India: Committee opines on Expedited Examination and Patent Term Extension
NITTO DENKO v. UNION OF INDIA & ORS.
The Patents Act, 1970 and especially Rule 24B(3) of the Patent Rules, 2003 provides the First Examination report is to be issued ordinarily within six months from the date of the request for examination or six months from the date of publication, whichever is later. However, with the trend that has been established which seems to be based on quite a liberal interpretation of this rule with the Indian Patent Office currently taking around seven to eight years to grant a patent term, leading to the reduction of the effective lifespan of the patent from twenty to thirteen years. These endless delays are not only frustrating but also jeopardize commercial interests of the applicant. Under the Act, there is no provision for early examination of the Patent Application and adding to the frustration of the Applicant, the annuities are due from third year onwards. Thus, the annuities must be paid while the patent is still pending and in turn penalizes the patentee for delays by the Indian Patent Office (IPO).
Although such delays and excessive backlog of pending patent applications at the Indian Patent Office has been an issue of serious concern for a while, however, it is only recently that the issue was seriously dealt with by the High Court of Delhi in two writ petitions filed by Nitto Denko Corporation, a company based in Japan. Addressing this issue, the Hon’ble Court, directed the Controller of patents to file an affidavit disclosing the steps which the respondents had taken to ensure that the mandate of Rule 24B (2) and (3) as regards the time prescribed for processing the application, is observed by the Patents Office. Pursuant to such directions, an affidavit was filed and subsequently, the government appointed a committee to come out with a programme for time-bound disposal of the pending patent applications and to suggest ways and means to ensure that fresh applications can be decided within the statutory time limit fixed in this regard. The recommendations of this committee were considered by the Court however, it was observed that the said measures were not sufficient to reduce the pendency to the level where the Controller of Patents can issue the examination reports within the prescribed period. Thereafter, the parties were directed to suggest the ways to clear the backlog of pending applications in a time bound manner.
Based on these suggestions, amongst other directions, the Government was directed to to constitute a committee to consider:- (i) If expedited examination is not considered feasible, whether waiver of maintenance fee for the delayed period or other measures could be considered in order to compensate the patentees for the time consumed in the examination process? And (ii) As to whether the examination of patents applicants could be carried out of turn under the existing provisions of the Patents Act, 1970 and Rules made thereunder and if so, under what circumstances? What factors and terms and conditions to be considered for expedited or out of turn examination?
So far as the question of waiver of maintenance fees and patent term extension was concerned, the Committee opined that such practices only exists in the United States and nowhere else in the world, and was not conducive to India. The Committee was, further, of the view that the 20 year patent term, which was originally seven years and thereafter 14 years, already provides for delays and therefore it does not require a further patent term extension, particularly in India, where monopoly itself is considered too long to block genuine competition. It was also opined that nothing prevents the applicant from taking steps for regulatory approvals and commercialization during the pendency of the patent application.
On the point of of out of turn examination, the Committee was of the view that it may be considered as a viable option subject to conditions that the invention directly contributes towards “Public interest” and that the applicant sets-up local manufacturing capabilities utilizing the invention as disclosed in the application or undertakes to manufacture the same within 2 years from the date of filing the request for expedited examination.
The Committee also proposed introduction of a new Rule 24C to Patent Rules, 2003 to incorporate such a measure according to which the applicant would be required to provide a corroborative statement from a bank or financial institution or auditor in India with evidence in support to show that he or his assignee or prospective manufacturer has sufficient capital to meet the reasonable public requirement or that sufficient capital or facilities will be made available within six months if a patent is granted.
Although, the judgment is first of its kind and a way forward towards tackling the issue of unreasonable and untimely disposal of patent applications for the first time in India, however, the Report of the Committee has, to an extent diluted the impact and the objective which was sought to be achieved. The proposed amendment still provides a discretion by the use of the word “ordinarily” which is again subject to discretion as well as delay and also, the local manufacturing requirement has been incorporated in the proposed Rule 24C by the committee in a manner which places undue burden on the patent applicant. The outward rejection of the patent term extension has also opened up a Pandora box for new discussions and debated on this ever-pinching issue.