Working Statements in India: Are You Compliant? – Update

This is an update to our post of January 21, 2018, regarding working statements in India. Specifically, the hearing originally scheduled before the Indian High Court for January 25, 2018, was postponed until February 5th.  During the hearing on February 5th, counsel for the Petitioner, Mr. Shamnad Basheer (an Intellectual Property Professor and activist), continued to argue that the patent working requirement has never been taken seriously by Patentees and unless there is a threat of sanction, Patentees would continue to ignore this statutory mandate.  Mr. Basheer’s counsel suggested that Patentees who had failed to comply with the working requirement (either in whole or in part), be given a deadline in which to comply.

Counsel for the Indian Patent Office (IPO), Mr. Mahajan, admitted that the patent working requirement has never been enforced against non-complying Patentees. Mr. Mahajan stated that until there was a legal framework in place to initiate prosecution against non-compliant Patentees, there was little that the IPO could do.  He noted that Section 122 of The Patents Act,1970 (Patents Act) only provided for a fine or, in limited circumstances (such as when deliberately providing false information), imprisonment for non-compliant Patentees.  Counsel for the government further stated that there needed to be a specific framework (namely, specific rules) to enforce the penalties as provided under Section 122 of the Patents Act.

The Court asked the IPO representative who was present in the court to file an affidavit on February 7, 2018, listing the various steps as well as provide a timetable for implementing a robust enforcement framework for prosecuting non-compliant Patentees.

During the subsequent hearing on February 7, 2018, Mr. Mahajan informed the Court that the IPO had not yet completed its plan for creating a robust enforcement framework for the working requirement.  Nonetheless, the Court passed an order requiring that the IPO strictly enforce Form 27.  The Court also directed the IPO to file an affidavit by February 20th outlining a time plan for putting an enforcement mechanism into place.  A further hearing has been scheduled for March 1st.

The Court’s order also provided some clarification regarding the issue of identifying licensees in Form 27 as well as the issue of the confidential nature of such licenses.  This issue was a key concern raised by Ericsson as part of its intervention application.  In its order, the Court stated that Form 27 did not require that all licensing terms be provided. Rather, the only details regarding such licenses that needed to be provided were those specifically provided for in Form 27. Interestingly, with respect to this point, Form 27 is rather open ended and asks, “Details licenses/sublicenses if any”.  A Patentee is simply required to demonstrate how its Patent has been worked through one or more licenses. In the event there is a court order preventing a Patentee from even disclosing the existence of a license, this can be specifically mentioned in Form 27 as the reason for non-disclosure. Patentees should keep in mind that licenses should not only be disclosed on Form 27, but should also be registered with the IPO pursuant to Sections 67-69 of the Patents Act (the Controller can redact confidential portions of a license at his or her discretion).  Such licenses are open to public inspection under Article 72.  Additionally, Patentees should keep in mind that it is not sufficient to simply state on Form 27 that the patent has been “worked” without anything more. There must be some data and/or other information to support this claim.

With the proceedings thus far in this case, the ball is now in the IPO’s court to decide how to enforce the penalties prescribed under Section 122 for non-compliance with the working statement requirement while at the same time, taking into consideration the difficulties of Patentees in fulfilling this unique requirement under Indian patent law. Under the current legal system in India, criminal liability, including a fine assessed against a person, can only be enforced by the criminal courts comprising Magistrates and Session Judges and not by executives such as the Controller of Patents, unless such power is specifically conferred to such executives under statutory law.  Practically speaking, what this means is that to make the IPO a law enforcing agency to enforce the provisions of Section 122, an amendment would be required to the Patents Act, 1970. Passage of such an amendment could prove to be a long and drawn out process. Furthermore, if the IPO is made responsible for enforcing Section 122, it would face the additional burden of having to monitor all working statements, which would include examining these statements from a compliance perspective as well as conducting penal proceedings in accordance with the principles of natural justice.  Adding these responsibilities will put additional an work load on the IPO which is already crumbling under the weight of having to examine over 70,000 pending patent applications filed almost six to seven years ago.  Given the circumstances, the IPO will have to take a practical and pragmatic approach to handling the monitoring and enforcement of working statements and it is likely it may have to frame rules that would allow for any person aggrieved by the non-filing or incomplete filing of a working statement to raise the issue before the criminal court system, thus limiting the role of the IPO in these cases to that of assisting the criminal court with factual determinations. In addition to making new rules to enforce non-compliance, the IPO may also need to amend the format of Form 27 to make it practical for technology companies to submit their working details. The affidavit that IPO will be filing with the Court by February 20 may provide further insight on these issues.

Please continue to watch the BRIC a Wall blog for updates on working requirements in India.

This post was written by Lisa Mueller and Manisha Singh of LexOrbis.