The first administrative encounter in the long road to patent protection is with the Indian Patent Office (the 'IPO'). Here, the Controller is the key decision-maker in matters of the grant and renewal of patents. Naturally, this decision-making authority, powerful as it is, is also safeguarded through various legal provisions so as to be shielded from abuse.
Occasionally, patent applicants may fumble, unintentionally, in meeting the procedural requirements of the Indian patent system, failing to, say, submit documents within the prescribed time, or in the prescribed manner. To ensure that principles of natural justice are not compromised, such situations may warrant an exercise of discretionary powers that an authority may have under the law. A rigid and strict application of the black letter of the law in matters of procedural irregularities may adversely affect the rights of the parties. Acknowledging that such situations may arise, and recognising that a balanced solution must be found, the Patents Act, 1970 (the 'Act') and the Patent Rules, 2003 (the 'Rules') provide the Controller with powers to condone procedural irregularities, to enable patent applications or granted patents to proceed in their course.
The significance of this rule came to the fore in a recent case involving the restoration of an Indian patent, where renewal fees were not paid on time, and the restoration application was not filed within the prescribed period of 18 months. In its decision, the Intellectual Property Appellate Board (the 'IPAB') restored the patent, stating that the Controller has vast powers to condone any procedural irregularity and ensure that principles of natural justice are followed.
Rule 137 of the Patent Rules
Rule 137 empowers the Controller to allow the amendment of any document or the condonation of any irregularity in a procedure under the law. Dealing with the 'Powers of Controller generally', the rule states:
"Any document for the amendment of which no special provision is made in the Act may be amended and any irregularity in procedure which in the opinion of the Controller may be obviated without detriment to the interests of any person, may be corrected if the Controller thinks fit and upon such terms as he may direct."
Applying this rule in the case of Rubicon Research Pty Ltd. vs. The Controller General of Patents & others (Order in OA/18/2014/PT/KOL dated August 21, 2020), the IPAB held that the Controller can condone any irregularity in a procedure, by keeping within the parameters of law and by observing the principles of natural justice.
The IPAB interpreted this rule to be akin to a residuary provision. It said that it was incorrect to presume that there was no provision in the Act or the Rules to condone or extend the time limit for filing an application for restoration, or that the Controller had no discretion in allowing a delay in filing an application for restoration of a lapsed patent. Noting that many cases of restoration have been cleared even by the courts, and that it was settled law that a party who has behaved in good faith should not suffer due to mistakes committed by his advocate/attorney, the IPAB reversed the Controller's decision, and directed that the patent be restored subject to the appropriate fees being paid.
The Patentee claimed rights of restoration on the basis of its conduct in good faith. To understand this position better, it is useful to examine the facts of the case. Indian Patent No. 202639, was granted by the IPO in March 2007. Although filed in India in 2003, this was a national phase application claiming priority from Australian patent applications filed in 2000. Once the patent was granted, the Patentee was required to pay all the annuities that became due from the 3rd year onwards, within three months from the grant of the patent.
Lapses due to former patent agent
The then agents of the Patentee failed to pay the accumulated renewal fee within this time period. To complicate matters, the agents also failed to inform the Patentee that this fee was not paid, or that the failure to pay the fee would result in the patent being abandoned. They also did not tell the Patentee that the renewal fee could still be paid within a period of 6 months by filing a request for extension. As a result of the failure to pay the fee the patent lapsed in June 2007.
Meanwhile, the Patentee sent numerous emails to their agents on record asking them for a copy of the patent and enquiring as to when the next renewal fee would be due. For over two-and-a-half years after the lapse of the patent, the agents on record did not respond to the repeated enquiries of the Patentee. In September 2009, the agents wrote a letter informing the Patentee that the patent had lapsed due to non-payment of annuities. In this letter, the agents stated that they had filed an application for restoration of the patent, but that this had not been accepted by the IPO.
Restoration efforts before Controller
The Patentee then engaged another firm to take up the matter. The new agents discovered that no request for restoration of application had been filed by the previous agents. The new agents filed a request for restoration of the patent along with a petition under Rule 137 for condonation of the irregularities in not submitting an application for the restoration of the patent, and for non-payment of renewal fees. However, the Controller refused to grant leave to file the application for restoration. On grounds that the statutory provisions (Section 60 of the Act) for restoration already provided for prescribed timelines and procedures, the Controller held "Rule 137 may be acted upon where no special provision is laid down in the Patents Act and hence cannot be taken into account towards deciding the matter in respect of application for restoration." In summary, it said that "the petition under Rule 137 is not considerable."
Appeal to IPAB
Against this order of the Controller, the Patentee filed an appeal at the IPAB. The Patentee argued that the Controller had not followed the procedure under Section 61 of the Act in considering its application for restoration. Section 61 provides that two factors must be considered when granting leave to file an application for restoration. Firstly, it must be seen if the failure to pay the renewal fee was unintentional or not. Secondly, it must be considered if there has been no undue delay in making the application.
In this case, the Patentee argued that they always had the intention to maintain the patent, as can be seen from the documents on record, which included numerous emails to the previous agents. Secondly, the Patentee argued that they were never informed of any timeline for the payment of arrears in renewal fees, the extendable period of payment of arrears, or for filing an application for restoration. Thus, the failure to pay the renewal fee was unintentional, and beyond the control of the Patentee. Having received the patent certificate only in October 2010, over 3 years after the patent was granted, the Patentee did not have knowledge of the application time-line for payment of annuities till such period. Accordingly, the patent only lapsed due to the failure of the former agents to perform their duty towards the Patentee. The Patentee further argued that there was no undue delay in making the application for restoration of patent, as the Patentee only received information from that patent office that no previous application for restoration had been filed by the former agents in December 2011.
The Patentee also argued that the Controller had misinterpreted the scope of Rule 137, and failed to appreciate that the Rule empowers the Controller to condone any irregularity and is not limited to circumstances where no special provision is laid down in the Patents Act.
In its order, the IPAB held that the Controller had decided the matter without considering and following the principles of natural justice and settled law. The Controller had argued that the communication made to the agent was equivalent to the communication made to the Patentee in the present case, but the IPAB held that this was not established as per the evidence on record. On the contrary, the IPAB held that the Patentee and their current agents were not aware about the situation, and as soon as they came to know, prompt action was taken.
With this, the IPAB set aside the order of the Controller and allowed the application for restoration filed by the Patentee.
The Controller's power to grant, refuse or restore a patent is a crucial factor in establishing the IP rights of an inventor. The Controller's power to condone irregularities in the patent process is an equally critical determinant of such rights. The absence of a strict regulatory and accountability mechanism in India for this purpose means that patent applicants and holders are at the mercy of patent agents here. This is especially true for foreign patent applicants and holders, who do not have the boots on the ground to monitor the quality of agent service. With the high stakes involved in patent rights, it becomes imperative to assure such applicants and rights holders that their interests remain protected, particularly when they have acted in good faith.
With this decision, the IPAB has reaffirmed that the power to condone procedural irregularities is a necessary component of the Controller's bouquet of powers, to be exercised with caution, and due regard to the boundaries of the law, and the principles of natural justice. In particular, behavior in good faith, prior knowledge, and intention, are all important considerations. If these are clearly established, they can positively influence the Controller's decision in cases where condonation or amendment is required.
Disclosure: the Patentee was represented by O&A, its current agent-on-record, before the IPAB.
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