Startups and small companies seeking patent protection for their inventions are likely to benefit tremendously from the proposed changes through the introduction of the Patent (Amendment) Rules, 2020. With these reforms, total filing and prosecution costs have been drastically reduced for start-ups and small entities. While the fees applied to small companies have been reduced directly, start-ups can maintain their “start-up” status for up to 10 years, enabling them to benefit from preferential fees, etc. for an extended period of time from what was previously available. Also, modalities regarding the filing of patents have been simplified for the patentees resulting in increased commercial viability.
The Central Government has been with vested power under Section 159 of the Patents Act, 1970 (“Act”) to formulate and publish rules relating to patents. On 19 October 2020, The Department for the Promotion of Industry and Internal Trade (DPIIT) published the Patent (Amendment) Rules 2020 (“Amendment Rules”) making certain amendments to Form 27 of the Act and Rule 21 of the Patents Rules of 2003 (‘Rules of 2003’).[i] The second set of amendments notified on 04 November 2020, called the Patents (Second Amendment) Rules, 2020 (‘2020 Second Rules’), further minimise the cost of filing and litigation for start-up and small entity applicants.
Patent (Amendment) Rules, 2020 dated 19.10.2020
In the case of Shamnad Basheer v. UOI, public interest litigation was filed in 2015 before the Delhi High Court (‘Court’), drawing to the Court’s notice the lack of compliance with the working statement’s filing provision under the Act. Special attention was drawn to the fact that the 2003 Rules elucidated Form 27 using vague terms resulting in compliance difficulties. This PIL resulted in the Government being ordered by the Court to make the required changes in Form 27. [ii]
FORM 27: CHANGE FROM CALENDAR YEAR TO FINANCIAL YEAR
BEFORE: Previously, Form 27 was to be submitted according to each calendar year and the deadline for filing was within three months after the end of the calendar year, i.e. by March.[iii]
The amended rule 131, for sub-rule (2) now states:
“(2) The statements referred to in sub-rule (1) shall be furnished once in respect of every financial year, starting from the financial year commencing immediately after the financial year in which the patent was granted, and shall be furnished within six months from the expiry of each such financial year.”[iv]
NOW: However, now in accordance with the amendment to Rule 131(2), the statements to be furnished by the patentee under Form 27 shall be furnished once in each financial year (1 April to 31 March) within six months of the expiry of that financial year the due date being 30 September of each financial year. In the commercial aspect, the shift from the academic calendar to the financial year will prove to be a business-friendly measure. For the Government, businesses, investors, and taxpayers, it is the financial year that is of utmost importance. The patentee will be operating within the purview of these individuals and institutions and thus will be at ease in collecting details for patent filing.
FORM 27: ESTIMATED AND NOT EXACT VALUES TO BE GIVEN
BEFORE: The former 2003 rules required the patentee to provide the “quantum and value (in rupees) of the patented product produced/imported in India”. This has created difficulty for the patentees because aside from posing serious confidentiality issues, it is extremely troublesome for the patentee to determine the exact value of the patented product / imported in India. In certain kinds of inventions, statistics aren’t easily available resulting in unnecessary hassle for the patentee.
NOW: The amended provisions of Form 27 now elucidate that in case the patented information has been worked, the patentee only has to submit the approximate and not the exact value/revenue amassed from manufacturing/ importing the patented invention in India. As per the amended regulations, patentees and licensees will now be able to provide approximate values, making compliance easier and less cumbersome.
FORM 27: MULTIPLE PATENTS UNDER A SINGLE FORM
NOW: Under the new amended rules a single form 27 can be used to file multiple patents, provided that:
- The patents are related
- From its related patents’ approximate revenue accrued, a single patent’s approximate revenue accrued cannot be derived separately
- All such patents are issued to the same patentee
FORM 27: PUBLIC DECLARATION REMOVED
BEFORE: The patentee was required to specify whether the public specifications for the patented invention had been satisfied in part/adequately/to the fullest extent under the 2003 Rules. Neither the Act nor the 2003 Rules specify any definition or direction as to how to assess this requirement resulting in procedural ambiguity.
NOW: The amendment removed the duty under Form 27 relating to the declaration of the patentee to report if the public requirement was fulfilled. This has led to the procedural simplifications and relaxation for the patentee. A Caveat to be kept in mind is that Section 146(1) of the Patents Act 1970 authorizes the controller to obtain information from the patentee, as may be deemed necessary.
FORM 27: OTHER CHANGES
- Where a patent is issued to two or more individuals, a joint statement of working may be filed by all such persons. Each patent licensee, however, is also required to file Form 27 individually.
- On behalf of the patentees, registered agents will be able to submit Form-27. This will ease the business aspect for innovators.
- The patentee is not supposed to file form-27 for a portion or fraction of the financial year.
- In case the patented invention has not been worked, reasons for not working the patented invention and steps being taken for the working of the patented invention will have to be provided. [v]
ALTERATIONS IN FILING OF THE PRIORITY DOCUMENT (RULE 21 OF THE PATENTS RULES, 2003)
Rule 21 of the 2003 Rules which mandate the filing of a priority document has been amended to comply with paragraphs (a), (b), or (b-is) of Rule 17.1 under Patent Cooperation Treaty (PCT) Rules.
The following amendments have been made:
- If the priority document is available in WIPO’s digital library, the applicant would not be required to submit the same in the Indian Patent Office
- The applicant would be required to submit a verified English translation of a priority document, where the validity of the priority claim is relevant to the determination of whether the invention concerned is patentable or not[vi].
Patents (Second Amendment) Rules, 2020 dated 04.11.2020
Notification No. G.S.R. 689(E) was released on 4 November 2020 by the Department for the Promotion of Industry and Internal Trade under the Ministry of Commerce and Industry to notify Patents (2nd Amendment) Rules, 2020 (“2nd Amendment”) to make certain modifications to the Patents Rules, 2003 to put small companies on par with start-ups. Hopefully, those reforms would enable small entities to innovate and pursue patent protection for their inventions as well.
The newly amended sub-rule (3) of Rule 7 of the Patents Rules, 2003 reads:
“(3) In case an application processed by a natural person or startup or small entity is fully or partly transferred to a person other than a natural person, startup or small entity, the difference, if any, in the scale of fees between the fees charged from the natural person, startup or small entity and the fees chargeable from the person other than a natural person, startup or small entity in the same matter, shall be paid by the new applicant with the request for transfer.
Explanation— Where a startup or small entity, having filed an application for a patent, ceases to be a startup or small entity due to the lapse of the period during which it is recognized by the competent authority, or its turnover subsequently crosses the financial threshold limit as notified by the competent authority, no such difference in the scale of fees shall be payable.”[vii]
ONLY TWO CATEGORIES OF APPLICANTS
BEFORE: Previously, for the purposes of fees, applicants were divided into three groups, namely, natural person or startup, small entity, and others as mandated under Rule 7; sub-rules 3, 3A, 3B.
NOW: After the 2nd Amendment, the previously mandated sub-rules 3A, 3B have been omitted. Their provisions have been clubbed into the newly modified sub-rule 3, under Rule 7 including small entities in the same category as natural person and startup. Rule 7(3) and Table I of the 1st Schedule to the Patents Rules, 2003 now categorizes the applicants under two categories –
-Natural person(s) or Startup(s) or Small entity/(ies)
-Other(s), alone or with Natural person(s) or Startup(s) or Small entity/(ies)[viii]
The new rules club a natural person, start-up, and small entity under one band in respect of the fees payable under Section 142 of the Patents Act, 1970 and in respect of other matters for which fees are required to be paid under the Patents Act.[ix]
REDUCTION IN FEES
BEFORE: Earlier small entities were given a 50% concession in fee compared to that applicable for “other than small entity”. For a natural person or startup, an 80% reduction of the fee was available, compared to that applicable for “other than small entity”. [x]
NOW: compared to the second category of Other(s) alone or with Natural person(s) or Startup(s) or Small entity/(ies), the fee for Natural Person/Startup and Small Entity has been grouped into one category with a waiver of 80% of the official fee.
This implies that the First Schedule to the Rules that sets out the specifics of the fees payable have been revised. The fee applicable to small entities for filing and prosecuting patent applications has been reduced in order to put them at the same level as start-up applications.[xi]
In addition, an explanation has been introduced to state that in the event that a small entity ceases to be a ‘small entity’ due to a rise in its turnover, etc the disparity in the fee scale (between what is payable by a small entity and what is payable by other entity) is not payable.[xii] Similar provisions that were previously available only in relation to start-ups have been maintained.
REQUEST FOR EXPEDITED EXAMINATION
In relation to demands for expedited review of applications, small companies have also been brought into line with start-ups. For this reason, the Proviso to Rule 24C(5) was amended. Where an application for an expedited review is submitted by a start-up or a small entity, it shall not be challenged solely on the ground that for the aforementioned purposes, the start-up or small entity ceases to be a start-up or a small entity.[xiii]
These amendments are in line with the government’s numerous initiatives to encourage entrepreneurship and in particular, start-ups in India. Initially launched as a pilot project to assist start-ups in creating and securing their intellectual property, the Scheme for Facilitating Intellectual Property Protection (SIPP) was extended from 01 April 2020 to 31 March 2023 for a further three years earlier this year. The first collection of changes, the 2020 Patents (Amendment) Rules, notified on 19 October 2020, simplify the process for the submission and translation of priority applications and the filing of working statements (Form 27). These changes would reduce the costs for applicants in both enforcement and prosecution. The second collection of amendments further reduce the filing and litigation costs for applicants who are startups and small companies. These reforms will make intellectual property security affordable as well as available to different business classes cumulatively, and will likely also increase patent filings.[xiv]
This article can be cited as:
Shreya Kumar, PATENT (AMENDMENT) RULES, 2020., Metacept- InfoTech and IPR, accessible at https://metacept.com/patent-(amendment)-rules,-2020.
[i] Update: Patent (Amendment) Rules, 2020, NASSCOM COMMUNITY, October 28, 2020, https://community.nasscom.in/communities/policy-advocacy/update-patent-amendment-rules-2020.html. Accessed 11 December 2020.
[ii] Devika, Patents (Amendment) Rules, 2020 | Patentee would get flexibility to file a single Form-27 in respect of a single or multiple related patents, SCC ONLINE BLOG, 28 October 2020, https://www.scconline.com/blog/post/2020/10/28/patents-amendment-rules-2020-patentee-would-get-flexibility-to-file-a-single-form-27-in-respect-of-a-single-or-multiple-related-patents/. Accessed 11 December 2020.
[iii] Aparna Gaur, Abhay Porwal, Gowree Gokhale, India: Patent (Amendment) Rules, 2020: Streamlining Form 27 Filings, THE NATIONAL LAW REVIEW, 18 November 2020, https://www.natlawreview.com/article/india-patent-amendment-rules-2020-streamlining-form-27-filings. Accessed 11 December 2020.
[iv] Patents (Amendment) Rules, 2020, Rule 131(2).
[v] Adheesh Nargolkar, Janaksinh Jhala, Patent (Amendment) Rules 2020 come into force, KHAITAN & CO, 22 October 2020, https://www.khaitanco.com/thought-leaderships/Patent-Amendment-Rules-2020-come-into-force. Accessed 11 December 2020.
[vi] Devika, supra note 3.
[vii] Patents (2nd Amendment) Rules, 2020, Rule 7(3).
[viii] Patents – Fees payable by a small entity reduced – Patent Rules amended, LAKSHMIKUMARAN & SRIDHARAN ATTORNEYS, 10 November 2020, https://lakshmisri.com/newsroom/news-briefings/patents-fees-payable-by-a-small-entity-reduced-patent-rules-amended/#. Accessed 11 December 2020.
[x] Patent filing fees in India based on type of applicant, OBHAN & ASSOCIATES, https://www.obhanandassociates.com/blog/what-are-the-various-fees-and-payment-processes-associated-with-patent-application-what-are-the-provisions-for-start-ups/. Accessed 11 December 2020.
[xi] Notification of Patents (2nd Amendment) Rules, 2020, NOVO JURIS LEGAL, https://www.novojuris.com/thought-leadership/notification-of-patents-2nd-amendment-rules-2020.html. Accessed 11 December 2020.
[xiii] Shivarpita Nailwal, India: Patents (2ND Amendment) Rules Implemented To Reduce Official Fee For Small Entity, CHADHA & CHADHA IP, 8 November 2020, https://www.candcip.com/single-post/india-patents-2nd-amendment-rules-notified. Accessed 11 December 2020.
[xiv] Essenese Obhan, Sneha Agarwal, New Indian Patent Rules offer benefits to startups and small entities, OBHAN & ASSOCIATES, https://www.obhanandassociates.com/blog/new-indian-patent-rules-offer-benefits-to-startups-and-small-entities/. Accessed 11 December 2020.