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.

Working Statements in India: Are You Compliant?

After a patent issues in India, the Patentee and each licensee (whether a nonexclusive or exclusive licensee) is required to file a working statement on an annual basis.  The working statement provides details describing the extent to which the patented invention was worked on a commercial scale in India during the previous calendar year.  The working statement must be provided to the Indian Patent Office (IPO) within three months from the end of the year, namely, by March 31st,using Form 27 (as required by pursuant to Section 146 (2) of The Patents Act, 1970).  Form 27 can be filed at IPO electronically by the Patentee, licensee or via an agent on behalf of the Patentee and/or licensee.

The legislative text in India is very clear that the granting of patents is not merely to “enable Patentees to enjoy a monopoly for the importation of the patented article”, but also to “secure that inventions are worked in India on a commercial scale and to the fullest extent reasonable”.  However, in the context of Article 27(1) of the TRIPS Agreement, it has been debated whether or not “importation” of a patented product or a product produced through a patented process constitutes working of the patent in India.  Some recent judicial decisions have upheld importation as constituting working of patent, particularly in situations where it is economically more practical to produce a patented product outside of India.

The purpose of a working statement is to inform the public whether a patented invention is or is not being worked in India.  In the event a patent has not been worked for three years from the date of grant, or, if the reasonable requirements of the public with respect to the patented invention have not been met, an interested third party can use this information to approach the Patentee for a (voluntary) license to the patent.  If, in response to such a request, the Patentee refuses to license the patent,  requests unreasonable terms to grant the license, or completely ignores the request (after the passage of  a reasonable amount of time), the third party can approach the IPO to request a compulsory license.  Once a compulsory license is issued, the government or any interested person can, two years after the expiration of the date of the order granting the first compulsory license, apply for revocation of the patent if the patented invention has not been worked in India (within those two years).  Therefore, under these circumstances, the burden falls on the licensee (of the compulsory license) to provide evidence of working in India to avoid revocation of the patent.

While a patent will not be held abandoned for failing to file a working statement, there are consequences for failing to make the submission.  Specifically, failure to file a working statement may result in a penalty of up to $25,000 U.S. dollars.  Additionally, knowingly furnishing false information in a working statement or knowingly or having reasons to believe that the information submitted is false or not true may result in criminal prosecution and imprisonment of up to six months.  Moreover, failure to submit a working statement may provide a valid ground for the granting of a compulsory license by the IPO.

If a patent is not being worked in India, the Patentee (and licensee) can provide one of the following explanations as to why the patent was not worked:

  • Lack of market potential for the invention; Market is being developed;
  • The invention may be worked in the future depending on market demand and/or when the technology is mature;
  • Patentee is actively working to develop a market for the patented product/process in India. The technology is available for licensing; or
  • Patentee is looking for working opportunities in a large scale.

If a patent is worked in India, the Patentee and licensee(s) are requested to provide: (1) the amount and value (in Rupees) of the patented invention; (2) whether the patented invention was or was not manufactured in India; and (3) whether the patented invention was imported from other countries (and if so, provide the country(ies) the patent invention is imported from).

Additionally, regardless of whether or not the invention is worked or not worked in India, the Patentee and licensee(s) must also indicate whether:  (1) any licenses and/or sublicenses were granted during the year; and (2) the public requirement has been met partly/adequately to the fullest extent possible at a reasonable price.

On January 10, 2018,  counsel for the Controller General of the IPO, appearing before  a Division Bench of the Delhi High Court, agreed to file a status report on the extent of non-compliance with working statements as well as the actions taken by IPO to amend the Patent Rules concerning working statements.  These submissions were made by the counsel for the IPO in response to a writ petition filed on January 19, 2015, by Shamnad Basheer, an Intellectual Property Professor and activist (Shamnad Basheer v. Union of India & Others (UOI)).  In his writ petition, Mr. Basheer highlighted the non-compliance of many Patentees and licensees in connection with working statements.  This writ petition appears to be the first attempt by any third party to enforce the working requirement using the judicial system.  Not surprisingly, on October 28, 2015, several months after Mr. Basheer filed his writ petition, an application to intervene in the litigation was filed by Mr. Narendra Reddy Thappeta.

In his writ petition, Mr. Basheer noted several examples of non-compliance with Section 146 (2) including:

  • Grant of compulsory license to Natco Pharma (Natco) in connection with Indian Patent No. 215758 covering an anti-cancer drug: In the compulsory license granted on March 9, 2012, Natco was required to provide an accounting of sales to the Controller on a quarterly basis (by the 15th of the succeeding month).  Mr. Basheer sought information from IPO about whether such reports had been filed and received information that “no details” were available.  Mr. Basheer informed IPO of the lapse several times by Natco but no action was taken.
  • Form-27 submitted by Ericsson: Ericsson refused to disclose licensing details in the form citing that the information was “confidential” or a trade secret.  Mr. Basheer pointed out that the Controller took no action with respect to this violation of  Section 146(2).

With respect to Ericsson, the Court noted that all Patentees and licensees are required to submit the details of licenses and sublicenses and that this information could not be termed “confidential” and that IPO had to treat non-inclusion of this information as a failure to comply with the requirements of Section 146 of the Patents Act, 1970. The Court adjourned the matter until January 18th and asked the Government to indicate whether amendments to Form 27 had been effected pursuant to the Patent (Amendment) Rules, 2015.  Not surprisingly, the Court’s order set off a debate on working statements in the country, particularly with respect to the type and extent of information to be submitted.

During the hearing on January 18, 2018, counsel for Natco presented evidence that it had submitted sales figures with the IPO on a quarterly basis and that its submission was available on the IPO’s website.  Unfortunately, the evidence submitted by Natco raised concerns about the quality of the data management performed across the multiple offices of the IPO.  Also during the hearing, the UOI raised concerns about the “confidentiality” of the information submitted as part of the working statement.  Specifically the UOI argued that the information relating to the amount and value of the patented invention worked in the country was sensitive information that could be misused to the disadvantage of the Patentee and/or licensee(s).  Additionally, the UOI argued that Form 27 simply requires mentioning the number of licenses and sublicenses granted during the previous year, not the name of each licensee and amount of each license.  Finally, arguments were made regarding the format of Form 27, specifically, that it was not suitable for all types of inventions.  It was argued that the form works well for Patentees of pharmaceutical inventions, but does not work well for Patentees in others sectors, such as in information and technology.  Specifically, Patentees in these areas find it difficult to provide information for at least the following reasons:

  • Patented inventions such as iPads or computers are often covered by hundreds of patents (for their various components and subcomponents);
  • Patentees of subcomponents may not always have control or knowledge regarding larger, composite products that incorporate their subcomponents to be able to accurately identify which of their patents require a working statement;
  • The global nature of the market makes it difficult to determine the amount and value of the patent invention;
  • There is a lack of an established market value for software such as auto-lock (which is not subject to FRAND); and
  • There is no uniform or standard method for determining public demand. For example, for subcomponents incorporated into larger, composite products, it is not possible to identify the public demand for the patented subcomponent separately.

The Court set another hearing for January 25, 2018.

In view of the writ petition and the Court’s direction to the Controller of IPO to file a status report on the extent of non-compliance and the action taken with respect to that noncompliance, Patentees and licensees should expect increased scrutiny and enforcement of Form 27 and its requirements.  The IPO is likely to amend the format of Form 27 to make it more practical to provide working information by technology companies.  Patentees and licensees should carefully review Form 27 and their responses to make sure they are fully compliant before filing in the IPO.  In cases where the correct working information was not provided due to difficulties in collecting and collating such information, it is recommended that the correct information be collected now and an amended Form 27 be filed with the IPO for any previous year in question.  In cases where the statement was filed as “worked” without providing  any additional information as to the specifics of the working, it is strongly recommended that the Patentee and/or licensee(s)  provide the additional information (via an amended Form 27) as quickly as possibly as the IPO may treat the previously submitted information as “false or incorrect” information.

The hearing in the writ petition is now scheduled for January 25, 2018, and we expect the Court will issue a decision clearly laying down the guidelines with regard to filing of the working statements to end the legal controversy associated these submissions.

Please continue to watch the BRIC Wall Blog for updates on the working statement issue in India.

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

Delhi High Court Strikes Down Section 24(5) of the Plant Varieties Act as Unconstitutional

On December 2, 2016, the Delhi High Court struck down Section 24(5) of the Plant Varieties and Farmers Rights Act, 2001 (Act) as unconstitutional in Prabhat Agri Biotech Ltd. et al. v. Registrar of Plant Varieties. As will be discussed in more detail below, the Court held that Section 24(5) violated Section 14 of the Constitution of India. Specifically, the Court held that this section of the Act gave unbridled power to the Register, who was not required to have a legal background or possess any legal expertise, to grant interim relief to a breeder against any abusive third party act occurring during the pendency of an application for registration of a variety.


The Protection of Plant Varieties and Farmers Rights Act, 2001 (Act) was passed in 2001 and went into effect in November 2005. The stated rational of the Act is to establish a system for the protection of plant varieties, rights of farmers and plant breeders as well as encourage the development of new plant varieties in India. Additionally, the Act is intended to provide the protection needed to facilitate the growth of the seed industry in India, ensure the availability of high quality seeds and planting material for farmers as well as protect plant breeders’ rights for accelerated agricultural development within the country.

Section 12 of the Act establishes the Plant Varieties Registry (Registry) to facilitate the registration of varieties while also providing for the appointment of as many registrars (Registrars) as necessary to allow for the registration of such varieties. Section 13 of the Act provides for the maintenance by the Registry of a register called the “National Register of Plant Varieties” (Register). The purpose of the Register is to record the names of all registered plant varieties along with the names and addresses of the respective breeders, the right of such breeders in their registered varieties, the particulars of the denomination of each registered variety, its seed or other propagating material along with specification of the salient features and any other information which may be required for registration of the variety.

Section 2 of the Act provides a number of definitions of key terms that are used throughout the Act. For example, Section 2(za) defines a “variety” as a “plant grouping except a microorganism within a single botanical taxon of the lowest known rank, which can be:

(i) Defined by the expression of the characteristics resulting from a given genotype of that plant grouping;
(ii) Distinguished from any other plant grouping by expression of at least one of said characteristics; and
(iii) Considered as a unit with regard to its suitability for being propagated, which remains unchanged after such propagation,
and includes propagating material of such variety, extant variety, transgenic variety, farmers’ variety and essentially derived variety.”

Section 2(i) defines an “essentially derived variety”. Specifically, this section states that a variety (the initial variety), shall be said to be essentially derived from such initial variety when it:

(i) “is predominantly derived from such initial variety, or from a variety that itself is predominantly derived from such initial variety, while retaining the expression of the essential characteristics that results from the genotype or combination of genotype of such initial variety;
(ii) is clearly distinguishable from such initial variety; and
(iii) conforms (except for the differences which result from the act of derivation) to such initial variety in the expression of the essential characteristics that result from the genotype or combination of genotype of such initial variety.”

Section 2(j) defines “extant variety” as a variety available in India which is:

(i) “notified under section 5 of the Seeds Act, 1966 (54 of 1966); or
(ii) farmers’ variety; or
(iii) a variety about which there is common knowledge; or
(iv) any other variety which is in public domain”.
Section 2(k) defines “farmer” as any person who:
(i) “cultivates crops by cultivating the land himself; or
(ii) cultivates crops by directly supervising the cultivation of land through any other person; or
(iii) conserves and preserves, severally or jointly, with any person any wild species or traditional varieties or adds value to such wild species or traditional varieties through selection and identification of their useful properties.”

Section 2(l) defines a “farmers’ variety” as a variety which:
(i) “has been traditionally cultivated and evolved by the farmers in their fields; or
(ii) is a wild relative or land race of a variety about which the farmers possess the common knowledge”.

A variety can be registered by submission of an application to the Registrar. According to Section 16 of the Act, an application can be submitted by any “person”. A “person” includes:

(i) any person claiming to be the breeder of the variety; or
(ii) any successor of the breeder of the variety; or
(iii) any person being the assignee of the breeder of the variety in respect of the right to make such application; or
(iv) any farmer or group of farmers or community of farmers claiming to be the breeder of the variety; or
(v) any person authorized in the prescribed manner by a person specified under items (i) – (iv) to make application on his behalf; or
(vi) any university or publicly funded agricultural institution claiming to be the breeder of the variety.

Section 18 describes the specific technical and other information that must be included in each application. According to Section 15, once an application has been submitted, a variety can be registered only if it satisfies the criteria of novelty, distinctiveness, uniformity and stability. During the examination process, the application can be amended if requested by the Registrar. Once an application is accepted, it is published for opposition. If no opposition is filed or if an opposition is rejected, the Registrar will register the variety and issue a certificate. If the certificate issued is for an essentially derived variety, the certificate is valid for nine years from the date of registration for trees and vines and six years from the date of registration for all other plants (which is renewable). However, , the total period of validity of a registration cannot exceed:

(i) eighteen years from the date of registration for trees and vines;
(ii) fifteen years from the date of the notification of that variety by the Central Government under section 5 of the Seeds Act, 1966 (54 of 1966) for extant varieties; and
(iii) fifteen years from the date of registration of a variety in all other cases.

According to Section 28(1) of the Act, a certificate confers an exclusive right on the breeder or his successor, agent or licensee, to produce, sell, market, distribute, import or export the variety. One interesting provision of the Act, which will be discussed in more detail below, is Section 24(5) which gives the Registrar the “power to issue such directions to protect the interests of a breeder against any abusive act committed by any third party during the period between filing of application for registration and decision taken by the Authority on such application”.

Prabhat Agri Biotech Ltd. et al. v. Registrar of Plant Varieties

The petitioners, Prabhat Agri Biotech Ltd. (Prabhat), Nuziveedu Seeds (Nuziveedu) and Kaveri Seed Company Ltd. (Kaveri), challenged the vires of Section 24(5) of the Act. Nuziveedu, a sister company to Prabhat, had, over the course of several years, various hybrid and parental cotton lines copied from one of the respondents, Maharashtra Seeds (Maharashtra). In fact, Maharashtra filed an application to register a hybrid variety of cotton which was alleged to have been developed using Nuziveedu’s proprietary parent lines. After filing its application, Maharashtra filed an application under Section 24(5) against Prabhat and Nuziveedu. The third petitioner, Kaveri, was not subject to an application under Section 24(5) by any third party.

During the proceeding, the Solicitor General, on behalf of the government of India, argued that Section 24(5) was necessary for the public interest. Specifically, the Solicitor General argued that this section of the Act was based on Article 13 of the International Convention for the Protection of New Plant Varieties, 1991 (UPOV), which necessitated Article 24(5) because it obligated parties to take suitable steps to safeguard the rights of applicants during the period during which their application was under evaluation. Specifically, the Solicitor General pointed to the statements in Article 13 of UPOV which states:

“Each Contracting Party shall provide measures designed to safeguard the interest of the breeder during the period between the filing or the publication of the application for the grant of a breeder’s right and the grant of that right. Such measures shall have the effect that the holder of a breeder’s right shall at least be entitled to equitable renumeration from any person who, during the said period, has carried out acts which, once the right is granted, require the breeder’s authorization as provided in Article 14. A Contracting party may provide that the said measures shall only take effect in relation to persons whom the breeders has notified of the filing of the application.”

According to the Solicitor General, Section 24(5) was based on sound public policy due to the fact that Article 13 of UPOV required a measure of interim protection. As a result, Section 24(5) had to be enacted.

In its decision, the Court stated that the power conferred upon the Registrar in Section 24(5), namely, the ability to make an interim order anytime during the pendency of an application, was simply too broad. Specifically, the Court stated:

“…its exercise is not in any manner conditioned upon consideration of any objective material. The only guidance given in the section was that such an order could be made if a person were engaged in an ‘abusive act’”.

According to the Court, an “abusive act” contemplated a range of behaviors from suspicion of infringement or use of someone’s material to the genuine use of material legitimately developed by a rival. As such, the Court stated:

“In other words, ‘abuse’ is not only wide and vague in its import, but ‘abuse’ by which entity – a specified third party, or generically all other parties (consider third parties) in the subject-object verb relationship sharpens the concern that the power (to issue interim orders) is overbroad and without any guidance. To illustrate, an abuse could be a case of theft of variety and its exploitation by sale; if demonstrable, that it is an abuse might be capable of injunctive relief. However, at the other end of the scale, if there is no theft or allegation of theft but rather claim by the applicant that it has developed the variety first and is, therefore, entitled to protection as opposed to the assertion of a rival that such a position is incorrect and the variety is an extant one, or a farmers’ variety, a possible view can be that use by such rival of the variety is an abusive act. Therefore, the basis for grant of an order under the impugned provision is existence of a vague and undefined state of affairs.”

The Court noted that the Act clearly provided the conditions that an applicant had to fulfill to secure the registration of a new variety. In contrast, the Act was less than clear and even vague in terms of what a Registrar had to scrutinize when deciding whether or not to grant interim relief under Section 24(5). What seemed to trouble the Court was the fact that the power of Section 24(5) was exercisable at any stage, even the moment after an application was filed, regardless of the merits of the case (namely, whether the applicant claimed to be a breeder or farmer of even if the variety was entitled to protection).

Additionally, the Court was further troubled by the fact that while the Act clearly spelled out the rights and obligations of the applicants, the qualifications to be fulfilled and the conditions to be made as well as the various steps involved in the granting or refusal of an application, it failed to specify the requirements and/or qualifications of individuals suitable to hold the office of Registrar. In fact, the Court noted that there was nothing in the Act that required that the Registrar have any judicial or quasi judicial expertise. In view thereof, according to the Court, it was constitutionally impermissible to give the Registrar the power to make significant legal determinations such as those contemplated under Section 24(5) given the potentially far-reaching implications.

The Court concluded stating:

“Given the importance of the Act, there is enormous danger in empowering authorities with unguided and uncanalized power through provisions that can implicate livelihoods and limit or impair food access to tens of thousands – potentially hundreds of thousands of farmers and users of plant varieties. The existence of a large section of farmers unschooled in the provisions of the Act and unaware of their rights renders unethical bioprospecting practices and spurious claims to development of new or other registrable varieties, entitled to registration, a real possibility. Section 24(5) of the Protection of Plant Varieties & Farmers’ Rights Act as cast as present may undoubtedly be an adequate remedy to prevent abusive practices (assuming that what is abusive can be defined over a period of time); yet the danger of abuse of the provision itself and the attendant (likely) long term injury to innocent breeders, framers and those in the business of development of hybrids and plant varieties far outweighs its benefits, in view of the unguided nature of the power, which is destructive of the rule of law and contrary to Article 14 of the Constitution of India. Section 24(5) of the Protection of Plant Varieties and Farmers’ Rights Act, 2001, is, therefore, declared void.”

This post was written by Lisa Mueller of Michael Best .

India’s Stringent and Shifting Policy on Genetically Modified Cotton Seeds

India’s Cotton Industry & Monsanto

India is the world’s second largest producer and exporter of cotton. While India produced cotton before the introduction of genetically modified seeds, Monsanto Company’s (Monsanto) Bacillus thuringiensis (Bt.) cotton technology has helped the country achieve astronomical gains in cotton production as illustrated below in Figure 1.

Figure 1: Average cotton yields in India, 1950-2010

chart 1

Monsanto’s presence in India is as Mahyco Monsanto Biotech (MMB), a 50:50 joint venture between Maharashtra Hybrid Seeds Company Private Limited (Mahyco) and Monsanto. MMB licenses two types of Bt. cotton seeds in India known as Bollard I and Bollard II, respectively. A description of these varieties is as follows:

  1. Bollgard I:
    1. Introduced in 2002, Bollgard Bt. I cotton was India’s first biotech crop technology approved for commercialization. It has built-in protection against infestations by the destructive American Bollworm, Heliothis Armigera, and contains an insecticidal protein from a naturally occurring soil organism. Use of this variety does not require the payment of a royalty fee as bollworms have developed resistance against this variety.
  2. Bollgard II:
    1. Bollgard Bt. II was approved in mid-2006. It provides protection against bollworms and Spodoptera caterpillar, which leads to better boll retention, maximum yield, lower pesticide costs, and protection against insect resistance. Use of this variety requires the payment of a royalty fee.

MMB currently licenses the Bollgard I and Bollgard II technologies to approximately 50 Indian seed companies. These seed companies have introduced the Bollgard technology into their own germplasm and manufacture over 300 different Bt. cotton hybrid seeds. As a result, MMB is the only supplier of genetically modified (GM) cotton seeds in India and more than 90% of the cotton grown employs Monsanto’s technology.

Cotton Farmers in India

Unfortunately, the rise of cotton production in India has not translated to prosperity for the country’s cotton farmers. Instead, high numbers of Indian farmers have committed suicide since 1995, with heavy indebtedness accrued from their cotton business believed to have played a role. The factors contributing to this heavy indebtedness are discussed in more detail below.

Cost of seeds

Bt. seeds can cost up to four times more than traditional varieties of seeds. Farmers purchase fresh seeds annually because the resulting hybrid cultivars contain “terminator” technology, thereby preventing farmers from replanting the seeds the following year.

Need for irrigation/wate

Bt. seeds require irrigation. Sixty-five percent of India’s cotton crop comes from farmers who rely on rain and who do not have access to irrigation. Therefore, unfavorable weather conditions acutely hurt their crops and pockets.

Need for insecticides

The bollworm was not a major pest in Indian cotton in the 1970’s but higher yielding plants produced from GM seeds have drawn more pests.  In 2010, Monsanto admitted that insects developed resistance to its Bt. I cotton seeds and that the Bt. I hybrid crops were no longer effective against the bollworms. In view of this, Monsanto has advocated that Indian farmers switch to Bt. II cotton seed technology because these varieties have a greater ability to delay insect resistance.

Critics have pointed out that insects will eventually develop resistance to the insecticide produced by  Bt. II cotton seeds. They have also noted that the toxin produced by the Bt. II cotton seed is active only for 90 days and that the bollworm is a late season pest (cotton season can last as long as 160 days). Therefore, bollworms have become problematic for cotton farmers. With the rise of industrial agriculture in India and the use of new hybrid and GM seeds, farmers have become increasingly reliant on insecticides. Unfortunately, the bollworms have evolved to become resistant to these insecticides and their natural predator populations have also declined. As a result, farmers must purchase large quantities of insecticides to harvest cotton.

Low pay for cotton farmers

Cotton farming is a low paying profession.  Not surprisingly, a dip in the global price of cotton can spell disaster for farmers. As a result, many farmers have turned to loan sharks to pay for fertilizers, insecticides, and hybrid and GM seeds. Cycles such as this have driven farmers deeper into debt and tragically to suicide.

Many of the materials needed for farming and agriculture in India are heavily subsidized or offered without cost to the farmers by the Indian government. Therefore, the purchase of insecticides and high priced GM seeds as well as the reliance on irrigation and sporadic rains ultimately drain farmers’ finances. Figure 2 below shows that over time, increased adoption of Bt. cotton correlates with an increase in number of suicides by farmers.

Figure 2: Farmer suicides in India, 1997-2006

chart 2.png

India’s Cotton Seed Regulations

The farmer suicide epidemic has resulted in the Indian government regulating prices for Bt. cotton seeds. The aim is to help decrease the financial burden of India’s cotton farmers and break MMB’s monopoly on the GM seed market.

On December 7, 2015, the Ministry of Agriculture and Farmers Welfare (“Ministry”) issued a price control order, entitled the “Cotton Seed Price (Control) Order, 2015”, to bring uniformity in GM Bt. cotton seed prices across the states in India where previously none existed. This Order was created under the section 3 of the Essential Commodities Act, 1955.

On March 8, 2016, the Ministry issued a Notification, under the Cotton Seed Price (Control) Order, 2015 which capped  GM cotton seed prices at Rs. 800 (11.90 USD) for a packet of 450 g of seeds for the financial year 2016-2017. It also reduced the royalty fees (referred to as “trait value” in the Notification) to Rs. 49 (0.73 USD) per 450 g of seeds.

Serial No.

Components Bollgard I version of Bt. cotton hybrid

Bollgard II version of Bt. cotton hybrid


Seed value (in rupees) 635 751


Trait value including taxes (in rupees)



3 Max. Sale price (in rupees) 635


Before the Notification, Bt. cotton seeds were sold at prices ranging from Rs. 830-1000 (12.30-14.80 USD). The royalty fee received by companies such as MMB was cut by 74% (excluding taxes) from the previous royalty fee of Rs. 163 to Rs. 43. The Ministry said that this Notification was prompted because Bt. Cotton’s ability to resist bollworm pest attacks had weakened.

On May 18, 2016, another Notification, entitled Licensing and Formats for GM Technology Agreement Guidelines, was issued under the Cotton Seed Price (Control) Order, 2015. This Notification provided tighter restrictions on GM technology providers, such as MMB. The main restrictions are:

  • GM technology providers cannot deny a license to any qualifying domestic seed company wanting to incorporate the approved GM technology into its own hybrids and varieties.
  • GM technology providers must award license for the GM technology within 30 days of receipt of a request from an eligible seed company. In the event this obligation is not met, the licensee (domestic seed company) is deemed to have obtained the license.
  • GM technology providers cannot charge royalty fees exceeding 10% of the maximum sale price, which is fixed at Rs. 800, for the first five years from the date of commercialization of the technology. After first five year period, the royalty fees are reduced by 10% of initial value every year.
  • If GM technology loses its efficacy, the GM technology provider is not eligible for any royalty fees.

Critiques of the Regulations

The Indian biotechnology industry opposed the regulations on GM technology providers. The Association of Biotechnology Led Enterprises-Agriculture Focus Group, a pro-GM advocacy group (which represents crop research companies such as Monsanto, Mahyco, Syngenta, DuPont, Pioneer, Bayer BioScience, BASF, Advanta) stated the decision would discourage companies from investing in research. Critics from the agriculture industry have called the new regulations arbitrary and innovation stifling. Opponents have criticized the regulations saying that they do not offer methodology on how the Indian government arrived at the final royalty fees, GM technology providers have little to no say on whom to give licenses, and that the aim of these regulations is to benefit one stakeholder: the domestic seed companies.

Monsanto representatives voiced that it would be difficult to justify bringing new technologies into India given the new regulations. The company also threatened to shut down its business in India.

Rescindment of the May 18, 2016 Notification

On May 24, 2016, the Central Government rescinded the notification of May 18, 2016 based on the advice of the Controller and after consulting with the Committee under the Chairmanship of Joint Secretary (Seed) and Controller, Department of Agriculture, Cooperation and Farmers Welfare which was involved in developing regulations.

After the rescindment, the Indian government laid out the May 18, 2016 Notification for 90 days  for comments and suggestions by the public before taking a final call. The decision to seek input by the public  was taken at the highest level of the Indian government because had the May 18, 2016 Notification been final, the move may have hurt foreign investment in agriculture research and discouraged the introduction of new technology in India.

This post was written by Lisa L. Mueller and Himani Nadgauda of Michael Best.

An Overview of the USTR’s 2016 Special 301 Report on the State of IPR in China

In this week’s post, the BRIC Wall Blog continues to examine the Office of the United States Trade Representative (USTR) 2016 Special 301 report (Report) reviewing the state of intellectual property rights (IPR) protection and enforcement in U.S. trading partners around the world. The Report details the results of extensive research and analysis, which led to placing eleven countries on the priority watch list and twenty-three on the watch list. China remains on the Priority Watch List, as the environment for protection and enforcement of IPR in China continues to be complex and contradictory. Surveys continue to indicate that many businesses chose not to offer their technology, goods, services, or investments in China. The choice was based on the obstacles that restrict foreign firms’ ability to fully participate in standards setting, the unnecessary introduction of inapposite competition concepts into intellectual property laws, and acute challenges in protecting and incentivizing the creation of pharmaceutical inventions and test data.

In the past year, China’s leadership developed draft reform measures on a range of subjects including copyrights, patents, trade secrets, drug review and approvals, Anti-Monopoly Law enforcement as it relates to intellectual property, and regulations on inventor remuneration. The State Council established the Office of the National Leading Group on the Fight Against IPR Infringement and Counterfeiting, currently chaired by Vice Premier Wang Yang. The group extended its online enforcement campaign in 2015 and has played a positive role in China’s IPR. Further, courts have been established in Beijing, Shanghai, and Guangzhou to study the merits of specialized intellectual property courts over a three year period.

Despite the reform measures, it is difficult to prevent the misappropriation of trade secrets due to deficiencies in China’s primary trade secrets law (found in the Anti Unfair Competition Law, or AUCL) that limit the law’s application; unresolved weaknesses in China’s civil enforcement system including limited injunctive relief and low damage awards; and difficulties in pursuing criminal enforcement, including the need to prove actual damages caused by the theft of trade secrets. In the Report, the U.S. urges China to consider drafting a stand-alone trade secrets law, which would provide an opportunity to address a broader range of concerns than possible as part of a reform to the AUCL.

The Report further indicates that the disclosure of critical intellectual property for foreign information and communication technology (ICT) products and services continues to be required as a condition of access to the Chinese market. The justification for this disclosure is purportedly for security measures. These measures were suspended in 2015, in response to strenuous objections from the U.S., other foreign governments, and the private sector. Furthermore, China’s draft counterterrorism law included provisions that appeared to require telecommunications business operators and Internet service providers to disclose critical proprietary intellectual property to regulators. Objection by the U.S. and others led China to remove some of the troubling aspects in the final version of the law. Similar concerns have arisen in China’s National Security Law and draft insurance sector regulations. The Report states that it is critical that China adhere to its commitments and not simply invoke security concerns in order to require the disclosure of critical intellectual property.

The Report also highlights the concern that certain government measures, policies, and practices that are purportedly intended to hasten China’s development into an innovative economy, instead put foreign right holders at a disadvantage. These measures appear to include the requirement that certain IPRs be developed in China or be owned or licensed to a Chinese party. Through engagement with the U.S., China has committed that:

  1. Technology transfer and technological cooperation shall be decided by businesses independently and will not be used by the Chinese government as a precondition for market access;
  2. It must treat intellectual property rights owned or developed in other countries the same as domestically owned or developed intellectual property rights; and
  3. Enterprises are free to base technology transfer decisions on business and market considerations, and are free to independently negotiate and decide whether and under what circumstances to assign or license intellectual property rights to affiliated or unaffiliated enterprises.

The Report states that the U.S. will continue to push back against existing measures that distort technology transfer.

Additionally, the Report states that online piracy and counterfeiting in China’s massive e-commerce continues to be a wide-spread problem, which results in great losses for U.S. right holders involved in the distribution of a wide array of trademarked products, as well as legitimate music, motion pictures, books and journals, video games, and software. The piracy extends to unauthorized access or copies of, scientific, technical, and medical publications as well. China has the largest internet user base in the world, with the annual sales of goods on the Internet projected at nearly half a trillion U.S. dollars. China’s State Administration for Industry and Commerce (SAIC) reported that more than 40 percent of goods that SAIC purchased online during a 2014 survey were “not genuine”. Furthermore, the USTR’s 2015 Notorious Markets List reported that China is the manufacturing hub of counterfeit products sold illicitly around the world. The effects of these counterfeit goods go beyond lost sales volume and harm to the reputations of U.S. trademark owners, as counterfeit goods potentially threaten the health and safety of consumers around the world. A positive development in 2015 was the reported removal of over 2.2 million unlicensed works at the request of the National Copyright Administration of China. In the Report, the U.S. urges China to accelerate the development of its E-Commerce Law and to ensure that it addresses online piracy and counterfeiting, while providing appropriate safeguards to Internet service providers.

Regarding patent related measures and policies, according to the Report, IPR and technological standards in China heighten U.S. concerns regarding a range of Chinese government policies and practices. Membership or participation rights to foreign parties have been denied by China, which prevent foreign parties from participating in the standards setting process. In addition, there is also the concern that patent holders may be forced to contribute proprietary technologies to standards (and to license them to implementers) against their will. The U.S. secured commitments in the 2015 U.S.-China Joint Commission on Commerce and Trade in which China stated that:

  1. It welcomed the participation of U.S.-invested firms in the development of national recommendatory and social organization standards in China on a non-discriminatory basis; and
  2. Licensing commitments for patents in voluntary standards should be made voluntarily and without government involvement in negotiations over such commitments, except as otherwise provided by legally binding measures.

The Report also disclosed the state of Anti-Monopoly Law (AML) enforcement. Specifically, it stated that Chinese competition authorities may target for investigation those foreign firms that hold IPRs that may be essential to the implementation of certain technological standards. In this regard, the U.S. has secured a number of commitments from China, including that:

  1. The objective of a competition policy is to promote consumer welfare and economic efficiency rather than promote individual competitors or industries;
  2. Enforcement of competition laws should be fair, objective, transparent, and non-discriminatory; and
  3. China’s AML enforcement agencies are to be free from intervention from other agencies in enforcement proceedings.

The Report further states that China also committed to attaching great importance to maintaining coherence in the rules related to IPR in the context of the AML, based on the pro-competitive effects of intellectual property licensing.

With regards to pharmaceutical patents, the Report states that China was once generally consistent in its review of patent applications with the U.S. and leading patent offices in other countries. However, an applicant’s ability to provide supplemental data in support of an application was severely restricted after revisions were made to the interpretations of the guidelines of the Chinese Patent Office. The revisions have resulted in the denial of patents and invalidation of patents that the U.S. and other jurisdictions have granted patent protection to in similar cases. According to the Report, China subsequently agreed to work with the U.S. to follow up on implementation of a revision of its policy on data supplementation in late 2013; however, industry generally reports only partial progress as a result of the change. Furthermore, the U.S. has concerns about the extent to which China provides effective protection against unfair commercial use of, unauthorized disclosure of, and reliance on, undisclosed data generated to obtain marketing approval for pharmaceutical products.

According to the Report, some of China’s proposals for reform appear to contain provisions that would provide regulatory incentives for companies to shift manufacturing to China or participate in selected national projects and programs. Proposals such as these may have lasting negative effects on promoting global innovation and would appear more consistent with forced technology transfer industrial policies.

Although there have been promising developments to IPR protection and enforcement in China, including repeated affirmation of the importance of intellectual property by China’s leadership, an ongoing intellectual property legal and regulatory reform effort, and encouraging developments in individual cases in China’s courts, the Report indicates that substantial issues remain.

In the next post, the BRIC Wall Blog will examine in detail the Report’s findings on the state of IPR in Algeria and Kuwait.

This post was written by Lisa Mueller and Kate Merath of Michael Best.

The much awaited Indian National IPR Policy has arrived!

On May 13, 2016, the much awaited National Intellectual Property Rights (IPR) Policy was released by the Indian Government. The goal is to create awareness about the importance of IPRs as a marketable financial assets and economic tools.  The twenty-eight page policy lays down seven objectives and the necessary steps to be undertaken by the relevant Ministries/departments.  A copy of the policy is attached here:  National_IPR_Policy_12.05.2016.  A brief summary of the objects of the policy are provided below.  A more in-depth analysis of each of these objectives will be provided in subsequent BRIC Wall blog posts.

What are the main objectives of the new National IPR Policy?

  1. To create public awareness on the economic, social and cultural benefits of IPRs among all sections of society

A nationwide promotion program is proposed for the purpose of improving the awareness about the benefits of IPRs and their value to rights holders and the public, including the less visible IP generators and holders.  The goal is the creation of an atmosphere where creativity and innovation are encouraged in private and public sectors, research and development (R&D) centers, industry and academia thus leading to the generation of protectable IP that would ultimately be commercialized.  “Creative India; Innovative India” is the proposed slogan for this program.

  1. To stimulate the generation of IPRs

There is a need in India to tap the talent pool contained in R&D institutions, enterprises, universities and technical institutes to stimulate the creation of IP assets. The policy proposes a comprehensive IP audit or base line survey across these sectors to allow for the formulation and implementation of targeted programs.  Focus will be placed on facilitating researchers and innovators in areas of national priority, and initiating the steps necessary to ensure that the benefits of the IPR regime reach all inventors, especially micro, small and medium enterprises (MSMEs), start-ups and grass root innovators.

  1. To have strong and effective IPR laws, which balance the interests of rights owners with larger public interest

While India has an effective and TRIPs compliant IPR regime, it is important for it to protect its rich traditional medicinal knowledge from misappropriation.  One suggestion proposed by the policy is to undertake a review of India’s existing intellectual property laws, in consultation with the relevant stakeholders, and update and revise these laws to remove any anomalies and/or inconsistencies, if needed.  This suggestion is important as it shows the willingness of the Indian Government to take a fresh look at India’s existing laws and improve upon them for the better.

  1. To modernize and strengthen service-oriented IPR administration

The administration of the Copyright Act, 1957 and the Semiconductor Integrated Circuits Layout-Design Act, 2000 will now be brought under the aegis of the ‘Department of Intellectual Policy and Promotion’ (DIPP).  Additionally, a cell (namely, a dedicated team/department) for IPR Promotion and Management (CIPAM) is proposed to be created.  According to the policy, it is believed that this will facilitate more effective and synergetic working between various IP offices, as well as the promotion, creation and commercialization of IP assets. The policy also envisages promoting awareness about patents to IPR officials at all levels regarding the objects and reasons behind India’s IPR laws and international obligations.

  1. Obtaining value for IPRs through commercialization

The policy envisages a concerted effort for capitalizing India’s existing IP assets by creating a public platform to connect creators and innovators to potential users, buyers and funding institutions.

  1. To strengthen the enforcement and adjudicatory mechanisms for combating IPR infringements

The policy envisages various measures to strengthen the enforcement of IPRs such as sensitizing inventors and creators of IP on the available measures for protecting and enforcing their rights, a need to build the capacity of enforcement agencies at various levels, the strengthening of IPR cells in State police forces, devising measures to check counterfeiting and piracy, conducting regular IPR workshops, etc.  The policy also emphasizes the need to adjudicate IPR disputes through specialized commercial courts and to explore alternate dispute resolution mechanisms.

  1. To strengthen and expand human resources, institutions and capacities for teaching, training, research and building skills in IPRs

The policy notes that in order to harness the full potential of IPRs for India’s economic growth, it is essential to develop and increase the pool of IPR professionals and experts in all spheres such as policy and law, strategy development, administration and enforcement.  It is believed that developing such a reservoir of experts will facilitate the generation of IP assets in India and their utilization towards commercial development.

This post was written by Lisa Mueller with ‘IP Alerts’ shared by Arun Kumar of K & S Partners.


An Overview of the USTR’s 2016 Special 301 Report on the State of IPR in India

In this week’s post, the BRIC Wall Blog continues to examine the Office of the United States Trade Representative (USTR) 2016 Special 301 Report (Report) released on April 12, 2016. The Report reviewed the state of intellectual property rights (IPR) protection and enforcement in U.S. trading partners around the world, and following extensive research and analysis, placed eleven (11) countries on the priority watch list and twenty-three (23) on the watch list. India is one of the 11 countries on the Priority Watch List in 2016. Although India has made efforts to improve its IPR, and the Indian courts retain their reputation for providing fair and deliberate treatment of both foreign and domestic litigants, long-standing and systemic deficiencies remain, in particular, in the pharmaceutical industry. Just yesterday, the Union Cabinet approved the National Intellectual Property Rights Policy, and a body of government-selected experts (the IPR Think Tank) is working closely with the United States to identify target issues for Indian policymakers. In particular, the Report expresses concerns regarding copyright infringement, patent system policies, trade secrets protection, and trademarks and counterfeiting.

With regards to copyright infringement, India has one of the highest rates of video piracy in the world, and according to a 2013 study, the number of incidents in India accounted for approximately half of all such piracy cases in the Asia-Pacific region that year. Despite the massive $4 billion dollar cost of pirated music and movies per year, India’s media and entertainment industry continue to grow and flourish; it is therefore even more imperative that India incorporate into its legal system more effective measures to counter piracy. To combat copyright infringement, the Report states that the United States has urged India to enact anti-camcording legislation, remodel its statutory license provisions, fully establish India’s Copyright Boards, and take steps to prevent public broadcasters from disseminating pirated content. The United States and India also announced important developments with respect to copyright through the 2015 Trade Policy Forum (TPF) Joint Statement, in which both countries agreed to strengthen copyright protection. The United States additionally held a workshop for a delegation of Indian government officials involved in copyright protection and enforcement, to discuss measures to curb piracy and promote content creation.

The patent system infrastructure in India also poses serious concerns for IPR protection. There is a significant backlog in the prosecution of pending patents, and Section 3(d) of the India Patents Act may limit the patentability of potentially beneficial innovations. The interpretation and application of Section 3(d) is unpredictable, and inventions that have successfully navigated prosecution in other countries can be denied patentability in India. This has been especially noticeable for inventions in software, biopharmaceuticals, agricultural chemicals, and green technologies. In 2015, India’s Ministry of Commerce and Industry issued The Patents (Amendment), Rules, 2015 (Patent Rule Amendments) in an effort to reduce delays in prosecution, however, the proposal incentivized the manufacture of products in India, going against international patent norms. The Indian government also needs to improve the conditions for which a compulsory license would be permitted, as only one compulsory license has been issued under Section 84 of India’s Patent Acts. The Report additionally urged India to provide an effective system for protection against unfair commercial use, without which companies are able to copy certain pharmaceutical products and seek immediate government approval for marketing based on the original developer’s data.

The Report also highlighted that India has not established reliable protection for trade secrets, and it is reportedly difficult to obtain compensation when these laws are violated. Additionally, India’s court system lacks sufficient procedural safeguards to protect trade secrets divulged through discovery, and there is a risk that such information may be publicly disclosed through the course of judicial proceedings. India is making efforts to improve laws that protect trade secret.

With regards to trademarks and counterfeiting, the Report noted that the level of production sale, distribution, importation, and exportation of counterfeit goods affecting India’s market remains concerning. Trademark holders face the risk of diminished profits and loss of reputation when consumers purchase fake products, and governments lose tax revenue since infringers generally pay no taxes or duties. The United States continues to express concerns about counterfeit and pirated goods produced in India and shipped to the United States.

Although India is taking steps to improve IPR protection and enforcement, the United States remains concerned about policies that appear to favor local manufacturing or Indian innovators in such a manner that damages the patent infrastructure not only in India but also around the world. Copyright and trademark infringement continue to pose a serious problem, and the unpredictable interpretation of the law provides modest legal coverage for inventors. It is encouraging that India is working to resolve these issues, however there are a number of important changes that need to be made and additional resources that need to be dedicated to strengthen IPR protection in India.

In the next post, the BRIC Wall Blog will examine in detail the Report’s findings on the state of IPR in China.

This post was written by Lisa Mueller and Caitlin MacNair.