India: Working Statement: A Unique Legal Requirement Under Indian Patent Laws

Last Updated: 6 March 2018
Article by Deepak Singh

The filing of an annual working statement by the patentee and licensees thereof of a granted patent in India is a unique, but debated requirement under Indian Patent laws. The debate is not only because this requirement substantially increases the workload and costs for the patentees. For certain industries, such as ICT and other hi-tech industries, it is impractical and in some cases almost impossible to collect relevant and correct information that needs to be furnished in the working statements. The format prescribed for submitting the statement (Form 27) presumes that each granted patent results in the production of one or more product and therefore it is easy for the patentee to keep track of the quantum of production and the sale of such products in India. The reality is far away from this position particularly in cases of patents forming part of a portfolio or pool program.

The second leg of the debate cloaks over the definition of "working", a term which is not defined anywhere in the Indian Patents Act, 1970 (the Act) or rules made there under.Section 83 of the Act which describes the general principles applicable to the working of the patented invention suggests that patents are not granted merely to enable patentees to enjoy a monopoly for the importation of patented article in India. This principle,however, is once again far from the changing industry dynamics since local manufacturing in all cases is not only impractical from acost perspective but in certain cases impossible due to unavailability of capacities and skills. The courts in India have in the recent past recognized those dynamics and held importation of patented product in India as "working" of the patent.

Shrouded under these debates, the requirement of filing of working statement is now under the judicial scrutiny of the Delhi High Court in a public interest litigation which highlights how lightly the patentees have taken this legal requirement despite penal consequences and how the Patent Office, which is mandated to initiate such penal consequences, has overlooked its duty so far. The Court hearing this writ petition has observed that the major difficulties in ensuring compliance with the requirement of filing of working statement are in the manner in which Form 27 has been worded or formatted. The counsel representing the Government agreed to this position and the Government was directed by the Court to submit a timeline on the manner in which it would be taking steps required for effecting the necessary modification to the prescribed forms. The Court also recognized the absence of adequate procedures in Patent laws to enforce compliance with this requirement and the Government is likely to soon bring anamendment to the Patent Rules to lay down such procedure.

For your reference the current legal provision related to filing of working Statement are as under:

Section 146(2) of the Act requires every patentee and every licensee (whether exclusive or otherwise) to furnish a working statement each year as to the extent to which the patented invention has been worked on a commercial scale in India.

Rule 131(1) of the Patent Rule prescribes a specific format (Form 27) for submission of the statements which need to be filed with the Indian Patent Office within 3 months from the end of every yeari.e. by before 31st March of every year for the previous calendar year.

The patentee or licensee can opt either of two tabs provided in Form 27 i.e. "worked" or "not-worked".

If worked, then the patentee needs to provide the quantum and sale of the patented product manufactured in India and/or imported into India. In case of importation, the patentee needs to provide country wise details from which such product was imported into India. In case any license is issued by the patentee to work the patent in India, then patentee needs to provide the details of license such as the name and particulars of the licensee. In case the patentee believes that other particulars such as commercial information associated with such license are confidential in nature and ought not to be made public, the patentee can make a request to the Patent Office to keep such information confidential and the Patent Office is required to take a considered view on such request. Last but not the least the current format of Form 27 requires the patentee to make a statement whether the reasonable requirement of the public in India in respect of the patent has been met partly, adequately, or to the fullest extent. This is a tricky statement for a patentee to furnish unless it is fully aware of the market requirements in India.

If "not worked", then no other information need to be given except the reasons for not working, which could be that the patented invention is not fully developed into a marketable product, invention is under regulatory approval, the market is not mature for the patented invention, the patentee is on a lookout for right partner/licensee, etc.

The purpose and objective of asking this information from the patentee and licensee and then making it public, is to inform the public and particularly a person interested in the patent to check if the patent is worked or not to meet the reasonable requirement of the public in India. If not, then the person interested in the patent can approach the patentee to obtain license to work the patent in India. And if the patentee refuses to grant such license on reasonable terms or ignores such request, then the said person can approach the Government for issuance of a compulsory license.

Non-filing of working statement or filing of "not worked" statement do not affect the legal status of the patent and it is not deemed as abandoned or cancelled. However, non-filing of working statement or knowingly furnishing of the incorrect statement may lead to criminal penalties including a fine up to USD 15,000 approximately or imprisonment, respectively.

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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