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has been given under sub-section (1) of section 35 in relation to the application in India, or all such directions have been revoked.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.
