‘Peace’ on the Nuclear Front? Analysing the Upheaval in the Nuclear Energy Patents Regime Through SHANTI Act

Base Photo by Zac Durant on Unsplash

India’s nuclear energy legal framework is undergoing a complete makeover with the recent passing of the SHANTI (Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India) Bill  in the Parliament, and the subsequent assent by the President on 20th December. The SHANTI Act (SA)  has replaced the Atomic Energy Act 1962 (AEA) and the Civil Liability for Nuclear Damage Act 2010 and is the product of a policy shift in nuclear energy governance. As evident from the Bill’s Statement of objects and reasons, the law aims at harnessing the full potential of India’s nuclear energy resources through measures such as greater participation of private actors. A fair share of controversies come with the Bill, including concerns over greater private sector involvement, weak accountability mechanisms, and the exclusion of certain information from RTI’s ambit(Interested readers can read these news coverage). Back in October, PTI had reported that 6 private firms have shown interest in the Request for Proposals by Nuclear Power Corporation of India Ltd. 

If you are reading this piece, you may wonder what the SHANTI Act holds for IP law. The answer can be traced to a lesser discussed provision of the Patents Act: Section 4. Section 4 prohibits the grant of patents in relation to atomic energy. What comes under that bar can be better understood through a reference to Section 20 of the AEA. SHANTI Act  has transformed this absolute prohibition to a qualified permissibility where patents can now be granted for peaceful uses of nuclear energy. 

The change in the patent law facet of nuclear energy needs more digging. This is what I do in this piece. In crux: we are in for a confused ride, and the government’s ability to run the game escapes certainty. 

Firstly let’s understand the current regime around atomic energy. As already mentioned, Section 4 of the Patents Act renders inventions relating to atomic energy non patentable. Why this statutory bar, and that too through a provision separate from Section 3 of Patents Act? The Ayyangar Committee Report mentions that atomic energy inventions were dealt with separately in an interim report owing to their ‘sui generis’ nature  and ‘importance for national well-being (para 13 of Report). (If any reader is able to find the interim report, please let us know, as I haven’t been able to find this anywhere!)

The parliamentary material on AEA and Patents Act can give some idea about legislative intention. VB Gandhi, an MP, referred to Justice Ayyangar’s comments in his remarks during the Lok Sabha debates on Atomic Energy Bill in 1962 (pg 2908 of Debates). J. Ayyangar had flagged three features of the Indian circumstances around atomic energy inventions: 

(i)  research and other technical work in this field are concentrated in Government establishments 

(ii)  all the applications in India are of foreign origin and relate to inventions evolved outside India, and 

(iii) nearly 50 per cent of these applications are by foreign Government departments.

Reference should also be made to Minutes of Evidence given before the Joint Committee on the Patents Bill, 1967.  One MP had remarked that all countries recognize that atomic energy is an ‘issue which is outside the field of normal commercial development’ and thus broad restrictions are in place worldwide (pg 65 of Minutes). 

The rationale for this non-patentability thus appears to be a mix of state sovereignty and national security concerns, concentration of activities in the government’s domain, and some sort of special nature of the inventions.

Now a look at AEA. Section 20 of AEA explains this prohibition in detail. Section 20(1) provides a long list of categories of activities related to atomic energy and safety. If in the government’s opinion the invention relates to those activities, then ‘no patents shall be granted’ for these inventions.  This includes inventions that are ‘useful for or relate to the production, control, use or disposal of atomic energy or the prospecting, mining, extraction, production, physical and chemical treatment, fabrication, enrichment, canning,………………’. A fairly elaborate list that would practically preclude any invention that is connected to atomic energy in any manner. 

Section 20(3) empowers the Central Government to inspect any pending applications and direct the Controller to refuse them on the above grounds. Conversely, the Controller has the power to refer any application to the Central Government for its decision on atomic energy non-patentability and the latter’s decision shall be final [Section 20(6)]. 

Section 20(7) declares that inventions conceived either in Central Government-controlled establishments or under contractual relationship with it shall be deemed to have been made or conceived by the Government. Section 20(8) reiterates the finality of the Central Government’s decision. Section 20(4) very interestingly obliges inventors to communicate information about their inventions to the Government if they believe they relate to atomic energy.

This is a brief recap of the erstwhile regime. Now it’s time to assess SHANTI Act and draw comparisons with AEA wherever necessary.

The new Section 4 of the Patents Act will read as follows: “The patents may be granted for inventions relating to nuclear energy subject to the provisions of this Act and section 38 of the Sustainable Harnessing and Advancement of Nuclear Energy for Transforming Act, 2025.” SHANTI Act’s statement of object and reasons refers to facilitation of ‘innovation in nuclear science and technology’, including through ‘active involvement of both the public and private sectors’. The revamped patent regime therefore seems predicated on the classic incentivization of innovation rationale. 

Section 38 of SHANTI Act replaces Section 20 of AEA. Section 38(1) allows the Central Government to grant patents for inventions that (in its opinion) are for ‘peaceful uses of nuclear energy and radiation’. This essentially opens up the innovation market to private players to develop technologies that pertain to peaceful uses. Now, ‘peaceful uses’ is not defined in the Act. I believe then the term has to be understood in its conventional sense? The provision pitches the determination to the Central Government’s opinion. However, it’s not clear how this ‘opinion’ arrives, in the procedural sense: Will the Controller have to send all applications pertaining to nuclear energy compulsorily to the Government? Section 38(7) does allow the Central Government to inspect applications at any time and issue refusal directions to the Controller if the invention doesn’t satisfy sub-section (1). The sub-section however has a fascinating proviso that complicates the picture. It mandates two categories of inventions that will be non-patentable despite being for peaceful uses. Let us take them one by one. 

First, inventions relating to activities specified in Section 3(5) of SHANTI Act. S.3(5) specifies a list of activities/facilities that have to be set up and undertaken exclusively by the Central Government (or through owned institutions). These include enrichment or isotopic separation of prescribed or radioactive substances, management of spent fuel, and any other facilities or activities as may be notified by Central Government. The last category gives a wide leeway to the government to increase the ambit of restrictions. Moreover, the list of prescribed substances is also decided by the government [See Section 2(33)].

Second, the provision also renders non-patentable inventions that are sensitive in nature or have national security implications. The assessment will flow from the Central Government’s opinion. Again, these two phrases do not find a definition in SHANTI Act and the guesses are up in the air. 

Similar to AEA, the SHANTI Act also requires the Controller to get the Central Government’s direction on whether the invention attracts the bar under the two categories mentioned above [Section 38(3)]. The language of Section 38(3) is however slightly different from its AEA counterpart. It says that if a question arises, the Controller ‘shall refer’ the application. Whereas S. 20(6) of AEA mentioned that the Controller ‘shall have the power to refer’. Food for thought for readers to debate the semantics. 

This is not the end for Section 38’s peculiarities. Let me now go to two more aspects that deserve a separate discussion.

What happens to the inventions that are non-patentable under the proviso to S. 38(1)? They ‘shall be deemed to have been made or conceived by the Central Government’. A question arises: What is the nature of the legal right that the government is holding over the invention? The text just creates a deeming fiction of manufacturing/conception in favour of the Central Government. Since that particular invention is to be non-patentable, it cannot be that the Government will be in position of a patent holder. Even under the previous statutory regime, the Department of Atomic Energy (DAE) couldn’t hold patents over inventions barred by Section 4 of the Patents Act. This is evident in Dr Jitendra Singh’s reply to an unstarred question in the Rajya Sabha in March 2025.  The query pertained to the IPR status of DAE’s invented technologies and processes. To which the reply mentioned that the DAE cannot patent technologies related to atomic energy in India. However, DAE does attain patent rights through R&D and spin-off technologies developed for the nuclear power programme of India (and these won’t be under the Section 4 statutory bar).  Consequently, I am eager to see the rights entitlement framework that the Central Government (most likely through DAE) will operate under in relation to these excluded inventions. 

Section 102 of the Patents Act can possibly provide another line of context for this issue. This provision allows the government to acquire inventions and patents for public purposes. After satisfying the procedural requirements (including payment of royalties, etc.),  the “invention or patent and all rights in respect of the invention or patent shall” stand transferred to and be vested in the Central Government. The section doesn’t solely use the term patent. The coverage extends to inventions that are the subject of an application. This means that rights in respect of the invention also exist (though I am still unsure as to how). Does this imply trade-secrets and know-how legally ‘belong’ to the government? In fact, Section 39(1) of SHANTI allows the Central Government to declare information (not in public domain) in relation to Section 38(1) proviso as restricted information.

The second aspect about Section 38 is the absence of clarity on the Central government’s finality of decision making. As mentioned before, Section 20 of AEA made the Central Government’ decisions final in respect of atomic energy patents. An attempt to challenge such a decision for non-application of mind was also dismissed in a Calcutta HC ruling (Raytheon Company). The Bombay HC however, in dealing with a writ petition against a Controller order, had set aside the order for absence of reasons. A mere reference to the DAE’s directions was not enough reasoning for the HC.

Contrarily, Section 38 of SHANTI Act doesn’t explicitly say that the government’s opinion is final. In my understanding, the Controller’s refusal under Section 38 of SHANTI Act will be covered under Section 15 of the Patents Act that contains the Controller’s powers of refusal or requirement of amended applications. And Section 15 orders are mentioned as appealable under Section 117A(2) of the Act. Would this mean then that the Central Government’s directions to the Controller under SHANTI Act are subject to HC appeal? Another provision of the Patents Act complicates the resolution. The Central Government, under Section 65 of Patents Act, has the power to revoke patents any time after their grant if they relate to atomic energy. And guess what: these revocation orders are not appealable under 117A(2). It then seems unlikely that the government didn’t intend to make its decisions under Section 38 of SHANTI Act final and immune to appeal. 

As a side note, the SHANTI Act envisages  an Atomic Energy Redressal Advisory Council that will decide on review applications filed by ‘any person aggrieved by an order or decision of the Central Government’. Textually speaking, Section 38 decisions can come under it. 

Regardless of the criticisms that may be raised against the government’s ‘liberalization’ of the nuclear energy sector, there exist statutory ambiguities and operational issues with the new patent regime under SHANTI Act. I have attempted to flag some of them in this post. One thing is sure that the private stakeholders cannot remain absolutely certain about the acceptance of their patent applications. The government, through exceptions such as national security, continues to hold the reins in this newly created free market. Add to it the recently increasing concerns over unreasoned orders being passed by the Controller, the problem of legal certainty may compound. 

Thanks to Swaraj Sir for the detailed comments and Bharathwaj for the interesting discussions on the issue!