Feb 18, 2022 | Indian Patents Act 1970, IPR & Business, Patent
Competition takes numerous forms in commerce, but in the pharmaceutical industry there is one market segment of specific characteristics and interests. This market incorporates community pharmacies providing legend medications based on physician prescriptions, and brand name distinction is the basis for competitiveness. The leading pharmaceutical houses license patents to one another and not to the remaining enterprises in the industry. Each licensee markets the replicated product under a distinct trademarked name, as is a customary practice.
An over- simplification of licensing is monetizing an intellectual property of the invention by allowing third parties the right to exploit the patented invention in exchange of royalty. Along with the patent rights, often, there is also transfer of know-how, experience, methodology, processes etc. Subject to the provisions of the licensing agreement, when an invention is given for licensing to a licensee, the organization is empowered with the ability to manufacture, distribute and sell in specific jurisdiction and for a specific period of time. The inventor is given royalties by the licensee as a consideration for the said patent license agreement.
Patents are designed to encourage private sector companies to spend in research and development (R&D). There are disparities in how different industries rely on the patent system. Because of two factors, the pharmaceutical sector is particularly reliant on the patent system. One, the technology is uncomplicated to reverse engineer, and two, the industry has no entrance hurdles. This is why the pharmaceutical industry has been at the center of the argument about patents.
In India, there was a remarkably extensive debate on the relationship between patents, and development, which emerged shortly after independence. Attempts to develop a distinct patent system began in 1948 and indicated in the Patents Act of 1970. There was a debate about whether India should join the Paris Convention until around 1986. Another round of discussion was sparked by the inclusion of so-called Trade Related Aspects of Intellectual Property Rights (TRIPS) as a negotiating subject during the Uruguay Round of multilateral transborder trade related negotiations of the General Agreement on Tariffs and Trade (GATT). The implementation of the TRIPS agreement in India has been a source of contention since 1994.
- Patent Law in India
Patent rights were initially introduced in India in 1856, and the Patent Act 1970 (“the Patents Act”) was passed in 1970, abolishing all earlier laws. India is also a signatory to the Paris Convention for the Protection of Industrial Property, which was established in 1883, as well as the Patent Cooperation Treaty, which was established in 1970. Any invention that meets the criteria of novelty, non-obviousness, and industrial utility can be the subject of a patent, according to the Patents Act. Some of the non-patentable inventions under the Patents Act encompass techniques of agriculture or horticulture, mechanisms for the medicinal, surgical, curative, prophylactic or other treatment of human beings, animals or plants or substances acquired by a simple admixture, culminating only within the agglomeration of the properties of the components, etc. With respect to pharmaceuticals, in the particular instance of substances deliberately designed for use or capable of being utilized as food, drugs or medicines or substances developed by chemical processes, patents are only issued for the manufacturing techniques of such compounds, not for the substances themselves. As a result, pharmaceutical products are now unprotected under Indian law.
The Patents and Designs Act 1911 established a product patent regime for all inventions in India. In 1970, however, the government passed the new Patents Act, which made pharmaceuticals and agrochemical products ineligible for patent protection.
“Thereby, under our established patent laws, molecules, which are products of chemical processes, are as such non-patentable in India,” the exclusion was initiated to break India’s ’s dependency on imports for drugs in bulk, formulations and to provide for the development of a self-reliant indigenous pharmaceutical industry. This restriction, combined with the prohibition on admixtures that result in the aggregation of qualities in which the components have no synergistic effect, significantly limits what can be patented in India. Although chemically manufactured “activities” have functional properties, they are not patentable in India. In India, typical pharmaceutical compositions in which the ingredients operate as admixtures are equally ineligible for patents. Only the process, i.e. the method of generating the product, is patentable in such instances.”[1]
The paucity of protection for product patents in pharmaceuticals and agrochemicals has had a considerable impact on the Indian pharmaceutical industry, leading to the development of remarkable expertise in reverse engineering of drugs that are patentable as products throughout the industrialized world but are unprotected in India.[2]
As a result, the Indian pharmaceutical sector flourished quickly by manufacturing less expensive versions of a number of patented pharmaceuticals for the home market, and then aggressively expanding into the global market with generic drugs once the international patents expired. Furthermore, the Patents Act establishes a number of measures to avoid patent infringement and improve medicine accessibility.
The legal recourses of bringing the patented product in the markets: Once patent is granted, in order to generate revenue, the commercialization of the patent becomes essential. For a patent holder there are three recourses established in order to make money from his property (i.e. patent). The first option involves patent licensing wherein the patent holder transfers patent rights to the third party for a specific period of time without transferring the ownership of the patent in exchange of royalty. Second course of action is the patent assignment wherein patent holder permanently transfers the ownership of his/her patent to the third party and such third party then becomes owner of the patent. The third is to bring patented product in the market via a Joint Venture (JV) wherein both patent holder and third party join hands to build and establish new venture in collaboration. All these modes may be explored by both patent holder and third parties to find out the most effective way of collaborating.
Compulsory licensing is a license granted by the Government under certain specific circumstances. On the expiration of three years from the date of securing the patent, any individual engaged in working the patented innovation may apply for a compulsory license with respect to the invention. The mandate of the controller of patents being satisfied that the reasonable requirements of the public with regard to the patented invention have not been met or that the patented invention is not accessible to the public at a reasonable price may direct the patent-holder to grant such a license on the conformity with the terms and conditions.
In addition to compulsory licensing, the Patents Act includes a provision for “right licenses,” under which the central government can apply for an order that the patent be endorsed with the words “right licenses” after three years from the date of the patent’s sealing, on the grounds that the reasonable requirements of the public with respect to the patent have not been met.
Patents for certain compounds that are not food items or drugs as such but that are capable of being used as food items or medications are presumed to be endorsed with the words “license of right” instantaneously on fulfillment of three years from the date of the sealing of the patent. Endorsing a patent with the terms “licensing of right” has the effect of allowing anyone interested in working on the patented innovation in India to obtain a license from the patentee. Even if he or she currently has a license under the patent, the grant of a license would be on mutually agreed-upon terms. If the parties are unable to reach an agreement on the terms of the license, they can apply to the patent controller for a settlement.
As mentioned earlier, a simplification is that by granting a license, a patentee allows others to create, use, or exercise an invention that would otherwise be prohibited. The licensing of a patent transfers a set of rights that are time, geographical, and scope of use limited. A patent license might be voluntary or compulsory.
- Voluntary licensing: A voluntary license is the one where patentee, at his or her discretion, grants another person permission to create, use, or exercise the patented invention through a written agreement. In such a license, neither the Indian patent office nor the central government plays any part.
– Exclusive License Agreement: A license that is confined to a specific field or subject, such as a market, territory, time period, or context, is covered by an exclusive license agreement. A technology application, a manufacturing method of the products, a geographical area, or the production of a certain product could all be covered by the agreement.
Exclusive does not imply that the license is “one and only license” but rather that the licensor agrees not to grant any additional licenses with the same rights that fall within the field or scope of the agreement. The licensor has the authority to issue an unlimited number of licenses with different rights within the same field or licenses with the same rights in a different field.
Anyone who infringes on any licensed rights within the field or extent of the agreement is subject to legal action by the holder of an exclusive license. In this case, the licensee becomes almost owner of the patent
- Non-Exclusive License Agreement: On the contrary, the non-exclusive license is the one wherein patent holder may grant such license to more than one party.
ii. Involuntary licensing: An involuntary license is granted by patent holder to the company under specific circumstances where the company infringes patent rights of the patent holder and wants to continue using the patented invention. This is the kind of license which is granted only when there is likelihood of patent holder filing law suit against company for patent infringement, and to avoid it, company undertakes the license or permission to use the patent from the patent holder.
iii. Compulsory license u/s 84: A compulsory license is a statutory license that the Controller of Patents can award to a third party under specified conditions. A compulsory license under the Patent system is an involuntary contract imposed and enforced by the government between a willing buyer and an unwilling seller. Compulsory licenses allow someone else to manufacture a patented product or process without the patent owner’s permission. Under section 84 of the Patents Act, 1970, a compulsory license may be granted on the following grounds:
(i) The public’s reasonable requirements for the patented innovation have not been met, or
(ii) The patented invention is not available to the public at a reasonable price, or
(iii) The patented invention is not used in the Indian territory. Compulsory licenses, on the other hand, can only be awarded after a three-year period has passed since the patent was granted.
A compulsory license to manufacture and sell a product is granted under Section 92 to any company that applies for one, and a license U/S 92 is granted in the event of extreme urgency or a national emergency.
In certain exceptional circumstances, compulsory license U/S 92A is granted for the export of patented pharmaceutical products.
The World Trade Organization’s Impact on Pharmaceutical Patents
As briefly mentioned earlier the World Trade Organization (WTO) was established in 1995, and it has since ushered in a massive paradigm shift in global trade. The agreement on Trade-Related (Aspects of) Intellectual Property Rights (TRIPS) was negotiated during the Uruguay round trade negotiations of the General Agreement on Tariffs and Trade (GATT), and “the pharmaceutical industry was one of the primary reasons for incorporating intellectual property issues into the GATT framework.” India signed the GATT on April 15, 1994, making it mandatory to comply with the agreement.
Consequently, India must comply with the TRIPS Agreement’s patent and pharmaceutical industry minimum standards. The availability of patents for both pharmaceutical substances and process inventions must now be included in India’s patent legislation. Any invention of a pharmaceutical product or technique that meets established requirements will be given a patent for a minimum term of 20 years.
Patent licensing’s significance in the pharmaceutical industry
Licensing is often regarded as one of the most essential means of transferring technology to developing nations. It usually includes the acquisition of production rights for innovative goods or services, as well as distribution rights, as well as the sale of basic technical information and know-how contained in the corresponding good, i.e. service. Licensing entails the transfer of intellectual property associated with an innovative product, such as a service, that is the subject of the license agreement[3].
The relationship between licensing, technology diffusion, and intellectual property protection is more complex and multidimensional than in other technology transfer channels. According to Maskus[4], one of the most important reasons is the diversity of license agreements. License agreements can be established between companies in the same joint venture or between companies that are completely unrelated. These contracts typically cover a wide range of topics, including technical assistance, the transfer of codified knowledge, the transfer of knowledge and skills, and the transfer of intellectual property rights.
Today, every country seeking a highly wealthy economy implements its growth strategy through a channel of increasing degrees of implementation mechanisms for the exercise of rights to industrial property protection. The pharmaceutical industry’s need for patents to safeguard inventions plays a prominent role in society’s progression and is one of the determinants of economic growth. Building a reliable and efficient system in the research process is associated with the costs that occur during the creation of new chemical supsatncii suspatnici as active in order to treat is associated with the costs that occur during the creation of new chemical supsatncii suspatnici as active in order to treat. Due to various unpredictable occurrences (such as a worldwide pandemic), the length and duration of the research stages are challenging to anticipate. Therefore, it’s not uncommon for it to take several years from baseline to first patent registration. To ensure stringent patent rights and to safeguard other parties, the first patent application should be filed as soon as possible, usually following the first detection of a successful operation. Patents are intended to create exceptions, but firms are not accustomed to doing so. The patent owner has the right to sell his or her patent. Some experts suggest that the existence of positive powers is justified by the right of disposal, particularly the right to derogate from the patent’s use by granting a license.
The monetary value of a patent or its licensing might vary substantially, making it difficult to determine.
Case Studies involving Patent Licensing of drugs
1. Celgene Corporation for Cancer drug Revlimid: Sun Pharma negotiated an agreement with Celgene Corporation, a wholly-owned subsidiary of Bristol Myers Squibb, to resolve patent litigation in the United States involving the generic version of Revlimid (lenalidomide capsules). Revlimid is a drug that is used to treat cancer.
Celgene will provide Sun Pharma a license to Celgene’s patents required to manufacture and sell a limited amount of generic lenalidomide capsules in the United States commencing on a confidential date after March 2022, pursuant to the conditions of the settlement. This will mandatorily be subjected to USFDA approval.
Sun Pharma will also be able to manufacture and sell an unlimited number of generic lenalidomide capsules in the United States starting January 31, 2026, under the terms of the license. Before this case between Celgene and Sun Pharma, other Indian companies, Cipla Ltd., Natco Pharma Ltd., Cadila Healthcare Limited and Dr Reddy’s Laboratories Ltd. and the U.S.-based Alvogen had settled patent litigations with Celgene. Celgene granted a patent license to all these companies, required to manufacture and sell an unlimited quantity of generic drug in the United States beginning after January 31, 2026.
- Merck for Molnupiravir: Merck entered into non-exclusive voluntary licensing agreements for molnupiravir with five Indian generics manufacturers namely Cipla, Dr Reddy’s Laboratories, Emcure Pharmaceuticals, Hetero Labs Limited and Sun Pharmaceutical Industries
The purpose of this license agreement was to expand access to Molnupiravir, an experimental oral antiviral Covid-19 therapy. Molnupiravir is an oral antiviral agent being studied in a Phase 3 trial for the treatment of non-hospitalized patients who have been tested positive with COVID-19 virus. Merck has been developing molnupiravir in collaboration with Ridgeback Biotherapeutics.
MSD Pharmaceuticals which is a trade name of Merck & Co. entered into these agreements to accelerate the production and availability of the antiviral molnupiravir in India along with in other low and middle-income countries (LMICs) following approvals or emergency authorization by local regulatory agencies.
- Compulsory licensing: P.H. Kurian, India’s Controller General of Patents, Design and Trademarks, marked his last day in office on March 9, 2012, by issuing a landmark judgment granting the first-ever compulsory license to an Indian generic pharmaceutical company, Natco Pharma, to manufacture and sell a generic version of Bayer Corporation’s patent-protected anti-cancer drug ‘Sorafenib Tosyalte’ (NEXAVAR).
This significant development is prone to alter the complexion of India’s pharmaceutical industry. Many contentious issues are raised by this decision, including whether “local manufacture” of a protected innovation is required in India, and what drug price is “reasonable” under the current patent framework.
- Trastuzumab is a type of antibody that is used to treat breast cancer. It is manufactured by Roche Pharmaceuticals and sold under the trade name Herceptin®. In India, this medicine was patented.[5] Each year, around 25000 Indian women are diagnosed with breast cancer. Only 5-6 percent of Indian patients have access to the medicine, according to research.[6] The underlying issue was the drug’s expensive cost. A month of therapy costs roughly INR one lakh. In 2013, the Indian government took a step forward in addressing this issue by initiating the process of giving Herceptin® compulsory licenses.[7] However, Roche chose not to pursue the patent in India later in 2013.[8] The company took this decision since there were no biosimilars of Herceptin available in India at the time, forcing patients to purchase Roche’s products. At the same time, the company may be spared from having to get a compulsory license.[9]
However, it has undoubtedly opened the market for the generic version of the drug. Many large Indian pharmaceutical companies have been working on biosimilars to Herceptin®. Compulsory licensing, if implemented, may make this feasible. Biocon Ltd., based in India, and Biocon Inc., based in the United States, collaborated in 2014. Mylan Inc. suggested selling Herceptin under the brand name CanmabTM. They proposed that it be sold in two dosage sizes. The MRP for a 440 mg vial is INR 57,500, whereas a 150 mg vial is INR 19,500.
Furthermore, this price is only 25% less than Roche’s original drug pricing.[10] In 2014, the High Court ordered Biocon to establish that their product had undergone adequate testing, after Roche claimed that the drug makers could not have completed acceptable clinical trials in such a short time. Biocon, on the other hand, disputed the allegations.[11] It is a tremendous hope that a cheaper version of the life-saving Herceptin will be available in the Indian market. All of this may be conceivable as a result of the threat and consequence of mandatory licensing.
- Novartis & Cipla License deal: Novartis has a patent on indacaterol, which is commercialized under the brand name Onbrez® in India. This medication is used to treat chronic obstructive pulmonary disease (COPD). In the late 2014, Cipla, an Indian generic pharmaceutical manufacturer, introduced a petition with the DIPP, asserting that COPD had reached epidemic proportions in India. It further asserted that the demand for Onbrez® imported in India by licensee Lupin was only 0.03 percent of the population, which was insufficient. Furthermore, the drug’s cost is excessive. As a result, Cipla requested that DIPP issue a compulsory license for Onbrez® under Sections 92 and 66[12]. Cipla introduced a generic version of Indacaterol, promising to sell it for over 42% less than Novartis. However, the Health Ministry determined that this application lacked a solid foundation and advised Cipla to make a new application under Section 84[13].
Taking into account the recent events the imposition of world-wide pandemic, Israel issued compulsory license to allow the government to import generic versions of Kaletra: For the sole purpose of medicinal treatment of COVID-19 patients.
This authorization is the first time Israel invoked Section 104 and Section 105 of the Israeli Patents Law, 1967 for public non-commercial use. Israel issued compulsory license to allow the government to import generic versions of Kaletra.
Royalty Rates
In pharmaceutical licensing agreements, an initial payment was historically acknowledged to protect any one or a combination of the following: a fee for disclosure of know-how, an advance payment for patentable improvements to be granted within the agreement period, and settlement for a patent dispute. Royalties, which the licensor considers the “rent”—which includes a profit for the drug’s sales are linked to the initial payment. The initial payment has recently become an integral component of contracts of ever-increasing complexity and magnitude. A single licensing deal for an innovative drug might incorporate an initial payment generally ranging from a few millions to several tens of millions of dollars. Royalties of up to 20% on net sales may also be included in a transaction. In the pharmaceutical industry, initial payments and royalty rates have tended to rise.
This pattern can be attributed by the considerable factors mentioned below:
- The task of discovering new drugs has gotten increasingly complex.
- Pharmaceutical companies must constantly discover and/or get new compounds that show promise of becoming innovative development pharmaceuticals because it takes more than ten years and at least a few hundred million dollars to introduce a new drug to market.
- Internal R&D efforts at pharmaceutical corporations have not been entirely successful, resulting in a pipeline of new drugs that is insufficient.
- Licensing operations must be used to supplement pharmaceutical companies’ R&D deficits. These variables have combined to produce fierce competition for crucial licensing possibilities.
Therefore, it’s no coincidence that initial payments and royalties have increased dramatically in pharmaceutical licensing transactions. Nonetheless, the magnitude and correlation between initial payments and royalty rates in the agreement should be determined on a rational and objective basis.
Negotiating mutually appropriate royalty rates is always fascinating and demanding for the licensing professional. Royalty rates on sales in the pharmaceutical sector have ranged from a few percent to over ten percent. In terms of determining the rates, one theory is that the minimum royalty should be set at a rate that covers the cost of licensing the patent and know-how. At research-oriented pharmaceutical companies, the most typically seen research and development expenditures to sales ratio is between 7% and 15%.
Conclusion
During the last two to three decades, the conventional chemical-centered pharmaceutical industry appears to have reached a plateau, with new inventions becoming a rarity. One of the reasons why developing new pharmaceuticals is becoming more expensive is as a result of this. The liberalization process, which began in 1991, has aided in the development of policies aimed at attracting overseas investment and establishing India as a transnational manufacturing base. Inflows of foreign direct investment and technology transfers have resulted in an atmosphere conducive to India’s industry’s dynamic growth and greater competitiveness.
India is gradually making inroads into global markets, competing with international quality standards and pricing criteria. Although R&D is critical for maintaining a competitive edge in the global marketplace, the Indian pharmaceutical industry’s future is highly reliant on patent protection. While economic analysis does not offer the rationale for value judgments, it is an economic reality that the extremely low volume pharmacy must pass on its higher average expenses to the consumer. The duplication of patent-licensed pharmaceutical products on the shelves of community pharmacies has a finite cost to the consumer.
Furthermore, TRIPS and the Doha Declaration viewed compulsory licensing as a crucial measure for providing health benefits to people without regard to race, caste, creed, or even country. These regulations allow for flexibility because each country’s and disease’s requirements change. These laws, as well as the flexibility they provide, should not be subjected to political pressure and should be used to serve the public as well as the patent holder.
Thus, this article tries to provide for a better understanding of the patent licensing regime in the pharmaceutical industry and the direct ripple of effects on the economic standings of the corporations alongwith implications on macroeconomics of the country at large.
[1] Pradubuddha Ganguli, Gearing up for patents: The Indian scenario, p. 47
[2] “TRIPs and Pharmaceuticals: Implications for India”, http://www.cuts-india.org/1997-8.htm#Pharmaceutical
%20Industry%20in
[3] Yang and Maskus, 2003
[4] Maskus, 2003
[5] Rajagopal D, Swiss drug major Roche to drop anti-cancer drug Herceptin patent in India, The Economic Times, 16 August 2013,
[6] Kazmin A, Roche drops patent for Herceptin in India, Financial Times, 16 August 2013,
[7] Staton T, India to hit Roche, BMS with compulsory licenses on
3 cancer drugs, FiercePharma,
[8] Copley C and Pfeiffer T, Roche gives up on India patent for breast cancer drug, Reuters, 16 August 2013,
[9] Supra at 31, 32
[10] Kresge N & Gokhale K, Roche Herceptin copy’s price still out of reach in India, Bloomberg Business, 21 January 2014,
[11] Kazmin A, Roche wins battle against India sales of generic cancer drug, Financial Times, 7 February 2014,
[12]Indian Patents Act, 1970, s92 s66
[13] Vishwanathan M, Govt refuses to entertain Cipla’s request for revocation of Novartis Onbrez patents, Spicy IP
By Vinita R. Gaud, Pravin Gandhi College of Law
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Feb 18, 2022 | Copyright, IPR & Business, Patent, Startups
The provision of Section 3(k) of Indian Patent Law, that says computer software per se is not patentable till it has technical applications, puts most of the inventors down. Knowing the fact that software patent in India is tough; the next question from the inventor is that, if not patent, can we at least get a copyright?
The fact of the matter is that the statutory right that one gets in the case of patent cannot be substituted by a copyright and it is important to understand difference between the two. Copyright and patents fall under separate legal regimes and for one single product, one may file for patent as well as copyright.
Prime difference between copyright and patent is that copyright protects only expression of the idea but not the idea itself, whereas, patent protects the concept as well. For example, if there is a product, meant for administration of a hospital, the idea or concept is administration of a hospital, which does not get protection under copyright law. However, the way code has been written is the expression of the idea and the author who has written the code has copyright over it. If any other person writes another code (without copying code from first author), he also has his copyright on the product. On the other hand, if there is a patent for the product, the patent holder can prevent everyone else from making, using, selling, offering for sale or even importing the patented product in the jurisdiction (s) where he has valid patent rights.
Independent creation of copyright is not an infringement whereas the same is not true for a patent. This means that if the work is not directly copied from the copyright holder, and created independently, it is not deemed to be copyright infringement. On the other hand, independent creation of patented product is deemed to be infringement.
As soon as patent application is filed, the applicant may write ‘patent applied for’ or ‘patent pending’ on the product, whereas copyright notice, such as ‘(c) copyright, Origiin IP Solutions LLP’ can be written without registration as well. Though copyright is an inherent right and needs no formal registration as such, but registration becomes important and registration certificate serves as a proof of ownership in case of copyright infringement or even in case of merging/acquisition or to obtain funding/loan from bank or venture capital.
Novelty-Critical Requirement
Novelty is the most critical requirement for a patent which means that before the date of filing a patent application, there shall not be any disclosure of the invention. Whereas copyright, though requires originality in the work, does not have novelty as a critical requirement that enables one to file backdated application as well. Term of a patent is 20 years from the date of filing whereas term of copyright is 50-70 years from the date of death of last author.
It is interesting to note that copyright registered in any country which is a member of Berne Convention hold good in all countries which are members of Berne Convention. In order to get patent rights in multiple countries application shall be filed separately in each country. Though we have single patent application filing platform like PCT, patent rights are granted only by national offices.
Case study
In order to understand difference between copyright and patent, lets have a look at Stac vs Microsoft, an interesting court case in the USA, which Microsoft lost and was required to pay $120 mn for its willful infringement of #4,701,745 (a compression software patent). Stac had a software patent on the algorithm for its PC hard disc data compression software product. Microsoft expressed interest in working with Stac and in the process copied the compressed algorithm of the Stac product. Microsoft then wrote its own code to execute the Stac algorithm and used the code in MS DOS 6.2 product. Stac sued Microsoft for patent, trade secret, and copyright infringement.
A permanent injunction was given against Microsoft and was ordered to pay Stac $120 mn. Calculation of the damage was calculated on basis that Microsoft had included the infringed code which prevented Stac from marketing millions of copies of its separate data compression software. After litigation, for about a week, a lobotomized version of DOS was shipped with the compression feature disabled. DOS manuals were shipped with stickers on the cover warning to ignore the chapter on compression. MS finally got license to use the algorithm in DOS and agreed to pay $1 mn per month for 43 months and to purchase about $40 mn of Stac convertible preferred stock.
Since Microsoft did not copy the source code and wrote a new code for same algorithm, Stac could only prove patent infringement in the Court but not copyright infringement as independent creation of the work is not copyright infringement. Patents can protect the basic concept of a software product, regardless of the actual source code but copyright only protects source code.
Before you decide between copyright and patent protection for the software product, it is essential to understand the difference between the two so that you are clear about what rights you are getting. Though both patent and copyright have their own pros and cons, it makes a lot of sense to consider registration process based on requirements.
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Jan 8, 2022 | Patent
Law regarding patents in India is governed by The Patents Act, 1970. A patent is a monopoly right given for a limited period of time to a person who have invented a novel product or process through his skills, judgement, and knowledge. Unlike Copyright, trademark and other intellectual property rights, the protection granted is for a shorter period. But then, the protection so granted is very extensive and prevents all kinds of misuse of the same. The core object of this patent system is to encourage scientific research and new technological progresses. According to Section 2(1)(m), a patent is granted for inventions and Section 3 of the Act deals with the subject matter for patent in India. It describes in detail what not are inventions for the purpose of granting the monopoly right. A monopoly of the Patent is the reward of the inventor.[1] Section 2(1)(j) of the Act defines what an invention is. It says, a new product or process involving an inventive step and capable of industrial application. [2] Therefore, for obtaining patent for a product or process should be novel, involve an inventive step and be capable of industrial application. According to Section 2(1)(ja) of the Act, an inventive step is when there is a technical advancement from the existing knowledge or there is an economic significance to it or both. It is also important to note that, the technical advancement and/ or the economic significance should not be obvious to a person skilled in the art. The capability of an invention to be made or used in an industry is what constitutes the requirement of capable to industrial application.[3] By novelty, the law demands that the invention should not have been anticipated or used in the country or anywhere in the world before the date of filing of the application for patent.[4]
Agreement on Trade Related aspects of Intellectual Property Rights
TRIPS Agreement or Agreement on Trade Related aspects of Intellectual Property Rights is the extensive multilateral agreement that deals with Intellectual property rights and have recognised Intellectual Property rights as private rights. TRIPS agreement was born out of a need for a multilateral framework for rules and disciplines dealing with international trade in counterfeit goods.[5] Section 5 of the TRIPS Agreement deals with Patent and Article 27 under the same comprises of patentable subject matter. According to Article 27(1) of TRIPS, any inventions, be it product or process, if it fulfils the conditions of being novel, involving an inventive step and capability of industrial application, patents shall be granted. This is applicable to inventions in all fields of technology. Article 27(2) and (3) of the TRIPS agreement lists out the category of things that may be excluded from patentability. This includes preventing patenting of inventions to protect the public morality, human, animal or plant life and health. Any therapeutic, diagnostic, and surgical methods which are essentially for the treatment of humans or animals may be exempted from granting of patents. Plants and animals and essentially biological processes for production of the same is exempted as well. But Micro-organisms are exception to this clause. The non-biological process and microbiological processes are also an exception to the said clause. For the members to apply this clause, they shall provide through patents or any such law the protection for the plant varieties.[6]
Impact of TRIPS Agreement on The Patent Act, 1970.
The TRIPS Agreement came into force on January 1, 1995. Prior to that The Patent Act, 1970 satisfied the international norms of patentability covering novelty, inventive step, and industrial application. Post TRIPS, for the ease of trade sanctions, all the members were ought to fulfil the obligations under TRIPS to which they are signatory of. To fulfil the same, The Patent Act, 1970 was first amended in the year 1999 retrospectively with effect from January 1, 1995. After that the Act was amended twice in 2002 and 2005 respectively.
The Patent Act prior to the amendments had its subject matters mentioned under Section 3 of the Act. It was a list of categories that were not considered as an invention. The following are the same:
- An invention which is frivolous in nature or is contrary to well established natural laws;[7]
- An invention of which primary or intended use would be contrary to law, morality or injurious to public health;[8]
- An invention where a scientific principle is merely discovered or an abstract theory is formulated;[9]
- An invention which is a mere discovery of new property or new use of a known substance or process respectively; [10]
- An invention which is just an admixture resulting in aggregation of properties or process;[11]
- An invention which is a mere arrangement or re-arrangement of a known aspect;[12]
- A method or process of testing which is applicable during the procedure of manufacture;[13]
- Any method of agriculture or horticulture;[14]
- Any medical, surgical, curative, or prophylactic or other procedure for treatment of human beings or animals and plants to free them from disease or increase the economic value of the same.[15]
The above mentioned nine clauses were the subject matter to which patentability was tested prior to the amendments. The Act listed out certain exceptions to which an invention can be defined or narrowed down to.
In 1999, an amendment was passed to fulfil the TRIPS obligation but no changes were made to the subject matter part in the Act. Hence, the same was followed by the authorities to decide the question of patentability of an invention. In 2002, the next amendment was passed and had major changes in the Section 3 which deals with subject matter. The following are the changes made with respect to Section 3:
- In clause (b), the commercial exploitation of the invention was added which was previously just the primary and intended use of the invention. Further excluded those inventions which caused serious prejudice to human, animal or plant life or health or to the environment.[16] Prior to the amendment, only those inventions which were contrary to law or morality and the ones injurious to public health were excluded.[17] This can clearly be concluded as a step to comply with clause 2 of Article 27 of TRIPS Agreement.
- In clause (c), “discovery of any living thing or non-living substance occurring in nature”, this was added towards the end denoting the invention those are merely discovery of living things or non-living things which is essentially already found in the nature shall not be patented.
- Clause (g) was omitted from the Act.
- In Clause (i), the terms “Diagnostic and therapeutic” was added to include these along with the other types of processes in medical arena. Clause 3(a) of Article 27 of the TRIPS Agreement is incorporated here.
- Clause (j), (k), (l), (m), (n), (o), (p) was inserted. Clause (j) dealt with non-patenting of plants and animals except micro-organisms. But it excluded seeds or varieties and species and essentially biological processes for production or propagation of plants and animals.[18] The provision under Article 27 Clause 3(b) is reflected in this particular clause. Clause (k) excluded mathematical methods, business methods, computer programmes from getting a patent. Clause (l) excluded the plethora of things which are capable of getting a copyright for like literary, dramatic, artistic works etc. Clause(m) eliminated mere scheme, rule, or method of performing a mental act or playing games from patenting. [19]Presentation of information and topography of integrated circuits were decided to be an ineligible invention under clause (n) and (o) respectively. Traditional knowledge became non-patentable through clause (p).
After this major amendment in 2002, in the year 2005 another amendment was made. Only a minor change was bought in the Subject matter that is an explanation clause was added to Section 3(d) was added for a better clarity and understanding.
Conclusion
Section 3 of the Act delas with what not are inventions and is considered as the subject matter of patentability. Article 27 of the TRIPS Agreement deals with provisions related to patent and gives out the standard as well as the subject matter in it. The current legislation that gives out the subject matter for patentability is result of many amendments to keep up with various international obligations like TRIPS Agreement. The changes so made have reflected in a positive way and have bought perfect clarity to confusions surrounding this area of law. The makers of law have given such a makeover to the legislation so as to have a strong patent system in our country and maximum people can be benefitted from the same. The category of things that are protected either by a different law or through different provisions are excluded by the Patent law.
Author: Akhila Sridharan
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