Protecting Business Innovation via Patent

Introduction:

Intellectual property, which safeguards the application of ideas and information of commercial value, is growing in importance due to increased industrial development. The three central types of intellectual property rights are- patents, trademarks and copyrights. Patents are temporary protection granted in respect of inventions or technological improvements, which may include any area of technology ranging from paperclips to computers.

The right which patents grant is to prevent all others from using the invention for the duration of the patent. They are the most basic, valuable and for competitors, potentially the most dangerous, of all intellectual property. Patents pose serious problems for competitors and this is why they are not freely available for all industrial improvements, but only for what is judged to qualify as a patentable invention by comparison with what is already known in the industry[i]. Patents are extensively used by business enterprises in order to protect their innovations. They provide growth opportunities and excludes third parties from exploiting the patented technology.     

Patent- Meaning and Purpose

According to the World Intellectual Property Organization (WIPO), a patent is an exclusive right granted for an invention, which is a product or a process that provides, in general, a new way of doing something, or offers a new technical solution to a problem[ii]. Section 2 (m) states that “Patent means a patent for any invention granted under this Act[iii]”. A patent must include a trace of inventiveness over what is previously known in order to get legal protection. It lasts for a period of 20 years from the application and requires that the invention be publicly described in the patent specification.    

A patent gives exclusive rights to the owner of a patented invention to commercially make, use, import, distribute or sell that invention and prohibits any other person from making, using, importing, distributing or selling the same invention without the patent owner’s consent. It is granted in any field of technology ranging from an everyday kitchen utensil to a nanotechnology chip[iv]. However, there are certain non-patentable inventions mentioned in the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement from Article 27 to 34; a list of exceptions which is followed worldwide. Section 3 and 4 under the Indian Patents Act, 1970, has been derived from the TRIPS Agreement, laying down the list of inventions which are not patentable in India.

This includes any invention which is a) frivolous b) contrary to public order or morality; c) mere discovery of a scientific principle or abstract theory, d) mere discovery of a new form of a known substance which doesn’t result in the enhancement of the known efficacy of that substance; e) a substance obtained by a mere admixture resulting only in the aggregation of the properties of the components thereof; f) the mere arrangement or rearrangement or duplication of known devices each functioning independently of one another in a known way; g) a method of agriculture or horticulture; h) any aesthetic creation i) mathematical or business methods or algorithms j) a presentation of information k) traditional knowledge[v] etc., or any invention relating to atomic energy[vi].

Historical Development of Patent Laws

The idea of conferring a market monopoly as an incentive to innovate has old roots. It was first introduced in England and other parts of Europe with the enactment of Statute of Monopolies in the year 1623. Section 6 of the Statute of Monopolies allowed patent monopolies for a period of 14 years upon “any manner of new manufacture” within the realm to the “true and first inventor”. The concept of patent specification then emerged in the 18th century during the industrial revolution.

One of the best examples of that time would be the patent protection provided to Boulton and Watt for their steam engine invention. The ancient patent laws were improved with time and new laws were introduced. Gradually, higher demands for registration and grants of patents emerged such as the introduction in 1949 of the obviousness as the ground of pre-grant opposition[vii]. All these demands resulted in the formulation of various international conventions and treaties, which govern different aspects such as the consideration and grant of patents in the contemporary world. One of the most primal intellectual property treaties would be The Paris Convention for the Protection of Industrial Property, which was signed in March 1883 in Paris, France. It formed a Union which was created to assist the persons of one country to acquire protection in other countries for their intellectual assets. World Intellectual Property Organization (WIPO), which was established in 1967 for encouraging creative activity and promoting the protection of intellectual property (IP) worldwide, governs 21 international treaties in the field of IP.

The Patent Cooperation Treaty (PCT) is one of the treaties governed by WIPO. It offers a system through which an applicant is required to produce only a single patent application. However, it doesn’t have any provisions with regard to grant of patents and the exclusive responsibility of granting a patent lies in the hands of the patents office of a particular country. The commencement of the World Trade Organization (WTO) Agreement on TRIPS in the year 1995, gave new dimensions and meaning to the multilateral safeguard and implementation of IP rights.

The existing Indian Patents Act was first enacted in the year 1911 by the British rulers in order to safeguard the interests of inventors. This legal protection was much needed because new inventions were on the rise during that period and the inventors were interested in protecting their personal inventions in order to prohibit others from copying them. However, a more comprehensive Patent law was required in order to cover the loopholes in the Act. The current Patents Act, 1970, which came into force in the year 1972; comprises of comprehensive provisions and is primarily based on international conventions and laws. The scope of the Act further widened after a 2005 amendment, which led to the extension of the patented products to all fields of technology including food, drugs, chemicals and micro-organisms[viii].

Constitutional Perspective

While the Constitution of India has no explicit provision on intellectual property, it provides indirect protection to the property. Article 253 plays a vital role in the context of intellectual property rights. It empowers the parliament to make laws for implementing any international treaty, agreement or convention with any other country or countries or any decision made at any international conference, association or other body[ix]. Certain provisions in Article 372 also approve the pre-constitutional law but with respect to certain conditions as laid down in the provisions. These Constitutional provisions made it possible to adopt the various international conventions and treaties on intellectual property rights and enforce them in India.

The repealing of Patent Act, 1911 and the enforcement of the new patents Act, 1970 was possible because of Article 372 (1) of the Constitution of India, which gives authority to the legislature or any competent body to repeal, alter or amend the pre-Constitutional laws. The present Patent law is derived from different international instruments such as the Budapest treaty, TRIPS agreement, United Nations Convention on Biodiversity, etc. Apart from that, Entry 49 under List 1 of the Constitution gives recognition to patents, inventions and designs; copyright; trade-marks and merchandise marks and Article 246 of the Constitution gives exclusive power to the parliament to make any law with respect to any matter enumerated in the Union List or List 1.  

Comparison Between Patent, Trademark and Copyright

• A patent is governed under the Patents Act, 1970 whereas Trade Mark and Copyright are governed under the Trade Marks Act, 1999 and Copyright Act, 1957, respectively.
• Types of protection and works: Patents provide protection to inventions which are novel, original and have industrial utility. Section 2 (zb) defines a trademark as “a mark capable of being represented graphically and which is capable of distinguishing the goods or services of one person from those of others and may include the shape of goods, their packaging and combination of colours…[x]”. Trademark provides protection to the unique name which distinguishes a brand from others in the market. Copyright provides protection to original creative expressions such as literary work, artistic work, dramatic work etc.
• Validity and reach: Section 53 of the Indian Patents Act specifies that the term of a patent is 20 years from the date of filing of the application for patent. It is a territorial right and therefore is effective only within the Indian Territory. Section 25 of the Indian Trade Marks Act specifies the duration and validity of a trademark. It states that trademarks are valid for a period of 10 years but can be made perpetual by renewing every 10 years. Trademarks are also territorial in nature and should be applied individually to each country in order to claim rights. Chapter V (sections 22-29) of the Indian Copyright Act lays down the term of copyright, which is the lifetime of the author plus sixty years after his/her death. The protection in case of copyrights is available in most of the countries in the world.

Process of Getting a Patent

Since there is no worldwide mechanism of granting a patent, a patent can only be granted by a National Patent office and a regional office that carries out the task for a number of countries. The Patents Act, 1970, is the principal body in India which deals with the filing and regulation of an existing and new patent. As per the provisions of this Act, the inventor, his assignee or legal representative of a deceased person, who before his death was either the inventor or assignee, can apply for patents at the head office of the Indian Patent Office or its branches depending upon in whose jurisdiction he resides or has a domicile or has a principal office of business[xi]. The steps required to apply for a patent in India are:

1. Invention disclosure
2. Patentability search
3. Decision to file an application for patent
4. Patent drafting
5. Filing the patent application
6. Request for examination
7. Responding to objections (if any)
8. Grant of patent
9. Renewal of your patent

Conditions of Patentability

The conditions for patentability have been laid down in paragraph 2.6 of the WIPO intellectual property handbook, which states that: “An invention must meet several criteria if it is to be eligible for patent protection. These include, most significantly, that the invention must consist of patentable subject matter, the invention must be industrially applicable (useful), it must be new (novel), it must exhibit a sufficient “inventive step” (be non-obvious), and the disclosure of the invention in the patent application must meet certain standards”[xii]. The conditions in the Indian Patents Act, 1970, are borrowed from the WIPO rules. They are mentioned as follows:

• Novelty: In simple terms, novelty is the quality of being new, original and unique and not something which can be anticipated. Sections 2(1)l and 2(1)j of the Patents Act, 1970, highlight the distinction between a new invention and an invention. As per these sections, invention means “a new product or process involving an inventive step and capable of industrial application[xiii]”, whereas a new invention means “any invention or technology which has not been anticipated by publication in any document or used in the country or elsewhere in the world before the date of filing of a patent application with complete specification, i.e., the subject matter has not fallen in the public domain or that it does not form part of the state of the art[xiv]”. Also, “anticipation” is not expressly defined under this Act but sections 29-34 identify what is not anticipation. In the case of Lallubhai Chakubhai Jariwala v Chimanlal Chunilal and Co[xv]., the Court observed that the two essential elements for a patent’s validity are novelty and utility. However, it emphasized that the real test of an invention is a novelty because a lack of novelty would mean that there would be no benefit given to the public and consequently no consideration moving from the patentee[xvi].
• Inventive step or non-obviousness: As per Section 2(1)(ja) of the Indian Patents Act, inventive step is “a feature of an invention that involves a technical advancement as compared to the existing knowledge or having economic significance or both, and that makes the invention not obvious to a person skilled in the art[xvii]“. The inventiveness of patent application has been examined by the Apex Court in the matter of M/s. Bishwanath Prasad Radhey Shyam v. M/s. Hindustan Metal Industries[xviii]. The Court held that “in order to be patentable an improvement on something known before or a combination of different matters already known, should be something more than a mere workshop improvement; and must independently satisfy the test of invention or an “inventive step”. Mere collection of more than one integers or things, not involving the exercise of any inventive faculty, does not qualify for the grant of a patent”[xix].   
• Industrial application: As per Section 2(1)(ac) of the Indian Patents Act, industrial applicability, in relation to an invention, means that the subject matter of the invention must be capable of being made or used in any kind of industry[xx].

However, even if the abovementioned conditions are satisfied, an invention may still not qualify for a patent if it doesn’t comply with sections 3 and 4 of the Patents Act, 1970.

Patents and Business

Patenting gives an exclusive right to the business to prohibit third parties from commercially exploiting its invention for 20 years from the date of filing of the patent application. It assists in constituting the business as a distinguished player and achieving higher returns on investment. The Patents can also be sold or licensed to other enterprises, making it a source of income for the enterprise owning the patent[xxi]. Patenting boosts the image of an enterprise by demonstrating a high level of expertise, specialization and technological capacity in front of the business partners, investors and shareholder which will help in raising funds, finding business partners and raising the company’s market value[xxii].

However, there are certain disadvantages of getting a patent. Some enterprises do not get their invention patented in order to protect their trade secret. This is because one of the essentials of getting a patent includes “making a clear and complete disclosure” about the invention. This means that the technical information about the invention will get into the public domain after 20 years. A well-known example of a trade secret would be that of Coca-Cola, which has never patented its recipe and has instead treated it as a trade secret for over 100 years.

Compulsory licensing is an exception to the general rule of patent. It is also a disadvantage for the patent owner since it gives authorizations to a third-party to make, use or sell a particular product or use a particular process which has been patented, without requiring any permission or consent of the patent owner. The concept of compulsory licensing is acknowledged at both domestic as well as international level, with explicit provisions in the Indian Patents Act, 1970 (under section 84) as well as TRIPS Agreement.

In a landmark judgment[xxiii] delivered by the Hon’ble Apex Court of India, India’s first-ever compulsory license was granted by the Patent Office on March 9, 2012, to Natco Pharma for the generic production of Bayer Corporation’s Nexavar, a life-saving drug used for treating liver and Kidney Cancer. This drug was sold by Bayers at exorbitant costs, with one month’s worth of dosage costing around Rs 2.8 Lakh. However, Natco Pharma wanted to make it affordable for all category and class of people and offered to sell it for Rs 9000. All the 3 conditions of section 84 were fulfilled and the decision was taken for the benefit of the general public[xxiv]. Apart from this, there have been many recent cases related to patents in India.

The Hon’ble Supreme Court in a recent case[xxv] held that a decision on revocation of a patent requires a trial, and cannot be decided in a summary manner. It observed that the Division Bench should have limited its decision to the injunctive relief in question, and remanded the case back to the Single Judge for a full trial in conformity with the law. The Delhi High Court in the case of Ferid Allani (petitioner) vs. Union of India and Ors. (Respondents) stated that computer programs embedded in digital or electronic devices must be tested for technical effect and that inventions relating to computer programs must be examined in the context of modern technology. It stated that computer programs cannot be denied patent protection if they satisfy the requisite standards under the law[xxvi].

Likewise, in the case of Bayer Corporation vs. Union of India and Ors., the Delhi High Court decided two appeals, which were related to the scope of Section 107A of the Indian Patents Act. The first case was a writ petition filed by Bayer against NATCO, pleading the Court to instruct Customs Authorities to confiscate its patented product, Sorafenib (under compulsory license) to NATCO, and prohibit NATCO from exporting the drug to China for purposes of conducting research to develop information for acquiring regulatory approval.

The second was an infringement suit by Bayer against Alembic, requesting the Court to ban Alembic from manufacturing and exporting its patented product, Rivaroxaban, to the European Union. The primary question in both the appeals was whether section 107A of the Indian Patents Act authorizes the export of a patented drug with the central aim of research or experiment to develop information for use in obtaining regulatory approval in another country. The Court held as follows[xxvii]:

1. The meaning of the term “sale” as given under Section 107A is inclusive of export for purposes of acquiring regulatory approval in another country (Para 84);
2. Section 107A is not an exception to Section 48, which determines the rights of the patent holder (Para 89);
3. Apart from the information produced from research and experiments in India, section 107A also extends to exporting of the patented invention (Para 91);
4. The expression, “making, constructing, using, selling or importing patented articles solely for uses reasonably related to development and submission of information required under any law for the time being in force…… or in a country other than India that regulates the manufacturing, construction, use, sale or import of any product …,” in Section 107A must be interpreted broadly to cover all uses required for research and development of data for regulatory approval (Para 92);
5. The quantity of the product or the place of research, experiment or development of information is not relevant for determination under Section 107A. What is relevant is the conduct or actions of the person in question, and whether the sale is for commercial purpose or for regulatory approval (Para 105);
6. Article 30 of the TRIPs Agreement must be followed while deciding a case under Section 107A. Balancing of private rights against public interest must be carried out while deciding cases under the Section (Para 117).

Conclusion

Patenting doesn’t protect each and every inventor who conceives an invention but only the first comers. They encourage inventions and the subsequent innovations; and help in procuring technical information about the patented product, for the rest of the industry as well as the public, which otherwise might be withheld. Several Business enterprises use patents to provide temporary protection to their inventions. The period of protection, however, (20 years) is a disadvantage because it is relatively short as compared to other forms of property. Another disadvantage is compulsory licensing, which is an important exception of patenting. Nevertheless, patents have also benefitted businesses over the years by providing a higher return on investment, giving exclusive rights and enhancing the image of business enterprises.    

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References:

[i] Cornish, W. R., Llewelyn, D., & Tanya Frances Aplin. (2019). Intellectual property : patents, copyright, trade marks and allied rights. Sweet And Maxwell.

[ii] Patents. (2019). Wipo.Int. https://www.wipo.int/patents/en/

[iii] The Patents Act, 1970, s.2(m)

[iv]Frequently Asked Questions: Patents. (2019). Wipo.Int. https://www.wipo.int/patents/en/faq_patents.html

[v] Supra note iii, s.3

[vi] Ibid, s.4

[vii] Seth, K. (n.d.). HISTORY AND EVOLUTION OF PATENT LAW -INTERNATIONAL & NATIONAL   PERSPECTIVES Karnika Seth, Attorney at law & Partner, Seth Associates. http://www.karnikaseth.com/wp-  content/uploads/history-and-evolution-of-patents1.pdf

[viii] Dalmia, V. P., & Katoch, P. S. (11 C.E., March 2011). Patents Law In India – Everything You Must Know – Intellectual Property – India. Www.Mondaq.Com. https://www.mondaq.com/india/patent/125766/patents-law-in-india-everything-you-must-know#:~:text=The%20history%20of%20Patent%20law

[ix] The Constitution of India, 1949, a.253

[x] Trade Marks Act, 1999, s.2 (zb)

[xi] Patent Filing In India – Application Filing, Registration& Grant ….SSRANA. (n.d.). SSRANA. Retrieved August 26, 2020, from https://www.ssrana.in/ip-laws/patents/patent-application-filing-india/#:~:text=In%20accordance%20with%20the%20provisions

[xii] WIPO INTELLECTUAL PROPERTY HANDBOOK. (2008). https://www.wipo.int/edocs/pubdocs/en/intproperty/489/wipo_pub_489.pdf

[xiii] Supra not iii, s.2(1)j

[xiv] Ibid, s.2(1)l

[xv] (1935) 37 BOMLR 665

[xvi]Lallubhai Chakubhai Jariwala v Chimanlal Chunilal and Co (1935) 37 BOMLR 665, Para 9.  

[xvii] Supra note iii, s.2(1)(ja)

[xviii] AIR 1982 SC 1444

[xix] Ibid.

[xx] Supra note iii, s. 2 (1)(ac)

[xxi] Supra note iv

[xxii] Supra note ii

[xxiii] Bayer Corporation v. Natco Pharma Ltd., Order No. 45/2013 (Intellectual Property Appellate Board, Chennai), available at http://www.ipab.tn.nic.in/045-2013.htm (Last visited on May 12, 2013).

[xxiv] Shukla, N. (2019, January 18). Compulsory Licensing In India – Intellectual Property – India. Www.Mondaq.Com. https://www.mondaq.com/india/patent/772644/compulsory-licensing-in-india

[xxv] Monsanto technology LLC and ors. Vs. Nuziveedu seeds ltd and ors. AIR 2019 SC 559

[xxvi] Summary of Indian Patent Cases of 2019. (2020, February 24). BananaIP Counsels.   https://www.bananaip.com/ip-news-center/summary-of-indian-patent-cases-of-2019/

[xxvii] Ibid.