The Patent Act binds inventors to market goods at a fair price

The Patent Act binds inventors to market goods at a fair price

In the age of globalization, patents and intellectual property assume great significance. To help readers get an idea on patents,Mintpresents an occasional column on the subject.

What are the obligations of the patent holder?

It’s great for the inventor to secure a patent for his invention. He may win several rewards and cash prizes in recognition of his merit. His reputation will rise among his peers. By himself, he may feel gratified and elated but that’s not all there is to it. The Patent Act binds the inventor to certain obligations, which may appear to be onerous at first. It is not possible for the inventor to sit tight after the patent is granted. There are many tasks that need to be followed up on. He has to work the patent, manufacture the patented goods, put them in the market, and make them available in adequate numbers and good quality to consumers at equitable prices.

That is why a one-year period is allowed between the date of filing the provisional specification and the date of filing the complete specification, so that in the interim the applicant can explore in advance the possibilities of manufacturing and marketing the goods before the patent is eventually granted.

If the inventor does not work the patent, or fails to file reports about how it works before the controller, or fails to pay the annual fee to keep the patent alive on the register, the controller may revoke the patent or treat it as lapsed, depending on the situation. If the patent holder does not make the goods available in adequate numbers or quality, the controller may grant what is called compulsory licence to any other person who is willing to work the patent and supply the patented goods to the public.

If the patent holder jacks up the price, the government may interfere and fix the fair price for the goods and direct the patent holder to sell the goods to the public at the fixed price. The government could also, should it be unsatisfied, permit itself the right to produce the patented goods, manufacture them or make them through some other agency, for usage as it pleases. For example, if the goods in question are medicines, the government may produce them and supply these to its own hospitals. If the patent holder works the patent in a manner that is detrimental to public interest, the controller may revoke the patent.

Supplying substandard goods, creating confusion in the market by misbranding or passing off non-patented goods as patented, or wrong attachment of symbol(s) to goods that are not patented, are some instances of acts detrimental to public interest.

The working of the patent includes working of it by import. Therefore, the patent holder may get the patented goods manufactured abroad and bring them to India for distribution and sale. A similar right is conferred on foreigners as well. A foreigner having a patent abroad can get the goods manufactured in India and export them to his own country, or any other country, for distribution and sale. This provision is incorporated in the Indian law on patents on the recommendation of the World Trade Organization (WTO) as a measure to promote international cooperation in business arising out of patents and also as a way to promote free flow of trade and commerce among WTO signatory countries.

What is the period of the patent? What happens if the patent lapses or the validity of the patent expires?

A patent is valid for 20 years. Earlier, it was 14 years for all goods, seven years for drugs and medicines, and five years for food. In order to make the validity period uniform for all types of goods throughout the world, WTO required all member countries to grant patents for all goods for 20 years. Accordingly, India has also adopted the 20-year validity period for all classes and types of goods.

If the patent lapses on any of the grounds—such as non-working of the patent or non-payment of fees in the live register of the controller—anybody learning the art contained in the patent may manufacture the patented goods and put them in the market. Such acts will not be treated as a breach of the monopoly conferred on the patent holder, or as an infringement on any of the rights of the patent holder. A patent cannot be cancelled. The patent holder may, after paying appropriate penalties, seek revival of a patent that has lapsed.

In case patent period expires, the art behind the patent enters public domain. It is then open to any person to deal in patented goods in any manner without the consent of, or reference to, the patent holder.

In a case where a compulsory licence is granted or in a case where the government exercises its right to use the patent, what is the relief the patent holder is entitled to?

The person granted a compulsory licence shall pay the patent holder such royalty as the parties may agree on. In case the parties cannot reach an agreement, the high court can take a call on the issue. The royalty, which the government shall pay in case of a dispute, shall be adjudicated by the high court. The royalty payable to the patent holder may be fixed as a percentage of net profits. The determination of the rate depends upon the nature of the business, the existing or expected turnover and market conditions. The rate of royalty may range from 2.5-10%.

N.K. Acharya is an intellectual property rights attorney specializing in patents, trademarks, copyrights and design.

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