India: Does Establishment Of Utility Model Make Sense?

Last Updated: 16 February 2018
Article by S.S. Rana & Co. Advocates

What is a Utility model?

Utility model provides a relatively short-term right (6 to 10 years) without renewal or extension possibility, granted for inventions/ innovations that may not qualify the stringent criteria of patentability. Not all countries offer the protection under Utility model.

There is no universal acceptance of the word "Utility model", different countries have different terminology, like in Australia, utility model protection is referred as "Innovation Patent", in France as "Utility Certificate", and in Belgium as "Short term Patent".

The countries and regions providing utility model protection are: Albania, Angola, Argentina, ARIPO, Armenia, Aruba, Australia, Austria, Azerbaijan, Belarus, Belize, Brazil, Bolivia, Bulgaria, Chile, China (including Hong Kong and Macau), Colombia, Costa Rica, Czech Republic, Denmark, Ecuador, Egypt, Estonia, Ethiopia, Finland, France, Georgia, Germany, Greece, Guatemala, Honduras, Hungary, Indonesia, Ireland, Italy, Japan, Kazakhstan, Kuwait, Kyrgyzstan, Laos, Malaysia, Mexico, OAPI, Peru, Philippines, Poland, Portugal, Republic of Korea, Republic of Moldova, Russian Federation, Slovakia, Spain, Taiwan, Tajikistan, Trinidad & Tobago, Turkey, Ukraine, Uruguay and Uzbekistan. In India, utility model protection is not available at present.

How India can be benefitted from Utility model.

India is a rapidly growing country with a large number of start-up companies getting registered every day. A high majority of these start-ups companies provide regular services in an out-of-the box way. These ways may be innovative but lack inventive-step criteria for patentability. In such cases, utility model concept may be most appropriate IP right.

Unfortunately, due to lack of the utility model system in India, majority of the Indian companies and Startups with innovative working models cannot opt for patent protection Due to this, such companies often face the situation of rise in competition with copied ideas, unfair market practices, market loss etc.

It is also seen that a section of Start-ups companies with Indian origin prefer to operate in the countries with extended type IP protection. It is not deniable that the Small and Medium Enterprises (SMEs) and MSMEs acquire prominent position in a developing country like India. Utility model protection would benefit Small and Medium Enterprise Businesses, since they usually suffer from shortage of funds for conducting tests and trials and paying hefty patent fees.

In recent years Indian IP regime has taken several initiatives to promote Intellectual Property, and one of the heated debates till date remains as to whether India should opt for Utility Model or not?

Going forward, if India pronounces a utility model, it would be beneficial for its developing Startups and SME's industry in the Indian market as well. In addition, efforts would be required to make the public at large be aware of the regime.

Points to be considered while formulating the laws for utility model protection in India Inventive step threshold

A utility model should be adopted with less stringent requirement of "inventiveness" and with an easier registration system. The system should be technically less complex so that it may be exploited by the Start-ups and SMEs. In case, the proposed invention in a patent application does not involve any inventive step and are quite obvious, but have utility and are definitely innovative, then a utility model should be proposed by the Patent Office to the applicant. Thus, the requirement of inventive step may be done away with in Utility Models.

Novelty criteria

The criteria of novelty should not be lowered and to be made an essential criterion for Utility model protection. However, selective absolute novelty criteria should be applied to judge if an incremental invention is worthy of protection under utility model.

Grace period

A grace period (between 6 months to 12 months) should be provided to the innovators for protecting their innovation from the unauthorized disclosure of their invention.

The aforesaid protection shall be beneficial for the small and medium enterprises who tend to bring their invention into the limelight in scientific/ commercial conferences so as to attract investors.

Protection period

The protection period ought to be lesser than that granted under the Patents Act. For exampleutility model protection should be granted for a period not beyond ten years.

Formal examination (Le stringent examination)

A stringent substantive examination of the application for Utility Model would not be essential and only a formal examination with focus on novelty should be conducted by the Examiners/Controllers.

Registration procedure

The procedure to secure a utility model protection should be simple, non-complex and fast. The time period from filing to grant should ideally between six months to 1 year. In case of issuance of examination reports, the objections should be complied with within two-three month from issuance of examination report, similar to that of Designs.

Legislation

A separate legislation with respect to utility model protection would be required, as already there for Design protection, to maintain the separation and organization of Utility model.

Transmutation

Transmutation of Patent applications to Utility model applications should also be allowed if the Utility model is implemented i.e. the applicant is able to convert the patent application to the Utility model application, if the invention lacks inventive step or gets rejected on the grounds of obviousness, but have the potential of being commercially exploited.

Utility model regime in different countries

  • Australian Chapter- (Paradigm Shift in Utility Patent Law)

Australia is one of the countries that rendered protection for an Innovation Patent (Utility Model Protection) for a period of around 8 years. The Innovation Patent has a low threshold requirement for inventiveness, and can essentially provide strong protection for inventions that may otherwise not meet the higher inventiveness requirements. Almost every subject matter that can be safeguarded under the Australian Standard Patent System is allowed protection under the Innovation Patent System.

However, the Australian Government has recently announced scrapping off the innovation (utility model) patenting system. The Government of Australia is of the view that majority of small and medium-sized enterprises (SMEs) who use the existing innovation patent system do not obtain value from it, and therefore the system imposes significant costs on third parties and the broader Australian community.

Possible Effects of the Abolishment

A Colossal Setback for Australian Patent Regime

The revocation of Innovation Patent System is likely to be considered as a major setback for Australia.

Once the transition is implemented, the innovators would have to follow the requirements of the Standard Patent System of Australia which is considered to be stricter than the Utility Model System/Law.

This revocation step shall decrease the number of filings for the innovations. Also, the local companies and startups which seek utility patent protection may apply for protection and prefer to initiate business in the countries that follow the utility patent system.

  • European Chapter

In Europe, there is no international agreement establishing utility model rights allowing to obtain protection in more countries, as is the case for patents. Only national utility models are available. which may be obtained in Albania, Austria, Bulgaria, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Poland, Portugal, Slovakia, and Spain.

There is currently no arrangement of utility model system in the United Kingdom.

  • German Chapter

A utility model is an IP right created under German law. Enforcement of German Utility models is limited to Germany, without application to the rest of Europe. Utility models are registered through the German Patent and Trademark Office. These applications can be applied directly, or branched off from pending German, European, or PCT patent applications.

The German utility model provides for a protection period of 10 years and is generally registered within 6 to 10 weeks after filing. In Germany, for example, one can file applications for both a patent and a utility model for the same subject matter, enabling a company/individual to obtain both immediate short-term protection (utility models) and stronger long-term protection (patents) for an invention, as an intelligent market strategy.

  • Japanese Chapter

The Japanese Utility Model Act (JUMA) protects "a device that relates to the shape or structure of an article or combination of articles and is industrially applicable". Japanese utility models have a term of 10 years.

Brief comparison of Utility models in major industrialized countries

Country

Germany

Japan

France

Korea

Australia

China

Term

10 years

10 years

6 years

10 years

8 years

10 years

Different

standar d for

obtainin g?

Yes

Yes

No

No

Yes

Yes

 

Novelty

Require ment

novelty

grace period of 6

month s.

Same as

pate nts

Same as paten ts

Same as patents

Same as Patents

Same as Patents

Subject for protecti on

except

proces ses and

shape,

cons truct ion,

etc.

Same as paten ts

shape,

constru ction, etc. of

Same as Patents

shape or

structur e of

product

metho ds

of an artic le

an article

Substantive

Examin ation

No

No

No

Yes

No

No

Comments

lower

standa rd of inventi veness than patent s

lower

stan dard of inve ntive ness than pate nts

No

coexis tence with paten ts

Inventive step require d

lower

standar d of

"innova tion" than regular patents

lower

standar d of

inventiv eness than patents

Conclusion

Innovations are growing rapidly but in terms of filling them, India is lacking behind. The experience of most Utility Model Patent seems very promising and beneficial to the Start-ups and SMEs. If India opts this comprehensive model, then it will be able to fill the gap between the patentable inventions and non-patentable inventions.

The Utility Model may serve as a remedy for the shortcomings of the Indian patenting system, provided that they are enforced within a legal structure conducive to our domestic economy and industry. The utility model, if and when implemented, should aim at supplementing the patent system and not erode it. It should in fact facilitate the flow of innovation and creativity in the nation to take the country to a higher level in terms of innovation and economy.

For further information please contact at S.S Rana & Co. email: info@ssrana.in or call at (+91- 11 4012 3000). Our website can be accessed at www.ssrana.in

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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