After five decades of remaining unchanged, the unique requirement of the "statement of working" of patents in India has finally received a much-needed overhaul. The amendments to Form 27, under which the statement must be submitted to the Indian Patent Office (IPO) periodically, were notified under Patent (Amendment) Rules, 2020, and came into effect from 19 October 2020.
What is Form 27
Indian Patent law requires every patentee and every licensee of a granted patent to file a statement of the extent to which the patented invention has been worked on a commercial scale in India. This statement is contained in Form 27 of the Patents Rules. Not filing this statement does not immediately amount to a forfeiture of patent ownership or licensing rights, but these risks do get heightened. Continuously failing to submit this statement would likely render the patent vulnerable to abandonment or revocation, and could lead to an eventual loss of rights.
The unamended Form 27 requires a set of basic details about the subject patent. Is it being "worked" in India at all? If it is not being worked, the patentee/licensee must provide reason(s) for not working, and detail the steps being taken to work the invention. If it is being worked, the patentee/licensee must provide commercial details of such working, such as the quantum and value of the patented product being manufactured or imported, and details of licenses and sub-licenses granted during the year. The patentee/licensee must also indicate whether public requirement (in India) has been met, at a reasonable price either partly, adequately or to the fullest extent.
Form 27 is not uncontroversial, and has been the subject of much debate and discussion, and even litigation (for example, W.P.(C) 5590/2015, CM No. 10090/2018). Questions that have been asked include: What are acceptable reasons for not working a patent? What is the nature of "commercial details" of working that must be submitted to satisfy this requirement? How do you balance the disclosure of commercially sensitive information while ensuring regulatory compliance?, and so on. We have written about some of these issues here, here, here and here.
The New Form 27
Form 27 has remained the same since it was introduced in 1970 when the Patents Act was first enacted in India. For the first time since its introduction, Form 27 has received a refreshing update, making it much simpler and easier for filers, as well as making it more relevant for modern technologies that are the subject of contemporary patents.
Single Form 27 for multiple related patents
Previously, a Form 27 had to be filed for every individual granted patent. This has now been simplified. Recognizing that a product is rarely protected by a single patent, but instead is covered by several patents, the amended process allows the filing of a single Form 27 in respect of multiple patents if it meets three conditions: first, they should be related patents; second, the approximate revenue /value accrued from one patented invention cannot be derived separately from that accrued from related patents; and third, all such patents are granted to the same patentee or patentees.
Where a single Form 27 is filed for several related patents, the revised Form 27 also allows the patentee to explain how the patents are related.
Where the patent or related patents have not been worked, the reasons for not working can be provided in a short statement of not more than 500 words.
Commercial details simplified
Further, the amended Form 27 now only requires that the approximate revenue/value accrued in India be mentioned. The earlier version required mentioning the quantum of the patented product in addition to the value; this has now been done away with. However, the distinction between manufacturing in India and importation into India is still maintained. This means that the patentee/licensee must still separately mention the revenue generated by manufacturing in India, and the amount obtained by importing into India. However, the previous requirement of listing out country-wise details (in cases of importation) are no longer needed.
Public requirement done away with
One of the most contentious, subjective and ambiguous requirements in the original Form 27 was to indicate whether public requirement has been met partly or adequately or to the fullest extent at a reasonable price. Each of these phrases – "public requirement", "met partly or adequately", "fullest extent", "reasonable price" – is open to multiple interpretations and there has rarely been clarity on what the IPO wants to know on this account. This requirement no longer exists in the revised Form 27, which is likely to bring considerable relief to filers.
Spotlight on Licensees
The amended Form 27 clarifies that every patentee and every licensee (exclusive or otherwise) is required to file this Form. Until now, a single Form 27 could be filed by all the parties, including all the patentees and licensees jointly.
While all patentees can file a single consolidated form, each licensee is now required to file a separate form. This amendment will now put in an extra burden on the patentee to ensure that every licensee files the working statement in time. Thus, it may now before important thus the license agreements now spell out that the licensee must file a Form 27.
Patentees were previously required to mention the licenses that were given out in a particular year. This requirement has been done away with in the amended Form 27.
The amended rules have also changed the timeline for submitting the working statement. The working statement is now required to be filed for a financial year, which is April 1 to March 31, and not for a calendar year, as previously required.
The amended rules have also increased the time given for filing the working statement. The statement must now be filed within six (6) months from the expiry of each financial year i.e., the statement is required to be filed till September 30, for the previous financial year.
In addition, the amended rule 131(2) has removed the ambiguity regarding when the first working statement is required to be filed after the patent is granted. It is now clarified that the statement must be filed from the financial year commencing immediately after the financial year in which the patent was granted.
The revised timelines are welcome, certainly, but there is a minor quibble still. Switching the time-line from a calendar year to a financial year may cause some confusion, especially for non-Indian companies, as internationally, the calendar year and financial year coincide, unlike in India.
By updating the outdated Form 27, the Patent (Amendment) Rules, 2020 will hopefully address a number of issues that are faced by patentees and licensees in the process of regulatory compliance in India. The amendment has simplified the form, and in the process, reduced ambiguity, and generally made it less cumbersome for filers overall. Previous concerns about disclosure of commercially sensitive information through Form 27, for instance, appear to have been sorted out through these amendments. Similarly, the revised timelines have clarified a lot of the fog that surrounded the time period for filing the first Form 27 after a patent is granted.
In sum, this is probably one of the most welcome amendments to patent procedure in recent times, reflecting the government's commitment to transforming India into a much more IP-friendly jurisdiction than it has been in the past.
Originally Published by Obhan & Associates, November 2020
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