Counterclaim v. Revocation – II (Scope of Counterclaim for revocation: Can it travel beyond the scope of alleged infringement?)

Taking the discussion further from my earlier post on the issue 1 [“Can a counterclaim for revocation in a suit of infringement before High Court be allowed to proceed hand-in-hand with a revocation proceeding before the IPAB involving the same patent and same parties?” ], I now take up the Issue 2, as mentioned in the said post, viz. Whether the scope of a counterclaim for revocation (against a suit for infringement) can travel beyond the scope of the said infringement suit? In other words, whether a defendant in its counter-claim for revocation can go on to challenge the validity of even those claims which are not alleged to be infringed by the defendant in the infringement suit filed by petitioner?

Although this is a sequel to my earlier post and whatever discussed therein is obviously a prerequisite to understand the connected issue of this post, I would still like to emphasize upon one of the findings (of my earlier post) that it is a ‘claim’ (or a set thereof) which should be dealt as a unit for the purposes of infringement and revocation proceedings and not the entire ‘patent’ always even though the relevant provisions in the Act or Rules may loosely refer otherwise [for e.g. the preamble to section 64(1) etc.]. I believe this holds the key to reach a logical conclusion for both the issues within the realm of the statute. 

In a case where a suit of infringement of a patent is filed by Petitioner against Defendant, section 107 provides that the defendant shall have, in its defence, all the grounds (of revocation of patent) enlisted in section 64 of the Patents Act. It need not be mentioned that these are not the only grounds available for defence in a suit for infringement, and it is possible for the defendant to simply assert non-infringement on merits without taking resort to the counterclaims of revocation viz. it may simply acknowledge the validity and enforceability of the patent while maintaining its stand that its actions are beyond the scope of the patent and are thus not infringing the patent. In such cases, the court is required to first determine the SCOPE of the patent claim (rather than its VALIDITY) - which is quite similar to the so called Markman’s Hearings in US involving interpretation of claims followed by infringement analysis. Thus, the Defendant is free to not to invoke its powers to challenge the validity of the claims. 

The alternative aggressive approach, which is presumably in fashion today, is to challenge the validity of patent itself in the suit of infringement on any of the grounds of revocation as available under section 64(1). A counter-claim for revocation is actually a fresh suit in itself and is by default clubbed by the Court with the suit of infringement. The critical questions which arises here is – the suit for revocation of what? Revocation of the entire patent including all claims therein? Or revocation of only those claims which have been alleged to be infringed by the defendant?

We shall hypothesize two situations in order to cover the possibilities. In case 1, lets presume that the person who is alleged to be infringing the patent doesn’t qualify the criteria of ‘person interested’, which although seems to be unlikely (considering that the person is purported to be an infringer), but may theoretically be possible in cases of contributory infringement or when the defendant is not the actual manufacturer of the product but only a merchandiser, importer etc. In such case where the alleged infringer is not a person interested, it, ipso facto, doesn’t have any right under the Patents Act to initiate any proceedings for revoking or invalidating or challenging a patent or a claim thereof (technically after the date of grant of patent) before any judicial or quasi-judicial forum. It is because of the fact that once a patent is granted, it can be subject to challenge (by a third party, other than the government) only through the post –grant opposition [under section 25(2) before the Controller] or through the revocation [under section 64(1) before IPAB], and in both cases the statute sets a pre-requisite of ‘person interested’ to initiate the proceedings. In case, however, a suit of infringement is filed against such person (who is not a person interested and doesn’t have the rights to challenge the patent otherwise), said rights (for challenging the patent) automatically deemed to stand vested in that person by virtue of section 107(1) of the Patents Act, 1970 immediately upon filing of such suit of infringement. Section 107 is reproduced herein below:

107. Defences, etc. in suits for infringement

(1) In any suit for infringement of a patent, every ground on which it may be revoked

under section 64 shall be available as a ground for defence.

(2) In any suit for infringement of a patent by the making, using or importation of any machine, apparatus or other article or by the using of any process or by the importation, use or distribution of any medicine or drug, it shall be a ground for defence that such making, using, importation or distribution is in accordance with any one or more of the conditions specified in section 47.

It must be appreciated that these rights are triggered only when the infringement has been alleged by the Patentee and are provided as a mere tool to the defendant to defend itself against such allegation. This conferment of rights does make a lot of sense as it tends to provide equal opportunities for both the parties. Following the principles of equity, however, the scope of these special rights so conferred in such situation must correspond, evenly, to the scope of alleged infringement only viz. the defendant should be allowed to challenge the validity of only those claims against which the infringement has been alleged and not any other claim (of the same patent) for the same reasons he was not entitled to challenge them before the institution of the suit of infringement. Thus if the petitioner has contended the infringement of only claims 1-10 (of total 30 claims in the patent), then the defendant in such case attains the equitable and statutory rights to challenge the validity of only those allegedly infringing claims viz. claims 1-10 and the defendant is still deficient of the rights to challenge the validity of the rest of the claims viz. claims 11-30. This seems to be in-line with my earlier contention that it is the ‘claim’ (or a set thereof) which constitutes a unit for the purpose of infringement and revocation proceedings and not always the entire patent (all the claims). It is also possible in such situation that the defendant challenges the validity of some of the allegedly infringing claims while only defends otherwise in respect of the rest of the allegedly infringing claims. In other words, the scope of the Defendant’s rights to challenge the validity shall not exceed the scope of alleged infringement, although the Defendant is at liberty to not to exercise it or to exercise it partially or fully. The benchmark is – the defendant, at the most, can challenge the validity of only those claims which are alleged to be infringed. Although this limited scope of challenge may appear to contradict the reference of the word ‘patent’ in section 107(1), but it seems justified for the same reasons that the preamble to section 64(1) also refers to the word ‘patent’ only (and as discussed earlier that the grounds make specific reference to claims etc.). As also discussed in my earlier post, the reference of ‘patent’ in the relevant sections need not be taken strictly to refer to the entire patent (viz. all claims) and should, at times, as and when applicable, be inferred as a subset of claims of the patent.

Proceeding to the case 2, where the person who is alleged to be infringing the patent is actually a ‘person interested’ within the meaning of the Act. In such case, the reasoning tendered above shall apply to the extent of procedural aspects of the rights. As per the statute, a ‘person interested’ is entitled, even without the institution of a suit of infringement against it, to challenge the validity of a patent (meaning thereby even a subset of claims of the patent and not necessarily the entire set of claims always) either by means of post-grant opposition [under section 25(2), before the Controller within 1 year of the date of publication of grant of patent] or by means of initiating revocation proceedings [under section 64, before the IPAB at any time after the grant of patent]. Thus, the institution of a suit of infringement against such interested person doesn’t seem to be actually conferring upon the alleged infringer any additional rights. This is true, however, only to the extent that there is no new right, in terms of the nature of rights, which has been created towards challenging the validity of the patent, but the difference in the procedural context is still maintainable viz. the forum before which such right could be evoked and ultimately adjudicated. In other words, the defendant in such case shall be entitled to challenge in its counterclaim before the High Court the validity of only those claims against which the infringement has been contended by the petitioner, and if the defendant is desirous of challenging the validity of claims other than those alleged to be infringed, than it has to take recourse to the corresponding statutory rights by filing a fresh proceeding under post-grant opposition before the Controller or a revocation before the IPAB, as the case may be. Such challenge to the validity of claims falling outside the scope of infringement shall not or should not be accepted as part of the Counter-claim before the High Court. Thus, in this case, its is the right to challenge the validity of patent in a counter-claim before the High Court which is exclusively triggered and conferred upon the defendant upon filing of a suit of infringement, which right (to challenge the validity of patent) otherwise allows the defendant only to raise it before the Controller or the IPAB. This is also in-line with finding in the earlier post that the proceedings for revocation before IPAB and counter-claim before the High Court could be maintainable and adjudicated simultaneously provided that the subject matter of the challenge differs viz. even though it involves the same patent, then either the set of claims which are subject to challenge are different or the grounds of challenge (of the same set of claims) are different or even when the grounds and claims are same, the facts relied upon to challenge the validity of claims are different (for example reliance upon different citations for challenging the novelty of the invention etc.). I am afraid that this would somehow also require a stricter interpretation of section 104 wherein it is provided that if the counterclaim of revocation is filed in a suit of infringement before a district court, the matter shall automatically stands transferred to the High Court. In such matters, I believe, that the district court must determine the scope of such revocation first – if it falls within the scope of such infringing claims, then the matter as prescribed should be transferred to the High Court. In case, however, the Defendant has attempted to challenge more than what is allowed (viz. outside the scope of infringement), then the District Court should outright reject the counter-claim to the extent that it is exceeding the determined scope (of infringement) because for that the claim is not maintainable before district court (which is not the appropriate forum) and should have been filed before Controller or the IPAB, as the case may be.

On a concluding note, I believe that the scope of counterclaim for revocation cannot exceed the scope of the alleged infringement in terms of the claims.

Any suggestions, inputs and comments are most welcome!

Examination and its commencement under the Patents Act: A conflict within the law

While discussing this issue with one of my close friend, I realize that there seems to be a clear conflict on this point among the Patents Act, 1970 and the Patents Rules, 2003.

From the general perception under the Patents Act, let’s assume for the time being that the term ‘Examination’ here refers to the formal examination of the patent application for the purpose of identifying the patentability of the alleged invention encompassed therein (although the term ‘Examination’ may bear a wider perspective then aforesaid and deserve a broader interpretation with consequences on the commencement thereto, the possibilities of which I shall discuss in the latter part of this post).

The formal examination of the application is considered to commence when the Controller actually refers the application and specification and other documents to the Examiner for preparing a report on patentability. All further steps are irrelevant for the present discussion and are thus avoided here. Of course such reference by the Controller of the application to the Examiner takes place only if the applicant has filed a request for examination (RFE). However, there is a prevalent conception that the examination does not or cannot commence also unless the application has been published viz. the actual examination can commences only if the request for examination has been filed as well as the application has already been published (of course we are not taking into account here that the applications are taken up for examination in the sequential order of the filing of the request for examination, which is quite well settled). This conception is in fact even rightly supported by Rule 24B (2)(i), as reproduced below: 

“The period within which the Controller shall refer the application and specification

and other documents to the examiner in respect of the applications where the request

for examination has been received shall ordinarily be one month from the date of its

publication or one month from the date of the request for examination whichever is

later.” (emphasis provided)

I do understand that this discussion is purely academic as this issue may sound extremely redundant and impractical from the view of as things currently stand at the patent office. This is because the currently pending backlog at the patent office doesn’t allow any application to be taken up for examination before about 4-5 years and by then in all possibilities the application would have been published (either under requested or by default after 18 months). For this problem, lets hypothesize a situation where the patent office has zero backlog and the turnaround time has reduced to 1 day with prompt action by Controllers and Examiners (I wish I see this happening in my lifetime!). In such a scenario, if a standard patent application (not PCT or Convention application, just to avoid any complexities) with complete specification is filed at the Patent Office on January 1, 2012 along with the request for examination, then the Controller shall, according to Rule 24B(2)(i) shall still have to wait for the application to be published (which is June 30, 2013, unless published early on request) in order to commence the examination viz. to refer the application to an Examiner.

Now let’s see what the relevant section has to say in this context. The section 12 of the Patents Act is reproduced below:

     

“12.  Examination of application

   (1)  When a request for examination has been made in respect of an application for a

patent in the prescribed manner under sub-section (1) or sub-section (3) of section 11B, the application and specification and other documents related thereto shall be referred at the earliest by the Controller to an examiner for making a report to him in respect of the following matters, namely,—

(a)    whether the application and the specification and other documents relating thereto are in accordance with the requirements of this Act and of any rules made thereunder;

(b)   whether there is any lawful ground of objection to the grant of the patent under this Act in pursuance of the application;

(c)    the result of investigations made under section 13; and

(d)   any other matter which may be prescribed.

(2)  The examiner to whom the application and the specification and other documents

relating thereto are referred  under sub-section (1) shall ordinarily make  the report to the Controller within such period as may be prescribed.” (emphasis provided)

Thus the statute, on the contrary provides that when a request for examination has been filed, the Controller shall, AT THE EARLIEST, refer the application with specification and other documents to the Examiner viz. commences the Examination. There is no reference of subjectivity to the publication of the application here. More interestingly, while this section 12 was amended in 2005 to insert, as one of the other amendments, the phrase “at the earliest”, the conflicting provision under Rule 24B(2)(i) came into effect under Patent (Amendment) Rules 2006 only viz. within a short span of about 1 year only.

This appears to be a clear conflict in law. There could have been a scope of harmonious interpretation of the statute in case the Act has merely mentioned something to the effect that upon filing the request for examination the Controller shall refer the application to the Examiner and one could in that case say that the Rule just adding another requirement (of publication) to be checked by the Controller before he actually refers the file to the Examiner after the filing of the RFE. Unfortunately, that is not the case since the Act specifically added the phrase “at the earliest”, which doesn’t leave any scope of the dependency upon publication (which is not even mentioned in the section) in order to commence the examination. Thus, going by the general rules of interpretation of statute, the Act trumps the Rules and in case of clear conflict the Act prevails. In this case, accordingly, section 12 shall prevail against the Rule 24B to the extent of conflict.       

Regardless of what has been discussed above, one could also take a view that the term ‘Examination’ is quite broad even in the context of its usage in the Act/Rules, wherein a general meaning of the term ‘Examination’ could be inferred from the prescriptions under section 12 (1) (a) to (d), in which (a) states “whether the application and the specification and other documents relating thereto are in accordance with the requirements of this Act and of any rules made thereunder”. In such case, isn’t the Controller under an obligation to scrutinize every patent application soon after its filing at least from the perspective of its subject matter to determine whether the application is related to a defence related invention and if it is so then to raise an objection within 6 weeks of the filing (because after 6 weeks, under section 39 of the Act, the Controller loses control over the Applicant in respect o filing corresponding patent applications in other countries). Is it not a check of the application is within the requirements of the Act viz. a part of the Examination, which effectually is deemed to have begun even before the filing of the RFE.  I am not sure if this scrutiny is or can be construed as part of the Examination. Certainly the exclusion of any prescribed manner of this scrutiny in the Act/Rules cannot be the reason. The reference of the application or for that reason any other matter by the Controller to the Examiner(s) is purely discretionary. Even in the seemingly mandatory provision under Section 12 and Rule 24 that the Controller “shall” refer the application to the examiner, the “shall” should be treated as “may” or it may be deleted altogether as a redundant provision. This is because the Controller is the point of authority under the Act and as per Section 73 of the Act, the Examiners “may” be hired by govt. to facilitate the Controller in discharging its functions under his authorization. The Controller is given enough wide powers to delegate the work or to retain it. It is understandable that the Rules have been made to regularize the procedure and make it more transparent, they should, at the same time, address all possible situations. In a hypothetical situation, assuming there are so few patent applications (say only 1 per month) are filed at the Patent Office so that the govt. need not hire the Examiners believing that only one individual person (viz. the Controller) could examine and handle it on its own. In such case, the rule and perhaps the section become redundant and infructuous to this extent.   

In respect of the publication, Examination and Grant of patent, I have always been of the view that the baseline is that the Patent should not be granted before the expiry of six months of the date of publication [under Rule 55(1A), in order to provide sufficient time for pre-grant opposition] irrespective of when, how and by whom the examination is commenced.

Any suggestions and inputs are welcome!

Indian Patent Agent Exam: Amendments and deteriorating standards

A Notification [No. S. O. 2296(E)] was published in the Gazette of India by Department of Industrial Policy and Promotion, Ministry of Commerce & Industry on September 26, 2012 and hosted at the Indian Patent Office website (at here) on November 7, 2012. This notification effectuates certain amendments to Rule 110 of the Patents Rules, 2003, which relates to the qualifying criteria for the examination of patents agents. In brief, this amendment while retaining the overall pass percentage to 60% of total (of all three exams) and maintaining the sectional cut-offs for the Exam I and II, it:

(a) reduced the maximum number of marks allotted to the viva voce from 100 to 50; and

(b) also did away with the requirement of sectional cut-off of 50% in respect of viva voce.

This means, that the total marks for the exam would now be 250 (instead of 300 earlier) viz. 100 each for paper I and II and 50 for viva voce, and one will have to score a total of 150 marks (viz. 60% of total) without any relevance of the score in viva voce (whereas the person will still have to score at least 50% in Exams I and II independently).

In nutshell, the significance of the viva voce has been greatly undermined in the qualification procedure and in fact one is given an option to qualify the exam without even appearing in the viva voce. This is sort of an unfortunate but expected move from the ministry after the judgment dated February 28, 2012 of Delhi High Court in the case of Ms Anvita Singh v. Union of India and Anr. I have not been able to digest the rationale behind the judgment in that case, wherein petitioner was found aggrieved because she could not clear the sectional-cut-off for the viva voce and she claimed herself to be in practice and diligent upon the subject. Woefully, the court relied upon her performance in previous exams and her graduation also. Going by such standards for changing the course of a qualifying examination, then every year thousands of students who fail to make it due to marginal sectional cut-offs in different exams, perhaps including civil service exams, and who are among the toppers in their graduation courses, must also challenge the examination procedure as flawed because they were good enough (by general performance) to clear the cut-offs.

The inclusion of viva voce in the qualifying exam is actually the demand of the practice and is in line with what is expected from patent practitioners.  The articulation skills and verbal proficiency are indispensable for patent practitioner or perhaps any practitioner practicing any field of law.

I am a firm supporter of bringing in new and innovative changes in the qualifying procedures and criterion in order to keep pace with the changing requirement of society and industry so as to make the whole system dynamic. But in this case not only the reasons for invoking such changes are absolutely unacceptable and baseless, the changes themselves are shortsighted and compromising. Where the standards for qualification should be scaled up (with an equivalent support in training and educational programs for aspirants so that more and more students qualify tougher and tougher exams), we are viewing a downgrade in the entire system. It seems like a village school, where the students who could not clear the exams went on to the headmaster to complain that the examination system is flawed and the students should be allowed to bring in and use their help books.

Nevertheless, we can expect the exam notification very soon, followed by the exams, followed by a more skewed result list.

Counterclaim v. Revocation: Enercon Revisited - I

Before proceeding to the main issues in this series of posts, I would first like to highlight a few seemingly obvious but fundamental features of a patent. These may literally sound too overt and basic to one, but are essentially critical to stick by while analyzing the issues involved. These basic features are identified as below [The image is taken from here]:

-          A patent is primarily a claim or a set of claims wherein each claim tends to be either determinative or assertive of the claimed territory of protection.

-          It is possible that in an infringement case, only a single claim or a subset of claims of a patent is infringed by a person while other claims are not infringed.

-          It is possible that in a revocation proceeding (either before IPAB or in a counter-claim before High Court) one may challenge only a subset of claims of a patent and only those (or some of those) are revoked while other claims are held intact and valid (as is or after amendment).

-          It is possible that a claim or a set of claims are challenged and invalidated on one ground (of several grounds of revocation enlisted in section 64) while another claim or set of claims are challenged and invalidated on some other ground of revocation.

-          At the same time, it is also possible that the different set of claims are revoked or invalidated on the same ground but with different issues involving different facts, such as for example the reliance on new fact or document (discovered later) while relying on the same ground of novelty/obviousness.

-          It is possible that different set of claims are revoked or invalidated in the same proceeding or even different proceedings at different points of time and in those different proceedings, it is possible that the parties are same, related or different.

I believe all the above mentioned presumptions to be correct in view of the principles of patent law as well as within the framework of Indian Patents Act, 1970. I welcome any objections on these presumptions. Some of them are also supported in the arguments below. In light of these, we will now take up the issues:

Issue 1. Can a counterclaim for revocation in a suit of infringement before High Court be allowed to proceed hand-in-hand with a revocation proceeding before the IPAB involving the same patent and same parties?

One would easily correlate this issues with the one purported to be dealt and resolved by the Delhi High Court in its judgment dated January 20, 2012 in the ongoing multi-faceted Enercon patent litigation. In particular, this was precisely the issue framed by the Court to be decided in the matter and I believe the Court did not do justice to the issue (not exactly the case in hand) in its judgment, which I did not found to be impressive enough to be set as a precedent.

A significant portion of the judgment deals with the applicability of the Doctrine of Election with its basic tenets and precedents. Although the elements of the doctrine were well identified, its applicability in this case is misplaced. Firstly, at the time of filing of the revocation proceedings (in 2009), the defendant had only one option viz to file for revocation of patents before IPAB and it could not have filed Counterclaim at High Court (as there was no infringement proceeding pending), so there is no point of election which could arise at that time. Subsequently, it is only after the infringement suits which were filed (in 2010), the defendants preferred to take the defence under section 107(1), which requires filing of a counterclaim of revocation of patent. As an alternative, the defendants could have asked the High Court to stay the infringement suit until disposal of the pending revocation proceedings at the IPAB, but it seems that such action doesn’t find any support in the statute. Defendants, therefore, followed the natural course of action to avoid prejudicing their case before IPAB as well as High Court. So the so called option of “Election” was technically neither available nor exercised by the defendants and they had just pursued according to what has been prescribed by the statute. It was the Court’s duty to decide judiciously on the issue by going a bit deeper into the subject rather than sweeping it superficially.

I believe that the Court should have better looked on the grounds (and perhaps the facts) raised and relied upon in the revocation proceeding of every patent before IPAB and compared them with the corresponding grounds (with facts) relied upon by the defendant in its counter-claim of revocation for respective patents. If the grounds are found to be entirely different (without any overlap), it would not be inappropriate for the Court to allow both the proceedings to run simultaneously; however, if the grounds are found to be identical or similar or overlapping, then it’s the duty of the court to device some way to avoid the parallel proceedings by staying the latter one (viz. the counter-claim and the clubbed infringement suit) until disposal of the revocation proceedings before IPAB which were already on fast track or so called ‘Rocket Docket’ (for readers of ‘The Litigators’). This would be appropriate to avoid any possibility of eventually conflicting findings and decisions from two different forums on the same issue (involving same subject/claims with same grounds of revocation and facts), which would result in an awkward situation for everyone. In this context, the plaintiff rightly argued before the court that there are several powers conferred upon the court, which allow the court to administer the proceedings in the action filed before it, so as to are borne in mind the convenience of parties, hierarchy of courts, and avoidance of conflicts between courts of co- equal jurisdiction or between a superior and subordinate courts, and to secure for the litigant an orderly, timely and just disposal of the cause. Some examples cited in this regard are: power to consolidate suits (Section 151); order separate trials (Order 2 Rule 6); to stay parallel proceedings, (Section 10 and Section 151); transfer of proceedings from one subordinate court to another or to itself (Section 24) etc. and the availability of such powers were indeed acknowledged and accepted by the Hon’ble Court. 

The Court on the contrary, was found to be highly inspired by the circumstances in reaching its conclusion rather than focusing on point of law. The Hon’ble Court erroneously relied upon the expedited proceedings before IPAB to state that since they would be decided soon viz. much before the proceedings before High Court, there is no possibility of any clash. In fact the Hon’ble Court went on to state to the extent that:

“The aforesaid circumstances would show that the continuation of the proceedings before the two forums has not yet reached a stage of collision, as apprehended by Dr. Wobben.”

Reliance on the pace of proceedings to determine such critical issue of maintainability of the proceedings (involving same issue) before two forums is preposterous. Now with this, I would expect one to catch the basic points (enlisted in the beginning) in my argument, which is that there exists a possibility of a plurality of proceedings, simultaneous or otherwise, before the same forum or otherwise, involving the same patent and same parties but different grounds/issues/facts relied upon for challenging the validity of claims of a patent. So, the issue of maintainability of the revocation proceeding at IPAB and a Counter-claim for revocation in the High Court (or hypothetically even a separate revocation proceeding before IPAB) should be determined by the subject, in particular on the grounds raised and facts presented.

Now let us see if this finds a place in the statute. Section 104 mentions ‘infringement of patent’ and not claims, but this I believe is absolutely alright and is not contrary to the basic presumptions and arguments above, because infringement of any claim of the patent would be termed as infringement of patent itself. Secondly, section 107(1) states that “In any suit for infringement of a patent every ground on which it may be revoked under section 64 shall be available as a ground of defence.” This section also specifies patent and not claims, but the word ‘revocation’ used herein should be interpreted to include even partial revocation where only a claim or set of claims are revoked while others are held valid and intact. This is perfectly supported by referenced section 64 (grounds of revocation), wherein most of the grounds are directed to claims instead of entire patent. In fact, this is the scheme and fundamental aspect of the patent law that every claim is to be treated independently. I also support my contention with the fact that at least one provision of the Patents Act which provides deterrence against notorious and frivolous challenges to the validity of patent, particularly qualify claims. Section 113, which provides for certificate of validity states that once “the validity of any claim of a specification is contested and that claim is found by the Appellate Board or High Court to be valid, the Appellate Board or the High Court may certify that the validity of that claim was contested in those proceedings and was upheld.” Section 113(2) further provides that:

Where any such certificate has been granted, then, if any subsequent suit before a court for infringement of that claim of the patent or in any subsequent proceeding for revocation of the patent in so far as it relates to that claim, the patentee or other person relying on the validity of the claim obtains a final order or judgment in his favour, he shall be entitled to an order for the payment of his full costs, charges and expenses of and incidental to any such suit or proceeding properly incurred so far as they concern the claim in respect of which the certificate was granted, unless the court trying the suit or proceeding otherwise directs:

PROVIDED that the costs as specified in this sub-section shall not be ordered when the party disputing the validity of the claim satisfies the court that he was not aware of the grant of the certificate when he raised the dispute and withdrew forthwith such defence when he became aware of such a certificate. (emphasis added)

Thus it is evident that in such proceedings, it is the claims which are treated as a ‘unit’ and not the entire patent. In such case, if different claims are subject matter of different revocation proceedings at different forums, there is no harm in letting those proceedings continue simultaneously.   

Conclusively, if the grounds of revocation are different in the revocation proceeding at IPAB and in the Counter-claim in an infringement suit at High Court, then even though the parties and the subject patent is same, the proceedings can definitely go simultaneously. Else, it is the duty of court to stay the proceeding initiated later in time even in absence of any direct provision like section 124 in Trade Marks Act, 1999 where the Court proceedings are stayed until disposal of rectification proceedings before IPAB.

The difference in issues could emerge from difference in the grounds raised or facts presented or the claims involved. The last portion viz. difference in the claims involved, leads to another reasonable doubt (Issue 2) – whether the scope of counterclaim can travel beyond the scope of infringement suit. In other words, whether the defendant in its counter-claim for revocation go on to challenge the validity of even those claims which are not alleged to be infringed by the defendant in the suit filed by petitioner? I will take this issue in my next post, coming soon!

Any comments and suggestions are welcome.

Phase II Amendments: Assignees can be Applicants at USPTO

As the 1-year expiration term since the enactment of the Leahy-SmithAmerica Invents Act (hereinafter referred to as AIA) is coming to an end, several other provisions of AIA are ready to get their life. One of the most important amendments which are going to take effect is the one which has been looked upon dearly by most of the companies, universities and institutions and which will bring the US practice at par with the rest of the world in this context. Section 4 of AIA which shall come into force on September 16, 2012, allows the assignees of the inventors to file and prosecute a patent application at USPTO in their own name. This will bring US practice at par with the rest of the world. 

In particular, this will primarily effect an amendment in section 118 of U.S. Patent Law, 35 U.S.C. As the section presently stands, it permits the filing and prosecution of patent applications by assignees of the inventors only in cases under the narrow exceptions of death, incapacity, absence or refusal. In other cases, although a person to whom the inventor had assigned an invention could file and prosecute an application for patent, but the inventor is considered the applicant. The existing Section 118 is provided as below: 

35 U.S.C. 118 Filing by other than inventor.

Whenever an inventor refuses to execute an application for patent, or cannot be found or reached after diligent effort, a person to whom the inventor has assigned or agreed in writing to assign the invention  or who otherwise shows sufficient proprietary interest in the matter justifying such action, may make application for patent on behalf of and as agent for the inventor on proof of the pertinent facts and a showing that such action is necessary to preserve the rights of the parties or to prevent irreparable damage; and the Director may grant a patent to such inventor upon such notice to him as the Director deems sufficient, and on compliance with such regulations as he prescribes.

This amendment broadens the scope of ‘fling by other than inventors’ by permitting (a) a person to whom the inventor has assigned or is under an obligation to assign the invention; or (b) who otherwise shows sufficient proprietary interest in the matter, to file and prosecute the application for patent. The amended section 118, as would be in effect post September 16, 2012, reads as below: 

35 U.S.C. 118. Filing by other than inventor.

A person to whom the inventor has assigned or is under an obligation to assign the invention may make an application for patent. A person who otherwise shows sufficient proprietary interest in the matter may make an application for patent on behalf of and as agent for the inventor on proof of the pertinent facts and a showing that such action is appropriate to preserve the rights of the parties. If the Director grants a patent on an application filed under this section by a person other than the inventor, the patent shall be granted to the real party in interest and upon such notice to the inventor as the Director considers to be sufficient.

This amendment would certainly streamline the practice at all levels including the PCT applications, which till now almost invariably found mention of the inventors being the applicant for US whiles assignees for the rest of the designated states. The companies can now do away with this practice. It must be noted, however, that for PCT national phase, this provision shall be applicable only for those cases where the PCT applications will be filed after September 16, 2012. Which means, the PCT national phase applications which are entered in US after September 16, 2012, but for which the PCT application was filed before the September 16, 2012, will still be filed and prosecuted in the name of the inventors only. 

Recently the Federal Register rules for effectuating and implementing this Section 118 amendment were also released on August 14, 2012, which can be found here. The amendment has necessitated respective amendments in several rules under Rules of Practice in Patent Cases, 37 C.F.R. 1, mostly the rules pertaining to oath and declarations which were required to be filed by the inventors. Many such requirements have now been relaxed. The rules governing applicants for international applications (§§ 1.421, 1.422, and 1.424) have been amended consistent with the AIA to no longer require that an inventor be an applicant in the United States. Some of the other amendments sound regular ones, such as: (a) the power of attorney should be executed on behalf of the assignee, not by the inventors; (b) the assignee organization (a juristic entity) is to be represented by a patent practitioner. In fact some new forms have been prescribed by USPTO in light of these amendments and have been hosted here. 

EPO: Another step towards Unitary Patent System

EPO (European Patent Office), which is considered to be one of the most organized and efficient patent administrations, has been frontrunner in adopting and implementing a centralized mechanism, which has benefited significantly European industry and particularly SMEs. In this economic downturn, European Council has decided to take a step further towards an absolute Unitary Patent System to be implemented in Europe. Although this decision of unitary patent system was taken long back in March 2011 within purview of "enhanced co-operation" scheme to which all 25 member agreed, it did not took-off until now due to some pending issues on working of the system. On June 29, 2012, the Council has finally given its nod by closing all the pending issues and the proposed system will soon be in force.   

Before moving on to the newly proposed, and agreed, unitary patent system, lets have a brief look on the existing structure of patent prosecution and grant before EPO. Presently, as a regional organization, European Patent Office (EPO), which is a central European authority, grants European patents for the Contracting States to the European Patent Convention. This is, however, merely a unified grant procedure wherein although a single patent is granted in respect of all the designated member states in Europe, the granted patent is not, in effect, a single patent from the point of view of validation, enforcement and other post-grant aspects. Thus, apart from the procedural unification uptil grant of a common patent, all other aspects such as arrangements of validation, enforcement and litigation are technically unbundled and are dealt at the national level. The patents granted are, therefore, not European Union patents or even Europe-wide patents, but a bundle of national patents. This eventually results a proliferation of national proceedings, which is not only costly but also weakens legal certainty for users.

On June 29, 2012, after a long wait, European Council has reached a consensus to do away with this problem by implementing a unitary patent system with a new European Patent Court. Some of the major changes which will be affected along with the system are identified as below:

Presently, once a European patent is granted by the EPO, the Patentee has to get it validated in each EPO member state where he seeks patent protection. For this purpose, the majority of states require a full translation of the patent in their official language(s). The future unitary patent will be automatically valid throughout the territory of the EU member states in the EPO language in which it was granted. Please note, however, that his shall be applicable in respect of only those member states who have participated in the enhanced co-operation scheme and the Applicants will have the choice of having a unitary patent in respect of such member and European Patent in respect of other members. For information, the new procedure for “enhanced cooperation” was put in place by the Lisbon Treaty, which allows a smaller group of EU member states to take a proposal forward under certain conditions if a blockage persists. Members deciding not to join at the outset can do so later. This is one of the first times the mechanism (of enhanced cooperation) is used , as it was taken for the patent dossier in 2011, and 25 member states accepted the existing EPO language regime for the unitary patent.

According to Benoît Battistelli, President EPO, the issue of translation cost has been one of the main stumbling blocks in reaching the consensus. According to him, as long as a full or partial human translation of the Community or unitary patent in all EU languages was required, users saw the new system as far too expensive and unworkable. This was overcome in 2010 by a technical innovation (perhaps with help of GOOGLE) at EPO which reviewed its machine translation programme in September 2010 and decided to set up a new system, now operational, which offers free, high-quality translation, potentially in all EU languages, for purposes of public information.

Secondly, the major difference between the unitary patent and the existing European patent will be in the post-grant phase, wherein the patent proprietor is required to decide on the geographical coverage where protection is needed. As per the new system, after the patent is granted, the patent proprietor can opt for: (a) a European patent with individual territorial protection in the designated states; or (b) a unitary patent with unitary territorial protection in all the states participating in the enhanced co-operation scheme; or (c) a combination of both schemes and request a European patent in a selection of those EPO member states not belonging to the enhanced co-operation scheme and a unitary patent for those belonging to the scheme.

In addition, the introduction of a central European patent court will benefit innovators by bringing down patent litigation costs and increasing legal certainty. The seat of the Central Division of new European Paten Court has also bee an issue of debate and reason for delay in this process since at least 2011 end. Finally an agreement was reached, on June 29, 2012 at the highest level of European government, on the seat of the court’s Central Division.

Putting in force such a system would certainly result in a true supranational patent system in Europe, something that has been discussed for decades and eagerly awaited by European industry.

I believe that the time is ripe for at least the South-East Asian countries (if not all Asian countries) to come together, take a leap and implement a similar mechanism for administration of patents, if not to this extent initially then atleast by entering a bi-lateral treaty for setting up a regional office. India, being a major player in South-East Asia, not only in terms of innovations originating therefrom, but also in terms of patenting and marketing, must take the lead.

Who should file the Foreign Filing License (FFL) under section 39 of the Patents Act, 1970?

A permission to file a patent application outside the home country (usually the country of basic application) obtained from the Patent Office of that country is commonly referred to as the Foreign Filing License (FFL). Most of the countries have enabled some mechanism in their patent law to monitor the export of inventions by its residents to other jurisdictions. The purported objective behind such check, perhaps, is to prevent the defence related inventions from being escaped to other jurisdictions without the State of origin being given first choice to use it. In effect, the State indirectly claims the first right of sale/exploitation of defence related inventions originating from its residents. The statutory provision for this in India is section 39 of the Patents Act, 1970, as reproduced below:

39. Residents not to apply for patents outside India without prior permission

(1) No person resident in India shall, except under the authority of a written permit sought in the manner prescribed and granted by or on behalf of the Controller, make or cause to be made any application outside India for the grant of a patent for an invention unless—

(a) an application for a patent for the same invention has been made in India, not less than six weeks before the application outside India; and

(b) either no direction has been given under sub-section (1) of section 35 in relation to the application in India, or all such directions have been revoked.

(2) The Controller shall dispose of every such application within such period as may be prescribed:

PROVIDED that if the invention is relevant for defence purpose or atomic energy, the Controller shall not grant permit without the prior consent of the Central Government.

(3) This section shall not apply in relation to an invention for which an application for protection has first been filed in a country outside India by a person resident outside India.

Focusing on Section 39(1) only, which is applicable to patent applications made be ‘person resident in India’. Since the phrase ‘person resident in India’ has not been defined, their lies some ambiguity pertaining to this and the ambiguity is not only as to ‘who falls in this category of person resident in India’ but travels much beyond its scope in light of different situations. To take the discussion forward and to understand the issues involved and their possible way outs, therefore, we can refer a few hypothetical cases as below:

Case 1: Where the inventor and the assignee (if any) both are residents of India [for individual applicants – the only authority I am aware of for the definition of ‘resident of India’ is FEMA (which although is not pari materia to the Patents Act, but may be the only reference material for this purpose)  which defines it as a person residing in India for more than 182 days in the preceding FY; for companies as the Applicants (as assignee of the invention) - a company which is incorporated in India is deemed to be resident in India; similarly for firms (who can also apply for a patent), it must be registered firm in India], then the applicant has to obtain an FFL if it wants to file an application in some other country before expiry of 6 weeks of filing in India (for these purposes, it is immaterial where the invention is conceived, what is relevant is what was the status of the inventor at the time of conceiving the invention). This is the most general case where both the Applicants are residents in India and therefore have to obtain the FFL as per the provision. Similarly, of course where none is resident in India, no need to obtain the FFL.

Case 2: Where the inventor is resident in India (as per the above meaning), but is on the payroll of a foreign entity and is merely working in India as its agent/ consultant. Assuming the employer entity owns the invention by virtue of the employer-employee agreement (or some assignment deed) and the entity now wants to file an application in some other country without filing in India. Will it be required for the company to obtain an FFL from the Indian Patent Office? I believe yes - it is required to obtain the FFL. The preamble to section 39 reads as “No person resident in India shall, except under the authority of a written permit sought in the manner prescribed and granted by or on behalf of the Controller, make or cause to be made any application outside India for the grant of a patent for an invention unless – ...”. The answer, to me, lies in the phrase “cause to be made” which although is quite vague, but if subjected to judicial interpretation will quite surely be interpreted liberally so as to encompass the case wherein the inventor (resident in India) is not ‘making’ the application directly but assigning it and causing its assignee (not resident in India) to make the application. Thus the inventor (being resident in India) needs to obtain FFL before either making or causing to made an application outside India. Moving a step further to a similar case (Case 3), where the inventor (resident in India) is not an employee of the Applicant entity and has merely assigned its invention (before filing any patent application in India) to a foreign entity, which thereafter is planning to file a patent application in some other country. This case, in effect, is no different than Case 2, and the Inventor shall be at breach of this provision if the Assignee files the patent application outside India without FFL, as the inventor caused, albeit unknowingly, to make the application outside India without obtaining FFL. The inventor may possibly try to raise a defence that it has merely assigned the invention to the entity and doesn’t know its future course (of whether the entity filed a patent application or not) and thus should not be held liable. But this defence appears not to be a valid defence as the ignorance of law is no excuse and the inventor should be wary of the law while assigning its invention and must have ensured that it is not filed outside India by the Assignee without obtaining FFL. This, however, appears to be (but not actually) slightly unreasonable and unjustified. Moving even a step further to the extreme case (Case 4) of this, where the inventor assigned the invention (which is nothing but a disclosure) to the foreign entity and the entity doesn’t file any patent application in any country. This thus amounts to a mere disclosure (of presumably a defence related invention) without filing a patent application for the same in India (and thus not providing IPO an opportunity to stop its disclosure) and there appears to be no prohibition against it under the Patents Act, nor under any other relevant Act (like Atomic Energy Act etc.). It appears to be an obvious loophole in the objective behind section 39. Coming back to the issue, now the question is whether section 39 imposes a duty upon the inventor (Indian resident inventor) to keep track as to whether the assignee of its invention is filing a patent application in some country or not and to ensure that such filing is in compliance with section 39. For inducing reasonability on this aspect, the Court may set up some standards such as due diligence; or may draw a distinction between the cases where the inventor is the employee of the Applicant (Case 2) an where the inventor is not an employee of the Applicant cases where the assignment is pursuant to a specific assignment deed (Case 3). [The difference between these two situations, to me, is only virtual as both of them are mere assignment of the invention from the inventor to the Applicant and I believe that the Employer, ipso facto, is not the owner of the invention and there is always a deemed assignment (by way of employer-employee agreement) from the inventor to the Employer, which is also clear from the section 6 (who may apply for the patents). Also, there can always be an employer-employee agreement wherein the employee reserves its rights to file for patent application.] Since every patent office (including IPO) requires some proof of the assignment of the invention from the inventor to the applicant, the control rests with the inventor itself and while assigning the invention (if not an employee), it must do so with a saving clause that if any application for patent is filed in respect of the invention, the FFL must be obtained from IPO. And in cases (like case 2), where the invention is assigned automatically to the Employer, the Employer must know the laws of the jurisdiction in which its employees are engaged. It is simply a matter of awareness and practical enablement and there is no un-reasonability.

Similarly, in Case 5, where the inventor is not a resident in India but an employee of the Indian company (which is presumed to be resident in India) and the inventor making invention outside India, for which the Indian company is the applicant, the company is certainly required to obtain an FFL as in this case the resident in India is directly ‘making’ an application (irrespective of the fact that the inventor is not resident in India and the invention was not conceived in India).  And in such case even if the inventor itself were to be the Applicant (for example in US), the Indian company would be required to obtain an FFL from India as such application may still come under the purview of an application “caused to be made” by the resident in India (the Indian company). Similar analogies can be drawn in this case also.

I believe, therefore, that as per the statute if either of the inventor or the Applicant is resident in India, the FFL must be obtained from IPO.

Is India really a First-to-File System?

“Unlike USA, which is a first-to-invent patent system, India is a first-to-file patent system.” – This is perhaps one of the very first lines taught to me in my basic patents class and I accepted this omnipresent claim as a matter of fact. It´s been quite some time that I have dared to re-look at this seemingly irrefutable fact and struggling to accept its veracity. The bone of argument lies in section 6 of the Patents Act, 1970, which is:

  6. Persons entitled to apply for patents

(1) Subject to the provisions contained in section 134, an application for a patent for an invention may be made by any of the following persons, that is to say,—

(a) by any person claiming to be the true and first inventor of the invention;

(b) by any person being the assignee of the person claiming to be the true and first inventor in respect of the right to make such an application;

(c) by the legal representative of any deceased person who immediately before his death was entitled to make such an application.

(2) An application under sub-section (1) may be made by any of the persons referred to therein either alone or jointly with any other person.

(emphasis provided)

Now this section confers legal rights, to apply for a patent, in favour of a person who claims himself to be a ‘True AND First Inventor’ of the invention [as is also evident from the language of Form-5 (Declaration as to Inventorship) – a compulsory form to be submitted with the Application for patent]. Now we consider two hypothetical situations to understand this in some detail:

a)      Situation 1 is where the Applicant or the Patentee ‘wrongfully obtained’ the invention from the actual viz. true and first inventor (who either did not apply for patent or applied only later) – such wrongful obtention is covered as a ground of Opposition in the pre-grant opposition [section 25(1)(a)] as well as in post-grant opposition [section 25(1)(a)] and also as a ground of revocation of patent [under section 64(1)(b)]. In such case the Applicant/Patentee is technically not the “True and First” inventor and thus the declaration made by the Applicant during the application is evidently false and thus irrespective of such explicit provisions of opposition/revocation, the Opponent may still have some remedy under common law. Section 26 and 52 further provides to the extent that if such ground is proved, the Controller may transfer the patent ‘as is’ (or with requisite amendments) in favour of the Opponent, and in case the Opponent has already preferred an application for the invention and the same is pending, the earlier priority dates of the wrongfully filed patent application shall be conferred upon the Opponent’s later filed genuine application, as if the Opponent filed its application on the earlier date. Thus whenever an application for a patent is filed, it is assumed that it is filed by the True and First Inventor (even if actually it is not done so by the True and First Inventor, whose identity is determined only later in time and in whose favour the original application/patent is transferred then).

b)      In the Second situation, which is more difficult and involves prime issue of this post, is where an invention is conceived independently by two inventors – A and B (assuming all fair play and no wrongful obtention). For the purpose of details, A conceived the invention on June 1, 2009 and filed an application for patent on July 1, 2009, whereas B conceived the invention on March 1, 2009 (and presumably B is able to prove its claim of date beyond reasonable doubt through its records) and applied for the patent only on August 1, 2009. Now, A applied for patent on July 1, 2009, but technically he may be the True inventor but certainly not the First inventor (Note the requirement is of being True AND First Inventor) of the invention and thus is not entitled to make the application, which should be bad in law and may be void ab initio (unless later transferred in favour of real ‘True and First Inventor’ with retrospective effect). On the other hand, novelty of the invention in B’s Application (B being ‘True and First Inventor’ in real sense) on August 1, 2009 is technically killed by Section 13(1)(b) and should not be able to pass the examination in light of the A’s application as prior art. So on the face of it, both A’s and B’s Applications are defective and none should be able to get the patent. The escape route is B challenging A’s application on the ground and consequently the A’s application is transferred in favour of B as if it is actually made by B on July 1, 2009, then B will be able to proceed with the application without section 13(1)(b) causing any obstacle as B is now granted the priority of July 1, 2009 (and if this is so, India is anything but first-to-file system). This, however, is feasible only if B is able to challenge the A’s application. But unfortunately, the grounds of pre-grant Opposition or post-grant Opposition as provided under section 25 (being exclusive grounds) uses the terminology “wrongfully obtained the invention”, which is not the case here. So B may never be able to file a pre-grant or pot-grant Opposition against A’s application. Grounds of revocation, under section 64(1)(b), however, does allow B to file a petition for revocation as the ground is “that the patent was granted on the application of a person not entitled under the provisions of this Act to apply therefor” and B can always say that A is not entitled under the Act to apply for the patent.

Thus the issue is whether B should wait for grant of patent for A’s application and then file a rectification or does it have any recourse available under common law to challenge the declaration made by A as false (even though unknowingly) and thus A’s application being void? I am still not able to figure out the solution to this hypothetical situation. Any suggestions and comments are welcome!