Indian patent law allows more than one person to come together and apply jointly for a patent. Upon grant of such patent, these applicants become joint/co-owners of the granted patent. Co-ownership of a patent might be unavoidable in certain scenarios when more than two parties have jointly invested or have common interests with respect to commercialisation of the patented product. Applicants who have joint ownership of a patent should be aware of the risks & legal ramifications involved because joint ownerships involve a great deal of shared investment and experience, both of which may be wasted if the applicants are not aware of risks and legal implications.
Co-ownership of a patent is dealt under sections 50 and 51 of the Indian Patents Act, 1970. Section 50 [Rights of co-owners of patents] lists out the rights of the joint owners as below:
- Each co-owner is entitled to an equal and undivided share in the patent, unless there is an agreement to the contrary. Co-owners may be two or more and they shall own equal share in the patent, by default. However, this equal share in the patent may be changed by executing an agreement where there is a clear mention of share each co-owner holds.
- Each co-owner is entitled to equal patent rights, as mentioned Section-48 [right of patentee], for his own benefit without accounting to the other person or persons. Each co-owner can independently commercialise the patent without seeking permission of other co-owner (s).
- If a patented article is sold by one of the co-owners, the purchaser and any person claiming through him shall be entitled to deal with the article in the same manner as if the article had been sold by a sole patentee.
As stated above, when a patent is jointly owned, all joint owners can commercialise the patent independently without consulting the other co-owners; however, a license for such patent shall not be granted to any third party by any of the co-owners without consent of the other co-owners. Further, a share in the patent shall not be assigned by one of the owners without consent of the other co-owners or joint owners. If proper care is not taken with respect to this clause while entering into a joint ownership of a patent, this may lead to dispute amongst the co-owners. Further, when a patented technology is sold by any one of the co-owners of the patent, the right that the buyer of the property acquires in the technology will be the same rights he would have acquired if the patent were not jointly held.
A patent shall be treated as a movable property (property that can be moved from one place to another) and rules of law applicable to the ownership and devolution of movable property generally shall apply in relation to patents. Movable property includes personal items such as clothing, jewellery, household goods such as furniture, decorative items and appliances and so on. For better understanding, let us take the following example.
Let us consider a situation where a patent has two joint owners: A and B. According to Indian Patents Act, 1970 both of them have an equal and undivided share in the patent and both of them can exercise the rights granted to them under section 48 of the Act on their own without accounting or waiting for the other’s consent. Here, the patent should be handled like a movable property for the purposes of ownership and devolution of patent rights.
Though co-owners can enjoy equal patent rights and privileges, the problem starts when one of them wishes to assign or license the patent. If a patent has to be licensed in India, it has to be written, duly executed and registered. If A wants to license the patent to someone, A must obtain B’s permission. If B is not willing to consent to such licensing, the situation becomes complicated. In such circumstances A is left with only one option. A has to approach the Controller, seeking his power to direct B to agree to the licensing under Section 51 (1) of the Indian Patents Act 1970. This section empowers the Controller to give directions to joint owners regarding the sale or lease of the patent, grant of licenses etc. Powers of the Controller to give directions to co-owner in case of sale or lease or execution of instrument are as follows:
- If a patent is co-owned, the Controller may give directions for the sale or lease of the patent or any interest therein or the exercise of any right under Section-50 to any of the co-owners. Such direction is given by the Controller only when application is made to him in the prescribed manner by any of the co-owners.
- If any person registered as grantee or proprietor of a patent fails to execute any instrument or to do any other thing required for carrying out of any direction given under this section within 14 days after being requested in writing so to do by any of the other persons so registered, the Controller may, upon application made to him in the prescribed manner by any such other person, give directions empowering any person to execute that instrument or to do that thing in the name and on behalf of the person in default.
Illustration
Maya is registered as grantee of a patent and she fails to execute the instrument (license agreement) with 14 days after being requested by the co-owner of the patent. If the co-owner makes an application to the Controller, any other person can execute the instrument in the name and on behalf of Maya.
- Before giving any directions under this section, the Controller shall give an opportunity for the following to be heard:
- In the case of an application under sub-section (1) to the other person or persons registered as grantee or proprietor of the patent;
- In the case of an application under sub-section (2), to the person in default.
- No direction shall be given under this section so as to affect the mutual rights or obligations of trustees or of the legal representatives of a deceased person or of their rights or obligations as such, or which is inconsistent with the terms of any agreement between persons registered as grantee or proprietor of the patent.
Approaching the Controller for directions might turn out to be a time-consuming process. Also, it may lead to uncertainty as it will be the Controller who then will decide about the directions to be given. No directions will be given under this section so as to affect the mutual rights or obligations of trustees or of the legal representatives of a deceased person or of their rights or obligations as such, or which is inconsistent with the terms of any agreement between persons registered as grantee or proprietor of the patent. This situation may get further complicated if the ownership of the patent itself is in question. These possibilities make it imperative for the parties to take utmost care while entering into a joint ownership of a patent.
This whole complexity can be taken care of if both A and B enter into an agreement about how they would exercise the licensing rights each of them have in order to avoid such complexities later. So, a lot of hardships may be prevented if a little precaution is taken at the time of entering a joint ownership of a patent, specifically at the time of entering into an agreement about the licensing of the patent.
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