Statement of Working to Compulsory Licensing – Are We Missing Something?

As pointed out by Supriya in her post, a compulsory license may be granted if a patent is not worked in India and reasonable efforts are made to acquire a license. Does the working of a patent in India mean that the patented invention must be manufactured in India? Reading of sections 83 and 84 of the Patents Act take us to that logical conclusion. The sections clearly point out that working of a patented invention in India through only importation would not be enough to avoid a compulsory license.  Form 27 therefore rightly requires a patent holder to furnish information of manufacture, importation and licensing.

Having said that, would non-submission of Form 27, Statement of Working of Patent, under Section 146 of the Patents Act be a ground based on which a compulsory license may be granted? In my opinion, failure to file the statement of working will not have any bearing on the grant of a compulsory license. The non-filing of the statement may act as a trigger for further investigation but it by itself cannot be the basis for getting a license. The Act provides for a fine of Rupees ten lakhs for failure to submit the statement of working under Section 122 but does not specify it as a ground for grant of compulsory license. In other words, a patent holder would only be liable for a fine in case of failure to submit the statement of working and a compulsory license would not be granted based on that failure.

A patent holder, who fails to file the statement of working, can prove that his patent has been worked in India in a compulsory license proceeding and avoid the license grant. Though the issue of non-submission of statement of working by certain pharma companies brought to light by Spicy IP has spurred interesting discussions, the failure is not too fatal and not as serious as it seems for the innovator companies. As discussed earlier in the post entitled, Genericization of Public Interest, any aspect that gives business benefits to generic companies is considered to be furthering public interest. Research work of innovator companies is thrown in the back burner and not given the importance it deserves. 
I am sure it would be argued that Section 84 must be read with 146 and presumption of non-working must lie in favour of the applicant for a compulsory license and the courts may go ahead and do so. Though such an interpretation may give immediate benefits through generic products if a license is granted, it will kill the spirit of research and development, which is just starting to catch up in India.

Authored by Dr. Kalyan Kankanala C.  

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