patent office to publish the Manual of Patent Procedure that is updated taking the recent case law and amendments to the Patent Rules into account. I do not see the Indian patent office taking this responsibility quite seriously.
Secondly, the amendments are not just for reducing the administrative burden for the applicants, right owners and the patent agents. Some of these requirements under old rules are clearly outdated. In my opinion, Ayyangar’s Report is not a religious text and with the changing times, Indian patent system has to evolve to at least do a “catch up” with the rest of the major patent jurisdictions.
In this regard, you point out the need for the more stringent information furnishing for the statement of working under Form 27. This is a headache, for instance, for the rights owners from the software domain. During the telecom standards negotiations, the implemented standard can work from a user-end device, intermediate telecom towers and finally, at the server end or even satellites. How do you in the present case file the accurate Form 27 information for the working “within” India? Form 27 is easier to comply where the working can be easily determined for a domestic market, for instance, in pharmaceutical industry. Thus, there is some nuance there depending on the scientific/technical field under question. Same set of rules for the working requirement under Section 146(2) of the Patents Act is not practicable.
Further, dilution of filing of Section 8 requirements is also complained about. Why? The Indian patent office examiners can benefit from the freely available information from the patent office websites of major jurisdictions such as USPTO and EPO for inquiring on the status, prior art references relied upon, the applicant’s responses and so forth. The only major problem in this regard is China, which does not allow outsiders who are not Chinese patent agents to log into their portal to see the file wrapper. This can be addressed, for instance, by raising the objection in the First Examination Reports (FERs) or the subsequent ones to clearly ask for the information from CNIPA from the applicant. In such a case, I am sure no applicant can deny providing this information. It is key to note that the arrangements of information sharing between CNIPA and EPO are not working anymore under the “Global Dossier” tool as before. Thus, it is smart to retain some level of control on the information sharing from the patent office perspective regarding the parallel foreign patent applications while asking the examiners to directly visit the freely available information form the other major patent offices, wherever possible. It has to be noted still Section 25 remains unamended and the failure to provide the required information or false information provided under Section 8 (Form 3) can still be used as a ground for opposition.
Regarding pre-grant oppositions, the negative attention largely comes from the incompetence of the Indian patent office to bring the procedure to quicker endings. Taking many years to come to a conclusion whether the subject-matter of an invention is patentable or not, is inexcusable. Thus, it makes sense, for procedural efficiency, to enable some control back to the Examiners/Controllers of the Indian patent office to determine the “prima facie” relevance of the evidence submitted. Clearly, no one should, in an ideal world, submit irrelevant information. Thus, it has to be closely followed what the Indian patent office considers to be prima facie relevant, depending on the facts and circumstances of the case. If it is just going to be random as with the current quality of the prior art results and the examination report of the Indian patent office, then God help us all. And I am an atheist.
If the worry from the lawyers and rights advocates that these changes are too patentee friendly, there is no other way left to catch up with the vast changes occurring elsewhere in the world. AI is automating, to a certain extent, the work of patent attorneys and/or examiners in searching, drafting, and even prosecution. There are a plenty of tools in the market.
With this background, the Indian patent office has only one option. To raise the quality of the work output. If unworthy applications are granted by the patent office, the onus is not on the public to file a pre-grant opposition and for the person “interested” to file a post-grant opposition. It is firstly the duty or job of the patent examiners and controllers to grant rights to the applications that are deserving. The Indian patent office has nowhere to hide anymore for its incompetency. There is no way to wiggle their way out by raising the bars of formal requirements such as asking for tons of foreign application information, or asking for the working of the patent. Thus, the first line of defence in making a working patent system is to train and hire qualified professionals at the Indian patent office, who can give some competition to the professionals working at the major foreign patent offices. It is unfair to shift the burden to the users of the system or the public for their sheer incompetency.
Even if the situation is so bad, that the granted patent prohibits the entry of others in the market. There are sufficient grounds in pre-grant and post-grant oppositions at the patent office. If not, revocation procedure under section 64 is available in front of the right court. If still there is no way around, there is a possibility to seek the license from the patentee. If the patentee refuses, as a last measure, the competitors have to work or design their product around the scope of protection offered by the patent. This is how the rest of the world has done it and it is high time Indian companies live up to the challenge. The alternative to this would be to take a closer look at our neighbour in the north. CNIPA users crowd the domestic market with the humungous number of rights and/or applications of their own. This enables the domestic right owners or domestic companies to sue the patent holders back at the jurisdiction of some choice in their own country. There is tax rebate! There is something to learn there.
However, increasing the bureaucratic burden or the compliance requirements with more and more red tapes for the applicants and/or patent owners is not the way forward. That mode of control had its time and its over. We have to look forward, not behind. The key for the working patent system lies with the patent office officials and ably supported by the qualified individuals (patent agents) who represent the interests of their clients in front of the patent office. Even if one of it is lagging, then the system breaks down.
Dear Anonymous, I appreciate the detailed engagement and response. Please find my responses as below:
Re your opening and closing lines: I agree that there must be more engagement with stakeholders and regular updating of positions, and that the patent office and the DPIIT could do more on this front. Must, do more on this front. However, with the caveat that ‘stakeholders’ includes more than practioners and industry bodies, whose interests in what is beneficial for them, may not always coincide with patent policy that is beneficial for the country.
Re Ayyangar Committee – of course it is not a religious text and no positions anywhere should be seen as sacred. However, we can’t ignore that it was used as a basis for the existing law, and that deviations from its “Reasoning” should be countered with appropriate evidence based reasoning too. It’s an unfortunate truth that data is very hard to come by, still. Much less, data-backed reasoning. So my focus there is on the reasoning.
In response of ‘catching up’ to other patent systems. I disagree to the extent that ‘catching up’ implies a certain hierarchy. US’ patent laws, for instance, are a complete mess, and have incentivised all sorts of undesireable outcomes. The progress of science and technology in certain countries is often much more linked to the amount of resources, capacity, and structure their governments are putting into “science and technology” (directly and indirectly). Taking higher education seriously. Taking local manufacturing seriously for targeted sectors. Building resilient local industry. Building a culture that encourages questioning and learning. And all the various policy measures to go with that.
I absolutely agree that we should look to learn from others accomplishments *as well as mistakes*, and if there is something to learn, we must be very clear what that exactly is, in its full context. And then certainly, we must try to see what is applicable to our country and learn accordingly. It shouldn’t be missed that the conversation in EU, US, etc is now on how to fix their patent system, and how to improve patent quality.
Re Form 27: I absolutely agree that it can be more nuanced, and be made sector/tech specific. In addition to your own stated reasons for making it sector/tech specific, I also think it would make the information more useful in Form 27’s initial purpose. My main issue there is in the making of it completely impotent.
Re efficiency and pre-grants. On law: the law allows it u/s 25(1). Rules can’t change that. Currently, they technically haven’t changed that, but they have increased the burden, so in my opinion, is not consistent with the spirit of the law.
On policy: My response would be what we’ve already written in the post, that there is very little evidence to show that pre-grants are systematically increasing pendency. I do think there needs to be a heavy focus on fixing pendency issues. If the patent office is serious about pendency, the patent office should collect and show the evidence of the average patent prosecution timeline, and where the various slow-downs occur. And once that data is out, then, each place where there is undue pendency should be scrutinized strictly. And such scrutiny should include what kind of trade-offs occur when making a change to the existing setup. So, I’m not at all saying there shouldn’t be a change. I’m saying our laws and policies should take change-making seriously, and not flippantly react to whatever is gathering the most noise.
Your comment re unamended 25 is taken and I agree. However, I still don’t see how increasing the burden on the patent office, is beneficial from a policy standpoint. At the same time, I do agree that there should be a systemic focus on reducing “unnecessary” procedures, to the extent that it doesn’t affect the quality of the grants coming out.
I think your 2nd last para has some interesting points to think over more. While I don’t think that creating/encouraging patent thickets is going to be helpful, it would be interesting to see more studies on how other countries have handled such problems and what India can learn from them.
I assume we’ll continue to disagree on some of these points, however, I do thank you for taking the discussion forward.