Patent Truth and untruths in India

By Hari Subramaniam (Subramaniam & Associates)

Posted: 23rd November 2017 08:12

History
 
While India is often considered to be a nascent jurisdiction, the reality is that India had its first codified Patent legislation over a century ago in the form of Indian Patents & Designs Act, 1911. Under this legislation, Indian Courts also had important judicial pronouncements including the equivalent of what is today known as “Gillette defence”. However, post 1947, when India became independent, it was felt that Indian Patent legislation required considerable revamping in view of the socio-economic conditions prevailing that time. In addition, it was noticed that while more that 90% of the patents granted in India were for foreign corporations and institutions, almost all of them were never exploited in the country. Therefore, with a review to safeguard national interests, our existing Patents legislation was repealed and replaced by the Patents Act, 1970. The salient features of the Patents Act were:
 
- no patents for food, drugs and chemical substances per se;
-patents for processes for preparing food or drugs were give a truncated term of seven years from the date of filing or five years from the date of sealing whichever was shorter;
-term of patent for all other areas of technology was entitled to term of only 14 years from the date of filing;
-commercial working of patents in India became mandatory, with failure to do so attracting compulsory licenses;
-strong provisions for pre-grant oppositions and revocations introduced.   
 
In 1994, India became a signatory to the GATT/TRIPs agreement and was given a 10 year period to make its Patent laws compliant with the TRIPs agreement. As a result, several amendments were made to our Patents Act, 1970 and pharmaceutical products finally became patentable with effect from 1 January 2005. India also joined the Paris Convention and Patents Co-operation Treaty on 7 December 1998. Since that time the number of patent applications being filed in India has been gradually but steadily increasing.
 
Indian Patent Office Statistics
 
During the year 2014-15, 42,763 patent applications were filed. The trend of the last five years in respect of patent applications, filed, examined, granted, refused and abandoned are given below:
 
Years 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015
Filed 39,400 43,197 43,674 42,951 42,763
Examined 11,208 11,031 12,268 18,615 22,631
Granted 7,509 4,381 4,126 4,227 5,978
Disposal (granted + refused/ Abandoned) 12,851 8,488 9,027 11,411 14,316
 
2. Recent changes to Indian Legislation:
 
There have been regular changes to tour procedural law in recent times with a view to making the patent grant more transparent and a little faster. Some of the most recent changes are discussed below:
 
2. 1. Patent Rules Amended. The Patent Rules, 2003, have been amended by The Patent (Amendment) Rules, 2016 which came into force on 16 May 2016. The amended rules bring in the following important changes:
 
2.1.1. New Applicant Category. A new applicant category ‘Start-up’ has been introduced. A Start-up may be a private limited company, a registered partnership firm or a limited liability partnership, which satisfies the following criteria:
-incorporated/founded not more than 5 years back,
-does not have a turnover of more than INR 25 crores (approx. USD 38,50,000) in any financial year, during the past 5 years, and
-is working towards innovation, development, deployment or commercialisation of new products, processes or services driven by technology or intellectual property (this activity has been clarified to be the creation or addition of value for customers or workflow)
-Fees applicable to a Start-up are the same as those applicable to a natural person. A ‘Start-up’ can also avail of the expedited examination procedure provided under the Revised Rules.
 
2.1.2. Reduced Examination response time. In an attempt to expedite the grant procedure, the time line to file a response to the first examination report (FER) has been reduced from one year to six months from the date of issuance of FER. This period of six months may be further extended by three months by filing for a request for extension of time before the initial period of six months. Retroactive extensions are not possible.
 
2.1.3. Adjournments. The Indian Patent Office now rarely issues a second Office Action. If the response to the first Office Action does not overcome all the objections, a hearing is appointed. A hearing may be adjourned on showing good cause and filing a request for adjournment with prescribed fees at least three days before the date of the hearing. There can be only two adjournments and each adjournment cannot be more than 30 days. In case of an adverse decision, an appeal may be preferred before the Intellectual Property Appellate Board.
 
2.1.4. Digitisation. It is now mandatory to file all documents in the Patent Office electronically, i.e. via the IPO e-filing portal. However, documents such as proofs of right, assignments, licenses, powers of authority, priority documents are still required to be submitted in original. A new Form 30 has now been included. Where no Form is so specified for any purpose, the applicant may use this new Form for making submission to the Patent Office.
 
2.1.5. Expedited Examination. For expediting the grant procedure, a request for expedited examination has been introduced for applicants who choose India as an International Search Authority or an International Preliminary Examining Authority in the corresponding international application by paying the prescribed fees.
 
2.1.6. Reduction of claims on National Phase Entry. It is now possible for the applicant to delete claims at the time of National Phase entry in India. Apart from deletion to reduce the number of claims, no substantive amendment can be carried out at the time of filing. Voluntary amendments may be effected after filing the application.
 
2.1.7. POA filing mandatory. The Patent Office shall take no action on an application till the power of attorney (POA) is filed. The POA is now required to be filed within a period of three months from the date of filing of an application.
 
2.1.8. Withdrawal of patent application and refund. A provision has been introduced for withdrawal of a patent application. It is also possible to obtain a refund of 90% of fees paid for request for examination/expedited examination, if a request for withdrawal of a patent application is made before the issuance of the first examination report. If the official fees were paid more than once for any proceeding, the excess fee will also be refunded. Apart from these, no other refund of fees is possible.
 
2.1.9. Faster examination of divisional application. A divisional application can be immediately referred to the examiner for examination provided the parent application has been referred for examination; a request for examination has been filed for the divisional application and the divisional application has been published.
 
2.1.10. Capping of Maximum Official fees for sequence listing. Maximum Official fees for sequence listings has been capped as INR 24,000 for natural person and start up, INR 60, 000/- for small entity and INR 1,20,000 for large entity.
 
3. Procedural Changes:
 
3.1. To make the Patent Office a paperless Office, it is now mandatory to file all documents to the Patent Office by electronic transmission i.e. via the IPP e-filing portal. The First Examination Reports (FER) and subsequent office communications shall also be communicated by e-mail. The Patent Office has more or less dispensed with physical service of communications.
 
3.2. To clear the back log and expedite the grant procedure, 300 new Examiners have been recruited.
 
3.3. The Indian Patent Office has launched a new search facility - the Indian Patent Advanced Search System (INPASS) with full text search capability along the lines of EPO, USPTO and WIPO search facilities.
 
3.4. An Electronic fund Transfer Facility for PCT Applications filed with the Indian Patent Office as Receiving Office has been operational from 1 April 2016.
 
3.5. A request for expedited examination has been introduced for applicants who choose India as an International Search Authority or an International Preliminary Examining Authority in the corresponding international application and for start-ups.
 
3.6. The Government of India has launched "Scheme for Facilitating Start-ups Intellectual Property Protection (SIPP)" to promote awareness and encourage IPR protection amongst Start-Ups under Make in India and Skill India drives.
 
4. New IPR Policy:
 
The Union Cabinet approved the National Intellectual Property Rights Policy on 12 May 2016 making it the first of its kind for the country. It is expected to “lay the future roadmap for intellectual property in India. The Policy recognises the abundance of creative and innovative energies that flow in India, and the need to tap into and channelise these energies towards a better and brighter future for all”.
 
5. New Computer Related Inventions (CRIs) Examination Guidelines:
 
After several deliberations the Indian Patent Office issued a set of Guidelines for the examination of CRIs in November 2015. Within a month or two they were put into abeyance and a new set issued in February 2016. These guidelines for examination of CRIs suggest that the Examiners may rely on the following three stage tests in examining CRI applications:
 
-properly construe the claim and identify the actual contribution;
-if the contribution lies only in mathematical method, business method or algorithm, deny the claim;
-if the contribution lies in the field of computer programme, check whether it is claimed in conjunction with a novel hardware and proceed to other steps to determine patentability with respect to the invention. The computer programme in itself is never patentable. If the contribution lies solely in the computer programme, deny the claim. If the contribution lies in both the computer programme as well as hardware, proceed to other steps of patentability.
 
There have been oppositions to this very narrow test for patentability of CRIs and it is to be seen how it withstands the scrutiny of time and the Courts.
 
6. Department of Industrial Policy and Promotion (DIPP) paper on Standard Essential Patents (SEPs):
 
With the storm brewing in the litigation arena over infringement of SEPs, the DIPP has issued a paper inviting comments from stakeholders over various issues related to SEPs. The moot point is whether the Government should interfere in these issues or let the market forces decide.
 
In 2012, India granted its first post-independence compulsory license to Natco Ltd, for the manufacture and sale of Bayer AG’s patented anti-cancer drug, Nexvar. This generated a huge panic amongst foreign multi-nationals. However, contrary to the popular belief that there will be a spate of compulsory licenses, in Lee Pharma Ltd. v. AstraZeneca AB, C.L.A No. 1 of 2015 the Controller rejected an application for a Compulsory License and held that the Applicant had failed to provide evidence along with application, or during hearing, or by supplementary submission, and failed to satisfy the Controller regarding any of the grounds as specified in Section 84(1) of the Act. Controller held that a prima facie case had not been made out for making of an order under Section 84 of the Act and therefore rejected the application for grant of compulsory license. This is such a rejection of an application for compulsory license since Natco Ltd was awarded a compulsory licence.
 
7. Recent judicial developments:
 
Injunctions
 
The Delhi High Court has been very proactive in granting injunctions against defendants in recent years, despite the fact that petitions for revocation of patents were pending. Novartis AG was successful in injuncting several defendants from infringing its patent for vildagliptin, an anti-diabetic compound. Similarly, Merck Sharp successfully restrained various generics from infringing its patent for sitagliptin, another anti-diabetic medicine.  This is good news, dispelling any myth that India does not uphold patent rights.  
 
F Hoffman LA Roche v Cipla Limited CS (OS) 89 of 2008 renumbered as CS(COMM) 414 of 2016: In a significant move, the Division Bench of the Delhi High Court passed its judgment on 27 November 2015 (reported as 2016 (65) PTC 1) holding that Cipla was infringing Roche’s patent. However, in view of the imminent expiry of the patent in question, the opinion of the Court was that equity was tilted towards Cipla - no injunction was granted. Cipla then preferred a Special Leave Petition against said judgment, challenging the observation on infringement and the findings of the Ld. Division bench qua Section 3(d) of the Patents Act, 1970. The main contention of Cipla in its petition was against the finding “that the molecule claim for a substance can subsume all isomers and polymorphic forms of the main molecule.” The leave was granted and is pending adjudication. Further, Roche has also filed a cross-petition against the refusal of an injunction, despite the finding of infringement of its patent.
 
Standard Essential Patent (SEP) litigation in India
 
Following a spate of SEP litigation involving Ericsson’s patents in 2013, several matters revolving around the question of SEPs are being adjudicated in Indian courts, pertaining to the grant of injunctions and competition and anti-trust complaints (filed mainly by defendants) and portfolio licensing, among others. In general, the Courts have so far been inclined to pass interim orders to safeguard the interest of the SEP holder. By far the most significant IP litigation in this area has been between Ericsson and various telecommunication companies like Micromax, Gionee, Intex, Xiaomi, Lava and iBall. Significant developments include the following:
 
-interim injunctions having been granted against unwilling licensees;
-royalty payments directed at the interim stage;
-agreements with similarly placed parties having been perused by the Court under confidentiality terms when determining royalties;
-the understanding that companies potentially selling similar telecommunication devices (viz., 2G/3G) could still be placed differently and hence different rates may apply to them (e.g.: Micromax and Gionee); and
-ETSI IPR policy being recognised.
 
The Competition Commission of India and SEPs: After the institution of a suit for infringement of an SEP, defendants inevitably raise the question of ‘abuse of monopoly’ by SEP owners. Various defendants have filed formal complaints along these lines before the Competition Commission of India as counter blast to the enforcement of SEPs.
 
In Telefonaktiebolaget LM Ericsson (Publ) v. Competition Commission Of India and Another W.P.(C) 464/2014 & CM Nos.911/2014 & 915/2014, a writ filed by Ericsson in the High Court of Delhi to prevent the CCI investigation and quash the CCI order holding Ericsson’s conduct while licensing its Standard Essential Patents prima facie constituted abuse of dominance. While considering the jurisdiction of the CCI to commence any proceeding in relation to a possible abuse of dominance by an SEP holder, the court analysed the background and intent behind the Competition Act as well as the Patents Act and considered potential issues of overlap between the natures of both acts. It was determined that while both Acts are special to each of their fields, with respect to patents, the Patents Act would be a special Act vis-à-vis the Competition Act. However, the Court finally held that there is no irreconcilable repugnancy or conflict between the Competition Act and the Patents Act. And, in absence of any irreconcilable conflict between the two legislations, the jurisdiction of CCI to entertain complaints for abuse of dominance in respect of Patent rights cannot be ousted.
 
Other important cases:
 
S. M. Anand Vel v. Union of India, Controller General of Patents Designs & Trade Marks (Mumbai), CGPDTM (Chennai), Assistant Controller Patents (Chennai), 2015 – 4 LW 78: This writ petition was filed to challenge the order of the Controller of Patents refusing a patent application under Section 15 of the Indian Patents Act, without first providing an opportunity to be heard.
 
The patent application in question had been examined by the Controller three times. The Applicant responded to every examination report issued by the Patent Office, and made amendments accordingly, including the third report, which contained a completely new set of objections that had not previously been raised. Following the Applicant’s response to the final office action, the Controller held that the application was deemed to have been abandoned under Section 21(1) of the Indian Patents Act. No opportunity to be heard was provided to the Applicant. As a result of the writ petition, the Court remanded the matter to the Controller to be duly reconsidered. It was also held that the Controller should first provide an opportunity of a hearing to the Applicant under Section 15, before refusing the application.
 
The Delhi Network of Positive People Vs. Union of India & Ors. W.P. (C) No. 2867/2014 (unreported): This public interest litigation (PIL) was filed to request the Court to prevent the misuse of the process of filing divisional patent applications in order to keep the parent application alive. The PIL sought various directions against the Ministry of Industry and Commerce, Controller General of Patents and Joint Controller of Patents & Designs regarding the procedure and regulations for accepting, proceeding and examining divisional applications filed by Applicants in order to prevent the Applicant form filing multiple divisional applications. The Court refused to interfere with the procedure followed by the Patent Office for divisional applications.
 
Monsanto (Gene Patenting and Related Aspects): Mahyco Monsanto Biotech India Pvt. Ltd. (MMBL) produces two version of the Bt. Cotton gene, both of which, when introduced to the genome of the cotton seed, render cotton crop resistant to Bollworm and other pests. MMBL is the Indian licensee for BG-II technology, and currently further licenses said technology to fifty seed companies in the country at a royalty or trait fee. These companies, represented largely by the National Seed Association of India (NSAI), then produce the resistant cotton seeds and sell them onward to farmers. Several legal proceedings are currently in progress in high courts in New Delhi and Karnataka, as well as before the Competition Commission of India. While a number of parties are involved in these proceedings, the main issues raised are the following:
 
-Whether or not the Government (both state and central) is permitted to regulate the Maximum Sale Price of Cotton Seeds to farmers, potentially eating into profits of the seed companies, even as MMBL’s trait fees remain exorbitant and its monopoly in the market persists;
-Whether MMBL ought to be permitted to retain said monopoly despite possessing a valid patent over its BG-II gene technology;
-Whether seed companies may continue to sell seeds created by them, using MMBL’s patented
technology, when MMBL wishes to revoke licenses on the ground of non-payment of royalties; and finally, the ownership of the cotton genome, once the cotton seeds have been produced, given that the technology belongs to MMBL, but is implemented by the seed companies.
 
The NSAI has set out its stand and legal strategy in a number of press releases over the last several months. It is of the opinion that the cotton seed as eventually sold to farmers contains intellectual property that belongs not merely to MMBL, but also to the seed company in question, and its sale is therefore subject to regulation not only by patent law but also by the sui generis legislation in the Protection of Plant Varieties and Farmers Rights Act, which in turn, unsurprisingly, contains rather liberal exceptions to the monopoly granted by patent rights. No decision on merits has so far been made on any of the issues enumerated above, but given the scale of the various contemporaneous disputes raging on these matters, and the enormous impact it is likely to have on the fate of thousands of farmers across the country, decisions are awaited with bated breath.
 
Conclusions
 
With the revamping of the IP laws, greater transparency in examination and recruitment of new examiners, the IP climate in India is expected to improve. It is also heartening to note that the present government is committed to promoting innovation and protection thereof, and the Courts no longer hesitate to grant injunctions against infringers even when revocation petitions are pending. India is an important market with a huge customer base, and with the national IPR policy tilting towards the rights holders, we expect the filings to increase steadily.
 
Hari Subramaniam is an attorney-at-law with a background in Biological Sciences. He is the Managing Partner of a leading New Delhi-based IPR law firm, Subramaniam & Associates (SNA) which has a staff strength of 60 with 20 highly qualified Scientists and Lawyers. He has been in practice in the field of IPR laws for 35 years and has been involved in over 30,000 cases in India and abroad spanning diverse areas of technology including several important and landmark cases in India.
 
Extensively travelled with experience working in several countries, he is a major contributor to and a regular speaker at various workshops and seminars in Intellectual Property Laws conducted worldwide. He is also an expert faculty for several institutions like Indian Law Institute, New Delhi, Faculty of law, Delhi and Academy of Intellectual Property Laws, Mumbai. He has authored several articles relating to his subject which have been published in leading International books and journals.
 
He has been invited several times as an expert witness before the Parliament for amendment of Patent laws and has played a key role in the development of Patent laws in India. He is also called upon by the Judicial Academies to train judges on Patents Laws. In August 2002, he was invited by the Prime Minister of Mauritius to advise the Mauritius Government on amendment of their IPR Laws. He has been felicitated as the “King of Patents in India” at Asia-Pacific Jurists Summit in October 2005.
 
Voted as “Leading Asia IPR Lawyer” by Asia Law for fifteen consecutive years, he is currently, the Councillor and an International Vice President of Asian Patents Attorneys Association based in Tokyo and President of Asian Patents Attorneys Association, India Chapter. He has also been voted as a leading IP lawyers by various law magazines such as “Managing Intellectual Property”, “Chamber & Law”, “Asia Legal 500”, IAMS, etc. and as IP lawyer of the Year 2013 by Corporate INTL as well as M&I Acquisition and Legal. He was featured in the cover story “50 IP Lawyers you should know in Asia and Pacific” in the March issue of “Asia IP”.

Hari can be contacted on (+91 11) 30165700 or by email at sna@sna-ip.com

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