1 Tech companies, while filing for patents in India mainly rely on the inventions of their employees and as a general practice file application in company's name. During the process of filing application for patent, the employees assign their patent rights to the employer either through pre-assignment which is a part of the employment contract or assignment agreement signed after the invention is realized. The practice of assigning the patent rights becomes necessary owing to a lacuna in the Indian Patent Act, 1970. There is no provision in the Act that clarifies the ownership of the patent invented by an employee under the aegis of an employer. Also, Section 172 of the Indian Copyright Act specifically assigns the copyright to the employer if the invention is made in the course of employment unless there is a contract to the contrary.
Due to the absence of any related provision in the Indian Patents Act, 1970, the assignment agreement backs the employer to register the patent under his name. Since the inventor is considered as the first owner of the patent, the interesting question that arises from this is, what happens when the employees are not made to sign these pre-assignment and assignment agreements?!
There is a gap in the Indian legislation as it has failed to include a 'deemed ownership' provision in the Patents Act, 1970. However, such provisions have been codified in other jurisdictions for example, under Section 393 of the UK Patent Act, Section 13 of the Israeli Patent Act, and Section 6 of the Chinese Patent Act. This deeming provision is based on the principle of "duty to invent" under which a person who has a duty to invent cannot get the patent registered in his name. The rationale behind this principle is that if the employee has used the facilities, technical know-how and resources of the employer, the employer should not be deprived of the benefits. In turn, implying that an employee, who conceived the invention during the 'course and scope of employment' cannot get the patent in his name. This argument of 'duty to invent' was presented before the Bombay High Court in Darius 4 3. But, the court refused to analyse the same as it was not able to critique on the merits of the case as it was an appeal for injunction.
Apart from "duty to invent" argument, there is another way of addressing the ownership i.e., "shopright" principle, which has originated in the United States. Shop-right is a non-exclusive and nontransferable license with the employer to use the invention without any payment of royalties, even if there is no agreement for the same. Under this doctrine, even if the employee, who is the owner of the patent, sells his right in the patent, the employer retains his shop-right in the patent.
The above-mentioned lacuna in the Indian patent law plays a significant role in foreign corporations involved in R&D, when their inventors are Indian employees. 5 Section 39 of the Patents Act states that whenever a resident in India makes an application for a patent or causes an application for a patent to be made in a country outside India, he needs to get permission from the Controller of Patents. For example, a company based in the United States wants to file a patent in the United States, but the inventors are resident Indian employees. Now, it can be argued that the Indian employees, through their patent assignment agreement have 'caused' the application for the patent to be made in the United States thereby requiring permission from the Controller of Patents in India. This becomes a major hindrance in speedy applications and grants of a patent to the employer-company.
With the ongoing ownership regime of patent law in India, the employer is always at a risk of not owning the invention despite making investments for the same and may discourage employers from investing in research opportunities. A similar stance as that in the United States, United Kingdom and other countries will certainly help in resolving the patent ownership issues between the employer and the employee in India. At the outset, the employer should be granted a say in the patent even in the absence of pre-assignment / assignment agreement for the same if the invention was realised using the resources of the employer and during the course of employment.
Footnotes
1 https://spicyip.com/2021/05/the-dilemma-of-employer-employeepatent-ownership-in-india.html
4 https://indiankanoon.org/doc/76799540/
5 https://ipindia.gov.in/writereaddata/Portal/ev/sections/ps39.html
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