27 Mar 2018

Significance & Importance of ‘Statement of Working’ for Patenting System in India

The Statement of working is important information which is submitted by either the patentee or the licensee to the IPO (Indian patent office) that clearly states the commercial exploitation of a patent in India. This statement of working system also checks if the patent meets the reasonable requirements of the public.

Legal provisions
Statement of working needs to be submitted for all patents in force under Section 146(2) of the Indian Patent Act and under rule 131. These statements are required to be filed on an annual basis with respect to all the granted patents in India. These statements of working disclose the extent to which the patented invented has been worked on the commercial scale. The timeline for filing of the working statement is March 31st of every year for each preceding calendar year. This statement is submitted by filing prescribed Form-27 each year within 3 months from the end of the calendar year. This form can be filed online by either the patentee or the licensee, or by a patent agent/ attorney who has the address of service in India. In case, the patentee or licensee is residing outside India, he must contact an Indian patent agent/ attorney for submitting this form at the IPO.

The controller at any time can also ask the patentee or the licensee to submit details in writing as to what extent of commercialization in respect of the patent has been exploited in India, as per Section 146(1).

One must update the Indian patent office with following details while filing form-27 i.e. statement of working of patented invention:

(i) The patented invention:
{    } Worked {    } Not worked

(a) If not worked: reasons for not working and steps being taken for the working of the invention
(b) If worked: quantum and value (in Rupees), of the patented product:
i) manufactured in India
ii) imported from other countries (give country wise details)

(ii) Licenses and sub-licenses granted during the year

(iii) State whether the public requirement has been met partly /adequately/ to the fullest extent at a reasonable price

Compulsory license
The information disclosed in the statement of working is used while taking decisions on granting a compulsory license. Therefore, legal provisions relating to compulsory licenses and working of patent are interlinked. IPAB (Intellectual Property Appellate Board), India, also took into consideration the same information disclosed in the statement of working by the patentee at the time of granting the first compulsory license in India. IPAB took a landmark decision in “Bayer Corporation v. Natco Pharma Ltd” case where compulsory license was granted to Natco.

Penalty on failure to oblige

In case, the patentee or licensee refuses or fails to submit information as required under Sec 146, the patentee or licensee can be punished with a fine, which can be extended up to Ten lakh rupees under Section 122(1)(b). Further, providing wrongful information or statement can impose imprisonment up to six months or fine or both under Section 122(2).

A patent can be also revoked on the grounds of non-working of patented invention under section 85 of Indian Patent Act.

Patent litigation
Working or non-working of a patent becomes an important factor while considering infringement suits. In suits relating to infringement under section 108 of Indian Patent Act, the patentee, can claim damages and injunction and/or an account of profit as relief. The disclosed information in the statement of working can be used by the court to estimate the actual damages that may have been claimed. On the other hand, if statement of working is not filed, the alleged infringer may argue that the patentee might not have encountered any damages in view of not filing any statement of working.

Publication of working statements
The statement of working provides useful insights into effectiveness of the patenting system for various companies, industries and other business bodies which utilize the patented invention in their course of business. The IPO made all working statements publicly available online, filed by the patentee during the preceding year. Section 146(3) clearly mentions power of Controller to publish the information received by the IPO under section 146(1) and (2). Such type of publication of valuable information shows the effectiveness of patenting system in India and can be utilized in many forums like academicians, law-makers and potential licensees to amend or improve the Indian patent law. It also helps to evaluate the patents covered under these published working statements.

Publication of statement of working encourages development in the science and technology domain. Beside this, it also has business and trade advantages. Working statements pertaining to a patent help in evaluating the value of a patent and thus help a potential licensee to negotiate the fee for getting the license which would be based on the value of a particular patent. Moreover, a working statement is also important in proving a milestone from the business merger or a business takeover perspective. Furthermore, industries may customize their resources occupied in research and development which would be according to the prospering technology relating to their field based on the information extracted from available working statements. Thus, the information we acquire from working of inventions gives an excellent idea about the commercial viability of inventions, effectiveness of inventions and plays an important role in valuation of patent portfolios and compulsory licensing.

Submitting information regarding working of patent is becoming a peculiar requirement under Indian patent law. Patents are granted to encourage invention, innovation, research and technology and to ensure that the invention, for which the patent has been filed, is being commercialized for the benefit of the public. Filing of statement of working discloses periodic information to the Indian patent office regarding Commercialization of the patented invention in Indian Jurisdiction thereby preventing the non-commercialization/ non- use or misuse of patented inventions. It does appear that the information from relevant form helps to evaluate critical information for compulsory licensing, also this information is important in the industry, and helps in taking business decisions. Therefore, the filing of Form 27 for all granted patents is a statutory requirement which is required to be followed and the Indian patent office should enforce action strictly against those people who are violating the Indian patent law.

About us
Effectual Services is a leading Intellectual Property (IP) management advisory firm offering IP support solutions to Fortune 500 companies, law firms, research institutes, universities, and venture capital firms/PE firms. Our team comprises of multi-disciplinary experts with rich experience in handling complex patent assignments in such domains as Alternative Energy, Automotive and Aerospace, Biomedical, etc. Effectual Services has technical and legal experts to handle every conceivable technology or situation and support at every stage of patent life cycle from drafting and prosecution to enforcement and litigation. Our firm’s clientele range from IP law firms, general law firms, patent licensing firms, patent brokers, legal departments at mid-sized companies, multinational conglomerates, research institutions and includes university and venture capital backed clients. We help our clients improve their business effectiveness and maximize ROI by leveraging deep domain expertise, engineering excellence, rock-solid execution and a comprehensive delivery model.

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