PATENT AMENDMENT RULES: A BOON FOR SMALL ENTITIES, START-UPS & EDUCATIONAL INSTITUTIONS

Introduction

In the month of October 2020, the Department for the Promotion of Industry and Internal Trade (DPIIT) issued the Patents (Amendment) Rules 2020 (hereinafter “new rules/rules”). They were issued to amend Form 27 of the Patents Act, 1970[1] and Rule 21 of the Patent Rules, 2003[2]. Subsequently, the second set of amendments, namely, the Patents (Second Amendment) Rules, 2020 (hereinafter “Second Amendment Rules/second set of amendments”) were introduced on the 4th of November 2020. The changes were made in accordance with Section 159 of the Patents Act, 1970[3] which empowers the Central Government to establish patent-based rules. In discussing these amendments, it is imperative to note that start-ups and small companies will be the largest beneficiaries in view of the drastic reduction of filing and prosecution costs. Additionally, start-ups can now maintain their status for a span of 10 years which would enable them to avail such benefits for a longer period of time. The biggest winners however are MSME companies which will benefit significantly from the reduced costs for filing, prosecution and maintenance of patents.

This article briefly discusses major amendments made to the Patent Rules.

Major Amendments

Form 27 also referred to as the ‘Statement of working’ has been a pre-requisite under the Act. Every patentee and every licensee is required to submit a statement of working annually under section 146(2) of the Act. The section reads as follows:

146. Power of Controller to call for information from patentees

(2) Without prejudice to the provisions of sub-section (1), every patentee and every licensee (whether exclusive or otherwise) shall furnish in such manner and form and at such intervals (not being less than six months) as may be prescribed statements as to the extent to which the patented invention has been worked on a commercial scale in India.

It would not be wrong to state that the amendments to Form 27 have been introduced in view of the Supreme Court’s directions to the Government to make relevant changes to the said form. For those who are unaware of the background to this order, Late Prof. Shamnad Basheer in 2015 had moved a petition to the Court highlighting the discrepancies related to the statement of working. The Court had then heard the matter in Shamnad Basheer v. Union of India[4]  and directed the government to make relevant changes to the Form.

Apart from the change in the format of the Form 27, the new rules have amended Rule 131(2) to read as follows:

“131. Form and manner in which statements required under section 146(2) to be furnished –

(2) The statements referred to in sub-rule (1) shall be furnished once in respect of every financial year, starting from the financial year commencing immediately after the financial year in which the patent was granted, and shall be furnished within six months from the expiry of each such financial year.”

Prior to the amendment, the statement of working was required to be submitted at the end of every calendar year and within three months of the end of such calendar year. Hence, the form was to be submitted by the end of March every year. However, the under the amended rule, Form 27 must now be furnished once every financial year starting from the financial year in which the patent was granted and within six months from the expiry of such financial year. This clearly indicates that the due date would fall around September 30th every year. This change is more convenient for businesses as the financial year takes precedence over the calendar year for them. These timelines will help the patentees in obtaining the relevant details and meeting the requirements accordingly.[5]

In terms of the change in format of the Form 27, the requirement for a patentee to provide the government with the ‘quantum’ of the patented product in rupees has been relaxed and the patentee is now required to only submit approximate figures. .

Yet another change in the Form 27 is the declaration regarding public requirement. The form previously dictated that the patentee had to clearly state whether the reasonable requirement of the public had been satisfied in part/adequately/to the fullest extent under the rules. This created ambiguity as there was no procedure to determine whether the details provided met the criteria. The new rules have abolished the requirement of such a declaration and if any data is required to determine the same, the controller can obtain such data under Section 146(1) of the Patents Act, 1970.[6]

Rule 21 of the Patents Rules: Filing of the Priority Document

While largely being the same, Rule 21 of the Patents Rules, 2003 has been amended slightly to include reference to priority documents filed with the International Bureau using the WIPO DAS mechanism. As earlier, applicants do not need to submit a copy of the priority document if the same has already been submitted to the International Bureau during the PCT filing.

Patents (Second Amendment) Rules, 2020: A Boon for Micro Small and Medium Scale Enterprises

The Department for the Promotion of Industry and Internal Trade, under the Ministry of Commerce and Industry, issued a notification dated November 4, 2020, implementing the Patents (Second Amendment) Rules, 2020.. Under the amended rules, MSMEs which earlier paid a 50% discounted will now pay a fee discounted by as much as 90% i.e., the same set of fees as was earlier applicable to Natural persons and Start-ups. Further, when a small entity ceases to be a small entity due to the lapse of the period during which it was recognized by the competent authority, or its turnover subsequently crosses the financial threshold limit, there will no difference in fees applicable. That is to say that, even if a company ceases to be a small entity (after the filing of the patent application), it will not be required to pay a higher fee and can continue paying the discounted fee.  In yet another major boost to small entities, Rule 24C(5) has been amended to allow MSME’s to file a request for the expedited examination which was earlier available mostly to start-ups and other entities subject to certain eligibility conditions. This amendment is perhaps one of the most welcome move since Small businesses should indeed be encouraged to innovate and seek patent rights for their inventions efficiently without costs being a hurdle in respect of the same. 

Draft Patents (Amendment) Rules, 2021: A Boon for Educational Institutions

The Government of India, through the Ministry of Commerce and Industry, published the draft Patents (Amendment) Rules, 2021 (hereinafter referred to as the “new draft rules”) on February 9, 2021, as a proposal to amend the Patents Rules, 2003.. In addition to natural persons, start-ups, and small entities, the new draft rules have proposed including a new category of applicant called ‘eligible educational institution’. The proposed amendments of the draft patent (amendment) rules, 2021 are as set out below.

Under Rule 2(c), a new sub-rule, namely, (ca), has been proposed to define an eligible educational institution as follows

“(ca) ‘eligible educational institution’ means an institution established by a Central, Provincial or State Act, which is owned or controlled by the Government, and is wholly or substantially financed by the Government.”

The term “substantially financed” has been described in the same way as it is defined in the clarification to sub-section (1) of Section 14 of the Comptroller and Auditor General’s (Duties, Powers, and Conditions of Service) Act, 1971.[7] An amendment to Rule 7 has been proposed so to insert the term ‘or eligible educational institute’ accordingly. An amendment to Rule 24C has been proposed which would enable such institutions to file for an expedited examination. The First Schedule is proposed to be amended, where, Table 1 will include the term ‘eligible educational institute’. Lastly, the formats of Form 18 and Form 28 have been proposed to be amended to include the term ‘eligible educational institute’.

Conclusion

The slew of amendments to the patent rules, are in line with the Indian government’s numerous initiatives to promote entrepreneurship and IP generation by start-ups and MSMEs. Once the Patents (Amendment) Rules, 2021 are officially notified educational institutions are bound to benefit greatly as these are often the cradles of research and development. The special provisions under the rules for educational institutions will certainly increase innovation within such institutions. To conclude, these changes would are bound to make intellectual property protection more affordable, accessible, and effective to a broader range of businesses which may in turn increase patent filings too.


[1] The Patents Act, Form 27, No. 39 of 1970, India Code (1993).

[2] The Patents Rules, 2003, Rule 21.

[3] The Patents Act, § 159, No. 39 of 1970, India Code (1993).

[4] Shamnad Basheer v. Union of India, W.P.(C) 5590/2015.

[5] Aparna Gaur & Abhay Porwal, India: Patent (Amendment) Rules, 2020: Streamlining Form 27 Filings, The National Law Review (Nov. 18, 2020), https://www.natlawreview.com/article/india-patent-amendment-rules-2020-streamlining-form-27-filings.

[6] The Patents Act, § 146, cl. 1, No. 39 of 1970, India Code (1993).

[7] The Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, § 14, No. 56 of 1971, India Code (1993).

About Vivek Basanagoudar 2 Articles
Vivek Basanagoudar is a second-year law student pursuing a B.A.LL.B degree from Jindal Global Law School. Having completed over 20 internships and 6 RAships in a span of one and a half years, he is determined to succeed in the fields of Intellectual Property Law, Environmental Law and Gender Justice. At The IP Press, he aims to write regularly about Intellectual Property Law and Technology Law. During his leisure, he enjoys playing football and working out.

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