Patent (Amendment) Rules 2020

Exercising the powers conferred by section 159 of the Patents’ Act 1970, the Department for Promotion of Industry and Internal Trade (DPIIT) under Ministry of Commerce and Industry of the central government has revised the Patents Rules, 2003 vide notification dated 19^th October 2020. The draft rules in respect of the said amendments had been made available for objections and suggestions were made available to the public on 31^st May 2019, which after due consideration have now been notified as Patents (Amendments) Rules, 2020 and entail the following amendments:

 Amendment to the form and manner in which Statement of Working requirement is to be met with: Rule 131(2), Patent Rules, 2003 and Form 27

1. According to the amendment to Rule 131(2), that the statement of working of a granted patent shall be furnished once every financial year, beginning from the year immediately after the financial year (April 1^st to March 31^st) in which the patent has been granted, within six months from the expiry of such financial year. Meaning thereby that the due date for filing the working statement of particular year shall be September 30th of the following financial year. The amendment made to “financial year” instead of “calendar year” shall make it easier for the applicant companies to give commercial details related to exploitation/working patented technologies which is typically calculated at the financial year end. It is also appreciated that the timeline for submission of the statement of working has been doubled to six months by way of this amendment. However, considering that failure to file the statement of working (a procedural requirement) may attract penalty under Section 121, Patents’ Act, 1970, provision for extension should by filing Form 4 should have been allowed.

2. The form in which the ‘Statement of Working’ of a granted patent on a commercial scale in India is to be provided in accordance with Form 27, Second Schedule. the requirement of filing a ‘Statement of Working’ under Form 27 is necessary to ensure that the exclusivity that comes with the grant of a patent is not used simply for the purpose of blocking others from developing technologies in the vicinity of the patented inventions. In order to ensure that the Indian population benefits from commercial use of the invention, the Patent Office and Central Government has time and again taken measures to ensure that the requirement to show working of a granted patent is made recurrent and mandatory. The amended Form 27 provides separate rows requiring specific information regarding working of a patent, wherein considerable amendments have been made to the earlier form, which are as follows:

1. Mandatory filing of proposed Form 27 by Patentee and the Licensees: The Rules modify Form 27 of the Act through which statements regarding the working of patented invention on a commercial scale in India have to be filed by Patentees and Licensees (exclusive or otherwise). This is bound to be an onerous requirement for patentees. The practice, thus far, has been that the patentee/s must file a Form 27 every year and provide details of licensees, if any, therein. This has been deemed sufficient proof of working by the Patent Office as well as the Hon’ble Courts. However, making said form mandatory for all the licensees as well will give rise to several issues –
• The non-filing of Form 27 leads to presumption of non-working of a patent and non-working for three years can amount to a compulsory license being granted, without giving the patentee an opportunity to negotiate said license. So, in a case where only one licensee has defaulted in filing Form 27, will it result in presumption of non-working, even if the patentee has shown working on its part? This is a very onerous situation and requires a higher degree of proof than is required to establish working of a granted patent.
• The patentee can be denied injunction against an infringer if the non-working of patent has been proved. Therefore, the question arises, whether non-filing of the said form by any of the licensees can cost the patentee a right to effectively enforce its exclusive rights?
• Similarly, non-working of patent is also a ground for revocation under Section 85 of the Act. Therefore, the question arises, whether non-filing of the said form by any of the licensees can cost the patentee its patent which gets painstakingly granted after several years of prosecution?
• This requirement will lead to submission of multiple statements (one by the patentee(s) and by each licensee(s) separately) on the working of the invention, wherein submitted information may be inconsistent.
• There shall be duplication of details in cases where the working by patentee is limited to its licensing activities alone. In such a case, the data of the patentee shall be an addition of the data by all of its licensees combined. Such a cumbersome process each year appears unnecessary for the purpose sought to be achieved.
  
  Considering that under Section 146(1), if the Controller requires any specific details as regards working, he may seek the same from the patentee/licensee in any case, such an onerous interpretation of the statement of working requirement by the patentee is neither necessary nor practical.
  
  

2. Details regarding “Working”: In light of the fact that the term “working” has not been defined under the Patents’ Act 1970 or in Rules, 2003, and accordingly, has been subjected to several interpretations. Under the amended form, the details of “working” required of the patentee/ licensee are as follows:
   
• The proposed form seeks details of approximate revenue / value (instead of quantum/units and value) accrued in India to the patentee through “manufacturing” and/or “importing” along with a brief write-up on the same. As regards “manufacturing in India”, it may be noted that said details need not necessarily mean that the patent in question is being worked in India. For instance, where the patentee is manufacturing the patented product in India, but for exporting purposes only, it cannot be said to have been worked in India. Pertinently, even for the purposes of Section 84(1) of the Act which provides for grounds for grant of compulsory license, it is not mandatory to have the product manufactured in India, as long as it is being worked therein.
• It is well thought to clarify that one form may be filed in respect of multiple patents, provided all of them are related patents, wherein the approximate revenue / value accrued from a particular patented invention cannot be derived separately from the approximate revenue/value accrued from related patents, and all such patents are granted to the same patentee(s).
• In case the patented invention has not been worked, reasons for not working the patented invention and steps being taken for working of the patented invention will have to be provided.
• The requirements of submitting information regarding licensees and sub-licensees granted in a year; and information regarding extent of working (partly, adequately, fullest) of the patented invention has also been done away with in the amended form.

Amendment to rule relating to Filing of Priority Document: Rule 21, Patent Rules, 2003

3. The filing of the priority document under Rule 21(1) has been amended so as to include compliance to the additional requirement of paragraph (b-bis) of Rule 17.1 of the Regulations under the Patent Cooperation Treaty. By virtue of the said amendment, where priority document is made available to the International Bureau from a digital library, in accordance with the Administrative Instructions, instead of submitting the priority document the applicant may request the International Bureau to obtain the priority document from such digital library whereby such request be made prior to the date of international publication of the international application. This amendment makes a third mode available for submission of the priority document (apart from submission of the priority document or transmittal document), thereby easing prosecution of international applications for the applicants, further. It may however be noted that this amendment was not a part of the draft rules made available in May 2019, although the said change is a welcome one.

4. Where an international application under Patent Cooperation Treaty (PCT) is filed designating India, the priority document, if any, is required to be submitted with an English translation. However, by virtue of the amendment to Rule 21(2), the designated office may only require the applicant to furnish such a translation where the validity of the priority claim is relevant to the determination of whether the invention concerned is patentable or where an international filing date has been according on basis of an element or part contained in the priority document (Regulations of PCT, Rules 51bis.1 (a), (b)). This also, was not a part of the draft rules which were released for comments and discussed at length at the stakeholders meeting with the DPIIT; however, given it makes filing of translation only upon request wherever necessary, it is an appreciable move. Further, the change suggested as regards the timeline to submit the translation in the draft rules, which received objections from numerous stakeholders, have not been amended by the notified rules.