India: Submission Of Working Report: A Mandate Requirement For Every Patentee And Licensee

Last Updated: 29 January 2018
Article by Aayush Sharma

The mandate requirement of working statement for every patent granted in India has been very well defined in section 146 (2)the Patents Act, 1970. The working statement requirement can be fulfilled by submitting the prescribed Form 27 at the Patent Office, each year within 3 months from the end of the calendar year, i.e. by 31st March of the subsequent year.

The working statement is a declaration required from the patentee or the licensee, stating if the patent has been commercially exploited / implemented / worked in India to meet the reasonable requirements of the public at a reasonable cost in the last calendar year, along with other details and reasons, as applicable. Non-compliance to the working statement may increase the risk of compulsory license and revocation of the patent in India. Also, the patentee or the licensee shall be punishable with a fine which may extend to ten lakh rupees for non-submission of the working statement. Despite the risk of revocation and huge penalty, it seems that the compliance mandate requirement by the right-holders is not fulfilled d at the Patent Office.

In 2015, a writ petition was filed in public interest, at the Delhi high Court, pointing out serious lapses in the filing of "patent working" documents by various patentees. Filings under Form 27 are meant to indicate how patentees have (or have not) worked the patent for the public benefit. Even those patentees who have filed the working statement, took it very lightly and submitted only scanty information. At the time of filing petition, the petitioner examined over 150 filed Form 27s relating to life saving drugs, high technology inventions and public funded research units. Based on the study, the petitioner found that many patentees have failed to submit annual returns.

Amongst the submitted forms, a number of them were either incomplete, evasive or defective. The sample also included shocking instances where patentees cited 'confidentiality' and refused answers to particular queries in the Form. The petitioner pointed out several other instances where requirement of working statement had been taken very lightly and vague information was submitted. Government's Annual Report too, shows that over 30 per cent of patentees did not submit Form 27s in 2013. The Patent office has issued 43920 patents during the year 2012-13, but returns as prescribed under Form-27 have been received only from 27946 patentees; and, shockingly, only 6201 patents have been disclosed as being worked by the patentees. No action was taken by Controller General (CG) under Section 122.

Sample Case Study:

NATCO Pharma, which was granted a compulsory license for an important anti-cancer drug, did not disclose as to how it was operating the license (and the quantum of drugs it was selling etc.). This despite the fact, that the Patents Act requires such reporting on working of patents even from licensees. Even the compulsory licensing order issued by Controller General had mandated that NATCO submit all information pertaining to quarterly sales.

The Petitioner also queried the CGPDTM regarding the action in case of M/s NATCO Pharma having failed to comply with the said requirements. In its response the petitioner has been informed that as per its records "no details are available".

Another shortcoming can be seen where Ericsson, in respect of Patent No. 203034 of August 24, 1999, mentioned against the column "the licenses and sub-licenses grant during the year" that as all the license are confidential in nature, the details pertaining to the same shall be provided under specific direction from the Patent Office.

The petitioner pointed that so far as the grant of patents is concerned, pertinent information is available on the website of the Patents Office. All that the patentees submitting Form-27 are required to submit, is the details of the licenses and sublicenses. This information cannot be termed "confidential" and therefore, the Patents Office must treat such suppression as failure to comply with the requirements of Section 146 of the Patents Act, 1970 and to take action against the patentees who do not furnish the required information.

The respondent, when came apprised about the above-mentioned facts, stated that concerns raised by the petitioner are valid and it is not adversarial litigation. The Respondent admitted that no action had been initiated under Section 122 so far. He also stated that Government was re-examining the form itself in view of the glaring defects pointed out in the petition.

After hearing the submissions, the Bench expressed disappointment with the state of affairs and directed the respondents to file a status report before the next date of hearing on the extent of non-compliance and action taken. In particular, it asked the Government to state what steps were taken after filing the writ petition and the course of action planned to rectify the form.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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