The Evolution of The Patents Act, 1970
This Blog is written by Soujanya Boxy from National Law University, Odisha. Edited by Ujjawal Vaibhav Agrahari.
A patent is an individual’s monopoly right to safeguard any new or upgrade of an existing product or a new process for a limited period. The government considers the applicant’s disclosure of the invention and grants a patent as an exclusive right for a limited duration. This exclusive right is enjoyed by the patentee for preventing the third party from performing any unauthorized act like selling, creating, importing, or using patented goods or processes in the country during the period of the patent. In India, the patent system was first founded in 1856. The first legislation that dealt with patents was the Act VI of 1856. This act granted exclusive rights to the patentees for a term of 14 years .
Later, this act was replaced by the Indian Patent and Design Act, 1911 with the main clauses unchanged. The Indian Patent Act, 1970 was formulated after putting considerable effort and was enacted in 1972. The act was formed with an aim to encourage inventions of Indian origin, secure them on a commercial scale, and aid the development of the industrial operation. The Act is the brainchild of two expert committees: Justice N. Rajgopal Ayyangar committee and Justice Bakshi Tek Chand. It was followed by a comprehensive discussion at both the houses of parliament and eventually, it brought Indian industries a revolution.
One of the signatories of TRIPS (Trade-Related Intellectual Property Rights) is India and because of its contractual obligation to ensure compliance with TRIPS’ provisions, India had to amend its Patent Act. The Patents (Amendment) Act, 1999, took effect on 26th March 1999, with retroactive effect from 1st January 1995. The second amendment, i.e., the Patents (Amendment) Act, 2002, was enacted on 20th May 2002. The third amendment was brought in by the Patents (Amendment) Ordinance, 2004. Later, it was replaced by The Patent (Amendment) Act, 2005, and Patents (Amendment) Rules, 2006 with retroactive effect from 1st January 2005.
There are many advantages of having a product or process patented. The primary aim of a patent is to prevent the third party from performing any unauthorized act with the patented invention. It increases in value with time. Since it is regarded as a valuable asset by prospective buyers and banks, it increases the value of the business . In case the invention is licensed, the patent could prove to be an additional source of income. It helps to recover research and development expenses and to gain returns on investments . The patentee holds the exclusive commercial right to license and apply the invention. It also allows the patentee to take legal action against anyone for the use of the invention without his permission. An individual’s patent could be sold to anyone for financial remuneration.
India’s innovative sector can earn impetus and a competitive and economic lead in the global market provided it acquires the essential skill for producing patentable new items. The benefits of patenting would be advantageous and incredibly valuable in encouraging innovation and protecting intellectual property in industries.
IMPACT OF PATENT LAW
India’s economic growth is indirectly affected by the Indian Patent law. Since its inception, the law has been consistently working on the barriers to any misuse of the inventions. Presently, in India, it is considered a proper law and a trustworthy place for the safety of intellectual property and its use. The multinational companies showed their trust in this, by initiating their research and development activities in India. This led to an increase in tax payment and employment to the Indians, resulting in the country’s increased economic growth.
A multinational company, Ranbaxy, that was founded in 1961, saw a rise in the number of employees from 1700 (2005) to 10,983 (2012) people. According to an observation, a rise in employees’ number consequently led to an increase in India’s economic development. Another multinational company, Dr. Reddy, which was founded in 1984 saw a 200% increase in the number of employees in 12 years . There were 7525 employees in 2006 and 2018, the number increased to 23,524. The patent office generated total revenue of Rs. 410.03 crore. As evidenced by the statistics given, the Patent law is fostering the growth of the country’s economy and providing new opportunities for its development.
Owing to the manufacturing of generic drugs at very low costs the Indian Pharmaceutical Companies are regarded as the world’s third largest. They also export drugs to several countries like Latin America, Africa, and other Asian countries, a cost of production lower than that of Europe and the US. As per the report of WIPO (World Intellectual Property Organisation), India’s second-largest subject matter is an application for pharmaceutical patent and this position was taken up after 2005, when the law, that provided for product patents, was enacted in India. The Indian Pharmaceutical industry has expanded at a great pace (6 billion US Dollar- 2005 to 30 billion US Dollar 2015) and it is anticipated to grow up to 55 billion US Dollar within a period of 5 years.
PROVISIONS OF THE PATENTS ACT, 1970
The Indian Patent Act, 1970 (IPA, 1970) has 162 sections in toto. Section 3 of IPA, 1970 (‘what are not inventions’) deals with the inventions that are not eligible for getting patented. It says that any invention, which is flippant or claims anything that goes against the well-established natural laws, or an invention, whose main or intended application or commercial exploitation could go against morality or public order or lead to prejudice to plant life, animal, human, health or environment, the mere finding of any living item or non-living item developing in nature, the mere finding of a new form of a known material that does not lead to an improvement of that material’s known efficacy, or the mere finding of a novel property or new application for a known material.
Patents for machines that provide more than 100% efficacy or eternal machines are prohibited under Section 3(a) of IPA, 1970. Patents for machines associated with gambling and gadgets for breaking into houses are prohibited under Section 3(b) of IPA, 1970. Section 3(d) of IPA, 1970 is critical in safeguarding public health and limiting pharmaceutical firms’ monopolies. As per the Atomic Energy Act of 1962, Section 4 of IPA, 1970 (Inventions relating to atomic energy not patentable’) prohibits any invention associated with atomic energy. This act establishes the control, improvement, and application of atomic energy for the benefit of Indians, other peaceful causes, and related matters.
Section 39 of IPA, 1970 (‘Residents not to apply for patents outside India without prior permission) talks about the filing of the patent application by any non-resident of India. As per the Patents (Amendment) Act, Indian residents are supposed to file the patent application first in India, and then after 6 months, they can file it outside India. Nevertheless, the term ‘resident’ has not been defined in the section. The term ‘resident’ is used in this section to eliminate any restrictions that may be imposed on the provision’s applicability and to broaden its scope. Section 43 of IPA, 1970 discusses the procedure of grants of patents to the patentee. Section 48 of IPA, 1970 talks about the rights of the patentee. However, certain conditions have been attached with the patentee’s exclusive rights by Section 47 of IPA, 1970. It is also to be noted that there is a provision of compulsory licensing for preventing any abuse of patents as monopolies.
CASE LAWS RELATING TO PATENT LAW, 1970
Novartis Ag v. Union of India :
Novartis, a Swiss firm of drugs, has lost its legal case against the government of India. It had accused it of carrying on ‘unconstitutional’ patent law activities. The ruling of this case forms a significant precedent that will encourage the development of generic markets in India.
The lawsuit was filed earlier this year after the government of India denied Novartis a patent for its cancer medicine Glivec. After establishing itself as a patent-free zone where generic drug makers thrived, India joined the World Trade Organization in 1995 and had to begin granting patents. As a developing country, India was provided a time period of 10 years for getting its patent laws in line with those of other WTO members.
Since prior to the Patent laws’ inception in India, imatinib (an active element of Glivec) had been granted a patent in several countries, there was a possibility of rejection of Novartis’ patent application, as a provision in the Indian patent law, section 3(d), excludes ‘incremental innovations. Later, the constitutional validity of section 3(d) was challenged by Novartis, but the case was dismissed.
Strix Ltd. v. Maharaja Appliances Ltd. :
Since the Maharaja Appliances infringed on Strix’s patent, the Delhi High Court ordered an interim injunction prohibiting Maharaja Appliances from producing and distributing it Maharaja Whiteline electric kettle Model No. EK 172. While granting the injunction, the Court noted two keynotes on why Maharaja failed to meet its burden of presenting a “credible challenge” to the legality of Strix’s patent.
First, the court noted that because the defendant failed to submit some appropriate scientific data, which was elaborated or supported by expert testimony, the patent was prima facie subject to revocation. The court also noted that because there was an objection filed to dispute Strix’s patent, the burden on the defendant to establish that it has presented a credible challenge will be higher.
As law ensures the welfare of the society and the development of the country, a law relating to patents was always needed. Since its introduction to India, patent law has been a safe place to put our trust on. For its efficacy throughout these years, it has gained a lot of significance in the growth of the country’s economy, especially in the field of pharmacy. A developer of a new product or process deserves certain rights. It was morally unethical to use someone else’s discovery or creation without prior permission and with the introduction of patent law in India, it has now become illegal too.
However, it is to be noted that some conditions have been attached, in which the patentee’s exclusive rights can be restricted by some specific acts of the government, as specified under Section 47 of IPA, 1970. This means the patent does not grant an absolute monopoly. Even then, one cannot deny the efficacy of a patent in protecting a new product or process of an individual. Rights conferred by any law might be curtailed, provided the restrictions are reasonable. Even our fundamental rights are not absolute. So, certain restrictions imposed on the patentee’s rights do not pose a challenge to the patentee or its product. To ensure the protection of patentees from any abuse, the provision of compulsory licensing has been made.
The law has provided all relevant information relating to the procedure and eligibility to file an application for patent. The law is flexible too, as in Section 39 of IPA, 1970, the term ‘resident’ has not been defined so as to avoid the restrictions that could be imposed on the provision.
The importance of Patent law has always been acknowledged by India for the development of the country’s trade and economy. With the amendments made, the Patent law, the safeguard for all the new products and processes, is getting stronger and more effective. With the introduction of patents, many countries have started to show their interest in businesses. Ultimately, this boosts the country’s economy. So, the law not only strengthens the patentee’s rights but also fosters the country’s growth to bring it at par with the modern nations.
. O.M. Bagade and others, ‘Evolving Pace Of Patent In India And Its Corollary In Past, Present And Future’  American Journal of Advanced Drug Delivery https://www.imedpub.com/articles/evolving-pace-of-patent-in-india-and-its-corollary-in-past-present-and-future.pdf accessed 9 June 2021.
. Jaya Bhatnagar and Vidisha Garg, ‘India: Patent Law In India’ https://www.mondaq.com/india/patent/54494/patent-law-in-india accessed 9 June 2021.
. Vikrant Rana, ‘India: Getting A Patent On Your Innovation’ https://www.mondaq.com/india/patent/455406/getting-a-patent-on-your-innovation accessed 9 June 2021.
. Mohammad Suleman Palwala https://www.mondaq.com/india/patent/827016/impact-of-patent-law-on-economic-growth-of-india-an-analysis accessed 9 June 2021.
. S.K. Verma and N.V. Muralidhar Rao, ‘Impact Of The Intellectual Property System On Economic Growth’ https://www.wipo.int/export/sites/www/about-ip/en/studies/pdf/wipo_unu_07_india.pdf accessed 9 June 2021.
. The Patents Act 1970, s 3.
. The Patents Act 1970, s 3(a).
. The Patents Act 1970, s 3(b).
. The Patents Act 1970, s 3(d).
. The Patents Act 1970, s 4.
. The Patents Act 1970, s 39.
. The Patents Act 1970, s 43.
. The Patents Act 1970, s 48.
. Suchi Rai, ‘India: Patent Does Not Confer Absolute Monopoly’ https://www.mondaq.com/india/patent/700958/patent-does-not-confer-absolute-monopoly accessed 9 June 2021.
. Novartis Ag v. Union of India, (2013) 6 SCC 1.
. Strix Ltd v Maharaja Appliances Ltd., MIPR 2010 (1) 0181 (Del).