India: Curious Case Of Working Statement

Historically, the Indian patent system is known to follow a balanced approach between protecting and fostering innovation and simultaneously ensuring that the innovation is used foremost for the betterment of the community. Policy framework for IPR in India mandates a very clear requirement of not just granting "monopoly" to an individual or group by granting patent, but to ensure that any invention recognized by the system must be commercially utilized to the fullest and must be available to the end-users as required. The Patent Act mentions that, "the protection and enforcement of patent right contributes to, technological innovation, the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare and to a balance of rights and obligation".12

To ensure that the basic underlying principle is followed, section 146 of the Patent Act makes it mandatory for all the patent holders to submit commercial performance of the patent, by furnishing statements known as working statements. In case the patent has been worked in India, the patentee is required to provide the quantity and value of the product so produced in India. In case the same is imported, then the patentee is required to furnish the country wise details.

The section 146 of the Patent act has one key concern with the patent holders and that is the subject of confidentiality. Most of the patent holders believe that the information that is mandated to be furnished in Form 27 is very sensitive in nature since quantum and value of the product is required to be announced. Patent holders have also raised concerns that such information can be used to the disadvantage of the patent holder because as per section 146 "Controller may publish the information received by him under sub-section (1) or sub-section (2) in such manner as may be prescribed".Due to the above apprehension of misuse of information furnished to the patent office, patent holders tend to provide as little information as they can. Recently a Writ Petition was filed by Prof. (Dr.) Shamnad Basheer who has alleged non-compliance with the provisions of the Patents Act, 1970 on the part the Controller General of Patents. The petition demanded that the authorities to be directed to enforce the statutory obligations as prescribed by the act. He also requested Delhi High Court to form a committee to review the current format of Form 27 and suggest if further changes are necessary to enforce statutory obligations. During a recent hearing on the subject matter, it was pointed out that there are severe lapses in the filing of Form 27 by various patentees. Filings through Form 27 are meant to indicate his extent to which patentees have, or have not, worked the patent for the public benefit. It was alleged that even those who had filed such documents had submitted only flimsy information.

The Annual Report published by the Office of the Controller General of Patents indicates that out of 43920 patents issued in 2012-13, only 27946 have provided patent working statement via Form 27. It was also pointed out that out of 43920 only 6201 patents have actually been worked by the patentees. Information received via RTI revealed that no action as per section 122 of the Patent Act, has been taken or even initiated for this non-compliance by patentees. Additionally, Mr. Basheer also pointed out several instances of such lapses. He submitted that NATCO Pharma, which was granted a compulsory license over an important anti-cancer drug, did not disclose as to how it was operating the license. This is despite the fact that the Act requires such reporting on working of patents even from licensees. In fact, the compulsory licensing order had mandated that NATCO submit all information pertaining to quarterly sales. Ericsson had also, in one of its forms, refused to disclose licensing details citing "confidentiality" or trade secrecy. No action has, however, been taken on such violations of the provisions.

On Wednesday January 17, 2018, IN THE HIGH COURT OF DELHI court by large agreed with the contentions put forward. The Bench comprising Acting Chief Justice Gita Mittal and Justice C. Hari Shankar then observed, "It is pointed out that so far as the grant of patents are concerned, information in regard thereto is available on the website of the Patents Office. All that the patentees submitting Form-27 are required to submit is the details of the licenses and sublicenses. This information certainly cannot be termed "confidential" and therefore, the Patents Office has to treat such suppression as failure to comply with the requirements of Section 146 of the Patents Act, 1970 arid to take action against the patentees who do not furnish the required information." Court also directed authorities to review Form 27 and suggest if further changes are required to make Form 27 amenable to the patentees to comply with the requirements as laid down by section 146 of the Patent Act.

Ericsson elevated some concerns on the court order dated January 2018. The court stated that "the details of licensees, licenses and sub-licenses" are not confidential and are necessary to be submitted by the patentees while submitting Form 27. Ericsson argued that it may not always be possible for the patentee to disclose all the terms and condition of the license. Court took the argument.

The court said as we quote.

"It is, therefore, made clear that the reference in para 13 of the order dated 10th January, 2018 to "details of licensees, licenses and sub-licensees" is only the specification with regard to number, date and particulars of the licensees and sub-licensees. In case, any party has reservation of any kind in furnishing details, it would have to disclose the reasons for such reservation and the patent office would be required to take a view in the matter so far as its satisfaction regarding compliance with the requirements of Section 146 is concerned."

The Verdict of Delhi High court is in our opinion very balanced and critical. The Respected Court on one hand had taken Care of Public interest by making clear that a Patentee Could not under the Guise of Confidentiality, refuse to disclose the very existence Factum of Licenses and the Name of Licensee. However on the other side court has also provided provisions for safeguarding critical business information by stating that in case any party has reservation of any kind in furnishing details, It would have to disclose the reason for such reservation and the patent office would be required to take a view in the matter so far as its satisfaction regarding compliance with the requirements of section 146 is concerned.


12. Section 83 in The Patents Act, 1970

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