Can non-compliance of mandatory provisions under the patents act, 1970 land you behind the bars?

Technically YES.

The Patents Act, 1970 (hereinafter referred to as the “Act”) is a piece of legislation, penalties under which are largely civil in nature, such as fines, award of monetary damages, injunction, loss of patentee rights including compulsory licensing, abandonment of application or revocation of a patent.

However, violation of certain provisions, such as Section 39 attracts liabilities as set forth in Section 40, and Section 118 of the Act.

In 2002, the foreign filing license (FFL) requirement was introduced in the Act. This requirement required that any inventor / applicant who is a resident of India should file or cause to be filed a patent application for his/her own invention first in India; and only after a period of six weeks after the date of filing of the patent application, a filing could be done in a country outside India. Such a requirement clearly indicates that any Applicant (including inventor) who is a resident of India and desirous to file a patent application firstly outside India is required to U/S 39 to seek a Foreign Filing License (FFL) prior to filing the patent application in any foreign jurisdiction. The principal intent behind FFL is to allow the Indian Patent Office (IPO) to track applications which may be of national importance and/or of sensitive nature, such as atomic energy, defense or national security. It is to be noted that there is no provision under the Act to seek a FFL retrospectively, which makes adherence to the provisions of Section 39 and related Sections that much more critical and important.

Under Section 39: “Residents not to apply for patents outside India without prior permission.—(1) No person resident in India shall, except under the authority of a written permit sought in the manner prescribed and granted by or on behalf of the Controller, make or cause to be made any application outside India for the grant of a patent for an invention unless—

(a) an application for a patent for the same invention has been made in India, not less than six weeks before the application outside India; and

(b) either no direction has been given under sub-section (1) of section 35 in relation to the application in India, or all such directions have been revoked.

(2) The Controller shall dispose of every such application within such period as may be prescribed: Provided that if the invention is relevant for defence purpose or atomic energy, the Controller shall not grant permit without the prior consent of the Central Government.

(3) This section shall not apply in relation to an invention for which an application for protection has first been filed in a country outside India by a person resident outside India”.

It is also important to note that, the scope of Section 39 with respect to “Residents” is not limited to citizens of India or people (citizens of India or elsewhere) living in India. The term “resident” in law is construed to be broader than the term “citizen.” The term “resident” is not defined anywhere in the Patents Act of 1970. The lack of a definition for the term “resident” in the Act necessitates that this interpretation be made from the definition of “resident” as given in the Income Tax Act, 1961. According to the Indian Income Tax Act, an individual is termed as a ‘Resident of India’ if he stays for the prescribed period during a fiscal year i.e. 1st April to 31st March, either for: 182 days or more; or Has been in India in the aggregate for 365 days or more in the previous 4 years. Thus, the scope of who is a resident, while not defined in the Act, can be found in Section 6 of the Income Tax Act, 19611.

Violation of directions under Section 39 attracts civil liabilities under Section 402 of the Act.  Briefly, under the said Section, contravention of Section 39 would result in the application deemed to have been abandoned, and if granted, shall be liable to be revoked under Section 64, sub-clause (n). The language of the provision clearly suggests that non-compliance of Section 39 would severely prejudice the interests of a patent applicant or patentee. A plain reading of the statute suggests that there is no option provided to the applicant to remedy the deficiency, and there are no judicial precedents established by the higher judiciary which may allow any such relief to the Applicant.

More importantly, violations of directions under Section 39 also attract criminal liabilities under Section 1183 of the Act, in which the term of imprisonment may extend to 2 years or a monetary fine imposed on the inventor, in addition to abandonment of the patent application or revocation of the patent even if it is already granted.

It is to be noted that judicial proceedings under Section 118 are to be initiated by the Controller. However, since the Controller has no powers to pass any order of imprisonment, the matter is to be sent to the Courts for formal proceedings.

The language of the said Section, particularly in reference to the word “shall” suggests that judicial proceedings are to be mandatorily initiated and that the Controller has no discretion in the matter. It is up to the Judge’s discretion to pass an order of fine, imprisonment or both. While there is no prior case of prosecution under Section 118, it is important for an Applicant to assume strict compliance in order to avoid unnecessary judicial proceedings.

Therefore, it is in the interests of the Applicant to not only be aware of the provisions of Section 39, 40, and 118, but also take timely action to be in compliance. The said Sections assume more relevance in the present context as many foreign companies have R&D centers in India, research findings of which are filed as patent applications first outside India.  Another common scenario is Indian citizens carrying out research abroad which can lead to generation of patents, or conversely, foreign citizens in India carrying out research. In any of the instances, it is likely that the foreign patent attorney may not be aware of the particular provisions as discussed herein and may inadvertently not only prejudice patentee rights, but also expose the applicant to court proceedings.

Thus, it is always recommended that, in the case of doubt over the residency status of an inventor, it is always safer to first file a patent application in India or to obtain written permission from the Controller of Patents for the grant of foreign filing license and thereby, safeguard the inventor from criminal consequences of Section 118 of The Indian Patents Act of 1970.

ABOUT THE AUTHOR:

Dr. Amitavo Mitra is a Patent Agent and Sr. Patent Associate at Khurana and Khurana, Advocates and IP Attorneys. Views expressed in this article are solely of the author and do not reflect the views of either of any of the employees or employers.

Queries regarding this may be directed to amitavo@khuranaandkhurana.com or swapnils@khuranaandkhurana.com

1Section 6 of Income Tax Act, 1961: (1) An individual is said to be resident in India in any previous year, if he- (a) is in India in that year for a period or periods amounting in all to one hundred and eighty- two days or more; or (b) having within the four years preceding that year been in India for a period or periods amounting in all to three hundred and sixty- five days or more, is in India for a period or periods amounting in all to sixty days or more in that year.

Explanation.- In the case of an individual,- (a) being a citizen of India, who leaves India in any previous year 4 as a member of the crew of an Indian ship as defined in clause (18) of section 3 of the Merchant Shipping Act, 1958 (44 of 1958 ), or] for the purposes of employment outside India, the provisions of subclause (c) shall apply in relation to that year as if for the words” sixty days”, occurring therein, the words” one hundred and eighty two days” had been substituted; (b) being a citizen of India, or a person of Indian origin within the meaning of Explanation to clause (e) of section 115C, who, being outside India, comes on a visit to India in any previous year, the provisions of sub- clause (c) shall apply in relation to that year as if for the words” sixty days”, occurring therein, the words 5 one hundred and eighty- two days”] had been substituted.]

(2) A Hindu undivided family, firm or other association of persons is said to be resident in India in any previous year in every case except where during that year the control and management of its affairs is situated wholly outside India.

(3) A company is said to be resident in India in any previous year, if- (i) it is an Indian company; or (ii) during that year, the control and management of its affairs is situated wholly in India.

(4) Every other person is said to be resident in India in any previous year in every case, except where during that year the control and management of his affairs is situated wholly outside India.

(5) If a person is resident in India in a previous year relevant to an assessment year in respect of any source of income, he shall be deemed to be resident in India in the previous year relevant to the assessment year in respect of each of his other sources of income.

(6) A person is said to be” not ordinarily resident” in India in any previous year if such person is- (a) an individual who has not been resident in India in nine out of the ten previous years preceding that year, or has not during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and thirty days or more; or (b) Hindu undivided family whose manager has not been resident in India in nine out of the ten previous years preceding that year, or has not during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and thirty days or more.

2 Section 40 of Patents Act, 1970: “Liability for contravention of section 35 or section 39.—Without prejudice to the provisions contained in Chapter XX, if in respect of an application for a patent any person contravenes any direction as to secrecy given by the Controller under section 35 or makes or causes to be made an application for grant of a patent outside India in contravention of section 39 the application for patent under this Act shall be deemed to have been abandoned and the patent granted, if any, shall be liable to be revoked under section 64”.

3 Section 118 of the Patents Act, 1970: “Contravention of secrecy provisions relating to certain inventions.—If any person fails to comply with any direction given under section 35 or makes or causes to be made an application for the grant of a patent in contravention of section 39 he shall be punishable with imprisonment for a term which may extend to two years, or with fine, or with both”.

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