Summary
The post provides an in-depth analysis of the working of patents within the Indian legal framework. It examines statutory provisions such as Sections 83, 84, 85, and 146 of the Indian Patents Act and explores the nuanced distinction between commercial and non-commercial working of patents. The discussion highlights judicial interpretations, particularly through notable case law, and addresses practical challenges in quantifying and enforcing working requirements. The author argues that while section 146 mandates disclosure of commercial working, non-commercial activities are also covered under the broader patent rights, and overly stringent requirements may be counterproductive. The post concludes that a balance must be maintained between incentivising innovation and protecting public interest within the patent system.
The Object of the Patent System
The patent system promotes the progress of science and technology by granting exclusive rights to inventors for a limited period. On expiry, inventions enter the public domain and add to the pool of knowledge available for further inventive activity. The exclusive rights granted by the patent system are believed to provide incentives to invent, invest, disclose and design, thereby advancing science and technology.
At its core, the primary goal of the patent system is public good. Benefit to the public is articulated directly or indirectly through scientific and economic progress. Debates about the value of the patent system often run in circles: opponents and proponents deploy the same public interest criteria to reach diametrically opposed conclusions. Despite more than two hundred years of research, no theory has been able to prove or disprove the patent system’s value in promoting scientific and technological progress.
In Biswanath Prasad Radhey Shyam vs. Hindustan Metal Industries, AIR 1982 SC 1444, the Supreme Court of India articulated the object of patent law as follows:
The object of patent law is to encourage scientific research, new technology and industrial progress. The price of the grant of the monopoly is the disclosure of the invention at the Patent Office, which, after the expiry of the fixed period of the monopoly, passes into the public domain.
By quoting Justice Ayyangar, the Supreme Court articulated the objective of patent law in the Novartis case as follows:
It would not be an exaggeration to say that the industrial progress of a country is considerably stimulated or retarded by its patent system according as to whether the system is suited to it or not.
The Supreme Court also quoted Michell with approval:
Patent systems are not created in the interest of the inventor but in the interest of national economy. The rules and regulations of the patent systems are not governed by civil or common law but by political economy.
Statutory Framework: Working of Patents Under the Patents Act
The following sections of the Patents Act are relevant to the question of working of patents.
Section 83
General principles applicable to working of patented inventions
Without prejudice to the other provisions contained in this Act, in exercising the powers conferred by this Chapter, regard shall be had to the following general considerations, namely;
a. that patents are granted to encourage inventions and to secure that the inventions are worked in India on a commercial scale and to the fullest extent that is reasonably practicable without undue delay …
Section 84
Compulsory licences
(1) At any time after the expiration of three years from the date of the grant of a patent, any person interested may make an application to the Controller for grant of compulsory licence on patent on any of the following grounds, namely:
a) that the reasonable requirements of the public with respect to the patented invention have not been satisfied, or
b) that the patented invention is not available to the public at a reasonably affordable price, or
c) that the patented invention is not worked in the territory of India …
Section 85
Revocation of patents by the Controller for non-working
(1) Where, in respect of a patent, a compulsory licence has been granted, the Central Government or any person interested may, after the expiration of two years from the date of the order granting the first compulsory licence, apply to the Controller for an order revoking the patent on the ground that the patented invention has not been worked in the territory of India or that reasonable requirements of the public with respect to the patented invention has not been satisfied or that the patented invention is not available to the public at a reasonably affordable price …
Section 146
Power of Controller to call for information from patentees
(1) The Controller may, at any time during the continuance of the patent, by notice in writing, require a patentee or a licensee, exclusive or otherwise, to furnish to him within two months from the date of such notice or within such further time as the Controller may allow, such information or such periodical statements as to the extent to which the patented invention has been commercially worked in India as may be specified in the notice.
(2) Without prejudice to the provisions of sub-section (1), 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 …
One important fact to be noted from these provisions is that Section 146 requires a statement with respect to the extent to which the patented invention has been commercially worked, while Section 84 and Section 85 simply state that a compulsory licence may be granted and the patent may be revoked if the patent is not worked in India. Section 84 and Section 85 do not require commercial working: any form of working, commercial or non-commercial, is sufficient to avoid a compulsory licence and later revocation. Section 83 states that an invention must be commercially worked to the extent reasonably practicable — commercial working is not an absolute mandate.
Two conclusions may be drawn:
- Working of a patent can be commercial or non-commercial, and Section 146 refers to commercial working only; and
- Commercial working is mandated only to the extent reasonably practicable. If it is not reasonably practicable, an invention may not be the subject of commercial working.
The Meaning of “Working”
During negotiations of the Paris Convention, at the Rome meeting in 1896, all countries maintained different meanings for the term “work.” The meeting ultimately adopted the compromise position that the word has different meanings and that every member country has the right to interpret it independently.
The Indian Patents Act, 1970, does not define the term “work” or “working.” In the Bayer compulsory licence case, while the Controller concluded that “worked in the territory of India” means manufactured to a reasonable extent in India, the Intellectual Property Appellate Board (IPAB) declined to define the term. The Board concluded that working could mean local manufacturing entirely, and in some cases could mean only importation, depending on the facts and evidence of each case. Though the Board did not define the term, it can be reasonably inferred from its approach that the term encompasses all patent rights.
The rights granted to a patent holder under Section 48 are instructive in this respect:
Rights of patentees
Subject to the other provisions contained in this Act and the conditions specified in section 47, a patent granted under this Act shall confer upon the patentee
(a) where the subject matter of the patent is a product, the exclusive right to prevent third parties, who do not have his consent, from the act of making, using, offering for sale, selling or importing for those purposes that product in India …
A patent holder obtains the following exclusive rights under Section 48:
- Right to Make;
- Right to Use;
- Right to Sell;
- Right to Offer for Sale; and
- Right to Import.
Logically, exercise of any of these rights must amount to working of a patent. Working therefore includes manufacturing, using, selling, offering for sale, and importing — encompassing both commercial and non-commercial activities.
Patentability and Workability
From a working perspective, patents may be categorised into two major classes:
- Workable Patents — patents covering inventions that can be worked; and
- Non-workable Patents — patents covering inventions that cannot be worked.
Enablement of an invention is satisfied if the invention is scientifically or technically capable of being reproduced, but the invention may not be workable for reasons other than scientific or technical factors, such as lack of capital or lack of government approval.
Workable inventions may further be classified as:
- Patented inventions immediately workable; and
- Patented inventions workable in the future.
A large percentage of workable inventions may not be worked immediately because of reasons such as: the invention requires further experimentation; further studies are needed to obtain government approval; the invention is ready but there is no market for it; or essential technologies are still developing. Some reports estimate that approximately ten per cent of all workable patented inventions fall within the first category of immediately workable inventions, and that less than one per cent of patented inventions ever reach the market.
Quantification of Commercial Working
Quantification of commercial working is possible only for a small percentage of inventions that directly translate into discrete products. In pharmaceuticals and chemistry, one product may be covered by one or a few patents. In telecommunications and information technology, each product may embed several patents — sometimes in the hundreds. One report estimates that more than three thousand patent families cover LTE. In that context, commercial working cannot be quantified easily and any disclosure becomes a probability rather than a certainty.
Assessment of Section 146
In the light of the foregoing, the following conclusions can be drawn regarding Section 146 and the statement of working requirement:
- Working includes exercise of any patent right — make, use, sale, offer for sale and import;
- Section 83 lays down the principle that a patented invention must be commercially worked to the extent possible, and recognises that this may not always be practicable;
- Section 84, which deals with compulsory licensing for non-working, does not refer to commercial working; a compulsory licence will not be granted even if an invention is not commercially worked, as long as it is worked non-commercially;
- Many patents are not workable on grant, and even among workable patents only a small proportion can be immediately worked;
- Quantification of working is not possible with certainty in most fields; and
- Section 146 requires filing of statements of commercial working only, and therefore has limited relevance in the overall scheme of the working provisions.
Because Section 146 covers less than what is required to trigger compulsory licensing under Section 84, it lacks the public interest significance sometimes attributed to it. The existing Form 27 prescribed under Section 146 could be simplified to make compliance more achievable. Making the form more extensive and onerous would be difficult to implement and would erode whatever limited value the requirement currently has. Strict enforcement of statement of working norms, without accompanying substantive reforms to the patent examination process, would be counter-productive to the patent system’s public interest objectives.
Disclaimer
This article is for general information and does not constitute legal advice. Readers should consult a qualified attorney before acting on any matter discussed here.