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Congratulations if you have secured a patent in India – truly well-deserved going through all that you’ve gone through. It could now be of relevance for you to know about a compliance requirement pertaining to your patent(s). A statement of working of the patented invention in India is required to be furnished to the Indian Patent Office under Indian Patent laws. Currently, in India, this aspect is receiving much attention and the government is taking steps to modify the disclosure requirements. This short note does not dwell much on the rationale behind this requirement, or the changes intended to be brought about. Rather, the discussion is limited to the fact that the statement of working of patent must be filed in Form 27 with the Indian Patent Office every year before 31stof March information pertaining to the previous calendar year. Since quite a few of our readers and followers have recently become patent holder for the first time, this note is intended to provide basic information to them and what one needs to do to comply with this requirement.
Statement of Working of Patents in Form 27:
As per Section 146 of the Indian Patents Act, 1970 (hereinafter “Patents Act”) and Rule 131(1) of the Indian Patent Rules, 2003 (hereinafter “Patent Rules”) a patentee and/or licensee of an invention patented in India is required to furnish a statement regarding the working of the patented invention on commercial scale in India. The patent licensee, in this case, could be an exclusive or non-exclusive licensee. The statement is to be furnished in Form 27 either in hard copy or electronically, either on their own or through a Patent Agent/ Patent Attorney. Patentee/ Licensee based outside India would have to engage an Indian Patent Agent/ Attorney for this exercise. No government fee is applicable for submitting this statement.
Due date for submitting Form 27:
The information has to be furnished by 31st of March each year, unless specifically asked by the Controller, and is required to contain information pertaining to the preceding calendar year. So, for example, by 31st March 2020, Form 27 has to be submitted with information about working of the patented invention for the period 1st January 2019 to 31st January 2019.
Is it mandatory to file Form 27? What happens when Form 27 is not submitted or false information is submitted?
Your patent will not get abandoned/ revoked immediately for failure to file a statement of working of invention in Form 27. However, you might be paving the way for full or partial loss of rights, including revocation of your patent for continually failing to furnish information on working of patents. To cut long story short, Indian Patent laws allows for grant of compulsory license of Indian patents to third parties under certain conditions, one of them being that the patented invention is not worked or not worked sufficiently in India. Non filing of the Statement does provide an opportunity to third parties to seek compulsory license. Separately, under section 122 of the Patents Act, fine up to Rs 10 lakhs (approx. equivalent to USD 14,000 or EUR 13,000 or GBP 11,000) can be imposed for failure or refusing to furnish information.This is enhanced to imprisonment up to six months, or with fine, or both in case false information about working of patent in India is furnished.
What kind of information is required to be furnished:
Firstly, you need to mention in Form 27, whether you are at all working your patent in India or not. If you are, then you required to also mention reason(s) for not working and steps being taken for the working of the invention. If you are working the invention in India, then broadly you need to furnish commercials details which would include the quantum and value of the patented product being manufactured or imported, details of licenses and sub-licenses granted during the year. Lastly, you would have to state whether public requirement (in India) has been met, at a reasonable price either partly, adequately or to the fullest extent.
Nuances relating the information required to be furnished in Form 27:
If the patent is not being worked in India, then along with stating to the negative, a patentee can provide valid technical/ commercial reasons for not working the invention in India. This could include reasons such as the patentee is pursuing further research or trials, patentee waiting for market to develop, or the patentee is actively pursuing for development of a market, including potential collaboration and /or licensing opportunities etc.
When the invention is worked in India, then from a patent portfolio management point-of-view, it might be helpful to bucket the patent(s) either as one involving a single unit which could be sold individually in the market, say for example a new device or a new chemical entity. In certain other cases, the patented invention may have multiple technical applications or attributing sales value to that patented technology out of total sales may not be easy. Thus, zeroing-in on the numbers, both in terms of the number of products sold based on the technology and in terms of quantifying the value (in Rupees) of sale in India. Sometimes an added layer of complexity arises when the information, either fully or partially ought to be kept confidential. In such a scenario ‘balanced’ approach specific to the case could be taken keeping in mind the relevance of the patent to the company, information available about working of patent in India and level of comfort patentee has about disclosing such information. A best estimate of direct or indirect sales can be provided, it could be supplemented with information obtained from certain public sources, like market data, company’s annual report, etc. In certain cases, a statement can be made that further information may be provided as and when asked by the Controller.