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Patent Trolls: How India managed to curb their activities?

Authored by Nameiaishan Kharkongor, student at National Law University, Jodhpur

  • Introduction

A patent is a legally enforceable right for the ownership over a device, process, technology, and anything else that comes under the ambit of intellectual property. A patent is usually assigned to an inventor by the government so as to secure the right to manufacturing and use of a particular invention.

In recent years the number of patent infringement cases has been on the rise. Some of these cases are legitimate claims but most are just a ruse to exploit businesses -usually small or medium-sized businesses or even startups. These kinds of infringement cases are often filed by Non-Practicing Entities or so-called patent trolls. Non-practicing entities (NPEs), some of which are also labeled as patent assertions or patent trolls, play a disputed role in our modern patent system. These entities, which do not make and sell products or services that embody their patented technologies, file a large percentage of all patent lawsuits[1].

There is no agreed-upon definition for a patent troll; however, they are usually associated with a person who obtains multiple patents through original patenting and through the acquisition of patents from other parties. The same person then, in turn, uses those patents to demand licensing fees from users of the products that fall within the scope of those patents. If they refuse to pay the licensing fee, patent infringement cases are filed against them. Patent trolls usually settle an infringement case with a compromise, since a compromise is at times more financially viable than going ahead with litigation. Being paid compensation, either awarded by the court or agreed upon by the parties involved, is the main objective of patent trolls.

In this article, we will discuss how the Indian legal system, with the help of the 2005 amendment of the Patents Act, 1970 has largely been effective in combating the activities of these so-called patent trolls.

India’s stand against Patent trolls

India like any other country has patent trolls which are most predominant in the information technology and communication sector. However, ever since the amendment to the Patents Act, 1970 in 2005 there has been a decline in cases of patent infringement in India. Although the amendment itself does not mention patent trolls, various provisions significantly prohibit non-performing entities or patent trolls.

Provisions of the Act that prevent patent trolling

The 2005 amendment has equipped the Act to discourage or curb the activities of patent trolls as much as possible with the help of various provisions. One such stipulation is Section 13(4) of the Act which states that “The examination and investigations required under section 12 and this section shall not be deemed in any way to warrant the validity of any patent, and no liability shall be incurred by the Central Government or any officer thereof by reason of, or in connection with, any such examination or investigation or any report or other proceedings consequent thereon.”[2] This implies that the validity of a patent is no longer guaranteed by the grant of a patent. It also places the onus probandi of the validity of the patent on the patentee, thus dissuading trolls from filing patent infringement cases.

Section 3(d) of the Act states that “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, the machine or apparatus unless such known process results in a new product or employs at least one new reactant.[3] This is of great help in preventing trolls from obtaining patents on the grounds of discovering a new use or property of an already existing invention, as the discovery of an already known substance or invention would not amount to a new invention.

Provisions in the Act such as section 25(2)[4] which aims to further discourage patent trolling, give an opportunity to any person to file a post-grant opposition within 12 months of the date of publication of the grant of a patent on any of the grounds specified therein, by giving a notice of opposition to the Controller. After receipt of the notice, the Controller informs the patentee of the opposition and constitutes an opposition board to examine the opposition and submit its recommendation to the Controller. In this way, this section ensures that even if a patent is granted, objections can still be raised against it.

Section 83(b) of the Act states that “they are not granted merely to enable patentees to enjoy a monopoly for the importation of the patented article.[5]” This section prevents patents trolls from monopolising any patent, as the patent’s purpose is to secure the rights to an invention, research, etc, and not to provide him/her with the power of monopoly over the invention.

The Patents Act, 1970 is further strengthened by compulsory licensing which is stated in section 84[6] of the Act. Compulsory licensing is a provision wherein a government allows someone else to produce a patented product or process without the consent of the patent owner. This can also be done when a government wants to use an invention for itself. According to this section, if a patent holder fails to make his invention available to the public within a reasonable time, either by manufacturing the invention or by giving the licenses to someone else, it may result in the grant of a compulsory license. A patent holder is given a period of three years from the date of grant of patent to work on his/her invention, after which any person interested may apply to the Controller for grant of a compulsory license. When a patent that has been granted is not used within the territory of India, a compulsory license can be issued: this is in accordance with section146[7] of the Act. 

Establishment of Special Appellate Board

The establishment of the Intellectual Property Appellate Board (IPAB) has further reduced the activities of patent trolls. Smaller businesses and companies can go forward with litigations without the high expenditure and time-consuming elements of trials. These appellate boards facilitate in speedy disposal of cases with low cost of litigation and help the parties accused of patent infringement to avoid a compromise which is the sole objective of trolls. The Intellectual Property Appellate Board (IPAB) has helped in delivering judgments to dozens of litigations across the country, thus reducing the caseload on High Courts.

The case of Spice Mobile Ltd. and Samsung India Electronics Pvt. Ltd. v. Somasundaram Ramkumar[8] is an example of the efficacy of the Intellectual Property Appellate Board. In this case, Somasundaram Ramkumar was the patentee who was granted a patent for mobile phones that could incorporate multiple sim cards. Somasundaram Ramkumar had registered his patent with the India Customs Authority to enforce his patent under Intellectual Property Rights (Imported Goods) Enforcement Rules and had also filed a suit for infringement, seeking an injunction, which was granted. He later amended his claim to incorporate, “a plurality of headphone/ earphone jacks for accepting a plurality of headphone/ earphone plugs and/or a plurality of Bluetooth devices in order to operate simultaneously.”[9]

The applicants argued that according to section 57[10] and 59[11] of the Patents Act, 1970, a patent specification cannot be amended except through an explanation, correction, or disclaimer and that the claims were amended by wholly incorporating new features, and new matters wholly outside the scope of the original disclosure and claims.

The Intellectual Property Appellate Board (IPAB) accepted the arguments that the addition of new subject matter was not supported in the specification before the amendment. The Board finally put an end to these antics and revoked the patent on the ground of lack of inventive steps. The board also advised Patent Office to apply its discretion more cautiously and judiciously under section 57(6), especially when there are large-scale amendments as noticed in the present case. It also stated that the explanation and clarification cannot be stretched beyond the limitations under section 59 of the Patent Act.

Another example of how effective the Intellectual Property Appellate Board (IPAB) can be, is seen in the case of M/s Aditi Manufacturing Co. Vs. M/s Bharat Bhogilal Patel & Anr[12]. In this case, there was a dispute regarding two patents i.e., Patent No.189027 and Patent No. 188787 granted to and held by the respondent (Aditi Manufacturing Company was petitioner while Bharat Bhogilal was the respondent) which the petitioner wanted to be revoked. Initially, the petition for revocation was filed in the honorable High Court of Gujarat, from where it was transferred to IPAB. Both the patents owned by the respondent were on the same subject matter relating to laser technology. Patent No.189027 was granted for a process of manufacturing engraved design articles on metals or non-metals using Lasers and Patents. Patent No. 188787 was granted for an improved laser marking and engraving machine.

The petitioner argued that inventions that are related to laser technology and the engraving machine is not novel and it was already in the public domain. The inventions also lack inventive steps as per the requirement of Section 2(j)(a)[13]. A lot of prior inventions were present disclosing identical products and processes. Thus the requirements of sections 3(k)[14], 3(f)[15], and 10(4)[16] of The Patent Act, 1970 were not met. The revocation in both cases was sought on the ground that the invention has been used from 1996 by one Sarju Laser Marking Private Limited and sold in the market even before the date of the patent.

The respondent argued that there was no presence of this technology in the public domain and stated that all prior inventions are different from his and share no known components.

The Intellectual Property Appellate Board (IPAB) observed that there are prior arts that have the features of the invention and that there was nothing new in the features that have been claimed to be new, the board revoked the patents on the grounds that the invention was already known and there is neither any novelty nor any inventive step.

In both these cases, the patents were revoked as there was a lack of novelty and inventive steps.  This would not have occurred but for the effectiveness of the amendments made to the Act. These cases clearly showcase the resolve of the Intellectual Property Appellate Board (IPAB) and how this insistence in its conditions for novelty and innovativeness reduces the chances of patent trolling.

Benefits of the Act

This Act has especially helped small companies and individuals who make heavy investments in the research and development of a product. Without deep pockets, they become targets of patent trolls and often have to yield before their demands.  However, after the amendment, they can go ahead with litigation as they are now inexpensive and not as time-consuming as before. Companies no longer have to pay a ransom, thus obviating the threat of lawsuits over dubious royalty payments. Consumers no longer have to pay for bogus intellectual property covering, since the burden of paying these kinds of costs always falls on the consumer.

Conclusion

With the 2005 amendment of the Patents Act, 1970, our country has been able to curb the activities of patent trolls to a certain extent. But just because our country has managed to reduce such activities by implementing provisions such as compulsory licensing and the establishment of the Intellectual Property Appellate Board (IPAB), we should not forget that there is more work to be done. Further, improvements can be made such as better scrutiny of patents before they are granted. With India already having taken a stand against patent trolls with its 2005 amendment of the Act, better regulation will only make India’s stand more resolute.

References

[1] John R. Allison, Mark A. Lemley, and David L. Schwartz, How Often Do Non-Practicing Entities Win Patent Suits? 32 Berkeley Technology Law Journal 237 (2017).

[2] The Patents Act, 1970, §13(4)

[3] The Patents Act, 1970, §3(d)

[4] The Patents Act, 1970, §25(2)

[5] The Patents Act, 1970, §83(b)

[6] The Patents Act, 1970, §84

[7] The Patents Act, 1970, §146

[8] Spices Mobiles Ltd. and Samsung India Electronics Pvt. Ltd. v. Somasundaram Ramkumar, 2012 IPAB 99, 100.

[9] See supra 8

[10] The Patents Act, 1970, §57

[11] The Patents Act, 1970, §59

[12] M/s Aditi Manufacturing Co. v. M/s Bharat Bhogilal Patel & Anr., 2012 IPAB 93.

[13] The Patents Act, 1970, §2(j)(a)

[14] The Patents Act, 1970, §3(k)

[15] The Patents Act, 1970, §3(f)

[16] The Patents Act, 1970, §10(4)

 

*Disclaimer: The content of this article is intended to provide a piece of general information. The views are expressed by the Author solely and BFTLR may or may not subscribe to the views of the Author.

 

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