The primary objective of the Indian Patents Law has been promotion of science and technology, for public interest specially in those sectors which are vital for socio-economic and technological development of India. The purpose of granting patents is to give the inventors an exclusive right to utilize/monetize their inventions on a commercial scale.
As per the Patent Rules, it is mandatory that the patent holder files Form 27 with the Indian Patent Office. Also, it must be filed annually to keep the Patent Office updated about current commercialization of the Patent, which is in accordance with Section 146 read with Rule 131 of the Patent Act.
Form 27 must be filed even for those patents which could not be commercially exploited or did not work for any reason. In such circumstances, it must be stated that the patent granted did not work and the reason for it.
There is no official fee associated with filing the working statement namely Form 27.
Section 83 of the Indian Patent Act, 1970, [the Patent Act] which outlines the general principles applicable to working of the patented invention:
That the patent is granted to encourage and secure the inventions that are fully worked in India on a commercial scale and that is reasonably practicable without undue delay
that the patent is granted not merely to enjoy the monopoly of the patented article;
that the protection and enforcement of the patent rights contribute to the promotion of technological innovations and to the transfer and dissemination of technology to the mutual advantage of the producers and users of technological knowledge and in a manner conducive to social and economic welfare and to a balance of rights and obligations.
that it does not impede protection of public health and nutrition and acts as instrument to promote public interest specially in sectors of vital importance for socio-economic and technological development of India;
that does not in any way prohibit the Central Government in taking measures to protect public health;
that 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 do not resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology; and
to make the benefit of the patented invention available at reasonably affordable prices to the public.
The Patents (Amendment) Rules which came into effect on 19th October 2020, further streamlined the requirements related to filing of Form 27. Inter alia, the amendments permitted the patentees to submit a single form for one or more related patents. It also permitted multiple patent holders who hold a common patent to file a single form. The Controller can seek additional information under Section 146(1) of the Patents Act, if so required. As per the amended Rules, the Patentee/Licensee or the Agent of the Patentee can sign the working statement.
Information sought in FORM 27:
Following information must be submitted by the patentee/licensee by way of FORM 27:
Whether the patented invention is manufactured or sold or licensed out in India?
If yes, then the patent holder needs to provide an approximate revenue (in Indian Rupees) generated through the sales of the product.
If not, then the patent holder needs to provide reason for non-working of the patented product along with a list of measures undertaken by the applicant to commercialize the product.
Whether the patented product is exported from India or imported in India?
Whether the patented product is licensed or sub-licensed by the Patent holder?
Form 27 must be filed even for those patents which could not be commercially exploited or did not work for any reason. In such circumstances, it must be clearly stated that the patent granted did not work and the reason for not working must be provided.
The timeline for filing the Form 27 has been amended under The Patent (Amendments) Rules, 2020. According to the revised rules, Form 27 [the statement of working of patents] has to be filed annually for every financial year and is to be submitted within six months from the start of the next financial year i.e. by 30th September of the next financial year. For instance, the annual working statement should be filed by the patentee for financial year starting from April 1, 2022 to March 31, 2023. However, this requirement is not applicable to patents granted on or after April 2023. The first working statement of such patents will be due by September 30, 2024, covering the working period from April 1, 2023, to March 31, 2024.
Ramifications of Not Submitting FORM 27:
Failure to file FORM 27 does not automatically lead to loss of ownership of the patent. However, consistently failing to file FORM 27 can lead to the risk of the patent getting abandoned or revoked, causing loss of patent rights to the patent holder.
As per Sec 122 of the Patent Act, failure to submit proper and correct information by way of Form 27, attracts a fine which may extend to Rs. 10,00,000/- [Rupees Ten lakhs]
Prior to the amendments introduced in the Jan Vishwas [Amendment] Act of 2023, [Jan Vishwas Act ] submission of incorrect information was also punishable with imprisonment which extended to six months, or with fine, or with both as prescribed in Section 122 of the Patent Act. However, after the passing of the Jan Vishwas Act, Section 122 of Patent Act was amended, and it was decriminalized. Submission of incorrect information now attracts only fine and not imprisonment.
The essence of Form 27 is by way of a finger on the pulse of the commercialized patents in the market. While it is appreciated that every patent granted cannot be monetized for a variety of reasons, annual submission of Form 27 serves as a means of keeping track of the patents that are in use in the market and those which could not be commercialized.
It is possible to license or sub-license patents to another, for a mutually agreed fee. These agreements are usually mutually negotiated by the patent owner and the patent licensee. However, a special category of licensing in the form of ‘Compulsory Licensing’ has also evolved.
In case of those patents, in which Form 27 has not been filed for 3 consecutive years and the patent holder is not very keen on licensing it to another, then such interested person may apply to the Controller of Patents for grant of license for such patent, inter alia, on the grounds that the general public is not benefiting from the patented invention.
After scrutiny, if the Controller of Patents observes that the interested person has made efforts to obtain such license from the patentee on reasonable terms and conditions, and he has been unsuccessful, then the Controller can direct the patent holder to grant license of the Patent to the interested person for the public good. This is also known as ‘Compulsory Licensing’.
FORM 27 and practical realities:
From the ground realities, it is observed that a significant portion of patents fall under the head of “not worked” and the reasons cited for their non-working status are largely similar.
As per the Annual Report 2021-2022, released by The Office of Controller General of Patents, Designs, Trademarks, and Geographical Indications, Government of India, out of the 55,014 statements on the working of patents which were submitted in Form 27 for the year, only 9,616 patents were reported as actively in use or "working."
Though the Report indicates an upward trend in the ‘worked patents’ from the data collected and analyzed for the last 5 years, the numbers can still be improved upon.
One of the primary reasons for the commercially ‘not working’ of most patents is the resistance to adopting new technology and inventions. Moreover, the process of transforming an invention into a market-ready product requires capital for manufacturing and marketing, which is a high risk investment in respect of new and innovative inventions, which not many people are willing to undertake, given the unpredictable nature of the modern markets.
The Patent Office alongwith the Judiciary and the market leaders, amongst others, must find ways to bridge the gap between the ‘patents filed’ and the ‘patents worked’, to encourage inventors for the general good.
In conclusion, working statements like Form 27 play a fundamental part of patent law, designed to ensure that patents serve their intended purpose - to promote innovation for the public good. It is crucial for the patent holders to actively use their patents and make them available for use to the public. Thus, Form 27 strikes a balance between protecting intellectual property rights and ensuring that these rights benefit society as a whole.