When any grantee or applicant, license or assign their patent rights to any licensee then such license or assignment deed holds importance for its assignee and its licensee. Under the Indian Patents Act, 1970 provisions are there to register the assignment deed and license for any Patent Application register under the Patents Act, 1970.
A license agreement/ Assignment deed is an agreement between the right holder and licensee and/or assignee to use rights owned by the right holder in exchange of patent or consideration, in lieu of one time settlement or a periodic royalty. Generally, the agreement may be in writing or oral but under the Patents Act, 1970, Section 68 clearly states that the agreement/ license are not valid until they are registered under the Patents Act along with all terms and conditions following the rights and obligations followed by both the parties in the proper manner. Further, Section 69 of the Indian Patents Act, 1970 embodies the proper procedure for registration of assignment or license agreement in India.
In this article, the concern is discussed as to what is the need for registration of agreement or license in the Patents Act and the consequences, if such is not registered either intentionally or mistakenly? In this article such issue can be understood by referring the case Sergi Transformer Explosion vs. Kumar Pratap Anil & Ors. on 16 April, 2014 1. In this case the Sergi Transformer Technologies Pvt. Limited (herein referred to as "plaintiff") filed a suit injunction against Mr. Pratap Anil, CTR Manufacturing Industries Limited and Mr. Phillipe Magnier (proforma defendant in the light of Section 109(2) of the Indian Patents Act, 1970) (hereinafter referred to as "the Act") as he is the patentee of the suit Patent (herein referred to as "defendants") for infringing the Patent No. 189089 titled as "METHOD & DEVICE FOR PREVENTING/ PROTECTING ELECTRICAL TRANSFORMER AGAINST EXPLOSION & FIRE". The plaintiff claimed to be the exclusive licensee of the above mentioned patent by the virtue of the license given on 01/08/2006. Meanwhile, the plaintiff also initiated the process of agreement registration in the Kolkata patent office dated 15/03/2010. Within this registration process, the defendant filed an application under order VII, rule 11 read with section 151 of the civil procedure code, 1908 to dismiss the above mentioned suit stating the facts that agreement is still not registered in the Patent office and hence it's not valid. The various grounds raised by the defendant is that when the agreement is not registered under the Patents Act, then such license agreement is not valid and duly executed. Further, the licensing agreement signed on 01/08/2006 was not valid till 2010 which the plaintiff used for filing such suit and applied for registration of such document in patent office. Arguing on such factual, the plaintiff stated that the non registration of the licensing agreement doesn't makes it void and also there is no bar under the provision of section 69 and 109 of the Patents Act to bring the suit against infringement filing. Also, in the act there is no time mentioned for request for registration of license agreement/ assignment deed for licensee.
OBSERVATION OF DELHI HIGH COURT
The Hon'ble Delhi High Court, on considering the facts and observations between both the parties, held that Section 68 (before amendment) states that, a license or assignment agreement shall have effect from the date of execution, only on registration and an application for such registration has to be filed with the Controller within six months from the date of execution of document. Post-amendment, Section 69(5) of the Act, says that the validity of the license or assignment agreement as evidence shall only be considered after the document is registered in the Patent office of the Controller, unless the Controller or the Court direct otherwise with reasons recorded in writing. Further, under Section 69 of the Act, there is no time prescribed for filing such an application for registration.
Moreover, the court on reading the Sections 68, 69, 109 and 110 of the Act stated that although there exists no bar to file a suit for infringement by the exclusive licensee even if the license agreement is not registered under the Act, in light of the wordings "unless the Controller or the Court directs otherwise" under Section 69(5) of the Act, the Court clarified that the only case where an un-registered license or assignment agreement shall be admitted in evidence of the title of any person to a patent is- 'if the Controller or the Court specifically directs in this regard in writing'.
Considering such case where the Plaintiff had filed the license agreement before the patent office for registration, the Controller had not passed any specific order. Therefore, the Court held that unless the agreement is registered or the court passes any such order, the license agreement is not to be considered as evidence by the Court. With respect to the averments on the illegality of the license agreement of Sergi Transformer, the Court held that these issues would be considered by the Patent Office when it decides on Sergi Transformer's application to register the agreement. Although the Court declined to dismiss the suit on the basis of lack of registration of Sergi Transformer's license agreement, the Court directed the Patent Office to decide on the registration of Sergi Transformer's license agreement within 6 months from the date of the order. Further, the Court also directed that all pending applications and suit proceedings in relation to the instant subject matter stand adjourned till the Patent Office passes an order on the registration of Sergi Transformer's agreement.
After observing the case stated above, it is clear that the license or assignment deed is valid only when registered in the office of the Controller and further mandatory registration of license or assignment deed in the patent office creates huge back log of pending applications where assignment is to be registered. Such situation is more complex in case of granted patents where assignment is not recorded for longer periods. The court also delays the proceedings as same in this case where court is slow in giving the decision. These pending proceedings for registration of license will be matter concern for licensee and patentees.
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