Amendments to Form 27 (Indian Patent Act) – Evaluating the Commercial Applicability of a Patent

 Patents are issued not just to provide protection but also to guarantee that they are used as much as possible in the economic sector. A patent that has no practical use does not help to address any major social issues. Therefore, the "functioning of the patent" provision demands particular consideration from patent legislators and examiners. A statement by the patentee or licensee detailing how the invention functions on a commercial scale in India is required by Form 27 of "The Patent Act, 1970 (39 of 1970) & the Patents Rules, 2003" in India.

The importance of Form 27, its evolution and amendment to the Patent Act of 1970's initial working patent clause, the need for revision, a comparison of the new and old formats, and the effectiveness of the most recent change are all covered in the following article. Let's first examine the history of Form 27 and Patent Law in India.

History of Form 27 and the Indian Patent Act, 1970

According to the (Indian) Patents Act, 1970, every patentee and licensee in India is required to provide a statement regarding the scope of commercial use of a granted patent in Indian territory. The "2003 Patent Rules" Form 27 contains the working concept. According to section 122(1)(b) of the Patents Act, failure to comply with the deadline for providing the working statement may result in a penalty of up to six months in jail, a fine, or both. As a result, the following list contains the pertinent data that Form 27 requests from the patentee or licensee:

• Whether the invention has been used commercially.
• the actions taken to implement the invention and the justifications for not doing so.
• In the event that the invention has been used, the quantity and price in INR of the patented product: (a) when made in India; and (b) when imported from other countries, giving the relevant information about the nations.
• grants of licences and sublicenses made during the year.
• Whether the public need has been met, either partially, satisfactorily, or completely, at a reasonable price.

Prior to the modification, the patentee or licensee was likewise obligated by law to submit the aforementioned data every year, within three months of the year's end. Therefore, March 31st was the latest deadline by which a patentee or licensee may submit such information for a specific calendar year.

According to a public interest litigation (PIL) brought before the Delhi High Court in 2015, the act was intended to promote compliance and the working of patents, however the goal was not met. Even though Form 27 discussed a public mandate, it left many details unclear, such as what was meant by the terms "sufficient extent," "fullest extent that is practically practicable," "commercial scale," and so forth.

An modification that may improve compliance, streamline the patent drafting and examination process, and address the important concerns of the stakeholders, including the patentee, licensee, examiners, etc. was required as a result of the ambiguity in the previous Form 27.

Reasons for Form 27 Amendments

1. The definition of terms such as "commercial scale," "sufficient extent," "fullest extent reasonably practical," etc.

The PIL brought before the Delhi High Court in 2015 placed a strong emphasis on the language and specifications of Form 27 as stated in the 2003 Rules. One illustration of such a condition was to ask whether the patentee had "partially/adequately/to the maximum extent" satisfied the public requirement relating to the claimed invention without providing any instructions on how to do so. The patentee interpreted the requirement according to their personal interpretation in the absence of any established standards.

2. The calendar year must be stated within three months of the year's conclusion.

In accordance with Form 27, which was part of the 2003 Rules, the patentee was obligated to provide a statement of the calendar year three months after the end of each year. Given that most firms are accustomed to the financial year cycle, it made acquiring and arranging the information problematic. The filing date was also set to three months after the end of each calendar year, which coincides with the end of the fiscal year and increases the likelihood that it will be missed.

3. Information Confidentiality

The patentee was required by Form 27 of the 2003 Rules to provide information regarding the quantity and cost of the manufactured good. The demand caused people to wonder if such sensitive information could be kept private. Many patentees are disappointed to learn that neither the Patent Act of 1970 nor the Patents Rules of 2003 go into detail about how such sensitive material is made public.

Only "the Controller may publish the information as prescribed under the relevant section, i.e., (S. 146(3) read with r. 131(3))" is stated in the act. Additionally, according to section 145, the patent controller must periodically publish an official journal that includes any material that may need to be made public in accordance with the law. Given this situation, it is reasonable to assume that the controller may choose to publish the information provided on Form 27.

4. The number of filings

The 2003 Rules' outdated Form 27 forced patent holders to submit a separate form for each patent they held, regardless of how closely connected they were, and it was impossible to distinguish the approximations of revenue and value from related patents. For patent owners aiming for seamless and prompt compliance, the variety of filing presented a challenge.

Let's examine how the Patent (Revision) Rules 2020 ("Amended Rules") solved the issues after examining the ones that necessitated the amendment.

Form 27 changes implemented by the revised rules

1. Extension of the filing deadline: According to the new amendment, Form 27 must now be provided for each financial year, as opposed to just the previous calendar year. Every financial year's deadline for filing is six months after it ends, or by September of the year following the relevant financial year. Patentees and licensees have welcomed the change from the calendar year to the financial year since it will make it much simpler to compile data for a financial year. The new regulations also give Form 27 filers an additional three months to file, providing the needed buffer in case of an emergency.

2. Approximate Value Accrued: In accordance with the New Form 27, the patentee or licensee is only required to provide the approximative revenue or value accrued in India as a result of the patented invention's manufacture there or importation into India. The patentee was required to identify the "quantity and value (in rupees) of the patented goods manufactured or imported in India" according to the 2003 regulations.

The shift has been lauded as a positive one because it was previously difficult for patentees to determine the precise quantity and value of patented goods produced or imported in India. For some inventions, it can be difficult to determine exact numbers, and concerns concerning confidentiality are valid. In accordance with the modified standards, patentees and licensees are simply need to furnish approximations of values, simplifying and simplifying compliance.

3. Removal of the requirement for licensee/sub-licensee information: From a secrecy standpoint, the previous Form 27's necessity to submit information about licensees and sub-licensees was another source of worry. This obligation has been eliminated by the new Form 27, which is good news for the managers and owners of patent portfolios. Details of licensees and sub-licensees, when made public, can reveal a lot about a company's patent licencing tactics, putting it at a competitive disadvantage.

4. No Statement on Meeting Public Requirement Must Be Provided:

According to Form 27 of the 2003 Rules, a patentee was required to indicate whether the public requirement for the patented invention was satisfied partially, adequately, fully, or at all costs. The condition's fundamental issue was the lack of a precise definition or instructions on how to determine whether a patentee had complied with the public requirement "partially/adequately/to the maximum degree." The contentious statement has been eliminated by the Amended Rules, much to the relief of the patentees.

5. One Form for Multiple Patents: As a result of the new, amended rules, a patentee may now submit a single form for multiple patents if all of them are related patents and the estimated revenue or value attributable to a specific patented invention cannot be separated from the estimated revenue or value attributable to the related patents. The issue of multiple filings for a group of related patents has been handled by the update.

Will the New Amendment Make the Goal of Providing Working Patent Information Stronger or Weaker?

Without a doubt, the new Form 27 is an upgrade over the previous and suggested versions. It has introduced the need to provide justifications if the invention hasn't been put to use. In contrast to the proposed form, which simply needed explanation for not working patent ideas, there is also a requirement to provide the measures being made toward working the invention (with an arbitrary word restriction of 500 words).

Apart from the benefit mentioned above, the new form has a few issues that need to be resolved:

1. The new Form 27 does not require specific information regarding the amount of the invention. The statistics on the total units of patented inventions imported and manufactured in India does not appear to have any justification. The information is important for assessing how well a patent is working and is essential for enabling the compulsory licence regime. As an illustration, NATCO Pharma was successful in persuading the authorities to issue a compulsory licence as a result of Bayer's disclosure via the previous form 27. If the patent had been worked in India, it couldn't have been known without knowing the precise quantity created and imported.

2. Extent of Working of Patent Has Met the Public Demand at a Reasonable Price: Detailed information about the extent to which the working of patent has satisfied the public requirement at a reasonable price is no longer required to be provided in the revised Form 27. The possibility of evaluating the effectiveness of a patent is eliminated by the relaxation on providing crucial information, such as the estimated demand of the patented invention or product, the extent to which the demand has been satisfied, and the details of any specific schemes or steps undertaken by the patentee to satisfy the demand. It would be difficult to determine whether the invention has been made accessible and inexpensive to the general public without this information.

3.The total number of granted licensees and sublicensees is: The new Form 27 does not require patentees/licensees to even disclose the existence of licences or sub-licenses, similar to relaxations on other topics. The elimination of details means that licensees and patentees will only be self-certifying that they have worked the patent; they won't be making any significant claims supported by information on licencing and sub-licensing. 

4. Word Limits Offer Another Escape Route: The new form has also established an artificial word restriction of up to 500 words to justify not using a patent, which reduces the amount of information needed and increases compliance. The lowered word restriction will make it impossible for the patentee or licensee to provide the required details regarding why the patented invention hasn't been implemented. Additionally, it might encourage cunning patentees to provide the bare minimum of obscure information and then escape responsibility by using the word restriction as an excuse.

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