India: Nitto Denko V Union Of India- Committee Report

Last Updated: 13 October 2015
Article by Anand & Anand

Nitto Denko v Union of India- Committee Report on compensatory measures for delays and provision for expedited examination at the Indian Patent office

A. Background

While patent office delays and excessive backlog of pending patent applications at the Indian Patent Office has been an issue of serious concern for a while, it is only recently that the said issue has been seriously dealt with and exposed vide two writ petitions before the Delhi High Court filed by Nitto Denko Corporation, a company based in Japan and represented by Mr. Pravin Anand of Anand and Anand Advocates.

As per the mandate of Patent Law, the First Examination report is to be issued ordinarily within six months from the date of the request for examination or six months from the date of publication, whichever is later, under Rule 24B(3)  of the Patent Rules, 2003. However, the word ordinarily is being stretched to almost indefinitely and currently the Patent Office is taking almost 8 to 9 years for a patent to be granted, thus significantly reducing the term from 20 to 13 years. It is under this backdrop that the said writ petitions were filed before the Delhi High Court and finally disposed of on 9th October 2014.

B. Outcome of the Order dated 9th October 2014

1. The Government has committed to spending more than 309.6 crore rupees (Equivalent to US $49,226,400) for recruitment of fresh examiners and to solving all related problems-salaries, attrition rate etc.

2. Additionally, a committee was constituted comprising of eight members, including the Joint Secy., DIPP; CGPDTM; representative of expenditure; Representative of Personnel & Training and few senior advocates, to deliberate upon the issues of:-

a) Waiver of Maintenance Fees as a compensatory measure for the delay in Patent Grant;

b) Patent Term Extension to compensate for the delay; and/or

c) Out of Turn/Expedited Examination.

The Committee submitted its report on 27th  February 2015.

C. Waiver of Maintenance Fees/Patent Term Extension not viable for India

With respect to Waiver of Maintenance Fees and Patent Term Extension, the Committee concluded that the said practices only exists in USA and nowhere else in the world and is not conducive to India.

The Committee was also of the view that the 20 year patent term which was originally 7 yrs and thereafter 14 yrs, already provides for delays and therefore does not require a further Patent Term Extension, particularly in India, where monopoly itself is considered too long to block genuine competition.

D. Out of turn examination-Public Interest/Local Manufacturing as prerequisite

The Committee was of the view that Out of Turn Examination may be considered as a viable option subject to certain prerequisites:-

a) Where the invention directly contributes towards "Public interest" ; and

b) When the applicant sets-up local manufacturing capabilities utilizing the invention as disclosed in the application or undertakes to manufacture the same within 2 years from the date of filing the request for expedited examination.

The Committee proposed a new Rule 24C  to Patent Rules, 2003 to incorporate such a measure. As per the new rule, the Patent Applicant would be required to provide a corroborative statement from a bank or financial institution or auditor in India with evidence in support showing applicant or his assignee or prospective manufacturer has sufficient capital to meet the reasonable public requirement or that sufficient capital or facilities will be made available within six months if a patent is granted.

E. Likely Impact

While the said decision seemed remarkable and a way forward towards tackling the issue of unreasonable and untimely disposal of patent applications for the first time in India, the Report of the Committee has, to an extent diluted the impact and the objective of the Writ Petitions.

The local manufacturing requirement has been incorporated in the proposed Rule 24 C  by the Committee in a manner which places undue burden on the Patent Applicant. The Committee also grossly failed in defining the specifics that fall in the "Public interest" domain to be considered eligible for out of turn examination. For example in US, an applicant may file a petition to make special where the invention will materially enhance the quality of the environment; develop or conserve energy resources; or counter terrorism. The applicant's age or health is also considered as a standalone factor for expediting examination in the US whereas in some jurisdictions, potential infringement may also be a ground.

Clearly, out of turn examination of applications under this program does not seem to be an option for most inventors particularly for the pharmaceutical industry which is already grappling with the stringent requirement of "local manufacturing" and "public interest". Moreover, there are strict procedural and substantive requirements and litigation risks (e.g., prosecution history estoppel) because the applicant must make submissions and provide additional evidence in support of its case, with barely any visible benefit.

It is also pertinent to note the word 'ordinarily' continues to find a mention in the proposed Rule 24C  to be added to Patent Rules, 2003 for expedited examination and may still pose issues of delay at the Patent Office, as is the existing state of affairs. It would be futile if even after paying additional fees, collecting necessary funds, establishing a local manufacturing plant, the Applicant's patent application continues to collect dust at the Indian Patent Office.

Although the report of the Committee did not take into account many recommendations and suggestions that were made on behalf of the Petitioner, it is indeed a significant victory that through a single Writ before the Delhi High Court, substantial funds got sanctioned to the Indian Patent Office from the Government of India. It is also for the first time that the proposal of expedited/out of turn examination is being considered to be introduced under the Indian Patent Law. This is a new wave of reform and demonstrates the methodology for future patent law reform.

Originally published on The Legal 500

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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