Hullabaloo over Working Statement under the Indian Patent Act

The filing of working statement is a peculiar requirement under the Indian Patent Act. Section146 (1) read with Rule 131 (2), requires every Patent holder to submit before 31st March, a statement on Form 27 to declare whether a Patent has been worked or not in India. The structure of the form and details required to be submitted have been subject of intense debate among the stakeholders and Patent office. A public interest petition was filed in 2015 at the Delhi High Court to bring to the court’s attention that working statements are either not being filed or complete information is not being disclosed by the Patentees under garb of it being confidential. The High Court as part of the hearing on the Petition noted the practical difficulties being faced by the Patentees in providing the information. The court directed the Patent Office to take appropriate steps required for effecting the necessary modification in the relevant Form 27. As a result of the court direction the changes in the structure and content of Form 27 have been now proposed (details outlined below). The form was shared with stakeholders, and comments/suggestions sought before implementation. A number of individuals and organizations have put forth their suggestions. This post analyses the proposed changes and how far these address concerns of stakeholders.

The major changes proposed in the new Form 27 are:

  1. details of licenses and sub-licenses are no longer required;
  2. details of importation: country wise detail/s are not required- Only the approximate value/s has to be given;
  3. statement whether public requirement has been met partly/adequately/ to the fullest extent at reasonable price, is no longer part of the form.

The above changes takes into account the concerns of the Patent holders that the current structure of the form sought information that was not only onerous but also confidential. In addition certain changes noted below have been made to the form 27 to address the concerns of patentees:

  1. The form has made a distinction between the product and process patents. It requires a patentee to submit approximate value for manufacturing/ importing in India on the basis of the subject matter of the patent i.e. product and process. Where the subject matter is a process, approximate value accrued from the product(s) obtained directly by that process has to be provided. The fact that figures can be qualified as being approximate value will help to maintain confidentiality and not put the patent holders in a position where they are required to provide exact figures and be held responsible for not providing the exact information.
  2. The form addresses the often raised question i.e. formula for determining the value of each patent worked in case of bundle of patents. The new form provides where the value accrued from a particular patented invention cannot be derived separately from the value accrued from related patents, and all such patents are granted to the same patentee(s). In such cases, the value accrued from all such patents can be provided under product/ process category.

Industry reaction

While, the industry has broadly welcomed the changes, the following concerns appear to have been voiced that have substance:

  1. In case a patent is being worked in India either through manufacture or import of products, its ‘value accrued’ has to be provided. The value accrued is a vague term and needs clarification as it could mean revenue or profit. Further, it is not clear whether the information provided by the patentee will be publicly available or remain confidential.
  2. Companies generally track particular product sales. The product in question may have multiple forms of intellectual property including a trademark, copyright, patent and a design. Thus strapping out the value of the patent from the total sales value of the product appears unrealistic and not feasible.
  1. The new form has taken into account the fact that from a bundle of patents, the value accrued for a particular patented invention cannot be derived separately. Thus, total value accrued from all such patents can be provided. However, it is not clear why a separate form for each patent is required.
  2. In case of non working of patent, justification for not working has to be provided. The word limit in the form is maximum 500 words. However, no guidelines have been provided to complete this section, and stakeholders are struggling to understand the depth of information expected from them. In particular, if statements mentioned below would suffice:
    • that due to the nature of the invention, working of the product cannot be accurately determined; or
    • at this stage patentee is unable to ascertain the specific details. It has a subsidiary company in India which has been granted license to use several of its patents; or
    • Patentee is exploring Indian market for determining need/demand of the product, exploring Business Partners/ Business Channel for commercializing the patent;

Ramifications of not filing working statement

The concerns of the patent holders arise from the fact that they cannot simply ignore filing of working statement considering:

  • It can be a ground for seeking compulsory license for the patent by a person interested;
  • Failure to furnish information is a punishable offence with fine, which may extend to ten lakh rupees (approx US $ 14,300), while furnishing wrong information is punishable with imprisonment which may extend to six months, or with fine, or with both;
  • A Patent can also be revoked on the ground of non-working (Section 85 of the Indian Patent Act); and
  • Working or non-working of a patent is also an important factor considered in patent infringement suits.

To sum up the industry that is most concerned about any changes in the working statement forms and rules is the Indian pharmaceutical industry with tug of war between generic and innovator companies continuing unabated. The compulsory licence granted to Natco (an Indian drug company) of Bayer’s cancer drug Nexavar was based on the data provided by Bayer in Form 27. Now that clause related to “whether reasonable requirement of public has not been met” proposed to be removed from Form 27, the generic pharma companies are terming it a sell out by government in response to the lobbying by US pharma companies. The government thus has to strike a fine balance to address local industry concerns while making it attractive for foreign companies to invest into India. The last word is yet to be written in this saga as the consultations to finalize the Form 27 are still underway.

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