IPR
Topic 54 Working Patents
Topic 54 — Working of Patents
A patent is granted not as an absolute right but as a conditional monopoly — the patentee is expected to "work" the invention in India, ensuring that the public benefits from the disclosed technology. This requirement, embodied in the duty to commercially exploit the patent within India, distinguishes Indian patent law from many Western systems. Section 83 of the Patents Act 1970 codifies the underlying principles, Section 146 mandates annual disclosure of working through Form 27, and Section 84 et seq. provides remedies (compulsory licensing) when working is inadequate. This topic walks through the entire framework — the philosophical foundation of the working obligation, the procedural machinery, the recent Delhi High Court intervention through Natco Pharma v. Union of India (2019), the 2020 amended Form 27, and the strategic implications for patent holders.
1. The Philosophy of "Working" Patents
A. The Constitutional Foundation
Section 83 — General Principles Applicable to Working of Patented Inventions "Without prejudice to the other provisions contained in this Act, in exercising the powers conferred by this Chapter, regard shall be had to the following general considerations, namely:— (a) that patents are granted to encourage inventions and to secure that the inventions are worked in India on a commercial scale and to the fullest extent that is reasonably practicable without undue delay; (b) that they are not granted merely to enable patentees to enjoy a monopoly for the importation of the patented article; (c) that the protection and enforcement of patent rights contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations; (d) that patents granted do not impede protection of public health and nutrition and should act as instrument to promote public interest specially in sectors of vital importance for socio-economic and technological development of India; (e) that patents granted do not in any way prohibit Central Government in taking measures to protect public health; (f) that the patent right is not abused by the patentee or person deriving title or interest on patent from the patentee, and the patentee or a person deriving title or interest on patent from the patentee does not resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology; and (g) that patents are granted to make the benefit of the patented invention available at reasonably affordable prices to the public." |
B. The Three Foundational Principles
1 WORK IN INDIA commercial scale | 2 NOT IMPORT MONOPOLY no mere import-only | 3 PUBLIC BENEFIT reasonable prices |
✅ Why Section 83 matters Section 83 reflects the Indian patent system's philosophical commitment to public benefit. Patents are not granted as bare property rights — they are granted on conditions tied to commercial working in India, reasonable pricing, public health protection, and avoiding abuse. This philosophy distinguishes Indian patent law from purely property-rights-based systems. In Bayer Corp. v. Natco Pharma (the 2012 compulsory licence case), the Patent Office, IPAB and Bombay HC all relied heavily on Section 83 principles to grant the compulsory licence. Section 83 is the gateway to Sections 84-92 — the operational provisions that enforce these principles. |
2. Section 146 — Working Disclosure (Form 27)
Section 146(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." |
A. Form 27 — The Working Statement
Form 27 is the patentee's annual disclosure of how the patent is being worked in India. The patentee (and exclusive licensees) must file Form 27:
- Annually for each calendar year.
- Within 6 months of the end of the financial year (revised from 3 months in 2020 amendments).
- For each patent in force.
B. Form 27 Required Disclosures
Form 27 (revised in October 2020 following Natco v. Union of India directions) requires:
- Whether the patented invention has been worked.
- If worked: quantum and value of working in India (sales/revenue/imports).
- Licensees and sub-licensees (if any).
- Whether public requirement has been met partly, adequately, or to the fullest extent.
- Whether the patented product is available to the public at reasonable price.
- If NOT worked: reasons for non-working.
✅ Natco v. Union of India (2019) — the Form 27 reform In Natco Pharma Ltd. v. Union of India (2019, Del HC, Justice Kameshwar Rao), the Court directed amendments to Form 27 to ensure meaningful disclosure. The Court held that the existing Form 27 was inadequate — patentees were filing perfunctory or evasive statements. The 2020 revised Form 27 implements the directions: · More structured information. · Mandatory disclosure of value of working. · Public-availability assessment. · Single Form 27 for related patents (no longer one per patent for grouped patents). The reform strengthens the working-disclosure regime and supports compulsory licensing applications. |
C. Penalties for Non-Compliance
Section 146(3) makes false statement in Form 27 punishable with fine up to ₹10 lakh (post-2020 amendment, increased from ₹10,000 in original Act). Failure to file is also subject to penalty. Persistent non-compliance can support compulsory licensing applications under Section 84 (the patentee has not "worked" the patent in India).
3. What "Working" Means
A. The Bayer-Natco Standard
📖 Bayer Corporation v. Union of India, 2014 (60) PTC 277 (Bom) Background — Continuation of the Bayer-Natco compulsory licensing case (covered in Topic 55). Bayer challenged the IPAB ruling that "working" required local manufacture in India. Holding — Bombay High Court (Justice Krishna Iyer / G.S. Patel, 15 July 2014) held that the requirement of "working in India" under Section 84(1)(c) is to be decided on a case-to-case basis. Working may, in some cases, be established by import — particularly if local manufacture is genuinely not feasible. However, the patentee must show why local manufacture is not possible. Bayer's mere import was held inadequate. Significance — The Bombay HC modified the IPAB's blanket "must manufacture locally" rule but retained substantial pressure to actually work the patent. Importation alone, without justification or commercial scale, is generally insufficient. |
B. The Working Requirements
To establish that a patent is "worked" in India, the patentee should typically demonstrate:
- Commercial-scale activity — not merely token sales or test marketing.
- Reasonable availability — sufficient quantity to meet public demand.
- Reasonable pricing — accessible to the relevant Indian market.
- Active distribution — presence in major Indian markets, not concentrated in metro cities only.
- If imported, justification for not manufacturing locally — capacity constraints, technology transfer barriers, etc.
4. Section 84 — When Working Is Inadequate
Where a patent is not worked, or worked inadequately, Section 84 provides a remedy — compulsory licensing. After 3 years from the grant of the patent, any "interested person" can apply to the Controller for a compulsory licence on the grounds:
Section | Ground |
|---|---|
Section 84(1)(a) | The reasonable requirements of the public have not been satisfied. |
Section 84(1)(b) | The patented invention is not available to the public at reasonably affordable price. |
Section 84(1)(c) | The patented invention is not worked in the territory of India. |
✅ Topic 55 — Compulsory licensing Section 84 is the operational remedy for inadequate working. Topic 55 covers the full compulsory licensing framework — Bayer Corp v. Natco Pharma (2012); the Sections 84-92 architecture; the procedural requirements; and India's sole grant of a compulsory licence to date. The connection between Section 146 working disclosure and Section 84 compulsory licensing is direct: Form 27 statements provide the documentary foundation for compulsory licensing applications. |
5. International Compliance — Working Requirements
A. TRIPS Article 27.1
TRIPS Article 27.1 (Patentable Subject Matter) "Subject to the provisions of paragraphs 2 and 3, patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application... patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced." |
Article 27.1's "without discrimination" clause is sometimes invoked against working requirements — particularly the local-manufacture interpretation. The argument is that requiring local manufacture discriminates against foreign patentees who choose to import. However:
- The Bayer Corp v. Natco IPAB and Bombay HC rulings clarified that "working" is flexible — local manufacture is not absolutely required.
- Article 5A of the Paris Convention expressly authorises member states to impose working requirements as a condition of patent rights.
- TRIPS Article 27.1 must be read with Article 5A Paris Convention (incorporated through TRIPS Article 2.1).
B. Brazil-USA WTO Dispute (2000)
In 2000, the USA challenged Brazil's local-working requirement at the WTO Dispute Settlement Body. The dispute was settled before a panel ruling, but the substantive question — whether local-working requirements violate TRIPS Article 27.1 — remains formally unresolved at WTO level. India's position (consistent with developing-country interpretation) is that working requirements are TRIPS-compatible when read with Paris Article 5A.
6. Other Working-Related Provisions
A. Sections 99-103 — Government Use
Sections 99-103 provide special working provisions for government use:
- Section 99 — patented inventions can be used by or on behalf of the Government for purposes of the State.
- Section 100 — power of Central Government to use patented inventions, on terms agreed or fixed by High Court.
- Section 102 — acquisition of inventions and patents by Central Government for public purposes.
B. Section 92 — Compulsory Licence for Public Non-Commercial Use
Section 92 allows compulsory licensing without the 3-year waiting period in cases of:
- National emergency.
- Extreme urgency.
- Public non-commercial use.
This provides flexibility for pandemic responses, public health emergencies, and other situations of urgent public interest.
C. Section 92A — Export of Pharmaceutical Products
Section 92A (added by 2005 Amendment) implements the Doha Declaration on TRIPS and Public Health. It allows compulsory licensing for export of patented pharmaceutical products to countries with insufficient or no manufacturing capacity. This protects developing-country access to medicines under Doha mechanisms.
7. Practical Compliance for Patent Holders
✅ Twelve practical points for working compliance Calendar Form 27 deadlines — annual filing within 6 months of financial year end. Maintain detailed records of commercial working — sales, revenues, distribution, pricing. For pharmaceutical patents, document patient access, hospital coverage, geographic reach. Justify any non-working with detailed explanation — capacity, market conditions, technology transfer barriers. For imports, document why local manufacture is not feasible — supports Bayer-Natco "case-by-case" defence. For public-pricing concerns, consider voluntary licensing or differential pricing schemes pre-emptively. For multinational pharma, work with Indian licensees or contract manufacturers to establish local working credentials. For high-priced drugs, monitor for compulsory licensing applications; respond promptly to interested-person queries. For grouped/family patents, file consolidated Form 27 (post-2020 reform). For licensees, require contractual commitment to work the patent and to file accurate working statements. Maintain documentary evidence of working at India-specific level — Indian sales data, Indian distribution, Indian pricing. For patent enforcement, maintain working compliance — non-working can prejudice damages and injunctive relief. |
🎯 EXAM POINTERS — TOPIC 54
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