Delhi HC Reiterates Importance Of Registration of Patent Licenses in India

Register your patent licenseName/citation of relevant case:
The Delhi High Court’s decision in Sergi Transformer Explosion Prevention Technologies Pvt. Ltd. v. Kumar Pratap Anil & Ors. is likely to influence the licensing strategies of patentees as well as the licensees. The Delhi High Court discussed the importance of the registration of a license/ assignment deed, as mandated by the Indian Patent Law, and the consequences of non-registration of such deeds.

Context:
In the context of patents, a license agreement or an assignment deed may be understood to be agreement between the patentee (or the right holder) and the licensee (in case of a license agreement) and/or assignee (in case of an assignment agreement) through which the patentee allows (in case of a licensing agreement) or transfers (in case of an assignment agreement) some or all of the rights, conferred by the patent law, on the patentee to the licensee and/or assignee in exchange for a consideration, which may be in the form of a one-time payment or a royalty which is paid either periodically or based on the volume of commercial utilization of the licensed or assigned rights. Even though the Indian Contract law recognizes both oral and written agreements, Section 68 the Indian Patents Act states that any license/assignment agreement shall not be valid unless the same is in writing embodying all the terms and conditions governing the rights and obligations of the parties and are duly executed. The Indian Patents Act, in Section 69, also states the procedure for registration of an assignment or license agreement.

Previous Case
Way back in 2009, in the case National Research Development Corpn. v. ABS Plastics Limited, the Delhi High Court affirmed the principles established under Section 68 and 69 of the Patents Act. The court held that where a right under patent is assigned or licensed in favour of another party, it is not valid unless it is in writing between the parties and has been filed in a prescribed manner with the Controller of Patents

Facts:
In the current case, the Plaintiff, Sergi Transformer Technologies Pvt. Ltd. (henceforth referred to as Sergi Transformer) filed a suit seeking permanent injunction against the Defendants and Mr. Phillipe Magnier (proforma defendant-the patentee) from infringing the Indian Patent No. 189089 (the patent). The patent describes a “Method and Device for Preventing / Protecting Electrical Transformer against Explosion and Fire”. Sergi Transformer claimed to be the exclusive licensee of the above-mentioned patent by virtue of a license agreement dated 1st August, 2006. Further, it was also stated in the plaint that Sergi Transformer had initiated the process of registration of the license agreement with the Indian Patent Office in Kolkata on 15th March, 2010.
During the pendency of said suit, the Defendants filed an application under Order VII Rule 11 read with Section 151 of the Civil Procedure Code, 1908 (CPC) to dismiss the above-mentioned suit on the ground that the suit was not maintainable as the license agreement forming the basis of the said suit was not registered with the Indian Patent Office, as is mandated by the Indian Patent Law.
The Defendants also alleged that the Sergi Transformer’s license agreement was not valid as it has not been duly executed and it was a back-dated document that had been created by the Sergi Transformer to file the said suit. The Defendants also argued that although Sergi Transformer claimed that the license agreement was executed on 1st August, 2006, with effect from 1st January, 2006; it was not until 15th March 2010, that Sergi Transformer took steps to register the license as required under the Indian Patent law and Sergi Transformer has not mentioned any reason for the delay in registering the license agreement.
Sergi Transformer argued that the non-registration of a license deed does not render it void and it had written to the Controller of Patents under Section 69 of the Indian Patent Law to register the same. Sergi Transformer also argued that Sections 109 and 69 of the Indian Patents Act did not bar filing of an infringement suit in absence of registration of license/ assignment deeds. Sergi Transformer also highlighted that the Indian Patent law, as amended, does not specify any time period within which an application for registration of a license/ assignment deed should be filed.

Analysis
On the arguments made with respect to Order VII Rule 11 CPC, the Delhi High Court. in light of the decision of the Supreme Court in Liverpool & London S.P. & I Assn Ltd. v. M.V. Sea Success [(2004) 9 SCC 512], reiterated that at the stage of considering an application under Order VII Rule 11 of the CPC, the Court has to examine only the plaint averments and the list of documents filed along with the suit. The Court thus held that other pleas advanced by parties including pleadings in the written statement have no relevancy in deciding such an application.
For the arguments with respect to the requirement of registration of license/ assignment deeds, the Court, on perusal of Sections 68 and 69 of the Indian Patents Act prior to and after the amendment in 2005, observed that the un-amended Section 68 states that, a license or assignment agreement shall have effect from the date of execution, only on registration and an application for such registration has to be filed with the Controller within six months from the date of execution of document. However, post-amendment under Section 69(5) of the Indian Patents Act, the validity of the license or assignment agreement as evidence is to be considered only after the document is registered in the Office of the Controller (i.e. the Indian Patent Office), unless the Controller or the Court direct otherwise with reasons recorded in writing. Further under Section 69 of the Indian Patents Act there is no time prescribed for filing such an application for registration.
The Court emphasized on a harmonious interpretation and conjoint reading of Sections 68, 69, 109 and 110 of the Indian Patents Act. Although there exists no bar to file a suit for infringement by the exclusive licensee even if the license agreement is not registered under the Indian Patents Act, the Court observed that (in light of the wordings; “unless the Controller or the Court….directs otherwise”; under Section 69(5) of the Indian Patents Act) the only case where an un-registered license or assignment deed shall be admitted in evidence of the title of any person to a patent is if the Controller or the Court specifically directs in this regard in writing.
In the current case, though Sergi Transformer had filed the license agreement before the Indian Patent Office for registration, the Controller had not passed any specific order. Hence, the Court held that unless the agreement is registered or the court/ the Controller passes any such order, the license agreement is not to be considered in evidence by the Court.
With respect to the questions on the legality of the license agreement of Sergi Transformer, the Court held that these issues would be considered by the Indian Patent Office when it decides on Sergi Transformer’s application to register the license agreement.
Although the Court declined to dismiss the suit only on the basis of lack of registration of Sergi Transformer’s license agreement, the Court directed the Indian Patent Office to decide on the registration of Sergi Transformer’s license agreement within 6 months from the date of the order. Further, the Court also adjourned all pending applications and suit proceedings in relation to the current case, till the Indian Patent Office passes an order on the registration of Sergi Transformer’s license agreement.

Practical significance
The Delhi High Court seemed to be highly reluctant to grant any relief whether interim or final, pending registration of the patent license or assignment agreement under the Indian Patents Act. Though, as per the Indian Patents Act, it is mandatory to register the license or assignment agreement with the Indian Patent Office, given the huge backlog of applications for registration of license agreements pending in the Indian Patent Office, the practice of staying proceedings pending the determination of registration of the license agreement is a matter of concern for a patentee/licensee seeking to enforce their rights in India. It is beneficial for both the patentee and the licensee/ assignee to register the license/ assignment deed, with the Indian Patent Office, as soon as the same has been executed.

Comparison with the position in the US
There is a provision for registering licenses with the USPTO but it is not mandatory. Reference: MPEP Section. I did not understand the significant benefits of registering a license agreement with the patent office. I will discuss the same in a separate post soon.

Keeping it Simple!!! Supreme Court of India Streamlines Patent Revocation Procedures

Keep It Simple

Image from here

Permission Notice: A modified form of this article has been accepted for publication in Journal of Intellectual Property Law and Practice ©: [2014] [Someshwar Banerjee] Published by Oxford University Press. All rights reserved

Name/citation of relevant case:
Dr. Aloys Wobben and another V. Yogesh Mehra and others (Civil Appeal No. 6718 OF 2013)

Summary:
In a landmark decision, which should go a long way in streamlining the procedural aspects of patent litigation cases, the Supreme Court of India addressed the issue of multiplicity of proceedings in patent opposition, invalidation and revocation cases.

Legal context:
Under the Indian Patent law, the validity of a patent can be challenged in three different ways:

  • by way of a pre-grant or post-grant opposition,
  • by way of a revocation proceeding before the Intellectual Property Appellate Board (IPAB),
  • by way of a counter-claim in an infringement suit before a High Court.

Under Section 25(1) of the Indian Patent Act, any person can file a pre-grant opposition. This is to be done before the grant of the patent. Once the patent is granted, there are two options:

  • under Section 25(2), a ‘person interested’ can file a post grant opposition within a year of the grant of the patent,
  • under Section 64, a ‘person interested’ can initiate revocation proceedings any time during the lifetime of the patent.

Section 64 provides two options to the ‘person interested’:

  • the revocation proceedings can be initiated in the IPAB,
  • the revocation proceedings are initiated as a counter-claim in an infringement suit. In this case, only High Courts and above have the jurisdiction.

Facts of the case:
The Enercon dispute is an exemplary case in which the multiplicity of proceedings in patent litigation cases took epic proportions. In all, Enercon India Limited had filed 23 revocation petitions, under Section 64, before the IPAB. Thereafter, Aloys Wobben had filed 10 patent infringement suits before the High Court, in response to which Enercon India Limited filed counter-claims seeking invalidation of the patents being enforced by Aloys Wobben.
Interestingly, identical prayer(s) had been made in both the revocation petitions and the counter-claims. Further, some of the revocation petitions, which have already been settled by the IPAB, were being re-agitated by Enercon India Limited before the High Court on identical grounds.
The appellants moved to the Supreme Court seeking relief from fighting out the same issues in multiple forums.

Analysis:
In the present case, the Supreme Court held that the remedies available under Section 64, i.e., a) by way of a revocation proceeding before the Intellectual Property Appellate Board (IPAB) and b) by way of a counter-claim in an infringement suit before a High Court were not conjunctive and the applicant has to make a choice between the two remedies. The Court stated that the use of the word “or” in Section 64 of the Indian Patent Act clearly demonstrated that the that the liberty granted to any person interested to file a “revocation petition”, to challenge the grant of a patent to an individual, cannot be adopted simultaneously by the same individual, i.e., firstly, by filing a “revocation petition”, and at the same time, by filing a “counter-claim” in a suit for infringement.
The Court agreed with the appellant’s arguments that even though a plurality of remedies are available to the respondents under Section 64 of the Indian Patent Act, the word “or” used therein, separating the different remedies, barred the respondents from availing both the remedies, for the same purpose, simultaneously. The Court also commented that purely on principle this would be the correct legal position.
The Court also noted that the opening words of Section 64 are “Subject to the provisions contained in this Act”, which, according to the Court, basically meant that the provisions contained in Section 64 are subservient to other provisions of the Indian Patent Act. Therefore, if any proceeding has been initiated by “a person interested”, under Section 25(2), the same will eclipse the right of the same person to file a revocation petition under Section 64 or to file a counter-claim, to seek the revocation of a patent, in response to a patent infringement suit.
The Court ruled that in case both the forums, i.e., the IPAB for revocation proceedings and the High Court for a counter-claim, have already been approached, then the following rules applied:

  • if a revocation petition is filed before the filing of a counter-claim in an infringement suit, the defendant will be barred from seeking revocation of the patent in the infringement suit through a counter-claim;
  • if revocation of a patent has already been sought in an infringement suit through a counter-claim, the defendant will not be able to file a revocation petition before the IPAB.

The Court, in absence of any clear answers or guidelines in the Indian Patent Act, based its reasoning on settled principles of law. According to the Court a counter-claim is essentially a suit filed by the defendant and for all intents and purposes has to be treated like a plaintiff. Since a counter-claim is an independent suit, it cannot be allowed to proceed, where the defendant has already initiated action in another forum, on the same cause of action as per Sections 10 and 151 of the Civil Procedure Code.

Practical significance:
The ruling of the Supreme Court will go a long way in streamlining patent litigation cases. However, certain grey areas still remain. As per the ruling of the Supreme Court, when a defendant is sued for infringement, he will not be allowed to file a counter-claim in the High Court if he has already initiated a revocation proceeding before the High Court. So is the High Court supposed to await the IPAB’s decision on the validity of the patent? If no, then it is not clear on what will happen if the High Court grants an injunction and on a later date the IPAB revokes the patent. We will have to wait for future decisions of the courts, in this regard, for the answers.

Section 8 of the Indian Patent Act || A Detailed Analysis

Image from here

Image from here

Section 8 of the Indian Patent Act (IPA) provides that, if patent applications for the same or a similar invention are filed in other jurisdictions corresponding to a patent application filed in India, the information relating to the filing and prosecution of such patent applications must be furnished to the Indian Patent Office (IPO). Section 8 imposes a duty on applicants who have filed a patent application in India voluntarily to update the IPO with information relating to the filing of their corresponding patent applications and to provide any specific information relating to them, as and when requested by the IPO.

Recently, one of my articles was published in the Journal of Intellectual Property Law & Practice (Oxford University Press). The article discusses s 8, its legislative intent and its interpretation by Indian courts and tribunals, suggesting practice points on compliance with s 8. The article is available here.

Patentability of Swiss Type Claims in India

Image from here

Image from here

A Swiss type of claim is generally used as a means to claim a new use of a known substance. Swiss type claims can be for medicaments as well as non-medicaments. For example, a Swiss type claim for medicaments is normally in the form:Use of compound X in the manufacture of a medicament for the treatment of disorder Y”.

New use of known medicament

In India, traditionally claims relating to the second use of a known substance have been barred from patentability. The position in India therefore, was much the same as the English position before the Patents Act of 1977 (discussed later in this post).

The amendments to the Indian Patents Act, effective from January 1, 2005 have made brought in some changes in this matter.. Section 3 of the Indian Patent Act states what are not inventions within the meaning of the Indian Patent Act.

Before the amendment of 2005, clause 3(d) read as: the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant

The above clause effectively made all Swiss type claims in respect of medicaments un-patentable. This was the English position too before the judgment in Wyeth (John & Brother Ltd’s Application) [1985] RPC 545.

However, in 2005, clause 3(d), has been amended in 2005 and now reads as:“the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant”

Explanation:  “Salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of isomers, complexes, combinations, and other derivatives of known substance shall be considered to be the same substance, unless they differ significantly in properties with regard to efficacy.

It would be noted that the first part of the above clause is worded negatively, viz. “which does not result in the ………” This part of the clause read with the opening words of section 3 (which too is negatively worded) therefore mandates that a new form of a known substance which results in enhancement of efficacy would be patentable. The remaining part of the clause deals with exclusions from patentability. Clearly, these exclusions would apply only to new forms of known substances that do not pass the test of enhancement of efficacy. The “Explanation” to the clause is consistent with the first part of the clause. The Explanation excludes certain new forms of known substances from patentability in case they do not pass the test of “enhancement of efficacy”. It is clear from the above, that a new form a known medicine (such as polymorph, salt etc.) would be patentable in case there is enhancement of efficacy.

In this context it would be noted that the second part of clause 3(d) still incorporates the prohibition of clause 3(d) prior to its amendment. This would suggest that the use of an existing substance, without change of form, in the manufacture of a medicament for the treatment of a different therapeutic indication not be patentable.

In relation to the second use of medicaments, it would further be noted that there is the problem of “inherency” which too needs to be overcome. The Court of Appeals  Bristol-Myers Squibb v Baker Norton [2001] RPC 1 referred to the House of Lords decision in Merrell Dow Pharmaceuticals Inc. and Another v. H.N. Norton & Co. Ltd. and Others, [1996] RPC 76 as follows:

The House of Lords held that the claim lacked novelty. Lord Hoffmann said at page 89 line 12:

“My Lords, I think that on this point the Patents Act 1977 is perfectly clear. Section 2(2) does not purport to confine the state of the art about products to knowledge of their chemical composition. It is the invention which must be new and which must therefore not be part of the state of the art. It is therefore part of the state of the art if the information which has been disclosed enables the public to know the products under its description sufficient to work the invention.”

He went on at page 90 line 40 to conclude:

“In this case, knowledge of the acid metabolite was in my view made available to the public by the terfenadine specification under the description ‘a part of the chemical reaction in the human body produced by the ingestion of terfenadine and having an anti-histamine effect’. Was this description sufficient to make the product part of the state of the art? For many purposes, obviously not. It would not enable anyone to work the invention in the form of isolating or synthesising the acid metabolite. But for the purpose of working the invention by making the acid metabolite in the body by ingesting terfenadine, I think it plainly was. It enabled the public to work the invention by making the acid metabolite in their livers. The fact that they would not have been able to describe the chemical reaction in these terms does mean that they were not working the invention. Whether or not a person is working a product invention is an objective fact independent of what he knows or thinks he knows about what he is doing.”

Having rejected the argument that the invention had been made available by use of the terfenadine, he said page 91 line 26:

“Anticipation by disclosure, on the other hand, relies upon the communication to the public of information which enables it to do an act having the inevitable consequence of making the acid metabolite. The terfenadine specification teaches that the ingestion of terfenadine will produce a chemical reaction in the body and for the purposes of working the invention in this form, this is a sufficient description of the making of the acid metabolite. Under the description the acid metabolite was part of the state of the art.”

The Indian Patents Act too provides that prior public use of the invention is novelty destroying. It is therefore likely that the position in the English law would also apply in India i.e. in case the known substance has been administered as a medicament earlier, it is unlikely that its new therapeutic use would be patentable unless the prior use did not result in the same chemical effect within the body.

It would therefore appear that the use of a known medicament in the manufacture of a medicament for a different therapeutic indication may not be patentable. A new form of a known substance may however be patentable in case there is enhancement of efficacy.

Method of treatment

At this stage it would be useful to refer to clause (i) of Section 3 of the Indian Patents Act, which provides as: “any process for the medicinal, surgical, curative, prophylactic, diagnostic, therapeutic or other treatment of human beings or any process for a similar treatment of animals to render them free of disease or to increase their economic value or that of their products”

Hence, clause 3(i) absolutely bars patenting of the process for the medicinal treatment of human beings and animals. The line between “the use of a substance in the preparation of a medicine for the treatment of a disease” and “the process for treating a disease using a substance” is thin. It is therefore necessary to draft Swiss claims carefully. There is likely to be controversy in India as to whether a claim is a Swiss claim or a method of treatment claim. This controversy will be resolved only through the judiciary.

It would follow from the above that Swiss type claims in India are likely to be possible only if the following conditions are satisfied:

  1. A new therapeutic use is found for a known substance;
  2. The Swiss type claim is not for the new substance itself but for an hitherto unknown form (such as salt, polymorph etc.) of the substance;
  3. The new form is substantially different in property with regard to efficacy.

Further, under Indian law no claim relating to a method of treatment is patentable.

Please note that the above does not amount to legal advice (as usual). Please get in touch with a Legal Counsel before taking any action which may affect your patent application.

The Indian Person Skilled in the Art

Image from here

Image from here

In 2013 the Intellectual Property Appellate Board (IPAB) issued several decisions, including the one discussed in this note, whereby it sought to raise the standard of non-obviousness of an invention in India by ruling that the legal fictitious person who serves as a reference for determining or evaluating whether an invention involves an inventive step and thus is non-obvious is Ms P Sita (a person skilled in the art, who has more than average knowledge of the state of the art and who also has some common sense). Such person is not at all ordinary and is not the same as Mr PHOSITA (the person having ordinary skill in the art) as referenced by US patent law and who is ordinary by definition.

I wrote an article on this which has been published by Journal of Intellectual Property Law & Practice published by the Oxford University Press. The Article is available here. I will share a detailed post on the implication of the decision in near future