Filing of patent working statements (Form 27s) in respect of granted Indian patents is a unique and significant, yet controversial, requirement under Indian patent jurisprudence. It is part of the patent bargain, i.e., patents should be worked in the countries where they are granted so that socio-economic benefits ensue therefrom. Lack of patent working can have serious consequences under Indian law, as discussed herein. The requirement is controversial, at least for pro-patent maximalists, for this very reason, and is often labelled as 'excessive'. We explore this working requirement, why controversies surrounding it are essentially misplaced, and how the proposed amendment regarding Form 27 timelines might be unnecessary.
The 'Working' Requirement
Section 146, Patents Act, 1970 ('Patents Act') requires that information/ statement regarding commercial working of an Indian patent has to be submitted (i) when so required by the Controller, or (ii) suo motu by the patentee and every licensee (exclusive or otherwise) at regular intervals.
Rule 131, Patent Rules, 2003 ('the Rules') requires that the statements have to be furnished "once in respect of every financial year, starting from the financial year commencing immediately after the financial year in which the patent was granted, and shall be furnished within six months from the expiry of each such financial year", in duly verified Form 27, and the same might be published by the Controller.
Refusal or failure to furnish the information/ statement to the Controller which is required by or under section 146 is punishable with fine that may extend to ten lakh rupees (Section 122(1)(b)). If the information/ statement furnished is false or the person submitting the same "either knows or has reason to believe to be false or does not believe to be true", then punishment can include imprisonment up to 6 months or fine or both. However, there is no official data on whether fine or imprisonment is being imposed. Pertinently, the IPO in its response dated 09th January 2014 had admitted that, at the time, no action had been initiated for non-submission of Form 27- a fact recognized by Delhi High Court.
Non-working & Denial of Interim Injunction
Working patented inventions is critical for the socio-economic development, boosting industrial development, and job creation in the granting country. Otherwise, patent offices and patent monopolies would be maintained without any benefits to the granting state. Recognizing this, a Division Bench (DB) of Delhi High Court1 refused interim injunction since the Plaintiff had not worked the patent in India- a precedent often pressed in service by Defendants in patent infringement disputes. The DB opined that accepting the patentee's contention regarding non-working "would seriously affect the market and economic conditions in our country in asmuchas it would enable a mechanical device, invented abroad (or in India) to be registered in India and kept unused thereby excluding public of its benefit, and, at the same time precluding a similar device being produced or used in our market or industry".
Non-working and conduct of patentees
Recently, the Delhi High Court, while dealing with FMC's request for interim injunction in context of a process patent for manufacturing an agro-chemical, noted the following in context of patent working and Plaintiff's conduct,
"The plaint claims that the process covered by the suit patent is 'commercially very successful... This is in stark contrast with the Form 27 dated 8th September 2022 where it is categorically admitted by the Plaintiffs that the product is not being worked in India..."
In its conclusion, while rejecting interim relief on several grounds, the Court made important observations about how non-working might be linked to lack of industrial applicability, thus leading to denial of interim reliefs,
"The non-working of the suit patent for more than 20 years from the priority date and 19 years since filing in India, raises serious doubts as to the industrial applicability of the suit patent itself. Although the threshold for industrial applicability at the time of granting a patent is not very high, at the stage of interim injunction, where the invention has not been worked for more than 19 years and the term of the patent has nearly expired, this Court would be hesitant to grant an interim injunction".
Compulsory Licenses & Working
One of the grounds for granting Compulsory License in India, under Section 84, is "that the patented invention is not worked in the territory of India". An application seeking the same can be made by a person interested to the Controller "at any time after the expiration of three years from the date of grant of a patent". The provision is technology neutral. Thus far, a solitary compulsory license (See, decision dated 09th March 2012 in Natco's application in relation to Bayer's drug Sofraneib Tosylate here) has been granted since 2002, (i.e., in 21 years since the current Indian Compulsory Licensing regime was introduced).
US criticisms & ground realties
The 2023 Special 301 Report of US Trade Representative continues to place India on priority watch list stating, "Patent issues continue to be of particular concern in India". It maintains that reporting requirements under patent law are "excessive". However, the truth about reporting is quite different, as amply demonstrated by the following data,
Table: India's Form 27 compliance (source: IPO's Annual Report, 2021-22)
|Patents in Force
|Form 27 received
|Reported as working
Amongst the patents in force, as per Indian government statistics, barely 8.30% are worked. If one goes by patents for which Form 27 was filed, an astonishing 82.52% haven't been worked. This raises serious questions about (i) benefits accruing to the Indian state from grant of patents, (ii) IPO's enforcement of working requirements and whether any action is taken under Section 122 when statements are not filed, or are false, (iii) the apparent disregard of statutory provisions by patentees, (iv) implications for grant/denial of Compulsory Licenses/ Interim reliefs in patent litigation, and (v) most importantly, is there anything to be gained from relaxing the Form 27 reporting requirement envisaged under draft Patent Rules' amendment- when hardly any patents are worked and a single compulsory license has been granted as noted above.
Are the proposed amendments to Form 27 timelines unnecessary?
The amended Rule 131 in the Draft Patents (Amendment) Rules, 2003 published on 22nd August 2023, proposes that Form 27 "shall be furnished once in respect of every period of three financial years, starting from the financial year commencing immediately after the financial year in which the patent was granted, and shall be furnished within six months from the expiry of each such period" with possibility of condonation of delay in filing the same. If the draft amendment goes through, Form 27 will have to be filed for a patent in interval of 3 years beginning from the grant thereof.
Consequently, will it be difficult for a person seeking compulsory license or objecting to an interim relief claim to demonstrate non-working? Since Form 27s would be filed at 3-year intervals, during the in-between period, there would be no official and public data submitted by the patentee to demonstrate working or lack thereof. This might have potential ramifications for, at least, (i) the Compulsory Licensing regime, and (ii) how requests for interim reliefs are dealt with especially where Plaintiffs make conflicting statements as in the FMC dispute above. Another instance where Form 27s can be of considerable importance is to potentially weed out attempts at evergreening. The Delhi High Court had vacated an ad-interim injunction for Ticagrelor noting there is a strong challenge to that Ticagrelor is not 'disclosed' in the genus patent in light of identical Form 27s filed for the genus patent as well three other specie / selection patents stating all of them were worked through sales of identical volumes of Ticagrelor).
Considering the importance of Form 27s, if the statutory requirements are altered as proposed by the aforesaid draft amendment, patentees might be able to secure interim injunctions while not working patents for years, completely disregarding nuances of Indian law- nuances which had been carefully designed keeping in mind the Indian socio-economic context. Interim reliefs are extremely important in the Indian context- for ensuring access and preventing patentees from abusing the patent system, especially since another DB of Delhi High Court had noted that "trial and final arguments take time in India" owing to the low judge-population ratio.
This raises an important question-Will the proposed amendment become a tool for the more seasoned and strategically sound big players- most of whom as per IPO's own data2 are not Indian- to overcome safeguards in Indian patent law that balance public interest and the constitutional commitment to social welfare? Only time will tell.
1. Franz Xaver Huemer v. New Yash Engineers, AIR 1997 Delhi 79
2. The Annual Report, 2021-2022, of IPO notes at page 26 that, "As on March 31, 2022 the number of patents in force was 115916 out of which 19700 belonged to Indian patentees" implying that only about 17% of granted Indian patents are held by Indian patentees.
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