India: Experimentation / Research Exemption In Indian Patent Law: Scope And Ambit Of Section 47(3) Remains Uncertain!

Last Updated: 8 December 2017
Article by Dinesh Kumar Sharma

Section 47(3) of the Indian Patent law i.e. Patents Act, 1970 (as amended) ("Act") provides for experimentation / research exemption to patent infringement. Section 47 of the Act reads as follows:

"47. Grant of patents to be subject to certain conditions.—The grant of a patent under this Act shall be subject to the condition that—

(1) any machine, apparatus or other article in respect of which the patent is granted or any article made by using a process in respect of which the patent is granted, may be imported or made by or on behalf of the Government for the purpose merely of its own use;

(2) any process in respect of which the patent is granted may be used by or on behalf of the Government for the purpose merely of its own use;

(3) any machine, apparatus or other article in respect of which the patent is granted or any article made by the use of the process in respect of which the patent is granted, may be made or used, and any process in respect of which the patent is granted may be used, by any person, for the purpose merely of experiment or research including the imparting of instructions to pupils; and

(4) in the case of a patent in respect of any medicine or drug, the medicine or drug may be imported by the Government for the purpose merely of its own use or for distribution in any dispensary, hospital or other medical institution maintained by or on behalf of the Government or any other dispensary, hospital or other medical institution which the Central Government may, having regard to the public service that such dispensary, hospital or medical institution renders, specify in this behalf by notification in the Official Gazette." 

Statutory Evolution

At the time of Independence, India's patent regime was governed by the Patents and Designs Act, 1911. Shortly after Independence, in 1949, a committee was constituted under the chairmanship of Justice (Dr.) Bakshi Tek Chand, to undertake a comprehensive review of the working of the 1911 Act. In 1957, another committee came to be appointed under the chairmanship of Justice N. Rajagopala Ayyangar to take a fresh look at the law of patent and to completely revamp and recast it to best sub-serve the contemporary needs of the country.

Justice Ayyangar submitted a comprehensive Report on Patent Law Revision in September 1959 and the new law of patent, namely, the Patents Act, 1970, came to be enacted mainly based on the recommendations of the report, and came into force on April 20, 1972, replacing the Patents and Designs Act, 1911.

Justice Ayyangar in his report noted that the right of research workers to use the invention – whether it be an article or a process – for the purposes of carrying out experiments – in the course of research, as distinguished from use for a commercial purpose is one matter in connection with the right of patentees which requires to be clarified. In this connection, while taking note of the uncertainty of the law on this topic in the U.K., Justice Ayyangar took the view that "I consider it desirable that the law should specifically exempt use of the patented articles or processes or the use of articles or products made by the use of the patented process or patented machine or apparatus for experimental purposes from being actionable as an infringement."

Justice Ayyangar also disagreed with the view taken in the case of United Telephone Co. v. Sharples, (2 RPC 28) that the use of an infringing article for the purpose of instructing pupils – pulling out the article to pieces and putting them together – was not a 'mere experimental user' and amounted to an infringement. Justice Ayyangar suggested that the insertion of the words 'including the use of the patented article or process for the purpose of imparting instruction to pupils' in the clause would avoid the above interpretation. Justice Ayyangar finally suggested a redraft of Clause 27 prescribing Rights of a patentee1 containing an exception as follows:

"(2) Notwithstanding anything in this Act, the making or using of a patented machine or apparatus or other article, or the use of a patented process or the use of an article made by the use of the patented process, machine or apparatus for the purposes merely of experiment or research including the imparting of instruction to pupils and not by way of commercial use, shall not be deemed to constitute an infringement of the rights conferred on a patentee by this Act."

Section 47 as it stands now on the statute book was originally introduced in the Patents Act, 1970 and since then it has remained untouched.

Examining Jurisprudence

The "experimentation/research" exception captured under Section 47(3) of the Act, though at first blush, appears to be fairly wide, but its scope and ambit is yet to be tested in a Court of law in India.

Although there are couple of cases wherein the Court had occasion to interpret Section 47 of the Act, these decisions were rendered in a different context i.e. in the context of patent litigation related to Government tenders. Despite seemingly broad scope of protection, the exact contours of the exemption provided by Section 47(3) still remain not completely clear and any inquiry into its applicability remains highly fact-specific. For instance, Section 47(3) is silent about certain aspects like liability of third party who performs a driving test for a prototype vehicle on the public road in India, assuming that the prototype vehicle is equipped with a patented technology owned by a competitor.

This article attempts to address the above question by exploring the related case laws, a prevailing interpretation of laws, or any other related information.

Although Section 47(3) uses terms like "experiment" or "research" which are not defined anywhere in the statute, what is noteworthy is that the phrase "experiment or research including the imparting of instructions to pupils" used in this provision is qualified by the term "merely", which means that an activity can qualify under this provision only if it is limited to experiment or research and this usage would limit the scope of the terms "research" and "experiment".

Indian Case Laws:

Although there is no Indian case law directly related to the above issue, one can derive some light from the Indian cases of Garware Wall Ropes Ltd. v. M/s. A. I. Chopra, Engineers & Contractors and Konkan Railway Corporation Ltd., [2009 (111) Bom LR 479] and Low Heat Driers (P) Ltd. v. Biju George and Anr., [2010 (2) KHC 566] wherein the Court had occasion to interpret Section 47 of the Act as a whole.

In Garware Wall Ropes Ltd.(Supra), a case related to Government tenders, the Bombay High Court observed, inter alia, as follows:

"18. Perusal of the above two provisions clearly show that rights of the patentee under Section 48 of the Act are curtailed by provisions of Section 47 of the Act. But then careful reading of Section 47 of the Act shows that these rights are not curtailed in entirety even in respect of Government...It is noteworthy that all Sub-Sections of Section 47 i.e. (1) (2) (3) and (4) of the Act every time uses the terminology, namely, for the purpose 'merely of its own use'....21. Perusal of the above provisions show that the said terminology 'merely of its own use' has been deliberately used in Section 47 of the Act in contrast to the provisions of Sections 99 and 100 of the Patents Act, viz. for the purposes of Government, for the purposes of Central Government, State Government or Government undertaking. The words 'merely of its own use' have been utilized with a definite purpose and it cannot be said that the Parliament used different words in Sections 47, 99 and 100 of the Act for no reasons or for no intentions. In my opinion, all these words 'merely of its own use' would mean use for the purposes of the Government by any department of the Government and use by servants and agents of the Government in performance of their duties/in discharge of their duties assigned to them irrespective of who is benefited by such use. This would not include use by any other person like contractor of railways and the meaning is strictly restricted to the direct use by any department of the Government or its servants in the performance/in the discharge of their duties. This is all the more so, because for such use contemplated by Section 47 of the Act, no payment of royalty is at all contemplated to the patentee....23. For the above reasons, therefore, if any other interpretation is put.., the net result would be that a patentee inventing a patent by utilization of huge money and manpower involving scientists, technocrats and technicians would be left high and dry and this would definitely be detrimental to the encouragement of scientific and technical advances in the country." (emphasis supplied)

It may be pertinent to note that in a similar manner, an emphasis was placed by the Delhi High Court in the case of Bayer Corporation v. Union of India & Ors. [W.P (C) 1971/2014], and Bayer Intellectual Property GMBH & Anr. v. Alembic Pharmaceuticals Ltd. [CS(COMM) No.1592/2016] on the words "solely for the purposes of.." used in Section 107A(a) of the Act which is commonly referred to as the "Bolar" exception. The Court in its judgment dated March 8, 2017 observed, inter alia, as follows:

"..It is thus 'the purpose for which the said acts are done' which distinguishes, whether the acts constitute infringement of patent or not. If the said purpose is within the confines of Section 107A, the acts so done would not constitute infringement and the patentee cannot prevent a non-patentee from doing them. However, if the purpose of doing the acts of making, using, selling or importing a patented invention is not solely for the purposes prescribed in Section 107A, the said acts would constitute infringement of patent and patentee can prevent non-patentee from doing them."

In another case of Low Heat Driers (P) Ltd. (Supra), the Kerala High Court, observed, inter alia, as follows:

"..It is true that Ext. A-17 patent is granted subject to the conditions specified under Section 47 of the Act which are really the superior right of user of the Government or the user for experiment or research or for imparting of instructions to pupils and the like and not for the commercial exploitation by any private individual.." (emphasis supplied)

Foreign Case Laws:

  1. Bell Helicopter Textron Inc. & Bell Helicopter Textron Canada Ltd. v. Airbus Helicopters, case No. B 15-20.554

As regards, foreign judicial precedents that may have persuasive value in addressing the above question, there is a recent decision dated July 5, 2017 issued by the Court of Cassation (Court of final appeal) in Bell Helicopter Textron Inc. & Bell Helicopter Textron Canada Ltd. v. Airbus Helicopters, case No. B 15-20.554. In this case, the Court of Cassation dismissed the "prototype" defense raised by Bell Helicopter and deemed the presentation of a prototype as an offer for sale and thus an act of infringement.

Airbus Helicopters, filed an infringement case against Bell Helicopter, based on French patent No. FR 2749561 directed to a landing gear with skids. In 2005, U.S. group Bell Helicopter presented a first version of a helicopter called Bell 429 which incorporated the claimed landing gear to the public. The Paris Tribunal de Grande Instance (TGI) (High Court of Paris) in 2012, rejected all infringement claims, as well as all invalidity counterclaims. The Paris Cour d'appel (The Court of Appeal of Paris) in 2015, partly reversed, upholding the validity part of the first instance judgment but reaching a different conclusion on infringement. 

The Paris Cour d'appeal negatived Bell's contention that the first version of Bell 429 was a prototype and observed, inter alia, as follows:

"Offering for sale extends to any material operation aiming at putting a product in contact with potential customers, at preparing a commercial  launch, even if said product, which in the present case was not yet approved, could not be marketed. Indeed, this presentation of a competitior's product in France may turn away part of the competitior's customers...This offer, in this circumstances, is an act of infringement."

The Paris Cour d'appel also dismissed Bell's defense based on article L. 613-5 of the Intellectual Property Code, which provides a list of exemptions as follows:

"The rights afforded by the patent shall not extend to: 

a) Acts done privately and for non-commercial purposes; 

b) Acts done for experimental purposes relating to the subject matter of the patented invention. 

[...]"

The Paris Cour d'appel dismissed Bell's defense as Bell could not prove that any scientific experimentation had been performed. Therefore, the presentation was deemed commercial in nature.

Being aggrieved by the decision of the Paris Cour d'appel, Bell preferred an appeal before the Court of Cassation. However, the Court of Cassation rejected the appeal. In appeal, Bell raised the "prototype" defense again according to the following two main points:

  1. A mere prototype [was presented] in a private context and within a narrow circle of specialists; the prototype had not yet flown, and was later subjected to several modifications; in the absence of any prior certification, it could not be marketed; [this] cannot correspond to putting on the market nor even to a preparatory act for such putting on the market.
  2. The acts committed related to the statutory experimental exception. The sole use of the landing gear could by itself aim at studying its behavior and therefore relate to the experimental exception.

However, as regards point 1, the Court of Cassation observed that the standard applied by the Cour d'appel was the right one, in particular because "the presentation of the product as a prototype can divert part of the clients of the patented product". Further, as regards, point 2, Court of Cassation refused to accept that the acts committed related to the statutory experimental exception, as no test and no act of research were performed when the first version of the landing gear was presented. Furthermore, the Court of Cassation observed that the absence of evidence of any experimental testing was sufficient to reject the experimental exception.

  1. Inhale Therapeutic Systems Inc. v. Quadrant Healthcare plc

In the case of Inhale Therapeutic Systems Inc. v. Quadrant Healthcare plc, [(2002) R.P.C. 21] the Patents Court had occasion to interpret Section 60(5) of the UK Patents Act, 1977 which reads as follows:

"(5) An act which, apart from this subsection, would constitute an infringement of a patent for an invention shall not do so if-

...

(b) it is done for experimental purposes relating to the subject-matter of the invention;"

The Court refused to regard exploitation of products intended to sell the technology to third parties as experimental which suggests that the acts entirely directed to commercial development rather than the attributes of the invention are not "experiments".

  1. Monsanto Co. v. Stauffer Chemical Co. and Anr.

Further, in Monsanto Co. v. Stauffer Chemical Co. and Anr., [(1985) RPC 515], the High Court of Justice – Patents Court held Section 60(5) not to extend to such field trials which were intended to widen the commercial market for the product. It was held that Section 60(5) limits experimental purposes to those relating to the subject matter of the invention. The High Court observed, inter alia, as follows:

"As a matter of language that limitation seems to me to restrict the paragraph to experiments directed to the patented invention as such, experiments such as testing whether a patented product can be made, or a patented article made to work, as described in the patent specification, or experiments to see whether the patented invention can be improved or testing the effect of a modification in some particular to see whether it is an improvement or not. But the limitation would, it seems to me, as a matter of language, exclude from the exemption of the paragraph use of a patented article or process in experiments to test or evaluate some other product or process—the purpose of any such experiments would not relate to the subject-matter of the patented invention.

Again, it seems to me that the limitation would exclude tests or trials having as their purpose achieving or extending the commercial acceptance of some commercial embodiment of the patented invention—such tests or trials would not, it seems to me, as a matter of language, be for purposes related to the subject matter of the patented invention. I am fortified in that view in that I feel it cannot have been the intention of the legislature to include in the exemptions from infringements of paragraph (b) of section 60(5) tests or trials intended, as their purpose, to promote the commercial prospects and acceptability of a product, ex hypothesi an infringing product, with a view to its wider or better marketing by the infringer when he should be free to market it, as, for instance, when the patent expires."

  1. CoreValve Inc v. Edwards Lifesciences AG & Anr.

The experimental use defence was also considered in a decision, CoreValve Inc v Edwards Lifesciences AG & Anr. [(2009) FSR 8], wherein the Chancery Division, Patents Court observed that an experimental use defence would not have been available, since CoreValve had mixed purposes in conducting its experiments and the experimental purpose was not the preponderant one. It was observed that if the envisaged commercial gain is immediately realisable, the exception will not apply. In this case, the experiment was found to have been done primarily to 'generate revenue'. As such, the experimental use defence failed.

Conclusion

Based on the above, it appears that Section 47(3) defence would be applicable in the given scenario only if it is shown by way of evidence that the subject activity is limited to experimentation or research and does not involve commercial exploitation or use of the patented technology.

In the absence of judicial precedents in India directly related to the above issue and the lack of clarity on the scope of the exception, it may not be that easy to predict with certainty whether Section 47(3) defence would be applicable in the given or other possible similar scenarios. Nevertheless, it is evident that Section 47(3) is relevant in the Indian scenario as the public policy objective behind this exception is to ensure that the patent rights should not hinder experimentation or research or technical education and accordingly it may be given a wide scope and ambit by the Courts in India. Despite this seemingly broad scope of protection, the exact contours, reach and ambit of the exemption provided by Section 47(3) still remain not completely clear and any inquiry into its applicability remains highly fact-specific.

It is hoped that the day will come soon when a fitting case involving interpretation of Section 47(3) will reach the High Courts, allowing jurisprudence on the subject to be revisited and statutory provisions to be interpreted in a manner suited to the true intent behind their promulgation, thereby providing much-needed clarity and the legal certainty on the issues involved, benefitting both patentees and third parties.

Footnote

1 "27. Rights of a patentee. – (1) Subject to the provisions of this Act, a patent granted either before or after the commencement of this Act, shall confer upon the patentee:

  1. where the patent is for an article or substance, the exclusive right by himself, his agents or licensees to make, use, exercise, sell or distribute such article or substance in India;
  2. where a patent is for a process of manufacturing an article or substance the exclusive right by himself, his agents or licensees to use or exercise the process in India and of using or selling in India articles or substances made by such process and of authorising others so to do.
  1. Notwithstanding anything in this Act, the making or using of a patented machine or apparatus or other article, or the use of a patented process or the use of an article made by the use of the patented process, machine or apparatus for the purposes merely of experiment or research including the imparting of instruction to pupils and not by way of commercial use, shall not be deemed to constitute an infringement of the rights conferred on a patentee by this Act."
  2. The rights conferred on the patentee by this section shall be exercisable only subject to the provisions of any other law in force.

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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