Delhi High Court takes notice of PIL seeking strict enforcement of filing of “Working statement” requirement under Indian Patent laws

working_statementOn September 1st, 2015 the Delhi High Court admitted a Public Interest Litigation (PIL) filed by a group of lawyers and academia demanding strict adherence to the filing of “working statement” in respect of granted patents in India as required under Section 146(2) of the Indian Patents Act, 1970.

The PIL is based on a previous study conducted on working of granted patents in India in respect of three fields: pharmaceutical (specifically life-saving drugs), telecommunication, and inventions originating from public funded research institutions. As per the report about 35% of the patentees failed to show the working status of their patents during the period 2009 to 12 and of the filed statements were either incomplete defected or incomprehensible.

Section 146(2) of the Patents Act, 1970 read with Rule 131 of the Patent Rules, 2003 requires every patentee and its licensee to file an annual statement as to what extent the patent is commercially worked in India. The format for this disclosure is prescribed in ‘Form-27’, and requires an admission as to-whether the patented invention was worked in India or not and if worked; then provide the quantum and value of the working. Failure to file the statement or providing incorrect information can face penalty of Rs. 10 lakhs (USD 26,000). Similar requirements are also prescribed under the provisions of the Companies Act[1] and the Income Tax Act[2], where the Patentee has raised revenues by licensing patent rights in India. The petitioners in the PIL has claimed that the Indian Patent Office has not been strictly enforcing this requirement in law which not only violate the statutory mandate but also hamper the right of the people who wish to apply for necessary licenses relying on the working status of the patent. One of the prayers in the PIL also reflects the general industry sentiment for changing the format of the Form 27. Form 27 as it currently stands is not adequate to indicate the working patents granted in many industries other than the pharmaceutical industry.

The Delhi High Court has issued notice to the Central Government to file its reply within 4 weeks.The matter is now listed for November 17 and the team LexOrbis will keep you posted on this issue.

[1]Sections 129 and 137 read with Schedule III of the Companies Act requires that every company must submit a detailed Financial Statement along with the Auditor’s Report each year to the Registrar of Companies. This also includes reporting on the sales of patented products, licensing activities and other transactions arising out of patent rights.

[2] Section 80RRB read with Rule 19AD of the Income Tax Act, 1961 and Rules allow patentees to claim deductions over royalty income and requires them to submit detailed information of their licensing practices in accordance with the format specified as FORM-10CCE.