Centre for Internet and Society

Patents and Mobile Devices in India: An Empirical Survey

rohini — 2017-03-29T04:03:03Z

Though India has the second-largest wireless subscriber base in the world, with more than 150 mobile device vendors, it has, until recently, remained relatively unaffected by the global smartphone wars. Over the past three years, however, a growing number of patent enforcement actions have been brought by multinational firms against domestic Indian producers. These actions, which have largely resulted in judgments favoring foreign patent holders, have given rise to a variety of proposals for addressing this situation.

In order to assess the potential impact of patents on the mobile device market in India, and to assist policy makers in formulating and implementing regulations affecting this market, we have conducted a comprehensive patent landscape analysis of the mobile device sector in India using public data relating to Indian patent ownership by technology type, nationality, and industry classification. Our results illuminate a number of important features of the Indian mobile device market, including the overwhelming prevalence of foreign patent holders, the rate at which foreign and domestic firms are obtaining patents, and how these patent holdings are likely to shape industrial dynamics in the Indian market for mobile devices, as well as the availability of low-cost mobile devices that can significantly enhance public health, agriculture, safety and economic development throughout India.

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This paper was published by the Vanderbilt Journal of Transnational Law on February 9, 2017.

For more details visit https://cis-india.org/a2k/blogs/patents-and-mobile-devices-in-india-an-empirical-survey

Patent Working Requirements and Complex Products: An Empirical Assessment of India's Form 27 Practice and Compliance

rohini — 2017-10-13T04:32:49Z

India requires every patentee to file an annual statement, also known as “Form 27”, describing the working of each of its issued Indian patents. If a patent is not locally worked within three years of its issuance, any person may request a compulsory license, and if the patent is not adequately worked within two years of the grant of such a compulsory license, it may be revoked. The research paper on Form 27 practices and compliance by patentees authored by Prof Jorge L. Contreras, University of Utah, and Rohini Lakshané, Centre for Internet and Society has been accepted for publication in the NYU Journal of Intellectual Property and Entertainment Law.

The research paper by Prof Jorge L. Contreras, University of Utah, and Rohini Lakshané, Centre for Internet and Society was published on SSRN on July 17, 2017. The paper has been accepted for publication in the NYU Journal of Intellectual Property and Entertainment Law.

The potency of India’s patent working requirement was demonstrated by the 2012 issuance of a compulsory license for Bayer’s patented drug Nexavar. In order to provide the public with information about patent working, India requires every patentee to file an annual statement on “Form 27” describing the working of each of its issued Indian patents.

We conducted the first comprehensive and systematic study of all Forms 27 filed with respect to a key industry sector: mobile devices. We obtained from public online records 4,916 valid Forms 27, corresponding to 3,126 mobile device patents. These represented only 20.1% of all Forms 27 that should have been filed and corresponded to only 72.5% of all mobile device patents for which Forms 27 should have been filed. Forms 27 were missing for almost all patentees, and even among Forms 27 that were obtained, almost none contained useful information regarding the working of the subject patents or fully complying with the informational requirements of the Indian Patent Rules. Patentees adopted drastically different positions regarding the definition of patent working, while several significant patentees claimed that they or their patent portfolios were simply too large to enable the reporting of required information. Many patentees simply omitted required descriptive information from their Forms without explanation.

The Indian government has made little or no effort to monitor or police compliance with Form 27 filings, undoubtedly leading to significant non-compliance. However, some of the complaints raised by patentees and industry observers may have merit. Namely, that patents covering complex, multi-component products that embody dozens of technical standards and thousands of patents are not necessarily amenable to the individual-level data requested by Form 27. We hope that this study will contribute to the ongoing conversation in India regarding the most appropriate means for collecting and disseminating information regarding the working of patents.

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For more details visit https://cis-india.org/a2k/blogs/patent-working-requirements-and-complex-products-an-empirical-assessment-of-indias-form-27-practice-and-compliance

Patent Working Requirements and Complex Products

Jorge L. Contreras, Rohini Lakshané and Paxton M. Lewis — 2018-01-23T15:09:30Z

The paper titled "Patent Working Requirements and Complex Products" has been published in the latest issue of the NYU Journal of Intellectual Property and Entertainment Law. It is one of the outputs of the Pervasive Technology project and has been authored by Prof. Jorge L. Contreras, Paxton M. Lewis, and Rohini Lakshané.

Download PDF here. The paper was published by JIPEL NYU Journal of Intellectual Property & Entertainment Law, Vol. 7 - No.1 on January 16, 2018.

Introduction
I. Patent Working Requirements
A. History of Patent Working Requirements
B. The Evolution of India’s Patent Working Requirement
1. Background
2. The Patents Act, 1970
3. India’s Current Working Requirement
C. The Indian Working Requirement and Natco Pharma Limited v. Bayer Corporation
D. Form 27 and India’s Reporting Requirement
E. Theory and Criticism of Form 27
II. Empirical Study of Indian Form 27 Disclosures in the Mobile Device Industry
A. Background: Existing Data and Studies
B. Methodology
C. Limitations
III. Findings
A. Aggregated Data – Forms Found and Missing
B. Working Status
C. Descriptive Responses
1. Working Status Not Disclosed
2. Patents Not Worked
3. Varied Interpretations of Working
4. Changes in Status
IV. Discussion and Analysis
A. Process Weaknesses
B. Non-Enforcement and Non-Compliance
C. Uncertainty Surrounding Working and Complex Products
D. Strategic Behavior
E. Opportunities for Further Study
Conclusion
Appendix

Introduction

In 2012, Natco Pharma Ltd. (“Natco”) petitioned the Indian Patent Office (“IPO”) for a compulsory license to manufacture Bayer’s patented cancer drug, Nexavar. Natco cited numerous grounds in support of its petition, including Nexavar’s high cost and limited availability in India. But along with these relatively common complaints in the global access to medicines debate, Natco raised a less typical theory; Bayer failed to “work” the patent sufficiently in India. In doing so, Natco invoked a seldom-used provision of Indian patent law that allows any person to seek a compulsory license under an Indian patent that is not actively being commercialized by its owner within three years from the issuance of the patent.

Patent working requirements exist in different forms throughout the world. Broadly speaking, to “work” a patent is to practice, in some manner, the patented invention within the country that issued the patent. While patents are seen as a means to create incentives for inventors to share their ideas, working requirements are intended to mitigate the exclusivity of patent monopolies by requiring the patent holder to disseminate its invention into the local market. The patent holder thereby imparts knowledge and skills to the local community, enhances economic growth, supports local manufacturing, and promotes the introduction of innovative new products into the local market.

While patent working requirements have existed in various jurisdictions for more than a century, working requirements have seldom been the subject of vigorous enforcement. The U.S.-Brazil dispute and the Natco case represent a revival of interest in patent working requirements. In particular, the Natco case has reintroduced questions of whether working requirements are, or should be, allowed under the TRIPS Agreement.

In prior work, Contreras and LakshanÈ have analyzed the domestic Indian patent landscape pertaining to mobile device technology. The authors now extend that work to examine the working of those patents. This Article presents a detailed case study of the Indian patent working statutes and their procedures, particularly the requirement that all patent holders file an annual form (Form 27) to demonstrate that their patents are being worked in the country. We collected and reviewed all publicly available Forms 27 in the mobile device sector to assess the completeness and accuracy of the information disclosed. We then analyzed the results to assess the robustness of India’s patent working requirement and its utility for complex information and communication-based products and technologies.

The remainder of this Article proceeds in four principal parts. Part I.A provides a brief history of patent working requirements. Part I.B describes the development of India’s current working requirements and its novel Form 27 filing requirement. Part II describes our empirical study of India’s Form 27 filings in the mobile device sector. Part III discusses our findings and analysis. We conclude with recommendations for further study and policy.

I. Patent Working Requirements

A. History of Patent Working Requirements

The origins of patent working requirements have been traced to the 1300s, when early patent privileges were granted in jurisdictions such as feudal England and the Republic of Venice, with an expectation that foreign innovators would teach the invented art to local industry. The underlying incentive for providing monopoly rights was thus tied to local industrialization. This incentive to share technology was directed not only to local citizens but, even more so, to foreign inventors. Countries issued patent privileges to encourage foreigners to migrate and develop or protect local industry by teaching their art to the local population. Local industrialization was thus considered a central means to economic development and technological advancement.

Despite these early developments, by the late 19th and early 20th centuries, developed countries’ conceptual understanding of a patentee’s obligation and its relevance to national development began to shift away from local manufacturing. As a result, in many developed countries disclosure through importation became sufficient to meet the “informational goal” of patents, particularly patents that represented improvements to existing technologies.

The 1883 Paris Convention for the Protection of Industrial Property prohibited the automatic forfeiture of a patent for a failure to work it locally. While both developed and developing countries disputed the proper remedy for the failure to work a patent, there remained a consensus that failure to work a patent was inconsistent with the patent privilege.

A half-century later, the 1925 Hague Conference, which amended the Paris Convention, recognized the failure to work a patent as an abuse that member states could “take necessary legislative measures to prevent.” As a remedy for non-working, drafters viewed compulsory licensing of non-worked patents as more palatable than outright forfeiture. Nevertheless, forfeiture of patent rights was still permitted under the Convention, though an action for forfeiture could not be brought until two years following the issuance of the first compulsory license covering the non-worked patent.In the 1967 Stockholm amendments to the Convention, further limitations on compulsory licensing for non-working patents were introduced, notably prohibiting member states from permitting the grant of a compulsory license for failure to work until three years after the issuance of the allegedly non-worked patent.

Within the flexibilities allowed by the Convention, developing countries continued to adopt strict working requirements and to resist international requirements that favored developed countries. For example, in the late 1970s and early 1980s, developing countries proposed revisions to the Paris Convention that would have provided that mere importation did not satisfy local working requirements and to permit the expansion of sanctions for non-working beyond compulsory licensing.

The desire of developed countries for stronger international rules relating to intellectual property led to the formation of the World Trade Organization (“WTO”) in 1994, under which the Trade Related Aspects of Intellectual Property Rights (“TRIPS”) Agreement was negotiated. While the TRIPS Agreement does not explicitly address patent working requirements, Article 2.1 incorporates Article 5A of the Paris Convention (i.e. the article related to compulsory licensing and the limitations on granting compulsory licenses discussed above), and Article 2.2 reinforces the existing obligations of members of the Paris Union. Additionally, Article 27.1 of the TRIPS Agreement, which establishes requirements for patentable subject matter, prohibits “discrimination as to the place of invention, the field of technology and whether products are imported or locally produced” raising a question as to whether countries with local working requirements must recognize importation as an acceptable manner of satisfying those requirements.However, Article 30 of the TRIPS Agreement permits a member state to allow exceptions to the exclusive rights of a patent holder, and Article 31 allows a state to issue a “compulsory” license under one or more patents without the authorization of the patent holder “in the case of national emergency or other circumstances of extreme urgency or in cases of public non-commercial use.” Given these mixed signals, commentators are divided on whether, and how, the TRIPS Agreement may affect local working requirements.

To date, the only WTO dispute challenging the validity of national working requirements has been between the United States and Brazil. In 2000, the Clinton administration, responding to concerns raised by the American pharmaceutical industry, initiated a WTO dispute proceeding to challenge Brazil’s local working requirement. The United States argued that Article 68 of Brazil’s 1996 Industrial Property Law violated Articles 27(1) and 28(1) of the TRIPS Agreement for discriminating against U.S. owners of Brazilian patents whose products were imported, but not locally produced, in Brazil.

Despite the pending WTO litigation, the Brazilian Ministry of Health adopted an aggressive stance toward reducing the price of antiretroviral medications and threatened to issue compulsory licenses for the local manufacture of two such drugs, both patented by U.S. companies, if they were not discounted by 50%. In response to political and public pressures, the United States and Brazil settled the dispute before any definitive opinion was issued by the WTO.

As a British colony, India’s pre-independence patent laws were modeled largely on then-prevailing English law. India gained its independence from Great Britain in 1947 and almost immediately began to consider the adoption of patent laws reflecting emerging national goals of industrialization and economic development. Thus, in early 1948, a committee known as the Tek Chand Committee was appointed to review and reconcile India’s patent laws with its national interests. The committee’s efforts resulted in the Chand Report, which recommended the use of compulsory patent licenses to stimulate India’s industrial economy.

A second major report commissioned by the Indian government and prepared primarily by Shri Justice N. Rajagopala Ayyangar, was issued in 1959. The Ayyangar Report suggested that India should deviate from the “unsuitable patent policies of industrialized nations” because patent regimes operate differently in developing versus developed nations. Recognizing that a significant weakness in developing nations “is that foreign patent owners do not work the invention locally,” the Ayyangar Report recommended compulsory licensing as “the remedy to redress the handicap of foreigners not working the invention locally.”

2. The Patents Act, 1970

The India Patents Act, 1970, was enacted in 1972. Among other things, it sought to address the economic repercussions resulting from foreign dominance of the patent landscape in India, as recommended by the Chand Report and the Ayyangar Report. Accordingly, Section 83 of the 1970 Act provides certain policy-driven justifications for India’s working requirements, explaining:

“that patents are granted to encourage inventions and to secure that the inventions are worked in India on a commercial scale and to the fullest extent that is reasonably practicable without undue delay; [and]

that they are not granted merely to enable patentees to enjoy a monopoly for the importation of the patented article[.]”

These provisions make clear that working a patent in India is both an important policy goal and consists of something more than importation of the patented article into India. Some additional knowledge transfer must occur so that manufacturing of other steps necessary for commercialization are carried out in India.

Following the Ayyangar Report’s recommendations, Section 84(1) of the 1970 Act provided for compulsory licensing of patents as follows:

“At any time after the expiration of three years from the date of the sealing of a patent, any person interested may make an application to the Controller alleging that the reasonable requirements of the public with respect to the patented invention have not been satisfied or that the patented invention is not available to the public at a reasonable price and praying for the grant of a compulsory licence to work the patented invention.”

These requirements, particularly the availability of the patented article to the public at a “reasonable price,” seek to address issues raised in the debate over access to medicines, and particularly the high pricing maintained by many Western pharmaceutical firms in developing countries.

However, working of patents more generally is incorporated into the compulsory licensing regime through Section 90, which clarifies when the “reasonable requirements of the public” will be deemed not to have been satisfied. In particular, Section 90(c) specifies that, for purposes of compulsory licensing under Section 84, “the reasonable requirements of the public shall be deemed not to have been satisfied Ö if the patented invention is not being worked in the territory of India on a commercial scale to an adequate extent or is not being so worked to the fullest extent that is reasonably practicable[.]” Thus, local working of patents is tied to the public interest and has become express grounds for requesting a compulsory license in India.

In addition to giving applicants the right to seek a compulsory license under non-worked patents, the 1970 Act also gave the Controller the power to revoke a patent on the grounds that the reasonable requirements of the public were not being satisfied or the patented invention was not available to the public at a reasonable price. Under Section 89(1), any interested person could apply to the Controller for such an order of revocation no earlier than two years following the grant of the first compulsory license under the relevant patent.

3. India’s Current Working Requirement

India became a member of the World Trade Organization on January 1, 1995, also making India a party to the TRIPS Agreement. In order to reconcile the 1970 Act with the TRIPS Agreement, India amended its Patents Act in 1999, 2002, and 2005. Most relevant to this Article, the 2002 amendments modified India’s compulsory licensing and working requirements.

India’s amended Patents Act retains strong working requirements, which permit the Controller to revoke unworked patents. Section 83 of the Act, as amended in 2002, provides several additional justifications for India’s patent working requirement not contemplated in earlier versions of the Act. For example, the 2002 amendments recognize that patents are intended to support the “transfer and dissemination of technology . . . in a manner conducive [sic] to social and economic welfare.” Several of the new justifications emphasize that patents should support, and not impair, the public interest, particularly “in sectors of vital importance for socio-economic and technological development of India.”

Against this backdrop, the amended Act explicitly makes compulsory licenses available for non-worked patents. Section 89 explains that one of the “general purposes” of compulsory licenses is to ensure that “patented inventions are worked on a commercial scale in the territory of India without undue delay and to the fullest extent that is reasonably practicable.” The amended Act expanded Section 84(1), which authorizes third parties to seek compulsory licenses, to include as an express basis for seeking a compulsory license “that the patented invention is not worked in the territory of India.”

Thus, new section 84(1)(c) establishes working of a patent as an independent ground for seeking a compulsory license, in addition to the grounds under sections 84(a) and (b) that the patented technology fails to reasonably meet public needs. This approach contrasts with the original 1970 formulation, discussed above, in which non-working of a patent formed a basis for seeking a compulsory license, but only as an element of the “reasonable requirements of the public,” rather than an independent ground in itself.

Section 84(6) specifies factors that the Controller must take into account when considering an application for a compulsory license, including:

(i) the nature of the invention, the time which has elapsed since the sealing of the patent and the measures already taken by the patentee or any licensee to make full use of the invention;

(ii) the ability of the applicant to work the invention to the public advantage;

(iii) the capacity of the applicant to undertake the risk in providing capital and working the invention, if the application were granted;

(iv) as to whether the applicant has made efforts to obtain a licence from the patentee on reasonable terms and conditions and such efforts have not been successful within a reasonable period as the Controller may deem fit [i.e., not ordinarily exceeding a period of six months] . . . .

Section 84(6) appears to represent a concession to patent holders, making clear that compulsory licenses will only be granted to applicants that are able to exploit the licensed patent rights in a manner that is likely to remedy the failure of the patent holder to work the patent.

While a formal definition of working is not provided under the statute, the language of section 83 suggests that the patented invention must be manufactured locally to the extent possible and that importation would be acceptable only if local manufacturing is unreasonable. Additionally, the statutory language suggests that if importation is necessary, only the patent holder or its chosen licensees may import the patented invention. The statute also fails to establish any circumstances that may be excused from India’s patent working requirement. This omission may have been intentional, perhaps suggesting that any technology that is worth patenting in India should also be capable of being worked in India.

In short, India’s patent working requirement is intended to be taken seriously. The penalties for failing to work a patent include the issuance of a compulsory license beginning three years after patent issuance, and if that does not fulfill public requirements for the patented article, possible revocation of the patent. Moreover, there is evidence that Indian courts may be reluctant to grant injunctive relief to patent holders that do not work their patents.

C. The Indian Working Requirement and Natco Pharma Limited v. Bayer Corporation

India’s patent working requirement was featured prominently in Natco’s recent compulsory license request with respect to Bayer’s Indian patent covering sorefanib tosylate, a kidney and liver cancer drug marketed by Bayer as NexavarTM. Bayer obtained an Indian patent covering Nexavar in 2008. Despite Bayer’s estimate that more than 8,800 patients in India were eligible to take the drug, its imports were sufficient to supply only 200 patients. Moreover, Bayer priced a monthly dose of the drug at more than 280,000 Rupees (approximately US$5,608), a price unaffordable to the vast majority of Indians. In response, Natco, an Indian generic drug manufacturer, attempted to negotiate a license with Bayer to manufacture and sell Nexavar in India. However, when negotiations were unsuccessful, Natco applied to the Drug Controller General of India for regulatory approval to manufacture a generic version of Nexavar in India. The approval was granted.

Natco then petitioned the Controller of Patents under section 84 of the Patents Act for a compulsory license to manufacture a generic version of Nexavar. Natco offered several justifications in support of its application for a compulsory license, including Nexavar’s high cost and limited availability in India. In addition, Natco argued that Bayer had failed to work its patent in India within three years of its issuance, as required under section 84(1)(c) of the Patents Act. Specifically, Natco argued that “[t]he patented product is being imported into India and hence the product is not worked in the territory of India to the fullest extent that is reasonably practicable.” Additionally, Natco argued that Bayer faced “no hurdle[s] preventing [it] from working the Patent in India” because Bayer already had “manufacturing facilities in India for several products.”

Bayer responded that it actively imported Nexavar into India, which demonstrated sufficient working, and argued that India’s working requirement did not require manufacture of the patented product in India. In evaluating Natco’s petition, the Controller considered the legislature’s intent, the Paris Convention, the TRIPS Agreement, and India’s Patents Act. In view of these authorities, the Controller interpreted the term “worked” to mean that the patented invention must be manufactured or licensed within India, reasoning that “[u]nless such an opportunity for technological capacity building domestically is provided to the Indian public, they will be at a loss as they will not be empowered to utilise [sic] the patented invention, after the patent right expires.” Under this interpretation, the Controller concluded that Bayer had not worked its patent in India since importation is not sufficient to constitute “working” a patent. Accordingly, in 2012 the Controller issued a compulsory license to Natco under Bayer’s patent covering Nexavar.

Bayer unsuccessfully appealed the Controller’s decision to the Indian Intellectual Property Appellate Board (IPAB). The IPAB affirmed the Controller’s decision, but disagreed with the Controller’s interpretation of the term “worked.” Instead of ruling that working categorically excludes importation of the patented product into India, the IPAB concluded that determining whether a patented invention is worked must be considered on a case-by-case basis. Thus, the term “worked” does not necessarily exclude importation, but it also does not strictly require manufacturing in India.

In affirming the decision of the IPAB, the Bombay High Court opined that “[m]anufacture in all cases may not be necessary to establish working in India[.]” However, the court implied that working a patent without local manufacture could be a high hurdle to clear, reasoning that the patent holder must then “establish those reasons which makes it impossible/prohibitive for it to manufacture the patented drug in India.” It is only when the patent holder satisfies the authorities that “the patented invention could not be manufactured in India” that it can be considered worked by import.

Apart from the working requirement, the Bombay court focused on whether Bayer had reasonably satisfied the requirements of the public, recognizing that those requirements might differ depending on the type of product covered by the patent. Thus, when assessing whether demand for the patented article was met to an “adequate extent,” the considerations pertaining, for example, to a luxury article would vary significantly from those pertaining to a lifesaving medicine. In the case of medicines, the court reasoned, meeting public demand to an adequate extent should be deemed to mean it is available to 100% of the market: “Medicine has to be made available to every patient and this cannot be deprived/sacrificed at the altar of rights of [the] patent holder.”

Following Natco’s successful application for, and defense of, its compulsory license, other generic drug manufacturers sought compulsory licenses to manufacture patented pharmaceutical products in India. For example, in 2013, BDR Pharmaceuticals, Ltd., an Indian manufacturer, filed an application for a compulsory license to manufacture Bristol Myers Squibb’s anti-cancer drug dasatinib (marketed as SprycelTM), and the Indian Ministry of Health recommended that the Department of Industrial Policy and Promotion (DIPP) grant local manufacturers compulsory licenses for trastuzumab, a breast cancer drug marketed by Roche (HerclonTM) and Genentech (HerceptinTM) and ixabepilone (Roche’s IxempraTM). To date, each of these petitions has failed for various reasons other than that pertaining to dasatinib, which remains under consideration by DIPP.

D. Form 27 and India’s Reporting Requirement

The Indian patent working requirement under Section 84 of the Patents Act, as well as the availability of compulsory licenses for non-worked patents, is not unique to India, and other developing countries have adopted similar legal requirements. India has, however, enacted what appears to be a unique reporting structure associated with its patent working requirement. India adopted a form submission requirement as a means to regulate the patent working requirement under the India Patents Act in 1970.Specifically, section 146(2) of the Patents Act provides that:

every patentee and every licensee (whether exclusive or otherwise) shall furnish in such manner and form and at such intervals (not being less than six months) as may be prescribed statements as to the extent to which the patented invention has been worked on a commercial scale in India.

In support of this statutory requirement, the patent rules adopted by the Indian Ministry of Commerce and Industry provide that the required statements of working must be submitted in a prescribed format (Form 27). The rules also provide that such statements must be furnished to the Controller of Patents in respect of every calendar year within three months following the end of such year.

Form 27, a template of which is appended to the 2003 version of the Indian patent rules, requires the patent holder to disclose “the extent to which the patented invention has been worked on a commercial scale in India.” To that end, Form 27 requires that the patent holder complete the following information:

The patented invention:

(i) { } Worked { } Not worked [Tick (✓) mark the relevant box]

a. if not worked: reasons for not working and steps being taken for the working of the invention.

b. if worked: quantum and value (in Rupees), of the patented product:

manufactured in India

imported from other countries (give country wise details)

(ii) the licenses and sub-licenses granted during the year;

(iii) state whether the public requirement has been met partly/adequately/to the fullest extent at reasonable price.

Under Section 122, failing to submit a Form 27 or providing false information on the form may lead to a significant fine, imprisonment, or both.

Though India’s working requirement first appeared in the Patents Act in 1970, it appears to have been ignored until around 2007. In 2007, the Controller first mentioned the local working of patented inventions in his annual report. The reports provided by the Controller between 2007 and 2009 indicate that, on average, less than 15 percent of Indian patents were being worked commercially. In 2009, 2013 and 2015, the Controller issued public notices calling on patent owners to comply with their obligations to file statements of working on Form 27.

While the penalties for failing to furnish information via Form 27 are steep, potentially resulting in fines or imprisonment, local critics claim that many patent holders fail to make the required filings and that the Indian government has never taken meaningful action to penalize this non-compliance.

On February 12 2013, the Indian Patent Office announced plans to make Form 27 submissions for the year 2012 available to the public via the IPO website. As discussed in Part II.A below, that effort has been met with limited success.

E. Theory and Criticism of Form 27

There is little legislative or administrative history explaining the genesis of India’s unique Form 27 requirement. On one hand, a requirement that the details of patent working be disclosed by patent holders supports the goal of making unworked patents available for compulsory licensing in India, both to promote economic development and public access to patented products. A public registry of Forms 27 could also shift enforcement of India’s working requirement from the IPO and Controller to private sector entities with the greatest incentive to monitor the working of patents in their respective industries. This shift could relieve India’s resource-strapped administrative agencies of a potentially significant policing function, one that it does not appear they were actively enforcing in any event.

However, it is not clear that these goals are well served by the current Form 27 framework, which has been criticized by a number of local commentators. For example, the IPAB ruled in Natco that the term worked must be decided on a case-by-case basis. How, then, should patent holders answer the first question posed in Form 27 and its sub-questions? How is a patent holder to know whether importation or licensing in a certain case will qualify as working a patent in India? If the Form is intended to increase transparency and certainty regarding the working of patents in India, it is hindered in so doing by the lack of a formal definition of working. This lack of clarity affects both patent holders, who are less able to order their affairs so as to comply with statutory working requirements, as well as potential compulsory licensees, who lack a clear assurance of when a compulsory license petition will be successful.

Commentators have raised a variety of additional critiques of the Form 27 framework. The U.S.-based Intellectual Property Owners Association, in a formal 2014 submission to the U.S. Trade Representative, has referred to the Form 27 process as “highly burdensome” and warns that the information disclosed in publicly-accessible forms could “result in even greater pressure on Indian authorities to compulsory license [patented] products.”Moreover, the association argues that Form 27 does not adequately recognize that some patents may be practiced by multiple products, or that multiple patents may be practiced by a single product. Thus, it may be unrealistic for patent holders to attribute a “specific commercial value” to specific patented features of complex technologies.

Additionally, a number of Indian practitioners have raised concerns that the public disclosure of confidential plans for working patents through Form 27 may jeopardize or destroy valuable trade secrets and proprietary information. This threat could cause patent holders to disclose as little specific or valuable information as possible in their Form 27 filings, a result that is suggested by the findings discussed in Part III below.

Based on studies of filed Forms 27, Professor Shamnad Basheer, has concluded that India’s local working Form 27 submission requirements are not being taken seriously, particularly by international pharmaceutical companies. As a result, in 2015 Professor Basheer initiated public interest litigation in the High Court of Delhi against the Indian government for failure to comply with India’s patent laws. The suit seeks a judicial order compelling the Indian government “to enforce norms relating to the disclosure of ‘commercial working’ of patents by patentees and licensees” and to take action “against errant patentees and licensees for failure to comply with the mandate.” In 2016 an Indian patent attorney, Narendra Reddy Thappeta, filed an application to intervene in Basheer’s public interest suit, among other things, in order to raise issues regarding the difficulty of complying with Form 27 requirement for information and communication technology providers.

Despite its perceived problems, Form 27 has proven useful in Indian proceedings. Notably, the information disclosed in Bayer’s Form 27 filings played an important role in the Natco case by helping to establish the low number of patients having access to the drug. Basheer refers to the working requirement as “a central pillar of the Indian patent regime” and views the disclosure requirements of Form 27 as essential tools to ensure that needed information is made public.

II. Empirical Study of Indian Form 27 Disclosures in the Mobile Device Industry

In order to gain a better understanding of India’s patent working requirement, particularly patent holders’ compliance with the statutory requirement to declare information about the working of their patents through Form 27, we conducted an empirical study of all available Form 27 submissions for Indian patents in the mobile device sector. In this Part, we describe the objectives, background and methodology of this study.

A. Background: Existing Data and Studies

Every year, the Controller publishes an Annual Report containing statistics relating to patent filings in India. Since 2010, this report has contained data relating to Form 27 filings. This data indicates that a significant number of patent holders fail to file Form 27 as required. Below is a summary of this data as derived from the Controller’s Annual Reports from 2010 to 2016:

Table 1

Indian Controller of Patents Form 27 Filing Data (2010-2016)

Under the Patents Act, a Form 27 must be filed every year with respect to every issued patent in India. Accordingly, the discrepancy between the number of patents in force for a given year and the number of Forms 27 filed likely indicates non-compliance with the filing requirement. Interestingly, it appears that instances of non-compliance dropped noticeably in years immediately after the Controller issued its public reminders to file Form 27 in December 2013, February 2013 and early 2015. Even so, compliance has not been complete even in these years.

As noted above, Professor Shamnad Basheer has conducted two studies of Form 27 compliance in India. The first study, released in April 2011, focused on the pharmaceutical sector. The researchers selected seven pharmaceutical products directed at either cancer or hepatitis, all of which were subject either to Indian litigation or patent office oppositions and were patented in India between 2006 and 2008. They then collected Form 27 filings relating to each of these patents through a series of Right to Information (RTI) petitions to the Indian Patent Office (IPO). Based on the Forms produced by the IPO in response to these requests, the researchers found significant non-compliance with Form 27 filing requirements: some firms failed to file forms in some years, while some forms that were filed were incomplete.

Professor Basheer’s second study had a broader scope, covering a total of 141 patents: 52 patents held by 13 firms in the pharmaceutical sector, 52 patents held by 7 firms in the telecommunications sector, and 37 patents held by 4 institutions which are claimed to have arisen from publicly-financed research. The researchers used series of RTI petitions to collect a total of 263 Forms 27 corresponding to these patents filed between 2009 and 2012.

Based on a total of 141 patents, full compliance with Form 27 filing requirements would have yielded 423 Forms 27 over the three-year period studied. The total of 263 Forms identified indicates a non-compliance ratio of approximately 38%, assuming that all filed forms were produced by the IPO. A review of the reported data indicates that some firms, particularly in the pharmaceutical sector, were assiduous in filing Forms 27. For example, Genentech and Janssen Pharmaceuticals, with two patents each, each filed six Forms 27, suggesting full compliance. Other firms, however, fell far short of this measure. Apple, for example, with four patents, filed only one Form.

In addition to raw filing statistics, Prof. Basheer investigates the quality of the disclosures made in individual Forms 27. He finds that significant numbers of filed Forms “were grossly incomplete, incomprehensible or inaccurate.” For instance, numerous forms failed to indicate how patents were being worked or the quantity, value or place of manufacture of patented products as required by the Form. In addition, of forty-two Forms that disclosed non-working of a patent, twenty-eight (65%) failed to offer any reason for non-working. Though the raw data underlying these conclusions does not appear to be publicly available, choice excerpts from a few Forms are offered.

While the prior studies cited above suggest that there are substantial non-compliance issues with Form 27 practice in India, additional data is required to develop a more complete understanding of this issue. The Controller’s annual report data is provided only at a gross level and lacks any detail regarding compliance. Prof. Basheer’s pioneering studies, while first alerting the public to the problems of non-compliance, cover only small, non-random samples of patents and end prior to the general online availability of Forms 27.

B. Methodology

In this study, we sought to assess annual Form 27 submissions across a comprehensive set of patents and a substantial time frame. To do so, we utilized a set of 4,052 Indian patents identified by Contreras and LakshanÈ as of February 2015 in a prior study of the Indian mobile device patent landscape (Landscape Study). Another 367 patents pertaining to mobile device technology, which were not included in the original Landscape Study, were also identified by an independent contracted search firm. In the aggregate, we analyzed 4,419 Indian patents issued as of February 2015 in the mobile device sector, which we believe to represent the large majority of issued Indian patents in this sector as of the date selected.

We identified Form 27 filings with respect to each such patent through searches of two public online databases maintained by the Indian Patent Office: Indian Patent Advanced Search System (“InPASS”) and Indian Patent Information Retrieval System (“IPAIRS”). We manually eliminated duplicate results obtained from these two databases.

Our initial searches in 2015 yielded Form 27 submissions for only 1,999 out of 4,419 patents. These searches yielded no Forms 27 for some firms known to be significant patent holders in the mobile devices industry. To attempt to locate the missing forms, LakshanÈ, through the Centre for Internet and Society (CIS), submitted two formal requests to the IPO located in Mumbai under the Indian Right to Information (“RTI”) Act of 2005. The first RTI application was submitted on June 10, 2015, requesting Form 27 information for over 800 patents. On June 17, the IPO replied with generic instructions on how to find Form 27 submissions online. A second RTI application was filed on March 11, 2016. The second request sought Form 27 filings pertaining to 61 of the remaining patents. These 61 patents were selected to represent a sample of patents held by the full cross-section of patent holders identified in the Landscape Study. In April 2016, the IPO replied that, due to internal resource constraints, it could only provide CIS with Forms 27 for eleven (11) of the requested patents.

Nevertheless, a few days after IPO’s reply, Form 27 submissions pertaining to patents in the Landscape Study started appearing on InPASS and IPAIRS. We repeated the search for Forms 27 corresponding to all 4,419 patents in our dataset in August 2016 and obtained a total of 4,935 Forms 27 corresponding to a total of 3,126 patents (an increase of 1,127 patents over the initial search).

All Forms 27 that we accessed were downloaded as PDF files or original image files and manually entered into a text-searchable spreadsheet maintained at CIS. All information from the Forms 27 was transcribed into the spreadsheet, including all textual descriptions of patent working and licensing. The results were then analyzed as described in Part III.A below.

C. Limitations

The present study was limited by the technical capabilities of the IPO’s online Form 27 repository. As described above, we found significant gaps in posted Forms 27 in our initial search, and it took a formal RTI application to spur the IPO to upload additional forms. Yet, we still identified 1,400 fewer Forms 27 than issued patents in the mobile devices category. The degree to which these missing forms arise from abandoned or expired patents, or additional failures of the IPO to upload filed forms, is unclear. Other than the IPO web site, there is no practical way to identify or access Forms 27 filed with the IPO. Technical issues with the InPASS and IPAIRS databases were constant challenges during this study. The databases were frequently unavailable, produced conflicting results, and were subject to numerous runtime errors and failures.

Despite these technical challenges, we believe that we have identified a large segment of filed Forms 27 covering Indian patents held by all major patent holders in the mobile device sector. We hope that this study will further encourage the IPO to improve the regularity and reliability of its Form 27 database.

III. Findings

In this Section, we describe the findings of our empirical collection analysis of Forms 27 pertaining to Indian patents in the mobile device sector.

A. Aggregated Data ñ Forms Found and Missing

As noted above, we used a dataset comprising 4,419 Indian patents in the mobile device sector issued as of February 2015. Of these, at least 107 patents were likely expired prior to the date on which a Form 27 would have been filed, leaving 4,312 patents for which at least one Form 27 could have been filed.

We were able to identify and obtain a total of 4,916 valid Forms 27which corresponded to 3,126 of these patents, leaving 1,186 Indian patents for which a Form 27 could have been filed, but was not found. This total represents 27.5% of the patents for which at least one Form 27 could have been filed: a significant portion of the total number of patents in the field, and within the general range of missing Forms identified by both the Controller and Basheer (2015).

Based on the year of grant of each of the 4,312 patents identified in the mobile device sector as to which a Form 27 could have been filed, we determined that a total of 24,528 Forms 27 should have been filed with respect to these patents. This figure represents the sum of total Forms 27 that could have been filed for each such patent, which ranges from a low of one to a high of eight Forms 27 per patent. In our sample, no single patent was associated with more than five Forms 27. As noted above, we obtained a total of 4,935 Forms 27 filed with respect to 3,126 patents, representing only 20.1% of the total Forms 27 that should have been filed and made available with respect to the 4,312 patents studied. Figure 1 below compares the number of Forms 27 filed in each year since 2009 with the number of Forms 27 that should have been filed each year based on the number of mobile device patents in force from year to year.

Figure 1

Actual vs. Required Form 27 Filings, by year (based on number of mobile device patents in force)

As shown in Figure 1, Form 27 filings have fallen well below the required number every year. In 2009, the first year in which Forms 27 were filed in any numbers, only 36 Forms were filed, representing only 2.8% of the 1,302 Forms that should have been filed based on the number of mobile device patents in force that year. By 2013, the number of Forms filed rose to 2,389, representing 70.7% of the 3,379 Forms that should have been filed. This ratio declined again in 2014 to 1,392 Forms out of a total of 3,639 (38.3%). Data for 2015 and 2016 are likely incomplete given the February 2015 cutoff for patents in our study. We also expect that many of the 1,186 “missing” Forms 27 were filed more recently and have not yet been uploaded by the IPO in a searchable format.

One possible explanation for the beginning of filings in 2009 and the significant jump in filings in 2013 may be the Controller’s public notifications of the need to file Forms 27 in 2009 and 2013.

Figure 2 below illustrates the number of issued patents in the mobile device sector for which Forms 27 were found and missing, categorized by patent holder (assignee). Complete data is contained in the Appendix, Table A1.

Figure 2

Forms 27 (Identified and Missing) Per Assignee

As shown in Figure 2, missing Forms 27 were distributed among most holders of Indian patents in the mobile device sector. Of the 40 firms identified as holding issued mobile device patents, Forms were missing for 37 of these (92.5%). In most cases, more Forms 27 were found than missing. In a few cases, however (most notably Philips), more Forms 27 were missing than found. In the case of four large patent holders (Qualcomm, Siemens, Philips and Samsung), more than 100 Forms 27 were missing. Forms 27 were missing for patents with issuance dates ranging from 2004 to 2015.

There are several possible reasons that Forms 27 may not have been identified for all issued Indian patents. One possibility, is non-compliance by the patent holder. This is likely the case with respect to the early years (2009-2010), when filing requirements were not yet normalized. However, in more recent years, the following factors suggest that patent holder non-compliance is not a significant cause of missing Forms 27 in the IPO database: (1) Forms 27 were missing for nearly all patent holders across the board, (2) large patent holders filed hundreds of Forms 27 and were clearly aware of their filing requirements, (3) the incremental cost of filing Forms 27 is minimal, and (4) in most cases, large patent holders simply copy text from one form to another (not in itself ideal, see below), requiring little incremental effort to file additional forms. Rather, given our experience with IPO during this study (see Methodology, above), we expect that the missing forms are due largely to the IPO’s failure to upload Forms 27 to its web site in a timely and reliable manner, and the dropping of Forms 27 once uploaded.

B. Working Status

As noted above, we reviewed 4,935 Forms 27 filed with respect to 3,126 patents in the mobile device sector. Figure 3 below illustrates the number of patents for which Forms 27 were filed and which the assignee designated that the patent was worked versus not worked (or, in a few cases, made no indication of working status).

Figure 3

Working Status, by Assignee

These results suggest that different patentees have developed significantly different strategies regarding their Form 27 filings. For example, Qualcomm, the largest holder of patents in the mobile device sector (1,298 patents, 993 of which have associated Forms 27), represents that nearly all of its patents (986, 99.3%) are being worked. Samsung, on the other hand, holds the second-highest number of patents (551 patents, 430 of which have associated Forms 27). Yet Samsung claims that it is working only 12 of its patents (2.3%). Clearly, these two patentees are employing different strategies regarding the declaration of working. A glance at Figure 3 suggests that some patentees such as RIM (now renamed Blackberry) follow Qualcomm’s approach of declaring most patents to be worked, while others (Ericsson, LG, Motorola, Panasonic, Philips, Siemens) follow Samsung’s approach and declare most patents not to be worked.

Of course, one might reason that there may be some difference between the patents themselves, and that the patentees’ declarations may simply reflect the fact that some firms’ patents are used more pervasively in India. This conjecture, however, is unlikely. Most of the patentees studied are large multinationals whose patents cover the same products. Many of these patents are declared as essential to the same technical standards. Moreover, given the generally ambiguous evidence proffered by patentees supporting their designated working status (see Part III.C, below), we doubt there are substantial enough differences among the patentees’ portfolios to account for the significant divide in declarations of working status.

C. Descriptive Responses

As noted above, Form 27 requires the patentee to disclose whether or not a patent is being worked in India. If so, the patentee must disclose the number and amount of revenue attributable to products covered by the patent that are manufactured in India and are imported from other countries. If the patent is not being worked, the patentee must explain why and describe what steps are being taken to work the invention. In both cases, the patentee must also identify licenses and sublicenses granted and state how it is meeting public demand for products at a reasonable price.

As first observed by Basheer, there is widespread non-compliance with these reporting and disclosure requirements. We largely confirm this result. Below is a summary of our findings with respect to the descriptive responses for the 4,935 Forms 27 that we reviewed.

1. Working Status Not Disclosed

For a surprising number of Forms 27 (95 or 3%), the working status of the relevant patent was not designated (i.e., neither the box for “worked” nor “not worked” was checked by the patentee). Table 1 below shows the patentees that filed Forms 27 in this manner.

Table 1

Forms 27 Failing to Disclose Working Status

Clearly, these sophisticated multinational firms understood the filing requirements for Form 27 and, in most cases, filed additional Forms 27 that did indicate whether the relevant patent was or was not being worked. Thus, the principal reason for filing a Form 27 without designating its working status appears to be the patentee’s uncertainty regarding the patent’s working status in India.

Illustrating this point, Motorola declares in several of its Forms of this nature that “[i]t is not possible to determine accurately whether the patented invention has been worked in India or not, due to the nature of the invention.” While Motorola fails to explain how “the nature of the invention” makes it impossible to determine whether or not the patent is being worked, it uses this litany in most of its Forms 27 that fail to disclose working status. Ericsson adopts a slightly different approach, stating that while it is actively seeking opportunities to work the patent, there may have been some uses of the patented technology. Thus, again, it is uncertain whether the patent is being worked or not. Presumably, these patentees felt that it was preferable to file an incomplete, rather than incorrect, Form 27.

Interestingly, most patentees never revised their working non-designations over the years. Thus, if a patent was not designated as worked or not worked in the first year a Form 27 was filed, subsequent filings for that patent typically duplicated the language of prior years’ filings. One exception appears to be Google, which acquired Motorola’s patent portfolio in 2012. For Indian Patent No. 243210 issuing in 2010, Motorola filed Forms 27 in 2010 and 2011 without indicating whether or not the patent was worked. However, in 2013, Google/Motorola filed a Form 27 for the same patent indicating that it was not worked.

Google has elected to opt for non-working when it is uncertain of the working status of a patent. For example, the following qualified language is used in several Forms in which Google indicates that a patent is not being worked:

Based on a reasonable investigation, it is Google’s belief that the patent has not been worked in India. The uncertainty arises because Google’s products and services are covered by numerous patents belonging to Google’s very large worldwide patent portfolio, and Google does not routinely keep track of which individual patent is being employed in Google’s products and services. The present statement is being filed on the basis of Google’s current estimation, but Google requests opportunities to revise the statement, should it transpire at a later date that the patent is being worked contrary to their present belief.

2. Patents Not Worked

We examined a total of 2,380 Forms 27 that indicated the relevant patents were not being worked. If a patent is specified as not being worked, the patentee must disclose the reasons for the failure to work the patent, and describe what steps are being taken to work the invention.

In a small number of cases, the patentee offered some plausible explanation for non-working of the patent. The most common of these, claimed by in Ericsson in thirty-six Forms 27, was that the underlying technology was still under development, making working impossible, at least until that development was completed. In a handful of other Forms 27 (6), Ericsson and Nokia have claimed that a patent was not being worked because it covered a technology awaiting approval or endorsement by a standards body. In the vast majority of cases, however, no explanation is offered as to why a particular patent is not being worked.

With respect to disclosure of the patentees’ plans for working a non-worked patent, most simply include stock language stating that they are “actively seeking” or “on the lookout for” commercial working opportunities in the future. Alcatel-Lucent adopted an even more passive and non-specific stance toward its plans to work patents, stating in numerous Forms 27 (applicable to 29 patents) that “as and when there is a specific requirement, the patent will be worked.”

3. Varied Interpretations of Working

We reviewed 2,425 Forms 27 that listed the subject patent as being worked. In such cases, the patentee must disclose the number and amount of revenue attributable to products covered by the patent, whether manufactured in India or imported from other countries. A tiny percentage of the Forms 27 that we reviewed provided this information in the form requested. As we discuss in our conclusions, below, it is likely that the format of the required response is simply unsuitable for complex products such as mobile devices. Below we summarize and classify the types of responses that patentees offered regarding the working of their patents.

a. Specific Information ñ Very few Forms 27 actually provide the specific product volume and value information required by the Form. The only patentee that provided the specific information required by Form 27 was Panasonic, which, with respect to the only two patents that it claimed to work (of a total of 66 Indian patents as to which a Form 27 was found), listed specific product volumes and values.

Other patentees disclosed specifics regarding the technical details of their worked patents, but declined to provide product volume and value information. For example, Ericsson discloses: “the stated patent covers a specific detail of data transmission to a mobile in a GSM or WCDMA mobile network where said transmission of data is not performed if the mobile has not enough battery capacity left for the transfer.” Ericsson goes on, however, to explain that because this patented technology is intended to be used in conjunction with other patented technologies, it is not possible to provide the financial value of the worked patent “in isolation.” Oracle also adopts this approach of offering specific product information, while declining to estimate associated sales volume or revenue.

b. Relevance to a Standard ñ In several cases, a patentee describes its patented invention by reference to an industry standard. For example, Nokia-Siemens utilize the following description for one patent that is allegedly worked: “Invention relevant for IEEE 802.16-2009 and IEEE 802.16-2011 standard.” While the patentee offers no additional information regarding the working of the patent, the desired implication, presumably, is that the patent covers an aspect of the standard, and if the standard is implemented in products sold in India (as it likely is), then the patent is thereby worked.

Some patentees offer less specific information regarding the standards that their patents cover. For example, Ericsson states in one Form that “This patent is essential for a 3rd Generation Partnership Project (3GPP) standard and Ericsson is also, subject to reciprocity, committed to make its standard essential patents available through licensing on fair, reasonable and Non-discriminatory (FRAND) terms.” In this formulation, the patentee appears both to be implying working of the patent by virtue of the implicit inclusion of the standard in Indian products, and also to be making known its willingness to enter into licenses in the future on FRAND terms. This future-looking perspective, however, is not responsive to the information called for by Form 27 for patents that are allegedly being worked, and implies that the patent is not, in fact, being worked yet in India.

c. Indian Licensees ñ Some licensees, Qualcomm in particular, disclose that they have licensed their patents to Indian firms. These licenses are disclosed in Qualcomm’s Forms 27 for various patents. However, it is not clear what manufacturing or other activity is carried out by these Indian licensees. Ericsson, which has been engaged in litigation with numerous Indian and Chinese vendors of mobile devices in India, reports that it is receiving royalties from at least two of these entities under court order, though it stops short of stating that these entities are licensed under Ericsson’s patents.

d. Worldwide Licensees ñ In addition to Indian licensees, Qualcomm discloses that, as of 2014, it had granted worldwide CDMA-related patent licenses to more than 225 licensees around the world, and that CDMA-based devices were imported into India from “countries such as Canada, China, Finland, Germany, Italy, Japan, Korea, Switzerland, Taiwan, and the United States.” While Qualcomm is not specific regarding the linkage, if any, between its worldwide licensees and mobile devices sold in India, it reports that more than 37.7 million CDMA-based mobile devices were sold in India in 2014 at an average price of USD $161.94. And though not express, the implication of these data is that all CDMA-based mobile devices sold in India somehow utilize Qualcomm’s patented technology.

The granting of worldwide licenses raises an interesting question regarding local working of patents. As Ericsson (which claims to have executed more than 100 patent licensing agreements) explains, its global licensees are, by definition, licensed in every country, including India. Because their global license agreements “are operational in India”, the licensees are theoretically authorized to work Ericsson’s patents in India. But it is not clear that this means that the patents are actually being worked in India. Simply granting a worldwide patent license does not mean that the licensed patent is being worked, just as the issuance of a patent in a country does not mean that the patent is being worked in that country.

e. Too Big to Know ñ Some patentees claim that they or their patent portfolios are simply too vast to determine how particular patents are being worked in India, or the number or value of patented products sold in India. Nokia, for example, uses the following language in 82 separate Form 27 filings: “Nokia’s products and services are typically covered by tens or hundreds of the nearly 10,000 patents in Nokia’s worldwide portfolio. Nokia does not keep records of which individual patents are being employed in each of Nokia’s products or services, and is therefore unable to report the quantum and value of its products or services which employ the patented invention.”

In a similar vein, Ericsson notes that its patented technologies are intended to be used in combination with a large number of other technologies patented by Ericsson and others. Accordingly, “it is close to impossible to prove an indication of specific or even close to accurate financial value of the said patent in isolationÖ” This said, Ericsson goes on to disclose its total product sales in India (3.09 billion SEK in 2013) and also notes that it earns revenue from licensing its patents (without disclosing financial data).

f. On the Lookout ñ Curiously, some patentees that claim to be working their patents use the same language regarding their search for working opportunities as they and others use with respect to non-worked patents. For example, Ericsson makes this statement regarding some of the patents that it is allegedly working in India: “The patentee is in the lookout for appropriate working opportunities in a large scale although there may have been some use of the patented technology in conjunction with other patented technologies.” This language is uncertain and does not seem to support a claim that, to the patentee’s knowledge, the patent is actually being worked. At best, it expresses optimism toward the possibility of finding an opportunity to work the patent in the future.

g. Information Provided Upon Request ñ Some patentees decline to provide any information about the working of their patents in Forms 27, but offer to provide this information if requested (presumably by a governmental authority). Some patentees further explain their hesitation to provide this information in Form 27 on the basis that the information is confidential, but commit to provide it if requested.

h. Corporate PR ñ Some patentees, in addition to, or in lieu of, providing information about their patents, offer general corporate information of a kind that would often be found in corporate press releases and annual reports. For example, Research in Motion offers this glowing corporate report in lieu of any information about its allegedly worked patents:

Patentee is a leading designer, manufacturer and marketer of innovative wireless solutions for the worldwide mobile communications market. Through the development of integrated hardware, software and services that support multiple wireless network standards, the patentee provides platforms and solutions for seamless access to time-sensitive information including email, phone, SMS messaging, internet and intranet-based applications. Patentee’s technology also enables a broad array of third party developers and manufacturers to enhance their products and services with wireless connectivity. Patentee’s portfolio of award-winning products, services and embedded technologies are used by thousands of organizations around the world (including in India) and include the Blackberry wireless platform, the RIM Wireless Handheld product line, software development tools, radio-modems and software/hardware licensing agreements.

RIM then goes on to explain that it has so many patents that identifying how the instant patent is worked in India is impossible (see “Too Big to Know” above).

Ericsson likewise offers a bit of self-serving corporate history in twenty-eight different Forms 27 in which it states:

Ericsson’s history in India goes back 112 years during which period Ericsson has contributed immensely to the telecommunication field in India. Ericsson provides, maintains and services network for several major government and private operators in India. At present, Ericsson has more than 20,000 employees across 25 offices in India. Further, Ericsson has established manufacturing units, global service organization and R&D facilities in India…

i. Just Don’t Know ñ Some patentees simply assert that they are unable to determine information regarding working of their patents, without any explanation why. Alcatel-Lucent, for example, offers the following unsatisfying disclosure with respect to the eight patents that it claims to be working in India: “The patentee is unable to particularly determine and provide with reasonable accuracy the quantum and value of the patented invention worked in India, including its manufacture and import from other countries during the year 2014.”

j. No Description ñ Some patentees simply omit to provide any information whatsoever regarding the working of their patents, even when patents are allegedly worked.

4. Changes in Status

While some of the “boilerplate” responses provided by patentees in their filed Forms 27 might suggest that patentees give little thought to the content of Form 27 filings, we identified a small but non-trivial number of patents (4.1%) as to which the patentee changed the working status, either from worked to not worked, or vice versa. Overall, we identified 128 instances in which the working status of a patent was changed from one year to the next. Of these, 51 went from worked to not worked, and 77 went from not worked to worked. Such changes suggest that patentees give at least some thought to the manner in which they work their patents, and seek to correct inaccurate disclosures, though these observed variances could also be attributed to changes in law firm, changes in interpretation of filing requirements or mere clerical errors and inconsistencies in filings from year to year.

In 17 cases, the status of the same patent changed twice over the course of three or more Forms 27. Almost all of these three-stage “flip-flops” moved from worked to not worked to worked, with the aberrant ‘not worked’ year occurring in 2013. In fact, 2013 seems to have been a popular year for changes in working status, whether because of heightened awareness, and therefore greater scrutiny of Form 27 filings due to the Controller General’s public notice of that year, or changes in interpretation of filing requirements occasioned by a widely-attended seminar or article. But whatever the cause, it seems highly unlikely that, over the course of three years, a single patent could go from being worked in India, to not being worked, to being worked again. As a result, we attribute these flip-flop changes primarily to filing errors and inconsistencies rather than genuine attempts to correct inaccurate disclosures.

Corresponding to changes in working status, patentees often changed the textual descriptions of working or non-working contained in their Forms 27. These changes usually involved adding stock language regarding working or non-working to a Form 27 that previously contained no descriptive information. However, in some cases the patentee’s descriptive text bears little relation to the purported working status of the patent. For example, as illustrated in Table 2 below, a single patentee’s disclosures with respect to two different patents across three filings employ the same textual descriptions but for different working status.

Table 2 Comparison of Working Status Descriptions

As illustrated by Table 2, the patentee’s working description (Text A) is identical in 2011 and 2014 for both patents, though in 2014 one patent is allegedly worked and the other is not. Likewise, in 2013, one patent is worked and the other is not, yet the textual description for both is identical (Text B). Putting aside, for a moment, the fact that neither Text A not Text B is particularly responsive to the information requirements of Form 27, it is puzzling why the patentee would use the same stock language to describe both working and non-working of its patents. The only consistency that emerges from this example is across filing years, suggesting, perhaps, that the textual descriptions used in these forms was more dependent on the person or firm making the filing in a particular year than the alleged working status of the patents in question.

IV. Discussion and Analysis

Professor Basheer charges that significant numbers of Forms 27 are “grossly incomplete, incomprehensible or inaccurate,” and has sued the Indian Patent Office to compel it to improve its monitoring and enforcement of Form 27 filings. Our results confirm that there are overall weaknesses in the Indian Form 27 system, several of which reveal deeper problems with the implementation of India’s patent working requirement.

A. Process Weaknesses

Though filings in support of India’s patent working obligation have been required since 1972, and Form 27 has been on the books since 2003, meaningful filings of Form 27 did not begin until the Controller’s first public notice on this topic in 2009. In the following eight years, Form 27 filings have increased, but are still well below required levels (see Part III.A, above). Even at their peak in 2013, we located only 70.7% of required Forms 27 in the mobile device sector, a sector characterized by sophisticated firms that are advised by counsel. Filing ratios were significantly lower in every other year.

There are several possible reasons for these discrepancies. First are possible issues with the IPO’s electronic access to records. As noted in Part II, we experienced significant difficulties obtaining Forms 27 through the IPO’s web site. It was only after two RTI requests that significant numbers of Forms 27 were made accessible online. It is possible that the IPO has additional Forms 27 in its files that have not been made accessible electronically. For a system the purpose of which is to make information about non-worked patents available to the public, such lapses are inexcusable, particularly given that India’s current working requirement is nearing its 50th anniversary. Accordingly, we expect that improvements to the IPO’s electronic filing and access systems may improve the profile of Form 27 filing compliance.

B. Non-Enforcement and Non-Compliance

As noted above, we expect that some portion of the apparent non-compliance with India’s Form 27 requirement is attributable to the inaccessibility of properly filed Forms 27. However, it is also likely that some portion of the deficit in available Forms 27 is due to actual non-compliance by patentees. Though there are stiff penalties on the books for failing to comply with Form 27 filing requirements, including fines and imprisonment, we are unaware of any enforcement action by the IPO or any other Indian governmental authority regarding such non-compliance.

Given that records of all issued Indian patents are available online, and that all filed Forms 27 should also be available online, it would not seem particularly difficult for the IPO to implement an automatic monitoring and alert system warning patentees that they have not filed required Forms 27. Such a system would likely increase compliance substantially. However, we find no evidence that the IPO monitors or otherwise keeps track of Form 27 filings or seeks to contact patentees who fail to meet their filing requirements. As a result, it is not surprising that non-compliance is widespread.

C. Uncertainty Surrounding Working and Complex Products

When Forms 27 are filed, many of them lack any meaningful detail regarding the manner in which patents are worked or the reasons that they are not worked. While the descriptive requirements of Form 27 are quite clear, even the largest and most sophisticated patentees seemingly struggle with determining whether or not a patent is actually worked in India and, if so, how to quantify its working in the manner required by the Form. There are several reasons that this degree of uncertainty exists. First, India has no clear statutory, regulatory or judicial guidelines for interpreting its working requirement. As the court noted in Natco, the working determination must be made on a case by case basis, with attention to the specific details of the patent in question. This open-ended standard offers little guidance to firms regarding the degree to which importation or licensing may qualify as working a patent, or even what degree of assembly, packaging or distribution within India will so qualify.

Additionally, some patentees have taken the position in their Forms 27 that merely licensing a patent to an Indian firm qualifies as working the patent in India. Some have even gone so far as to take the position that granting a worldwide patent license qualifies as working the licensed patent in India, given that India is part of the world. These conclusions seem stretched, but they have not, to our knowledge, ever been challenged by the IPO or any private party.

What’s more, several patentees take the position that it is impossible to determine the value attributable to a single patent that covers only one element of a complex standard or product (“too big to know”). While these patentees may disclose the size of their large patent portfolios or total Indian product revenues, these figures do not provide the information required by Form 27 relative to the individual patent that is claimed to be worked.

Given the degree of uncertainty surrounding the Indian working requirement and how it is satisfied, it is not surprising that the disclosures contained in most Forms 27 are meaningless boilerplate that convey little or no useful information about the relevant patents or products. Moreover, it is questionable whether it is even possible for a willing patentee to provide the product and revenue information currently required by Form 27 for complex, multi-patent products such a mobile devices. It may be time for the IPO to revisit the information requirements of Form 27, which were seemingly developed with products covered by one or a handful of patents in mind, to more suitable address complex electronic and communications products that may be covered by hundreds or thousands of patents each.

D. Strategic Behavior

In an environment of extreme uncertainty and low enforcement, it is not surprising that patentees have developed self-serving strategies to achieve their internal goals while arguably complying with the requirements of Form 27. Evidence of strategic behavior can be seen clearly in the divide between those patentees that claim that they are working most of their patents and those that claim that they are not. We can assume that there are not significant differences in the portfolio make-up among these different patentees, so the large difference between their ratios of worked and non-worked patents must be attributable primarily to decisions made to further corporate interests.

For example, it is possible that those patentees claiming significant working of their patents do so in order to avoid requests for compulsory licenses against their patents. Such patentees may wish to exploit the Indian market themselves, or license others to do so on terms of their choosing, so may seek to avoid compulsory licensing on terms dictated by the government. Those patentees claiming significant non-working, on the other hand, may actively be seeking applications for compulsory licensing. Why? Perhaps because these patentees do not plan to sell products in India and see little prospect of entering into commercial license agreements with Indian producers. Thus, their greatest prospect of any financial return on their patents may be a compulsory license. As unlikely as it sounds, they may be using Form 27 as a legally-sanctioned “To Let” sign for otherwise unprofitable patents.

Whatever the underlying reasons are for patentee strategic decisions in the filing of Forms 27, IPO owes the public greater clarity regarding the formal requirements for working patents in India. It is only when disclosures are made in a consistent and understandable format that the public will acquire the knowledge about patent working that the Act intends for them to receive.

E. Opportunities for Further Study

This is the first comprehensive and systematic study of reporting compliance with India’s patent working requirements. It covers only one industry sector: mobile devices. Expanding this study to additional industry sectors, particularly pharmaceuticals and biomedical products, would likely yield additional insights.

It would also be informative to revisit the instant set of patents in a few years time to determine whether increased IPO access to electronic records may alter the somewhat poor compliance landscape revealed by this study. That is, if a significant number of Forms 27 that have been filed are simply unavailable through the IPO’s web site, then hopefully continued information technology improvements at the IPO will improve availability in years to come.

Conclusion

India’s annual Form 27 filing requirement is intended to provide the public with information regarding the working of patents in India so as to enable informed requests to be made for compulsory licenses of non-worked patents. While such a goal is laudable, it is not clear that this system is currently achieving the desired results.

In the first systematic study of all Forms 27 filed with respect to a key industry sector ñ mobile devices ñ we found significant under-reporting of patent working, likely due to some combination of systemic deficiencies and non-compliance by patentees. Thus, from 2009 to 2016, we could identify and access only 20.1% of Forms 27 that should have been filed in this sector, corresponding to 72.5% of all mobile device patents for which Forms 27 should have been filed. Forms 27 were missing for almost all patentees, suggesting that defects in the Indian Patent Office’s online access system may play a role in the unavailability of some forms.

But even among Forms 27 that were accessible, almost none contained useful information regarding the working of the subject patents or fully complying with the informational requirements of the Form and the Indian Patent Rules. Patentees adopted drastically different positions regarding the definition of patent working, some arguing that importation of products into India or licensing of Indian suppliers constituted working, while others even went so far as to argue that the granting of a worldwide license to a non-Indian firm constituted working in India. Several significant patentees claimed that they or their patent portfolios were simply too large to enable the provision of information relating to individual patents, and instead provided gross revenue and product sale figures, together with historical anecdotes about their long histories in India. And many patentees simply omitted required descriptive information from their Forms without explanation.

The Indian government has made little or no effort to monitor or police compliance with Form 27 filings, likely encouraging non-compliance. Moreover, some of the complaints raised by patentees and industry observers regarding the structure of the Form 27 requirement itself have merit. Namely, patents covering complex, multi-component products that embody dozens of technical standards and thousands of patents are not necessarily amenable to the individual-level data requested by Form 27. We hope that this study will contribute to the ongoing conversation in India regarding the most appropriate means for collecting and disseminating information regarding the working of patents.

APPENDIX

TABLE A1

Professor, University of Utah S.J. Quinney College of Law and Senior Fellow, Centre for International Governance Innovation. JD (Harvard Law School), BSEE, BA (Rice University). The authors are grateful for constructive discussion and feedback at the 2016 Works in Progress in Intellectual Property conference at University of Washington, the 2017 International Intellectual Property Roundtable at NYU Law School, the 2017 Intellectual Property Scholars Conference (IPSC) at Cardozo Law School, the Second International Conference on Standardization, Patents and Competition Issues at Jindal Global Law School, and a faculty workshop at the University of Utah S.J. Quinney College of Law. We also thank Anubha Sinha, Shamnad Basheer, Nehaa Chaudhari, Kirti Gupta, Kshitij Kumar Singh, Marketa Trimble and Sai Vinod for their helpful input regarding this article, and Anna Liz Thomas and Nayana Dasgupta for valuable research assistance. The research for this article was conducted as part of the Pervasive Technologies Project at the Centre for Internet and Society, India, and has been supported, in part, by the International Development Research Centre (Canada), the Albert and Elaine Borchard Fund for Faculty Excellence at the University of Utah and Google, Inc. The views expressed in this article are solely those of the authors.

Program Officer, Centre for Internet and Society, India. Bachelor of Instrumentation Engineering (University of Mumbai).

Law Clerk, Supreme Court of Utah. JD (University of Utah S.J. Quinney College of Law), BS, BA (Butler University).

Natco Pharma Ltd. v. Bayer Corp., (2011) I.P.O. Order No. 1, at 6 (India).

See id.

The Natco case is one in a long line of cases in the ongoing “access to medicines” dispute, in which developing countries seek compulsory licenses for local use of lifesaving drugs that are patented by western pharmaceutical firms. See, e.g., Srividhya Ragavan, Patent and Trade Disparities in Developing Countries (2012); Charles R. McManis and Jorge L. Contreras, Compulsory Licensing of Intellectual Property: A Viable Policy Lever for Promoting Access to Critical Technologies?, in TRIPS and Developing Countries ñ Towards a New IP World Order? (Gustavo Ghidini, Rudolph J.R. Peritz & Marco Ricolfi, eds. 2014); Jerome H. Reichman, Comment: Compulsory Licensing of Patented Pharmaceutical Inventions: Evaluating the Options, 37 J. L. Med. & Ethics 247, 250 (2009).

Natco Pharma Ltd. v. Bayer Corp., supra note at 6.

See Patents Act, No. 39 of 1970, India Code (1970), ch. XVI, ß 84(1).

See Rochelle Dreyfuss & Susy Frankel, From Incentive to Commodity to Asset: How International Law Is Reconceptualizing Intellectual Property, 36 Mich. J. Int’l L. 557, 576 (2015); See also Feroz Ali, Picket Patents: Non-Working as an IP Abuse, at *5, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2732521 (last visited Feb. 6, 2017); see also Bryan Mercurio & Mitali Tyagi, Treaty Interpretation in WTO Dispute Settlement: The Outstanding Question of the Legality of Local Working Requirements, 19 Minn. J. Int’l L. 275, 281 (2010).

Marketa Trimble, Patent Working Requirements: Historical and Comparative Perspectives, 6 U.C. Iʀᴠɪɴᴇ L. Rᴇᴠ. 483, 500-501 (2016).

Id. at 495.

Jorge L. Contreras & Rohini LakshanÈ, Patents and Mobile Devices in India: An Empirical Survey, 50 Vand. Transnat’l L.J. 1 (2017). The data set used in the foregoing study can be found at https://cis-india.org/a2k/blogs/dataset-patent-landscape-of-mobile-device-technologies-in-india.

Trimble, supra note , at 488. In England, royal patents were granted to foreigners who would teach their art to the local population. Id. at 488, 497. Venice provided monopoly rights and tax holidays for foreign inventors to immigrate and improve local industrialization. Ragavan, supra note , at 3.

See Ragavan, supra note , at 3; see also G.B. Reddy & Harunrashid A. Kadri, Local Working of Patents ñ Law and Implementation in India, 18 J. Intell. Prop. Rights 15, 15 (2013).

See Ragavan, supra note , at 3; see also Trimble, supra note , at 488.

See Ragavan, supra note , at 3; see also Reddy & Kadri, supra note , at 16.

See Reddy & Kadri, supra note , at 17; see also Ali, supra note , at *9.

See generally Paul Champ & Amir Attaran, Patent Rights and Local Working Under the WTO TRIPS Agreement: An Analysis of the U.S.-Brazil Patent Dispute, 27 Yale J. Int’l L. 365, 371 (2002).

Trimble, supra note , at 498 (“In the United Kingdom in the 18th century ‘the requirement of compulsory working dropped into desuetude and its place was taken for all practical purposes, in particular in the practice of the law courts, by [the full disclosure] requirement’”) (alterations in original) (internal citations omitted).

Paris Convention for the Protection of Industrial Property, World Intellectual Property Organization, art. 5(A)(1), March 20, 1883.

See Reddy & Kadri, supra note , at 17; see also Champ & Attaran, supra note , at 371; Trimble, supra note , at 493ñ94.

Hague Revision to Paris Convention for the Protection of Industrial Property, World Intellectual Property Organization, art. (5)(A)(2), November 6, 1925.

See Champ & Attaran, supra note , at 372; see also Trimble, supranote , at *490-94 (tracing history of remedies for failure to meet working requirements, including forfeiture).

London Revision to Paris Convention for the Protection of Industrial Property, World Intellectual Property Organization, art. 5(A)(4), June 2, 1934; See Trimble, supra note , at 494.

Stockholm Revision to Paris Convention for the Protection of Industrial Property, World Intellectual Property Organization, art. 5(A)(2), July 14, 1967.

See Trimble, supra note , at 494-95; see also Janice M. Mueller, The Tiger Awakens: The Tumultuous Transformation of India’s Patent System and the Rise of Indian Pharmaceutical Innovation, 68 U. Pitt. L. Rev. 491, 517-18 (2007)..

See Trimble, supra note , at 494.

See Ragavan, supra note , at 65-66. See generally TRIPS: Agreement on Trade-Related Aspects of Intellectual Property Rights, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1c, 1869 U.N.T.S. 299, 33 I.L.M. 1197 (1994), reprinted in World Trade Organization, The Results of the Uruguay Round of Multilateral Trade Negotiations 365 (1995) [hereinafter “TRIPS Agreement”].

Additionally, those countries that were not members of the Paris Union but are members of the WTO are therefore obligated to comply with the Paris Convention and its revisions under Article 2.2 of the TRIPS Agreement.

TRIPS Agreement, supra note , art. 27.1.

TRIPS Agreement, supra note , art. 30-31; see also Ragavan, supranote ; McManis and Contreras, supra note .

See generally Trimble, supra note , at 496; Shamnad Basheer, Making Patents Work: Of IP Duties and Deficient Disclosures, 7 Queen Mary J. Intell. Prop. 3, 16-17 (2017).

Request for Consultations by the United States, Brazil ñ Measures Affecting Patent Protection, WTO Doc. WT/DS199/1 (June 8, 2000); see also Reddy & Kadri, supra note , at 17; Trimble, supra note , at 496-497.

Champ & Attaran, supra note , at 380.

Article 28(1) of the TRIPS Agreement defines the rights that may be conferred on patent owners.

Champ & Attaran, supra note , at 381-82.

Id. at 381. The two patented drugs that the Brazilian Ministry of Health threatened to grant compulsory licenses on were efavirenz and nelfinavir. These drugs are antiretroviral drugs used to treat AIDS. Geoff Dyer, Brazil Defiant Over Cheap AIDS Drugs, Fin. Times, Feb. 9, 2001, at 10.

Barbara Crossette, U.S. Drops Case Over AIDS Drugs in Brazil, N.Y. Times (June 26, 2001), http://www.nytimes.com/2001/06/26/world/us-drops-case-over-aids-drugs-in-brazil.html.

Kalyan C. Kankanala, Arun K. Narasani & Vinita Radhakrishnan, Indian Patent Law & Practice 1 (2010).

See Mueller, supra note , at 509-511; see also Ragavan, supra note , at 31.

Shri Justice N. Rajagopala Ayyangar, Report on the Revision of the Patents Law (September 1959) [hereinafter “Ayyangar Report”]; Ragavan,supra note , at 31-33.

P. Narayanan, Patent Law 5 (4th ed. 2006).

Ayyangar Report, supra note .

Ragavan, supra note , at 35.

Id. at 39-40.

See generally The Patents Act, No. 39 of 1970, India Code (1970).

See Ragavan, supra note , at 42-45 (summarizing changes effected by the 1970 law).

The Patents Act, 1970 ß 83 (emphasis added).

The Indian Controller General of Patents, Designs & Trade Marks, who will be referred to herein as the Controller for simplicity.

The Patents Act, 1970, ß 84(1) (emphasis added). The three-year time period reflected in the Act is derived from Section 5(A)(4) of the Paris Convention (current numbering). See supra note .

The Patents Act, 1970 ß 84(1).

Id. ß 90(c).

Id.

Id. ß 89(3). While the language of Section 89 is couched in terms of the “reasonable requirements of the public,” it is interesting to note that the caption of the section reads “Revocation of patents by the Controller for non-working,” thus focusing more explicitly on the working requirement.

The Patents Act, 1970 ß 89(1). The two-year time period reflected in the Act is derived from Section 5(A)(3) of the Paris Convention (current numbering). See supra note and accompanying text.

See India and the WTO, Wᴏʀʟᴅ Tʀᴀᴅᴇ Oʀɢ.,http://www.wto.org/english/thewto_e/countries_e/india_e.htm. See generally TRIPS Agreement.

India amended its 1970 Act in three amendments, corresponding to the transition periods permitted by the TRIPS Agreement. India played a significant role in establishing the TRIPS multi-year transition periods. See Mueller, supra note , at 518. For a discussion of India’s political and economic considerations underlying its support of compulsory licensing under TRIPS, see Omar Serrano & Mira Burri, Making Use of TRIPS Flexibilities: Implementation and Diffusion of Compulsory Licensing Regimes in Brazil and India (World Trade Inst. Working Paper No. 1 2016).

The Patents (Amendment) Act, No. 38 of 2002, India Code (2002).

Id. ß 85.

Id. ß 83(c).

Id. ß 83(d)-(f).

Id. ß 89.

Id. ß 84(1) (emphasis added).

Id.

Id. ß 84(6).

See Thomas Cottier, Shaheeza Lalani & Michelangelo Temmerman, Use It or Lose It: Assessing the Compatibility of the Paris Convention and TRIPS Agreement with Respect to Local Working Requirements, 17 J. Int’l Econ. L. 437, 441 (2014).

See The Patents Act, No. 39 of 1970, India Code (1970), ß 90(2) (“No license granted by the Controller shall authorise the licensee to import the patented article or an article or substance made by a patented process from abroad where such importation would, but for such authorisation, constitute an infringement of the rights of the patentee.”).

See Basheer, supra note , at 9.

Natco Pharma Ltd. v. Bayer Corp., (2011) I.P.O. Order No. 1, 5 (India).

Id. at 22.

Id. at 25 (noting that an average Indian government employee would have to work for 3.5 years to afford a single month’s dosage).

Id. at 6.

Id. at 5.

Id.

Id. at 6.

Id.

Id. at 37.

Id.

Id. at 38.

Id. at 40-41.

Id. at 43.

Id. at 45 (“I am therefore convinced that ‘worked in the territory of India’ means ‘manufactured to a reasonable extent in India.’”).

Id. at 60.

Natco Pharma Ltd. v. Bayer Corp., (2013) I.P.A.B. Order No. 45 (India).

Id.

Id. at 43.

Bayer Corp. v. Union of India, Bombay High Ct. at 29 (Jul. 15, 2014).

Id.

Id. at 24.

Id. Bayer subsequently appealed to the Indian Supreme Court, which declined to hear the case. See Samanwaya Rautray, Nexavar License Case: SC Dismisses Bayer’s Appeal Against HC Decision, Economic Times, Dec. 13, 2014, http://economictimes.indiatimes.com/industry/healthcare/biotech/pharmaceuticals/nexavar-licence-case-sc-dismisses-bayers-appeal-against-hc-decision/articleshow/45500051.cms

Harsha Rohatgi, Indian Patent Office Rejects Compulsory Licensing Application: BDR Pharmaceuticals Pvt. Ltd. vs. Bristol Myers Squibb, Khurana & Khurana (last visited Oct. 20, 2017), http://www.khuranaandkhurana.com/2013/11/13/indian-patent-office-rejects-compulsory-licensing-application-bdr-pharmaceuticals-pvt-ltd-vs-bristol-myers-squibb/.

Patralekha Chatterjee, 2013: India Battles for Right to Use Compulsory Licenses to Make Medicines Affordable, Intellectual Property Watch(last visited Oct. 20, 2017), https://www.ip-watch.org/2013/01/22/2013-india-battles-for-right-to-use-compulsory-licences-to-make-medicines-affordable/.

See Pankhuri Agarwal, DIPP Drags the Dasatinib Compulsory License Drama: A Situation of ‘Extreme Urgency’?, SpicyIP blog (Sep. 24, 2016), https://spicyip.com/2016/09/dipp-drags-the-dasatinib-compulsory-license-drama-a-situation-of-extreme-urgency.html. See, e.g., IPO Order No. C.L.A. No.1 of 2015, In the matter of Lee Pharma Ltd v. AstraZeneca AB, dated January 19, 2016 (rejecting application due to lack of evidence presented under all three prongs of Section 84 analysis).

For example, Article 68 of Brazil’s 1996 Industrial Property Law subjects a patentee to compulsory licensing if the patentee does not exploit “the object of the patent within the Brazilian territory for failure to manufacture the product or failure to use a patented process.” 68 C.P.I., Law No. 9,279 (Brazil, May 14, 1996). For additional examples, See Cottier et al., supra note , at 461-71.

While form submissions to show the working of a patent are unique to India’s patent law, a submission requirement to maintain intellectual property rights is similarly used in the United States for trademarks. In the United States, registered trademark owners must submit a declaration of use to avoid cancellation of the registration. See 15 U.S.C. ß 1058.

The Patents Act, No. 39 of 1970, India Code (1970), ß 146(2).

Id.

The Patent Rules, Rule 131, India (2003).

The Patent Rules, Rule 131, India (2003). There is an apparent discrepancy between section 146(2) of the India Patents Act, 1970 and Rule 131 of the Patent Rules, 2003. While section 146 suggests that patentees should file Forms 27 every six months, Rule 131 of the Patent Rules, 2003 requires the statements to be furnished in respect of every calendar year.

The Patents Act, No. 39 of 1970, India Code (1970), ß 146(2).

The public requirement refers to “the reasonable requirements of the public with respect to the patented invention.” The Patents (Amendment) Act, No. 38 of 2002, India Code (2002), ß 84(1)(a). In other words, if the patentee must explain how he has or has not met his duties under section 83 and 84 of the Patents Amendment Act of 2002.

Patents Rules, Form 27, 2003.

The Patents (Amendment) Act, No. 38 of 2002, India Code (2002), ß 122 provides:

“1) If any person refuses or fails to furnish-Ö b) to the controller any information or statement which he is required to furnish by or under section 146,

he shall be punishable with [a] fine which may extend to twenty thousand rupees.

2) If any person, being required to furnish any such information as is referred to in sub-section (1), furnishes information or statement which is false, and which he either knows or has reason to believe to be false or does not believe to be true, he shall be punishable with imprisonment which may extend to six months, or with fine, or with both.”

Annual Report 2007-08, Office of the Controller General of Patents, Designs, and Trade Marks including GIR and PIS/NIIPM (IPTI), at 12; see also Reddy & Kadri, supra note , at 21.

Annual Report 2008-09, Office of the Controller General of Patents, Designs, Trade Marks and Geographical Indications, at 21; Annual Report 2007-08, Office of the Controller General of Patents, Designs, and TradeMarks including GIR and PIS/NIIPM (IPTI), at 12; see also Reddy & Kadri, supra note , at 21-22.

Controller Gen. of Patents, Designs and Trade Marks, Public Notice No. CG/PG/2009/179, Dec. 24, 2009; Controller Gen. of Patents, Designs and Trade Marks, Public Notice No. CG/Public Notice/2013/77, Feb. 12, 2013; Controller Gen. of Patents, Designs and Trade Marks, Public Notice No. CG/Public Notice/2015/95, 2015.

The Patents Act, No. 39 of 1970, India Code (1970), ß 122. (A patentee may be imprisoned for submitting false information).

Reddy & Kadri, supra note , at 22; see also Shamnad Basheer v. Union of India, Writ Petition, at F (Del. 2015) [hereinafter Basheer Writ Petition (2015)] (“[T]he Respondents authorities have never initiated action against any of the errant patentees.”).

Prashant Reddy, Patent Office Publishes All ‘Statements of Working’ ñ Finally!, Spicy IP, (June 25, 2013) https://spicyip.com/2013/06/patent-office-publishes-all-statements.html.

See, e.g., Basheer Writ Petition (2015), supra note (raising numerous deficiencies with Form 27); Shamnad Basheer & N. Sai Vinod RTI Applications and ‘Working’ of Foreign Drugs in India, Spicy IP, at 5 (Apr., 2011) (“However, Form 27 in its present format leaves much to be desired and we will be drafting a more optimal Form 27 and forwarding this to the government for consideration, so that the form can be a lot more clearer and can call for a greater range of information.”).

Letter from Philip S. Johnson, President, Intellectual Prop. Owners Assn., to Hon. Michael Froman, U.S. Trade Representative (Feb. 7, 2014).

Id.

Prathiba Singh & Ashutosh Kumar, When in Rome, do as the Romans do, IP Pro Life Sciences at 16, (Mar. 10, 2013)http://ipprolifesciences.com/ipprolifesciences/IPPro%20Life%20Sciences_issue_04.pdf.

Among other things, Prof. Basheer is the founder of the SpicyIP blog, a leading source of intellectual property news and commentary in India. SeePart III.A, infra, for a discussion of the results of his studies of Form 27 compliance.

Basheer & Vinod, supra note , at 6-8.

Basheer Writ Petition (2015), supra note .

Id. at 1, 8.

Shamnad Basheer v. Union of India, Writ Petition No. 5590 (Del. 2015), Application Seeking Permission to Intervene in the Above Public Interest Litigation (2016). Some of the issues raised by Mr. Thappeta are discussed in Part IV below.

Bayer Corp. v. Union of India, Writ Petition No. 1323 of 2013, Judgment at 8ñ10 (Jul. 15, 2014).

Basheer, supra note , at 17.

Indian Patent Office reporting year (Apr. 1 – Mar. 31).

See supra note .

Basheer & Vinod, supra note .

This study pre-dates the electronic availability of Forms 27.

Basheer & Vinod, supra note , at 7-8.

Basheer Writ Petition (2015), supra note , at Annexure P-11, tbl. I. It is not clear how the studied patents were selected. They do not represent the totality of patents in the designated industry sectors. Likewise, it is not clear how “publicly-funded research” is defined nor the amount of such funding behind the selected patents.

It appears that this study covered three “reporting years” at the IPO: 2009-10, 2010-11 and 2011-12. Reporting years run from April 1 to March 31.

This figure is calculated as 1 – 263/421. Prof. Basheer has reported this ratio as approximately 35%. Basheer, supra note , at 18.

Basheer Writ Petition (2015), supra note , at Annexure P-11, tbl. I.

Id. at 10.

Id. at 10-16; Basheer, supra note , at 19.

Basheer, supra note , at 12-13.

See Contreras & LakshanÈ, supra note , at 27-28 (describing electronic search and case harvesting methodology).

Searches were conducted and results were compiled by a contracted Indian service provider selected through a competitive bid process.

While InPASS and IPAIRS retrieve Form 27 submissions from the same URL, we observed that sometimes a submission that was displayed on data base was not displayed on the other. Thus, IPAIRS was used when Form 27 was not found for a queried patent on InPASS. InPASS has two features: Application Status and E-Register. At times, some forms were not available at E-Register that could be found through the Application Status table, and vice versa. Thus, both features were used. A detailed, step-by-step description of the search methodology used can be found at http://cis-india.org/a2k/blogs/methodology-statements-of-working-form-27-of-indian-mobile-device-patents.

Ajoy Kumar, “Request for Information under Section 6 of the Right to Information Act, 2005; regarding Form 27 Submissions for Patents,” The Centre for Internet and Society, (June 10, 2015), https://cis-india.org/a2k/blogs/rti-app-2015.pdf/at_download/file.

Boudhik Bhawan, “Supply of information sought under RTI ñ reg,” The Centre for Internet and Society, (June 17, 2015), https://cis-india.org/a2k/blogs/rti-reply-2015.pdf/at_download/file.

Ajoy Kumar, “Request for Information under Section 6 of the Right to Information Act, 2005; regarding Form 27 Submissions for Patents,” The Centre for Internet and Society, (Mar. 11, 2016), https://cis-india.org/a2k/blogs/rti-app-2016.pdf/at_download/file.

Id.

Ujjwala Haldankar, “Supply of information sought under RTI, 2005 ñ reg,” The Centre for Internet and Society, (Apr. 4, 2016), https://cis-india.org/a2k/blogs/rti-reply-2016.pdf/at_download/file.

Rohini LakshanÈ, Dataset for “Patent Working Requirements and Complex Products: An Empirical Assessment of India’s Form 27 Practice and Compliance,” The Centre for Internet and Society (Aug. 17, 2017), https://cis-india.org/a2k/blogs/dataset-for-patent-working-requirements-and-complex-products-an-empirical-assessment-of-indias-form-27-practice-and-compliance.

Similar deficiencies with the IPO’s online filing facility have been noted by Basheer. See Basheer Writ Petition (2015), supra note , at 17.

Prior to the 2002 Amendments to the Patents Act, 1970 (effective May 20, 2003), the term of product patents in India was 14 years from the date of issuance. Patents Act (2002 Amendments), Sec. 53. Accordingly, any patent issued in 1995 or earlier would be expired by 2009. Based on the data provided by the Controller and Basheer, it appears that few, if any, Forms 27 were filed prior to 2009. Thus, it is unlikely that any patent that expired prior to 2009 would have a corresponding Form 27. As a result, for purposes of counting Forms 27 that were, and should have been filed, we disregarded 107 patents in our dataset that were issued in 1995 or earlier (the vast majority of which were owned by Siemens).

A total of 4,935 Forms 27 were identified by our search. In 2013, Motorola filed 19 Forms 27 that were backdated to 2004 and 2005. These Forms corresponded to patents issued between 2008 and 2010, and apparently reflected the patentee’s incorrect belief that Form 27 must be filed as of the date of the filing of a patent application rather than the issuance of the patent. Because the patentee also filed Forms 27 dated as of 2013 for these patents, we have disregarded these spurious filings.

Based on the data provided by the Controller and Basheer, it appears that few, if any, Forms 27 were filed prior to 2009. Thus, we assumed that Forms 27, if filed, would only have begun to be filed in 2009. As discussed in note , supra, the first patents that could be expected to have a filed Form 27 were issued in 1996 (i.e., one Form filed in 2009, the year of the patent’s expiration). Thus, beginning with patents issued in 1996, we calculated the total number of Forms 27 that could have been filed with respect to such patents beginning in 2009 and ending in 2016 (noting that we ended our study in August 2016). Thus, for patents issued in 1996 and expiring in 2009, one Form 27 could have been filed. For patents issued in 2002 to 2008, and expiring well after 2016, a total of eight Forms 27 could have been filed, in each case beginning in 2009 and ending in 2016. Patents issued in 2015 could have at most one Form 27 filed. Though Form 27 is not required to be filed until the year after a patent has been granted, some patentees have made filings in the year of grant. We counted these filings, but did not count year-of-grant filings in determining the maximum number of filings that could be made for a particular patent.

See supra text accompanying note .

It is not surprising that no forms were available for patents issued prior to 2007, the first year that the Indian Controller of Patents drew attention to the Form 27 requirement. See supra Part I.D.

For patents that had different working designations in Forms 27 filed in different years, we counted a patent to be declared as worked if at least one Form 27 so designated the patent.

See supra text accompanying note .

See Basheer Writ Petition, supra note , at 10.

Motorola, Form 27 for 243220, IɴPASS (Mar. 31, 2014), http://ipindiaonline.gov.in/frm27/2013/243220_2013/243220_2013.pdf.

Ericsson, Form 27 for 241488, IɴPASS (Feb. 3, 2012), http://ipindiaonline.gov.in/frm27/2011/241488_2011/241488_2011.pdf(“The patentee is in the look out for appropriate working opportunities in a large scale although there may have been some use of the patented technology in conjunction with other patented technologies.”).

Google, Form 27 for 243210, IɴPASS (Mar. 27, 2015), http://ipindiaonline.gov.in/frm27/2014/243210_2014/243210_2014.pdf. See infra Part III.D for a discussion of patents as to which the patentee has changed the working status over the years.

See, e.g., Ericsson, Form 27 for 209941, IɴPASS (Mar. 30, 2015), http://ipindiaonline.gov.in/frm27/2014/209941_2014/209941_2014.pdf.

See, e.g., Ericsson, Form 27 for 259809, IɴPASS (Mar. 19, 2015), http://ipindiaonline.gov.in/frm27/2014/259809_2014/259809_2014.pdf.

Ericsson, Form 27 for 227819, IɴPASS (Mar. 13, 2015), http://ipindiaonline.gov.in/frm27/2014/227819_2014/227819_2014.pdf(“The patentee is in the look out for appropriate working opportunities in a large scale”); Motorola, Form 27 for 236128, IɴPASS (Mar. 8, 2013), http://ipindiaonline.gov.in/frm27/2012/236128_2012/236128_2012.pdf(“The Patentee is actively looking for licensees and customers to commercialise the invention in the Indian environment.”).

Alcatel-Lucent, Form 27 for 258507, IɴPASS (Mar. 18, 2015), http://ipindiaonline.gov.in/frm27/2014/258507_2014/258507_2014.pdf.

Panasonic, Form 27 for 239668, IɴPASS (Mar. 21, 2014), http://ipindiaonline.gov.in/frm27/2013/239668_2013/239668_2013.pdf; Panasonic, Form 27 for 208405, IɴPASS (Mar. 21, 2014), http://ipindiaonline.gov.in/frm27/2013/208405_2013/208405_2013.pdf.

Ericsson, Form 27 for 233994, IɴPASS (Mar. 6, 2013), http://ipindiaonline.gov.in/frm27/2012/233994_2012/233994_2012.pdf.

Id.

See Oracle, Form 27 for 230190, IɴPASS (Mar. 24, 2014), http://ipindiaonline.gov.in/frm27/2013/230190_2013/230190_2013.pdf(“The methods/structures of the patent are generally related to "Asynchronous servers". This product has been sold to several businesses in India in the past few years and is believed to be used by them. Additional information will be enquired and provided to the Patent Office upon request.”).

Nokia Siemens, Form 27 for 254894, IɴPASS (Mar. 28, 2014), http://ipindiaonline.gov.in/frm27/2013/254894_2013/254894_2013.pdf.

Ericsson, Form 27 for 249058, IɴPASS (Mar. 03, 2014), http://ipindiaonline.gov.in/frm27/2013/249058_2013/249058_2013.pdf; In other Forms 27, however, Ericsson

provides significant detail regarding the standards/specifications covered by its patents.

See, e.g., Ericsson, Form 27 for 213723, IɴPASS (Mar. 16, 2016), http://ipindiaonline.gov.in/frm27/2015/213723_2015/213723_2015.pdf(citing ETSI TS 126 092 V4.0.0 (2001-03), ETSI TS 126 073 V4.1.0 (2001-12) and ETSI TS 126 093 V4.0.0 (2000-12), all of which are pertinent to the UMTS 3G standard).

See, e.g., Qualcomm, Form 27 for 251876, IɴPASS (Mar. 28, 2015), http://ipindiaonline.gov.in/frm27/2014/251876_2014/251876_2014.pdf(disclosing Indian licensee Innominds Software Pvt. Ltd.).

See Ericsson, Form 27 for 213723, IɴPASS (Mar. 16, 2016), http://ipindiaonline.gov.in/frm27/2015/213723_2015/213723_2015.pdf(referencing royalty payments from Micromax and Gionee).

Qualcomm, Form 27 for 251876, IɴPASS (Mar. 28, 2015), http://ipindiaonline.gov.in/frm27/2014/251876_2014/251876_2014.pdf.

Id.

Nokia, Form 27 for 220072, IɴPASS (Mar. 20, 2014), http://ipindiaonline.gov.in/frm27/2013/220072_2013/220072_2013.pdf.

Ericsson, Form 27 for 251757, IɴPASS (Mar 11, 2014), http://ipindiaonline.gov.in/frm27/2013/251757_2013/251757_2013.pdf.

Id.

See, e.g., Ericsson, Form 27 for 248764, IɴPASS (Mar. 23, 2012)

http://ipindiaonline.gov.in/patentsearch/GrantedSearch/viewdoc.aspx?id=gPYX0WsErIRQR3is4uM1fw%3d%3d&loc=wDBSZCsAt7zoiVrqcFJsRw%3d%3d.

See, e.g., Huawei, Form 27 for 251769, IɴPASS (Mar. 4, 2014), http://ipindiaonline.gov.in/frm27/2013/251769_2013/251769_2013.pdf(“Information not readily available; efforts will be made to collect and submit further Information, if asked for.”).

See, e.g., Hitachi, Form 27 for 226462, IɴPASS (Mar. 28, 2013), http://ipindiaonline.gov.in/frm27/2013/226462_2013/226462_2013.pdf(“Confidential Information will be provided if asked for.”).

Research in Motion, Form 27 for 261068, IɴPASS (Feb. 10, 2015), http://ipindiaonline.gov.in/frm27/2014/261068_2014/261068_2014.pdf.

Ericsson, Form 27 for 254652, IɴPASS (Mar. 21, 2016), http://ipindiaonline.gov.in/frm27/2015/254652_2015/254652_2015.pdf.

See, e.g., Alcatel-Lucent, Form 27 for 202208, IɴPASS (Mar. 27, 2014), http://ipindiaonline.gov.in/frm27/2013/202208_2013/202208_2013.pdf.

See, e.g., Ericsson, Form 27 for 235605, IɴPASS (Feb. 23, 2011), http://ipindiaonline.gov.in/patentsearch/GrantedSearch/viewdoc.aspx?id=ghLLyAj0oCzH9pUf4tY2Kw%3d%3d&loc=wDBSZCsAt7zoiVrqcFJsRw%3d%3d; Ericsson, Form 27 for 235605, IɴPASS (Feb. 6, 2012), http://ipindiaonline.gov.in/patentsearch/GrantedSearch/viewdoc.aspx?id=ghLLyAj0oCzH9pUf4tY2Kw%3d%3d&loc=wDBSZCsAt7zoiVrqcFJsRw%3d%3d; Huawei, Form 27 for

249244, IɴPASS (Mar. 11, 2013), http://ipindiaonline.gov.in/patentsearch/GrantedSearch/viewdoc.aspx?id=9BzV82RULJkFoIPZZZeH9A%3d%3d&loc=+mN2fYxnTC4l0fUd8W4CAA%3d%3d.

Basheer Writ Petition (2015), supra note , at 10.

A patentee may be imprisoned for submitting false information. The Patents Act, No. 39 of 1970, India Code, ß 122 (1970).

See Reddy & Kadri, supra note , at 22; Basheer Writ Petition (2015), supra note , at 10 (“authorities have never initiated action against any of the errant patentees.”).

See supra text accompanying notes -84.

See supra Part III.C.3.c.

See supra Part III.C.3.d.

See supra Part III.C.3.e.

For example, as of 2015, more than 61,000 patent disclosures had been made against ETSI’s 4G LTE standard, and more than 43,000 against ETSI’s 3G UMTS standard, both of which are only one of many standards embodied in a typical mobile device. Justus Baron & Tim Pohlmann, Mapping Standards to Patents Using Databases of Declared Standard-Essential Patents and Systems of Technological Classification at 20, Table 5 (Regulation & Econ. Growth, Working Paper, 2015), http://www.law.northwestern.edu/research-faculty/searlecenter/innovationeconomics/documents/Baron_Pohlmann_Mapping_Standards.pdf.

See supra Part III.B.

We thank Chris Cotropia for this insight.

421 Forms 27 were found for Motorola. This total has been reduced by the 19 Forms filed in 2013 and incorrectly backdated to 2004 and 2005.

101 Siemens patents expired prior to 1996.

For more details visit https://cis-india.org/a2k/blogs/patent-working-requirements-and-complex-products

Patent Valuation and License Fee Determination in Context of Patent Pools

vikrant — 2014-07-09T09:46:16Z

The focus of this research paper is on an extremely limited though important aspect of patent pools — that of patent valuation and license fee determination. It is important to bear in mind that the concept of patent valuation and license fee determination as it exists independently is modified when it is applied in context of patent pools.

I. Introduction

A patent pool is essentially “An agreement between two or more patent owners to aggregate (pool) their patents and to license them to one another or third parties. Pools usually offer standard licensing terms to licensees and allocate a portion of the licensing fees (royalties) to patent owners according to a pre-set formula or procedure.[1]

A patent pool particularly faces intense scrutiny by way of competition/ antitrust law and each step of structuring of a patent pool has to be done keeping the prevalent norms of antitrust law in context. This article merely brushes with the antitrust aspect, as a discussion on that topic is beyond the scope of this particular article. However, suffice is to say that like other aspects of structuring of a patent pool, patent valuation and licensing fee determination is also subject to antitrust law concerns.

Part II of this research paper is a discussion as regards factors which determine patent value in context of a patent pool. Similarly, Part III is a discussion as regards factors that determine license fee in context of a patent pool. Thereafter, Part IV discusses the methods which are applied for patent valuation and license fee determination. A number of these methods are independent evaluation methods and hence their dynamics when applied in context of patent pools may need to be altered in light of the discussion in Parts II and III. Part V discusses certain aspects of actual patent pools in the technological field to better understand the principles which have been discussed in Parts II-IV. Finally, Part VI concludes this research paper.

II. Determination of Patent Value in a Patent Pool

One of the prominent pillars of a patent pool is an appropriate patent valuation process. Patent valuation is a difficult and subjective task.[2] Moreover, the result of a patent valuation independently outside of a pool might be quite different from when it is part of a pool transaction. A “pool regularizes the valuation of individual patents - making, as the United States Supreme Court put it, ‘a division of royalties according to the value attributed by the parties to their respective patent claims’”.[3] However, this value attribution process is not an arbitrary one but incredibly dynamic, and constantly evolving. This difficulty is furthered by the fact that the term “patent value” itself is subject to interpretation. Patent value essentially comprises of the economic benefit that the patent can bestow.[4]

A number of factors as discuss hereinafter determine the value of a patent. It is not necessary though that all the factors would come into play in context of every exercise of valuation of a patent in a pool. The factors determining patent value can be largely classified into a discussion as regards the types of patents in a patent pool in context of their relative importance and other complementary factors which further affect such importance.

A. Categories of Patents in a Patent Pool

Patents in a pool can be classified based on their necessity and quality. Thus, arises the concept of essential and non-essential patents and strong and weak patents.

Essential and Non-Essential Patents
As the terms indicate, essential patents are those which are imperative for the success of pool creation and thus naturally have considerably more value. Non-essential patents on the other hand are patents which though not imperative may bring efficiency advantages to the pool. However, what exactly comprises an essential patent is a subjective and constantly evolving definition determined by each patent pool according to its commercial needs and capabilities. For example, the number of patents in the MPEG-2 pool, all of which are declared to be essential to the MPEG-2 standard, increased from 27 in 1997 to more than 900 in 2010.[5]

Essential patents naturally have more economic value than non-essential patents.[6] “A pool that includes non-essential patents can increase prices for some consumers, while decreasing prices for other consumers.”[7] Also, inclusion of inessential patents can raise potential concerns about foreclosure of alternative technologies and higher royalties for some licenses than would have occurred if these patents were excluded from the pool.[8] These concerns though should be balanced against the costs of excluding potentially essential patents from the pool.[9] Such concerns were raised in context of the DVD 3C patent pool.[10] Thus, it has to be decided on a case by case scenario as to whether the patent pool will include only essential patents or both essential as well as non-essential patents.

“Whether a patent pool improves a market’s transactional efficiency depends on the competitive characteristics of the patents included within the pool’s offering.”[11] Properly demarcating all required patents for a technology is important during patent pool formation. Otherwise it may create a “hold out” problem where a patent owner will “hold out” for higher royalties, “knowing that the manufacturer has individually negotiated for and already acquired the rest of the necessary … patent licenses, and that the value of all those licenses depends on obtaining a license to its own patent.”[12] Essentiality of a patent can be determined based on certain characteristics of patents:

a. Blocking Patents
Blocking patents comprise of improvement patents on an existing technology. Thus, the improvement patent is deemed to be “subservient” to the earlier, “dominant’ patent”[13] and the subservient and dominant patents are said to block one another.[14] This is so because, the subservient patent cannot be exploited without infringing upon the dominant patent.[15] Likewise, the dominant patent cannot be developed in the improved embodiment without permission from the subservient patentee.[16] For example, the Wright brothers patents for aeroplane wings were improved upon by Glenn Curtiss and Alexander Graham Bell by using a set of wing flaps, or ailerons. The Curtiss patent, however, was found to infringe upon the Wright patent. As a result, Curtiss had no legal right to make, use, or sell his ailerons without a license from the Wright brothers, and the Wright brothers had no legal right to make, use, or sell Curtiss's commercially successful form of the stabilizing device. Their patents mutually infringed and blocked one another and they had to form a patent pool.[17] Similarly, public key encryption method was devised and patented at Stanford University, and licensed to Cylink. Soon thereafter, a team of scientists at the Massachusetts Institute of Technology developed and patented an algorithm, and licensed its use to RSA. The RSA algorithm was successfully commercialized and became an industry standard. Cylink and RSA constituted blocking rival patents and the issue was resolved by formation of a patent pool.[18]

b. Complementary Patents
Complementary patents cover technologies that are largely lacking or inefficient absent a license to a separate patented product.[19] They occur as a consequence of independent invention. Thus, value of complementary patents increases when combined with a separate patented invention; they act synergistically, each increasing the value of the other.[20] “Two products or technologies are complements if an increase in the price of one of them reduces the demand for the other.”[21] For example, production of a light bulb requires patent rights to both the vacuum bulb as well as the filament.[22] A patent pool that only contains complementary patents may have substantial market power if the pool does not face competition from alternative or substitutable technology.[23] This though, could lead to the occurrence of royally stacking i.e. double-marginalization, which can occur when firms sell or license complementary products or technologies and demand is sensitive to price.[24] It refers to the addition of successive mark-ups by suppliers in a vertical relationship.[25]

c. Competing Patents

Competing patents result when there exist totally novel products or processes that provide market substitutes for patented goods, or when inventors sufficiently modify existing patented goods so that the original patent is deemed “invented around” and not infringed.[26] “Two products or technologies are substitutes if an increase in the price of one of them increases the demand for the other.”[27] A patent pool may obtain market power by obtaining control over substitutable patents too.[28] An individual who acquires the rights to a competing patent eliminates or significantly lessens his need for competing patents within or outside of the pool.[29] Thus, the value of a pool consisting of competing patents increases with acquisition of substitute patents.[30]

Strong and Weak Patents
A patent pool can comprise of strong as well as weak patents. The value accorded to the patents would naturally be in accordance with its “strength.” “‘Low patent quality’ is shorthand for such problems as overlapping claims, inappropriately broad claims, slow patent prosecution, and patents on obvious inventions.”[31] Patents are “probabilistic rights”[32] Their scope and extent often remains probabilistic until their claim determination which may often be done only upon adjudication. Similarly in situations of a patent flood,[33] the overall quality of patents may become lower.[34] The additional protection of the pool affords a weak patent enforcement rights that it may not have secured standing alone.[35] Thus, even weak and invalid patents become important and can be used to exclude competitors, for example for litigation threats.[36]

Some patent pools contain explicit agreements to support weak patents, such as covenants not to challenge patents, joint defense agreements, and allocation of patent rights to parties who are best able to defend them.[37] Some patent pools achieve a similar effect not by explicit agreements, but by creating an institutional environment where patentees find that it is mutually advantageous to recognize each other’s patents.[38]

B. Other Factors Determining Patent Value in Context of Patent Pool

Besides the patents themselves, other complementary criteria impact on patent value. These comprise of the holistic environment in which the patents subsist, as discussed hereinafter.

Subject matter of Invention
“Value is highly dependent upon the subject matter of the invention.”[39] Certain subject matter fields or innovations do not have sufficient commercial importance or market demand to warrant investments.

Scope of Invention
A particular subject where there is extensive minefield of patents already in existence is less likely to have considerable patent value due to the limited patent scope as opposed to a field where patents are relatively lacking and there is possibility of a broader patent scope. Analogously, “value of a patent is derived from an ability to preclude others from practicing the unique innovation described by the words of the patent’s claims.”[40] “Generalizing, a patent employing broad claim language is typically more valuable than a patent of narrowly written claims in the same technology arena.”[41]

Size of Patent Pool
The size of a patent pool i.e. the number of its members and their patents is an important facet in determining the value of patents involved. Greater the number more are the governance issues as well as royalty determination issues, which in turn affect the valuation of the patents. This though does not imply that pools should be of a specific size, only that their size should meet efficiency demands.

Value of Patent Pool
The patents under the purview of a patent pool determine the pool’s value which in turn determines the value of the patents within as well as out of the pool. Value of a patent pool may be limited if certain holders of essential patents are not members.[42] This may occur due to various reasons such as if it was perceived that the patent may have more value as an independent entity, or due to strategic interests, or choice of joining different pools.[43] Correspondingly, if the patent pool does not contain all the patents it cannot curtail royalty stacking issues for the users. For example, Alcatel-Lucent pursued infringement claims for patents that it alleged covered the MPEG-2 standard and were not in the pool.[44]

While it is evident that collecting all necessary patents where the end product or standards is determined is extremely difficult, it becomes considerably more difficult where there is no predetermined or identifiable end-product.[45]

Patent Portfolio
Certain academic studies are of the opinion that “the real value of patents lies not in their individual significance, but instead in their aggregation into a patent portfolio: a strategic collection of distinct-but-related individual patents that, when combined, confer an array of important advantages upon the portfolio holder.”[46] This theory has been applied to explain the patent paradox where the patent intensity, i.e. patents obtained per research and development dollar has risen dramatically even as the expected value of individual patents has diminished.[47] Thus, greater the control of an entity over a portfolio of patents, more would be its negotiation power in context of valuation.

Signaling
It has been opined that the value of patents inheres not so much in the exclusivity they confer upon inventors, but rather in their ability to serve as credible signals.[48] Firms use patents to credibly convey information about the invention to the market who otherwise might not be willing to expend the costs necessary to obtain the information.[49]

Defensive Aspect
Patent value is also ascertained based on its use to serve as an insurance, whereby competing firms use them as “bargaining chips” to negotiate and secure certain niches in the marketplace.[50] This is so especially from the negotiation as well as the litigation viewpoint.

Valuation Dynamics
In context of certain subject matters, inability of the patents to be valued or possibility of dynamic changes in value creates problems in structuring the patent pool, or it might lead to issues of according over-value or under-value. For example, in the process of biological research, where hypotheses are often adjusted and experimentation continually refined, it is impossible to anticipate the particular value of a given research tool for an investigative procedure.[51] Similarly, in context of the Human Genome Sciences, the patent for the gene that encodes CCR5 protein, was likely not valued very highly, because of unsurity of its utility, which changed when independent research established its importance in the fight against HIV.[52]

C. Role of Independent Evaluator

Often, independent experts in the relevant technology are employed for patent valuation purposes. Their role includes the responsibility of providing a mechanism for determining the market value of each participating patent for the purpose of setting appropriate royalty rates within the patent pool.[53] Also, they would evaluate the current state of the art and determine which patents are essential and which aren’t.[54] An evaluator’s is a continuing responsibility throughout the existence of the duration of the patent pool to monitor developments in the field so as to ensure each patent’s essentiality and incorporate additional patents if necessary.[55] Concerns though have been expressed as regards the expert’s ability and impartiality.[56]

III. Determination of License Fee for a Patent Pool

Theorists, have suggested criteria to gauge viability of patent pools.[57] The various elements involved in structuring of a patent pool do not function in a vacuum. Each has an impact on the other and ultimately they determine in totum, the licensing fees.

A. Pool Dynamics

The factors catalyzing pool creation impact on the licensing fee that is set. A patent pool may primarily be structured due to government influence,[58] court influence,[59] commercial and business perspective,[60] to achieve or pursuant to standard setting,[61] and social objectives.[62] Accordingly, riders may be placed on creation of the pool and setting of licensing fees.

Analogously, members comprising the patent pool affect royalty determinations. Different perspectives can be observed in commercial entities as opposed to research entities or voluntary organizations. Similarly, the negotiation capabilities are different for established commercial conglomerates as opposed to entrepreneurs, or smaller entities.[63] Similarly, patent pools may distinguish between patent contributing licensees and mere licensees in fixing royalty rates.[64]

Furthermore, pool governance as well as nature of the pool would have an impact on royalty determination. Pools can essentially be of two types based on regulation of members or licensing- open and closed.[65] Correspondingly, the patent holders themselves may have different perspectives or expectations of their rights.

The negotiating entity too has an impact on royalty determination. “Agreements between the members of the patent pool and third parties can be established directly through patentees and licensees or indirectly through an entity specifically created to administer the pool.”[66] There are a considerable number of business models involved in context of a patent pool that define the parameters of the relationship between what are primarily classified as IP creators and IP consumers.[67] These dynamics have considerably altered with the strong and prolific emergence of IP intermediaries; they in turn affect the royalty rate negotiations.[68]

B. Negotiation Dynamics

License negotiations involve complicated factors, such as uncertain outcomes, asymmetric information about the values of technologies and the contributions of licensees to a technology's value, the credibility of disagreements, differential bargaining power and skill, and the individual circumstances of licensors and licensees.[69] Royalty determination depends on “the bargaining skills of patentees, their licensing objectives, the qualities of their patents, opportunity costs that patentees may have if they choose not to license their patents, the likelihood of injunctions, and the methods that courts apply to calculate infringement damages.” [70] Pool members act strategically to maximize their share of the pool’s revenues.[71] “The defining characteristic of patent ownership has been described as the right to extract royalties ‘as high as [one] can negotiate with the leverage’ of exclusivity.”[72] “The patent holder can ask for a high starting price; the potential infringer can counter by pointing to potential substitute technologies; and ultimately the process should yield a price that accurately reflects the marginal advantages of the patented technology.”[73] Again, negotiation strategies include deploying a number of tactics by corporates to whittle down an independent inventor’s patience and his price, thus reducing the licensing fee from the desired amount.[74] Correspondingly, there is no average length of time or amount of money needed for successfully creating a patent pool; it depends on the number of members involved in the negotiations and their commitment and willingness to negotiate an appropriate price.[75]

Timing of the license negotiation too has an impact on determination of the royalty scheme. Licensing can occur in two primary settings: ex ante licensing, i.e. prior to pool formation; and ex post, i.e. post pool formation. In ex ante licensing, the manufacturer has a choice to alter existing products to incorporate the patented features, and can thus perform a rational cost-benefit analysis prior to making any product alterations.[76] Analogously, a holdout who demands royalties prior to the final organization of the pool can only demand a royalty that reflects the additional value that his new patent adds to the collection.[77] If he demands more than this value, the pool will work around the holdout’s patent by adopting a different standard, adjusting the patent pool to cover slightly different technology, or dissolving itself.[78] In ex post licensing, on the other hand, a holdout is in a stronger negotiating position, and can demand not only the marginal value of his patent, but also the switching costs that would be incurred if the established standard or licensing regime were limited by a court injunction.[79] Complicating this situation are licenses that are granted ex ante but negotiated ex post.

Furthermore, patent pools are generally voluntary collaborations; however, it is also possible to compel parties to join the pool or risk losing revenue from a large segment of the industry.[80] Depending on the situation, the negotiation dynamics and hence the royalty scheme would be affected.

Rules governing damages for patent infringement also affect patentees’ decision to join a pool or to license independently, as the threat of injunctive relief can provide a patentee with bargaining power that can be disproportional to the number of patents he owns.[81]

C. Terms of License

The terms of the license considerably influence royalty determination. These include, nature of licensed products,[82] character of license- whether exclusive or non-exclusive,[83] granting clause, geographic scope of the license, field of use governed by the license, provision of sublicensing, grantback provisions, future usage governance, non-assertion clauses, reach-through provisions, termination clause, and licensee’s ability to challenge patents in the pool.

Included herein too would be the treatment of after-acquired patents, which in turn can be classified into two types: (1) improvement patents based on a patented technology licensed by another member of the patent pool; and (2) patents unrelated to patented technologies licensed to the members of the patent pool.[84]

License governance in context of graduated and progressive licensing would also influence royalty determination. This would include “provisions for pool members to license their patents without licensing all the patents in a pool”[85] And the freedom “to license their patents bilaterally, i.e., outside of the pool structure.”[86]

IV. Methods for Patent Valuation and License Fee Determination

There are three basic methods of valuation: the cost method,[87] the market method,[88] and the income method.[89] In context of patent valuation, these methods find varied expressions. “A truly accurate assessment of patent value requires intensive legal and technical evaluation of individual patents.”[90] The economics literature, however, has also proposed several proxies for patent value based on objective and readily available information.[91]

In context of patent pools the dynamics of patent valuation methods is altered and they need to be viewed through the prism of factors discussed in Part II. This doesn’t imply that approaches to objective patent valuation are not relevant.[92] “However, such valuation approaches focus only on characteristics of patents at the time of issue and neglect to consider what happens afterwards.”[93] “Technology developments or price fluctuations, among many factors, may alter the relationship between two patents … In turn, this may decrease the value of any static analysis conducted by experts.”[94]

Determination of the licensing fee of a patent pool is based on the joint affect of certain transactions. Again, as with patent valuation, so also with licensing fee determination, in context of patent pools, the factors discussed in Part III need to be given heed. The transactions influencing licensing fee determination essentially comprise of valuation of the patent, which in turn is used to set a royalty rate pertaining to allocation of various fees received by licensing of the pool patents. Thus, royalty payment is comprised of two components: a royalty rate and a royalty base, upon which the rate is applied.[95]

A. Determining an Appropriate Royalty Base

The scope of the royalty base can be determined in two principal ways- apportionment and entire market value rule.

The apportionment principle implies that when a patent reads on the entirety of an infringing product, the royalty base should be the total value of the sales (or use) of that product.[96] When the patent at issue covers only a component of the infringing product, the value of the sales or uses of that item must be apportioned between the patented invention and the remaining unpatented components.[97] Thus, the principle aims at allocating awards in proportion to contribution, and is not based on any value attributable to the infringer’s or third parties’ inventions.[98] Thus, essentially, a licensor garners a royalty fee in proportion to the number of infringed patents owned by him.

The entire market value rule, recognizes that the economic value added to a product by a patented component may be greater than the value of the component alone.[99] Thus, this rule focuses on whether the patented component drives demand for the entire product, and if it is so, then the patentee may treat all revenue from the infringing product as an appropriate royalty base.[100]

B. Setting Royalty Rates

Royalty rates are typically a percentage rate and thus reflects the proportion of the base value that the patented technology contributes.[101] Various approaches have emerged in determining royalty rates; these could be adapted in context of patent pools.

Rule of Thumb
This approach suggests that the licensor should receive 25 percent of the licensee’s gross profit from the licensed technology.[102]Thus, this rule’s purpose is not the valuation of a technology per se, but rather the apportionment of a technology’s value between the licensor and licensee.[103] The percentage split between the licensor and licensee should be adjusted upwards or downwards to take into account the parties’ respective investment and risk in the licensed technology.[104]

Numerical Proportionality
According to this approach, royalty entitlement of the holder of patents essential to a standard should be calculated in light of the proportional contribution of that patent owner’s essential patents compared to the total contribution of all other essential patents reading on the standard.[105] This method rests on the proposition that every patent is of equal value.[106]

Industry Standards / Market or Comparable Technology Method
Under this approach, the worth of a patent is determined by examining the royalty rates garnered in similar past transactions.[107]

Discounted Cash Flow
This approach proposes that patent price can be expressed as the present value of the future stream of economic benefits derived from ownership, which includes projected sales of products (or components) based on the patent over its expected life or any increased share of sales as compared to competitors, net of any capital requirements of production.[108] To implement it, one must determine (1) the future cash flows generated by the patent in question and (2) an appropriate discount rate.[109]

Ranking
This approach compares the intellectual property asset to be valued to comparable intellectual property assets on a subjective or objective scale.[110] There are five components to a ranking method: (i) scoring criteria; (ii) scoring system; (iii) scoring scale; (iv) weighting factors; and (v) decision table; these components are used to calculate a composite score for an asset, which is then compared to the average score for a comparable intellectual property asset to determine the relative value.[111]

Cost-based Rate Setting
This approach proposes that the patent holder’s cost of obtaining the invention and its patent forms the basis of the royalty rate; a profit margin is simply tacked onto the innovation cost.[112]

Surrogate Measures
Surrogate measures value patents by reference to the patents themselves.[113] They can be largely categorized into: (1) the number of patents issued to a company; (2) payment of patent maintenance fees i.e. patents which are regularly renewed are more valuable; (3) prior art citations i.e. more a patent is cited, more is its value; (4) characteristics of litigated patents i.e. patents which are the subject matter of litigation are more valuable.[114]

Disaggregation Methods
There are two basic types of disaggregation methods - value disaggregation and income disaggregation.[115] The former apportions some fraction of total value to intellectual property assets by setting the value of intangible assets equal to the value of a firm minus the firm’s monetary and tangible assets from to determine the value of the intangible assets.[116] The latter apportions some fraction of total earnings of a firm, based upon various factors, to intellectual property assets.[117]

Option Methods
This approach views an investment in intellectual property as an option to develop the intellectual property further, or to abandon the intellectual property, depending upon future technical and market information.[118]

Competitive Advantage Valuation (R)
The major premise of the CAV method is that intellectual property assets have no inherent value; the value of intellectual property assets resides entirely in the value of the tangible assets which incorporate them.[119] The minor premise of the CAV method is that the value of a given intellectual property asset can best be measured by the competitive advantage which that asset contributes to a product, process, or service.[120] In its most general form, CAV method consists of following six basic steps[121]:

The intellectual property asset to be valued (IPA) is associated with a product and the product’s net present value is calculated.
The product's net present value is apportioned among tangible assets, intangible advantages and intellectual property assets. (There are three groups of intellectual property assets: technical [utility patents, functional software copyrights and technical trade secrets]; reputational [trademarks, service marks and brand names]; and operational [business method patents and proprietary business processes].
The product is associated with competition parameters which can be used to compare the product to substitute products and competition parameter weights are calculated. (There are three groups of competition parameters: technical [price and performance], reputational [recognition and impression], and operational [cost and efficiency]. Weights are calculated for each parameter group and for individual parameters within each group).
The IPA is associated with an individual competition parameter and the IPA's competitive advantage relative to substitute intellectual property assets is calculated. (Substitute intellectual property assets are assets which are incorporated in substitute products and associated with the same competition parameter as the IPA).
The IPA is associated with complementary intellectual property assets and the IPA's competitive advantage relative to complementary intellectual property assets is calculated. (Complementary intellectual property assets are assets which are incorporated in the same product and associated with the same parameter group as the IPA).
The value of the IPA is calculated by apportioning a share of the product's intellectual property asset value to the IPA based upon the IPA's competitive advantage contribution relative to substitute and complementary intellectual property assets. If the IPA is associated with multiple products, the IPA's relative competitive advantage contribution to each product is calculated and these contributions are summed to calculate the total value of the IPA. If the IPA is associated with multiple parameters, the IPA's relative competitive advantage contribution for each parameter is calculated and these contributions are summed to calculate the total value of the IPA.

Georgia Pacific
The fifteen factors enumerated in the Georgia Pacific case, several of which repeat approaches discussed above, are used in royalty rate determination:[122]

The royalties received by the patentee for the licensing of the patent in suit, proving or tending to prove an established royalty.
The rates paid by the licensee for the use of other patents comparable to the patent in suit.
The nature and scope of the license, as exclusive or non-exclusive; or as restricted or non-restricted in terms of territory or with respect to whom the manufactured product may be sold.
The licensor’s established policy and marketing program to maintain its patent monopoly by not licensing others to use the invention or by granting licenses under special conditions designed to preserve that monopoly.
The commercial relationship between the licensor and licensee, such as, whether they are competitors in the same territory in the same line of business; or whether they are inventor and promoter.
The effect of selling the patented specialty in promoting sales of other products of the licensee; the existing value of the invention to the licensor as a generator of sales of its non-patented items; and the extent of such derivative or convoyed sales.
The duration of the patent and the term of the license.
The established profitability of the product made under the patent; its commercial success; and its current popularity.
The utility and advantages of the patent property over the old modes or devices, if any, that had been used for working out similar results.
The nature of the patented invention; the character of the commercial embodiment of it as owned and produced by the licensor; and the benefits to those who have used the invention.
The extent to which the infringer has made use of the invention; and any evidence probative of the value of that use.
The portion of the profit or of the selling price that may be customary in the particular business or in comparable businesses to allow for the use of the invention or analogous inventions.
The portion of the realizable profit that should be credited to the invention as distinguished from non-patented elements, the manufacturing process, business risks, or significant features or improvements added by the infringer.
The opinion testimony of qualified experts.

The amount that a licensor (such as the patentee) and a licensee (such as the infringer) would have agreed upon (at the time the infringement began) if both had been reasonably and voluntarily trying to reach an agreement; that is, the amount which a prudent licensee-which desired, as a business proposition, to obtain a license to manufacture and sell a particular article embodying the patented invention-would have been willing to pay as a royalty and yet be able to make a reasonable profit and which amount would have been acceptable by a prudent patentee who was willing to grant a license.

Academics have prescribed modification to the approach towards these factors analyzing that the relevant questions in calculating a reasonable royalty fall into four basic categories: (1) whether the patentee in fact produces a product in the market; (2) the contribution made by the patented technology compared to the next best alternative; (3) the number and importance of other inputs necessary to make that technology work; and (4) evidence of how the market has actually valued the patent, to the extent it differs from the outcome of (1), (2), and (3).[123]

V. Patent Pool Examples

The following discussion highlights certain aspects of patent pools from real world examples. These examples are restricted to the technological field. Study of these aspects is of value in understanding the concepts discussed hereinbefore.

A. Manufacturers Aircraft Association (MAA)

The MAA was formed in 1917 in U.S.

Apart from the “foundational” patents of Glenn Curtiss and the Wright Brothers, which had substantial royalty rates, most licensing was conducted on a royalty-free basis, with mutual forbearance from infringement suits as the real payment for the exchange.[124]

The MAA was open to anyone who wished to use the Wright-Curtiss designs for a $1000 initiation fee and a licensing fee of $200 per aircraft built; these funds were to be distributed primarily between the Wright and Curtiss interests until each received a sum of $2,000,000 or their key patents expired.[125] MAA retained $ 25 (12.5%) to cover its administrative expenses, $ 135 (67.5%) was paid to the Wright-Martin Aircraft Corporation and $ 40 (20%) was paid to the Curtiss-Burgess Airplane & Motor Corporation.[126]

Patents added to the pool after its formation were divided into two classes- normal patents were licensed into the pool for all to use, with no special royalty payout going to the inventor or firm; exceptional patents earned ongoing royalties, in an amount determined by a formal arbitration procedure.[127]

The MAA also included a grant-back provision that applied to after-acquired patents.[128]

MAA’s members could license their patents to non-members if the terms were no more favorable than to members and any MAA member could withdraw at any time, but its patents in the pool at the time of withdrawal would remain.[129]

B. Moving Picture Experts Group (MPEG)

MPEG technology allows for transmission and storage of digital video and audio signals. It was formed by the Trustees of Columbia University, Fujitsu Limited, General Instrument Corp., Lucent Technologies Inc., Matsushita Electric Industrial Co., Ltd., Mitsubishi Electric Corp., Philips Electronics N.C., Scientific Atlanta, Inc., and Sony Corp. in 1997. The patent pool for the MPEG-2 standard is administered by a common license administrator- MPEG-LA

MPEG-LA is required to grant licenses to any potential licensees, without discrimination and at a reasonable royalty rate.

MPEG LA offers a portfolio of MPEG-2 systems licenses with a fixed royalty for each licensed mobile MPEG-2 systems signal receiver and a different fixed royalty for all other MPEG-2 systems devices.[130] Additional patents, not included in the portfolio, are available for specific implementations.[131]

The pool offers a standardized five-year license to all prospective licensees.[132] The licensing royalties do not change if patents are added to the portfolio during the five-year licensing period, although the royalty rate may increase by up to 25% in a license renewal.[133] Each patent in the pool is valued equally.[134]

The license has a grant-back provision that requires the licensee to grant to the licensor and other portfolio licensees a nonexclusive license, under fair and reasonable terms and conditions, on any essential patent that the licensee has a right to license.[135]

There exists a partial termination right given to licensors, who may request that MPEG-LA terminate the license of that licensor’s IPR to a particular licensee, if that licensee has sued the licensor for infringement of an MPEG-2 essential or “related” patent or refused to license a related patent on fair and reasonable terms.[136]

C. DVD

Sony, Philips and Pioneer organized the DVD3C patent pool in 1998 for the licensing of patents that are “essential” to comply with the DVD-Video or DVD-ROM standard specifications.

Royalty payments are allocated under guidelines set by the Ground Rules for Royalty

Allocation rather than on subjective analysis by an expert.[137] The royalty rate in standard licenses is not related to fluctuations in the market price of a licensed product; also, the royalty rate is not computed on a per-patent basis and does not fluctuate as patents are added or removed, therefore, the same royalty rate is payable when using one essential patent as when using several.[138]

Hitachi, Matsushita, Mitsubishi, Time Warner, Toshiba, and Victor organized the DVD6C patent pool in 1999 again for the licensing of patents that are “essential” to comply with the DVD-Video or DVD-ROM standard specifications.

The DVD6C pool is also governed by the “Ground Rules for Royalty Allocation” guidelines.[139] The royalties are 4% of the net selling price of the product or U.S. $4.00 per product, whichever is higher. Royalties for DVD decoders are 4% of the net selling price of the product or U.S. $1.00 per product, whichever is higher.[140]

The DVD6C agreement contains a grant-back clause, which, requires licensees to grant each of the licensing companies of DVD6C (and their licensees) a non-exclusive license on fair, reasonable and non-discriminatory terms to use any of their patents that are deemed essential for the manufacture, use or sale of DVD Products; this grantback is restricted only to those DVD products actually licensed to the licensee.[141]

D. 3G Mobile Telephony

The 3G Patent Platform Partnership was formed in 1999. The purpose of the 3G Patent Platform Partnership is to allow for “fair, reasonable, and nondiscriminatory” access to rights essential for implementing the W-CDMA 3GPP standard.[142]

There are three form contracts associated with the Platform: the Framework Agreement, the Standard License, and the Interim License.[143] The Framework Agreement gives each member the choice either to license its essential patents according to the Standard License or to negotiate terms directly with a licensee.[144] The Standard License prescribes standardized royalties for licenses, to be determined by an independent commission.[145] If the patent owner foregoes the Standard License and fails to come to terms in bilateral negotiations, the Interim License comes into effect which has the same royalty terms as the Standard License.[146]

E. Bluetooth Special Interest Group (SIG)

The Bluetooth SIG was formed in 1997 to provide a technology for interconnection of mobile phones, computers, laptops, printers, PDAs, and other devices via a short-range radio frequency band; SIG oversees the development of Bluetooth standards and its licensing.[147]

SIG’s member companies are divided into three different classes- (1) promoter company, which are intensely engaged in the strategic and technical development of Bluetooth wireless technology; they include Agere, Ericsson, Intel, Lenovo, Microsoft, Motorola, Nokia, and

Toshiba; (2) associate members, who are licensed to use Bluetooth specifications and trademarks; (3) adopted members, which use published specifications and trademarks, but do not influence the specification process, nor do they have early access to unpublished specifications.[148]

SIG licenses to member companies on a royalty-free basis, but, associate members pay an annual fee based on their company’s annual revenue, with “small” associates (less than $100 million USD/year) paying $7,500 USD/year and “large” associates (more than $100 million USD/year) paying $35,000 USD/year; adopted members are not required to pay an annual fee.[149]

VI. Conclusion

As is evident, patent valuation and license fee determination are extremely subjective and case based. Moreover, their dynamics alter according to the situation, as in the context of patent pools. This dynamism is furthered by the fact that there are no strict or universal formulas or procedures which can be applied in such determinations. Furthermore, such determinations cannot be made in a vacuum but are subject to the cascading effect of a multitude of factors comprised of the holistic technological environment that may not be just restricted to the innovation in question.

[1] Krista L. Cox, The Medicines Patent Pool: Promoting Access and Innovation for Life-Saving Medicines Through Voluntary Licenses 4 Hastings Sci. & Tech. L.J. 293 (Summer, 2012) citing IGWG Briefing Paper on Patent Pools: Collective Management of Intellectual Property--The Use of Patent Pools to Expand Access to Essential Medical Technologies, Knowledge Ecology International, (June 3, 2007) quoting Robert P. Merges, Institutions for Intellectual Property Transactions: The Case of Patent Pools, in Expanding the Boundaries of Intellectual Property, Innovation Policy for the Knowledge Society 123 (Rochelle Cooper Dreyfuss et al. eds., 2001).

[2] Jer Rutton Kavasmaneck v Gharda Chemicals Ltd. and Ors. (Suit No.2932 of 2011; Decided On: 20.03.2012) Bombay H.C. (Intellectual Property Rights (IPRs) including the patent right is valuable right for all the commercial purposes. These intangible assets play important role in any financial assessment of the trade/commercial or the market. It changes from time to time, market to market, person to person based upon the situations. If valuation is always a complex and flexible issue and a matter of discussion and debate in business strategies. The patent valuation involves many described and undescribed elements).

[3]Robert P. Merges, Contracting into Liability Rules: Intellectual Property Rights and Collective Rights Organizations 84 Calif. L. Rev. 1293 (October 1996) citing Standard Oil Co. v. United States, 283 U.S. 163, 171 (1931).

[4] Michael S. Kramer, Valuation and Assessment of Patents and Patent Portfolios Through Analytical Techniques 6 J. Marshall Rev. Intell. Prop. L. 463 (Spring, 2007).

[5] Richard J. Gilbert, Ties That Bind: Policies to Promote (Good) Patent Pools 77 Antitrust L.J. 1 (2010) MPEG LA Business Review Letter from Joel I. Klein, Ass’t Att’y Gen., U.S. Dep’t of Justice, to Garrard R. Beeney, Esq., Sullivan & Cromwell LLP (June 26, 1997), available at http://www.usdoj.gov/atr/public/busreview/215742.pdf; MPEG LA, MPEG-2 Patent Portfolio License Briefing (Aug. 4, 2010).

[6] See Kramer, supra n.4 at 463 (essential patents of technical standards are more valuable, on average, than the general population of patents).

[7] Gilbert, supra n.5.

[8] Id.

[9] Id.

[10] Id.citing DVD 3C Business Review Letter from Joel I. Klein, Ass't Att'y Gen., U.S. Dep't of Justice, to Garrard R. Beeney, Esq., Sullivan & Cromwell LLP (Dec. 16, 1998), available at http://www.usdoj.gov/atr/public/busreview/2121.pdf.

[11]R. Justin Koscher, A Patent Pool's White Knight: Individual Licensing Agreements And The Procompetitive Presumption 20 DePaul J. Art Tech. & Intell. Prop. L. 53 (Fall, 2009).

[12] Daniel Lin, Research versus Development: Patent Pooling, Innovation And Standardization In The Software Industry 1 J. Marshall Rev. Intell. Prop. L. 274 (2002).

[13] Steven C. Carlson, Patent Pools and the Antitrust Dilemma 16 Yale J. on Reg. 359 (Summer, 1999).

[14] Id.

[15] Id.

[16] Id.

[17] Id.

[18] Id.

[19] Id.

[20] Michael A. Sanzo, Antitrust Law And Patent Misconduct In The Proprietary Drug Industry 39 Vill. L. Rev. 1209 (1994).

[21] Gilbert, supra n.5.

[22] Carlson, supra n.13.

[23] Philip B. Nelson, Patent Pools: An Economic Assessment Of Current Law And Policy 38 Rutgers L. J. 539 (Winter, 2007).

[24] Gilbert, supra n.5.

[25] Id.

[26] Carlson, supra n.13.

[27] Gilbert, supra n.5.

[28] Nelson, supra n.23.

[29] David S. Taylor, The Sinking Of The United States Electronics Industry Within Japanese Patent Pools 26 GW J. Int'l L. & Econ. 181 (1992).

[30] Id.

[31] Michael J. Meurer, Business Method Patents and Patent Floods 8 Wash. U. J.L. & Pol'y 309 (2002).

[32] Mark A. Lemley & Carl Shapiro, Frontiers of Intellectual Property: Patent Holdup and Royalty Stacking 85 Tex. L. Rev. 1991 (June, 2007).

[33] Meurer, supra n.31 (A patent flood occurs when many inventors apply for patents on similar inventions during an interval of a few years).

[34] Id.

[35] Robert P. Greenspoon and Catherine M. Cottle, Don't Assume A Can Opener: Confronting Patent Economic Theories With Licensing And Enforcement Reality 12 Colum. Sci. & Tech. L. Rev. 194 (2011).

[36] Meurer, supra n.31.

[37] Gilbert supra n.5 citing the cross-licensing arrangement between the Singer Manufacturing Company and Gegauf, contained provisions by which each of the parties agreed not to bring any infringement action against the other. United States v. Singer Mfg. Co., 374 U.S. 174, 178 (1963).

[38] Gilbert supra n.5.

[39] Kramer, supra n.4.

[40] Id.

[41] Id.

[42] Jorge L. Contreras, Standards, Patents, and the National Smart Grid 32 Pace L. Rev. 641 (Summer Issue, 2012).

[43] Gilbert, supra n.5 (To the extent that a patent pool successfully lowers total royalties relative to independent licensing, this leaves ‘headroom’ available for an independent licensor outside the pool to charge a high royalty for its patent).

[44] Id. citing Multimedia Patent Trust v. Microsoft Corp., et al., 525 F. Supp. 2d 1200 (S.D. Cal. 2007).

[45] Chase A. Marshall, A Comparative Analysis: Current Solutions To The Anticommons Threat 12 J. High Tech. L. 487 (2012); Damien Geradin and Anne Layne-Farrar, Patent Value Apportionment Rules for Complex, Multi-Patent Products 27 Santa Clara Computer & High Tech. L.J. 763 (2010 / 2011) (the typical semiconductor chip likely involves hundreds, perhaps more, patents. In turn, that chip may be intended for use in a laptop computer, the other components of which involve hundreds, or more, patents. Without knowing how many patents actually read on a product, and how many have holders who will actively seek licensing fees, it can be exceedingly difficult to assign the contributed value to those that are known).

[46] Gideon Parchomovsky and R. Polk Wagner, Patent Portfolios 154 U. Pa. L. Rev. 1 (November, 2005); Elizabeth M. Bailey, Gregory K. Leonard and Mario A. Lopez, Making Sense Of “Apportionment” In Patent Damages 12 Colum. Sci. & Tech. L. Rev. 255 (2011) (combining patented technologies typically creates value that is greater than the sum of the parts. For example, patent pools often bring together various technologies that are necessary to create the product in question. The stand-alone value of any one patent in the pool may be low or close to zero unless combined with the other patents in the pool).

[47] Parchomovsky and Wagner, supra n.46.

[48] Id.

[49] Id.

[50] Id.

[51] Scott Iyama, The USPTO's Proposal of a Biological Research Tool Patent Pool Doesn't Hold Water 57 Stan. L. Rev. 1223 (March, 2005).

[52] Bradley J. Levang, Evaluating the Use of Patent Pools For Biotechnology: A Refutation to the USPTO White Paper Concerning Biotechnology Patent Pools 19 Santa Clara Computer & High Tech. L.J. 229 (December, 2002).

[53] Courtney C. Scala, Making the Jump From Gene Pools to Patent Pools: How Patent Pools Can Facilitate the Development of Pharmacogenomics 41 Conn. L. Rev. 1631 (July, 2009).

[54] Id.

[55] Id.

[56] R. Justin Koscher, A Patent Pool's White Knight: Individual Licensing Agreements And The Procompetitive Presumption 20 DePaul J. Art Tech. & Intell. Prop. L. 53 (Fall, 2009) citing DVD-6 Business Review Letter from Joel I. Klein, Assistant Attorney General, to Carey R. Ramos, Esq., of Paul, Weiss, Rifkind, Wharton & Garrison (June 10, 1999), available at http://www.usdoj.gov/atr/public/busreview/2485.htm.

[57] Alexander Lee, Examining the Viability of Patent Pools for the Growing Nanotechnology Patent Thicket, 3 Nanotechnology L. & Bus. 317 (2006) suggests that to determine the viability of using a patent pool in a market, companies should ponder the following list of nine criteria: (1) product development driven by standards; (2) moderate fragmentation of patent landscape; (3) at least five pool members; (4) each member working on specific subcomponent of a product; (5) willingness of patent holders to negotiate; (6) commitment by members to create the pool; (7) an industry that is in the later stages of product development; (8) certainty of patent ownership; and (9) a patent pool clear of potential antitrust violations.

[58] See Gilbert, supra n.5 discussing the Manufacturers Aircraft Association, where the U.S. government used the threat of compulsory licensing to compel the pioneers of the aircraft industry to form a patent pool in 1917. The industry was enmeshed in litigation over the scope and validity of patents, and some patentees, particularly the Wright-Martin Company, were demanding royalties that the government and other aircraft manufacturers deemed excessive. Creation of the Manufacturers Aircraft Association patent pool resolved the litigation chaos. The government negotiated a portfolio license from the pool with a royalty of $ 200 per aircraft, which was a fraction of the royalty that Wright-Martin was demanding for a single patent ($ 1,000 per aircraft).

[59] See Carlson, supra n.13 discussing that pool agreements are frequently employed as a means of settling existing litigation, and citing examples including patent pools in the laser eye surgery, and the public key encryption industries;

also see Lemley & Shapiro, Frontiers of Intellectual Property, supra n.32 discussing that the average royalty rate granted in all reasonable-royalty cases is 13.13% of the price of the infringing product, which is much higher than that of patent licenses negotiated without litigation.

[60] See Greenspoon and Cottle, supra n.35 discussing the value of patents as a form of currency that can be used to further goals unrelated to market creation or entry. Such goals can be to improve a firm's competitive position when trying to acquire start-up funds, to improve negotiating terms when licensing other patents, and to reduce the chance of paying excessive royalties to external patent owners;

also see, Gilbert, supra n.5 discussing how different business strategies can cause firms to pool their patents with some firms, but not with others, citing the example of emergence of two pools to license DVD patents as a consequence of differing approaches to industry standards. One explanation offered for the existence of two separate pools is that the two groups could not reach an accord about their respective shares of joint royalty payments.

[61] See Gilbert, supra n.5 discussing how some pools license their patents royalty-free or at royalties that are deliberately held below profit-maximizing levels in an effort to promote adoption of new technologies covered by their patents, citing the example of the Bluetooth Special Interest Group and the Multimedia Home Platform. The article also discusses patent pools formed to license patents that are necessary to implement a defined standard, such as MPEG encoding, DVDs, or mobile telephony.

[62] See Gilbert, supra n.5 discussing pools that limit royalties to promote social objectives rather than to profit from new products citing examples of companies, universities, and research organizations such as Syngenta- an agricultural technology company, the Public Intellectual Property Resource for Agriculture, the SARS IP Working Group, and the UNITAID pool for AIDS medications.

[63] Yuichi Watanabe, Patent Licensing And The Emergence Of A New Patent Market 9 Hous. Bus. & Tax L.J. 445 (2009) (The current state of affairs shows that the patent licensing market strongly favors larger corporations over smaller ones, enabling the larger corporations to reap much of the market opportunities and benefits while limiting them to smaller patentees).

[64] Roger B. Andewelt, Practical Problems In Counseling And Litigating: Analysis Of Patent Pools Under The Antitrust Laws 53 Antitrust L.J. 611 (October 11, 1984/October 12, 1984) (Pools typically contain restrictions on those who join the pool by contributing patents and/or those who take licenses under the pooled patents).

[65]Chase A. Marshall, A Comparative Analysis: Current Solutions To The Anticommons Threat 12 J. High Tech. L. 487 (2012).

[66] Ann Weilbaecher, PSY.D., Diseases Endemic in Developing Countries: How to Incentivize Innovation 18 Ann. Health L. 281 (Summer, 2009).

[67] Greenspoon and Cottle, supra n.35 identify five general types of entities that license and enforce patents: (1) Individual inventors with a single patent; (2) Individual serial inventors; (3) Non-Practicing Entities; (4) Operating companies who practice inventions acquired from others; and (5) Operating companies who practice inventions developed in-house.

[68] See, Raymond Millien and Ron Laurie, A Survey Of Established & Emerging IP Business Models 9 Sedona Conf. J. 77 (2008) discussing various models, viz. Patent Licensing and Enforcement Companies, Institutional IP Aggregators/Acquisition Funds, IP/Technology Development Companies, Licensing Agents, Litigation Finance/Investment Firms, IP Brokers, IP-Based M&A Advisory Firms, IP Auction Houses, On-Line IP/Technology Exchanges, Clearinghouses, Bulletin Boards, and Innovation Portals, IP-Backed Lending, Royalty Stream Securitization Firms, Patent Rating Software and Valuation Services, University Technology Transfer Intermediaries, IP Transaction Exchanges & Trading Platforms/IP Transaction Best Practices Development Communities, Defensive Patent Pools, Funds and Alliances, Technology/IP Spinout Financing, and Patent-Based Public Stock Indexes.

[69] Richard J. Gilbert, Deal or No Deal? Licensing Negotiations In Standard-Setting Organizations 77 Antitrust L.J. 855 (2011).

[70] Gilbert, supra n.5

[71] Merges, Contracting into Liability Rules, supra n.3.

[72] Alan Devlin, Standard-Setting And The Failure Of Price Competition 65 N.Y.U. Ann. Surv. Am. L. 217 (2009) citing Brulotte v. Thys Co., 379 U.S. 29, 33 (1964).

[73]Doug Lichtman, Understanding The Rand Commitment 47 Hous. L. Rev. 1023 (2010).

[74] Peter N. Detkin, Leveling The Patent Playing Field 6 J. Marshall Rev. Intell. Prop. L. 636 (Summer, 2007).

[75] Lee, infra n.57.

[76] Kelce Wilson, The Four Phases of Patent Usage 40 Cap. U.L. Rev. 679 (Summer, 2012).

[77]Gavin D. George, What is Hiding in the Bushes? eBay's Effect on Holdout Behavior in Patent Thickets, 13 Mich. Telecomm. Tech. L. Rev. 557 (2007).

[78] Id.

[79] Id

[80]Daniel R. Cahoy and Leland Glenna, Private Ordering and Public Energy Innovation Policy 36 Fla. St. U.L. Rev. 415 (Spring, 2009).

[81] Gilbert, supra n.5; See for example, Merges, Contracting into Liability Rules, supra n.3 describing how in the airplane cross-licensing agreement, it provides that a board of arbitrators may decide in any case what reward should be paid to individual patent owners and this is based not upon the official determination of patentability by the Patent Office, but upon the unofficial determination of the importance of the invention by a board of arbitrators.

[82] See Andewelt, supra n.64 (The scope and variety of patents included vary considerably from pool to pool. Some pools are limited to patents covering a single commercial device. Others contain numerous and diverse patents relating to different devices in different markets).

[83] See, Scala, supra n.53 discussing how the non-exclusive character of a license is particularly important for those firms holding patents whose full utility is unascertainable at the time of the formation of the pool.

[84] Dustin R. Szakalski, Progress In The Aircraft Industry And The Role Of Patent Pools And Cross-Licensing Agreements 2011 UCLA J.L. & Tech. 1 (Spring 2011).

[85] Ed Levy, et. al, Patent Pools And Genomics: Navigating A Course To Open Science? 16 B.U. J. SCI. & TECH. L. 75 (Winter, 2010).

[86] Id.

[87] Ted Hagelin, Technology and Legal Practice Symposium Issue: Valuation of Intellectual Property Assets: An Overview 52 Syracuse L. Rev. 1133 (2002) (The cost method of valuation measures the value of an asset by the cost to replace the asset with an identical or equivalent asset. The assumption underlying the cost method of valuation is that the cost to purchase or develop a new asset is commensurate with the economic value that the asset can provide during its life).

[88] Id. (The market method values an asset based upon comparable transactions between unrelated parties).

[89] Id. (The income method values an asset based upon the present value of the net economic benefit (net future income stream) expected to be received over the life of the asset).

[90] Sannu K. Shrestha, Trolls Or Market-Makers? An Empirical Analysis Of Nonpracticing Entities 110 Colum. L. Rev. 114 (January, 2010).

[91]Id.

[92]Colleen V. Chien, From Arms Race to Marketplace: The Complex Patent Ecosystem and Its Implications for the Patent System 62 Hastings L.J. 297 (December, 2010).

[93] Id.

[94]R. Justin Koscher, A Patent Pool's White Knight: Individual Licensing Agreements And The Procompetitive Presumption 20 DePaul J. Art Tech. & Intell. Prop. L. 53 (Fall, 2009).

[95] Geradin and Layne-Farrar, supra n.45.

[96] Id.

[97] Id.

[98] Id.

[99] Id.

[100] Id.

[101] Id.

[102] Hagelin, supra n.87; also see, Geradin and Layne-Farrar, supra n.45.

[103] Id.

[104] Id.

[105] Geradin and Layne-Farrar, supra n.45.

[106] Id.

[107] Hagelin, supra n.87; also see, Geradin and Layne-Farrar, supra n.45.

[108] Geradin and Layne-Farrar, supra n.45.

[109] Malcolm T. "Ty" Meeks & Charles A. Eldering, PhD, Patent Valuation: Aren’t We Forgetting Something? Making the Case for Claims Analysis in Patent Valuation by Proposing a Patent Valuation Method and a Patent-Specific Discount Rate Using the CAPM 9 Nw. J. Tech. & Intell. Prop. 194 (Fall, 2010).

[110] Hagelin, supra n.87.

[111] Id.

[112] Geradin and Layne-Farrar, supra n.45.

[113] Hagelin, supra n.87.

[114] Id.; Meeks & Eldering, supra n.109.

[115] Hagelin, supra n.87.

[116] Id.

[117] Id.

[118] Id.

[119] Id.

[120] Id.

[121] Id.

[122] Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970).

[123] Daralyn J. Durie and Mark A. Lemley, A Structured Approach To Calculating Reasonable Royalties 14 Lewis & Clark L. Rev. 627 (Summer, 2010).

[124] Merges, Contracting into Liability Rules, supra n.3.

[125] Michael Mattioli, Communities Of Innovation 106 Nw. U.L. Rev. 103 (Winter, 2012).

[126] Szakalski, supra n.84.

[127] Merges, Contracting into Liability Rules, supra n.3.

[128] Mattioli, supra n.125.

[129] Szakalski, supra n.84.

[130] Gilbert, supra n.5.

[131] Carlson, supra n.13.

[132] Id.

[133] Id.

[134] Id.

[135] Lin, supra n.12.

[136] Dorothy Gill Raymond, Benefits and Risks Of Patent Pooling For Standard-Setting Organizations 16 Antitrust ABA 41 (Summer, 2002).

[137] David Serafino, Survey of Patent Pools Demonstrates Variety of Purposes and Management Structures, KEI Research Note 2007:6, Knowledge Ecology International, 4 June 2007.

[138] Id.

[139] Id.

[140] Id.

[141] Id.

[142] Id.

[143] Michael R. Franzinger, Latent Dangers in a Patent Pool: The European Commission's Approval of the 3G Wireless Technology Licensing Agreements 91 Calif. L. Rev. 1693 (December, 2003).

[144] Id.

[145] Id.

[146] Id.

[147] David Serafino, Survey of Patent Pools Demonstrates Variety of Purposes and Management Structures, KEI Research Note 2007:6, Knowledge Ecology International, 4 June 2007.

[148] Id.

[149] Id.

For more details visit https://cis-india.org/a2k/blogs/patent-valuation-and-license-fee-determination-in-context-of-patent-pools

Open Letter to Prime Minister Modi

rohini — 2016-02-14T04:39:01Z

After the government introduced the "Make in India" and "Digital India" programmes, the air is thick with the promise of reduced imports, new jobs, and goods for the domestic market. In light of the patent wars in India, the government can ill-afford to overlook the patent implications in indigenously manufactured mobile phones. CIS proposes that the Government of India initiate the formation of a patent pool of critical mobile technologies and a five percent compulsory license.

The blog post was re-published by Medianama on March 24, 2015.

Honourable Prime Minister Shri Narendra Modi,

We at the Centre for Internet and Society support the "Make in India" and "Digital India" initiatives of the Indian government and share your vision of a digitally empowered India where “1.2 billion connected Indians drive innovation”, where “access to information knows no barriers”, and where knowledge is the citizens’ power. The government’s plan of incentivising the manufacturing of electronics hardware, including that of mobile phones in the 2015 Union Budget is equally encouraging. Towards this important goal of nation building, the Centre for Internet and Society is researching the patent and copyright implications of Internet-enabled mobile devices that are sold in the Indian market for Rs 6,000 or less.

Bolstered by Make in India, several mobile phone manufacturers have started or ramped up their manufacturing facilities in India. Homegrown brands — such as Spice, Maxx Mobile and Lava — and foreign manufacturers alike are making humongous investments in mobile phone plants. Chip manufacturer Mediatek; one of the newest entrants in the Indian smartphone market, Xiaomi; and telecom company Huawei, all different links in the mobile phone manufacturing chain, are setting up research and development units in India having recognised its potential as a significant market. These developments promise to cut or substitute imports, cater to the domestic market, create millions of jobs, and stem the outflow of money from India.

However, mobile phone manufacturers, big and small, have also been embroiled in litigation in India for the past few years over patents pertaining to crucial technologies. Micromax, one of the several Indian mobile phone manufacturers with original equipment manufacturers in China was ordered by the Delhi High Court late last year to pay a substantial 1.25 to 2 per cent of the selling price of its devices to Ericsson, which has claimed infringement of eight of its standard essential patents. Intex and Lava, two members of Micromax’s ilk, have been similarly sued and claim to have received the short end of the stick in the form of unreasonable and exorbitant compensations and royalty rates. Chinese budget phone manufacturers operating in India — Xiaomi, OnePlus, and Gionee — also have come under the sledgehammer of sudden suspension of the sale of their devices. The bigger companies such as Asus, Samsung and ZTE have faced the heat of patent litigation as well.

The fear of litigation over patent infringement could thwart local innovation. Additionally, the expenses incurred due to litigation and compensation could lead to the smaller manufacturers shutting shop or passing on their losses to their consumers, and in turn, driving the price points of Internet-enabled mobile devices out of the reach of many. It could also become a stumbling block to the success of ambitious plans of the government, such as the one to provide free WiFi in 2,500 cities and towns across India.

We propose that the Government of India initiate the formation of a patent pool of critical mobile technologies and mandate a five percent compulsory license. Such a pool would possibly avert patent disputes by ensuring that the owners' rights are not infringed on, that budget manufacturers are not put out of business owing to patent feuds, and that consumers continue to get access to inexpensive mobile devices. Several countries including the United States regularly issue compulsory licenses on patents in the pharmaceutical, medical, defence, software, and engineering domains for reasons of public policy, or to thwart or correct anti-competitive practices.[1] [2] Unfortunately, we did not receive a response from the previous government to our suggestion of establishing such a patent pool. We believe that our proposal falls in line with your ambitious programmes designed to work towards your vision of India, and we hope that you would consider it.

Yours truly,
Rohini Lakshané,
Programme Officer,
The Centre for Internet and Society

Copies to:

Shri Arun Jaitley, Minister for Finance
Shri Rajiv Mehrishi, Secretary to Ministry of Finance
Smt. Smriti Zubin Irani, Minister for Human Resource Development
Shri Satyanarayan Mohanty, Secretary to Ministry of Human Resources Development
Smt. Nirmala Sitharaman, Minister for Commerce and Industry
Shri Amitabh Kant, Secretary to Department of Industrial Policy and Promotion
Shri Ravi Shankar Prasad, Minister for Communication and Information Technology
Shri Rakesh Garg, Secretary to Department of Telecommunications
Shri R. S. Sharma, Secretary for Department of Electronics and Information Technology

Also read: FAQ: CIS' Proposal for Compulsory Licensing of Critical Mobile Technologies

[1]. James Love, Knowledge Ecology International (KEI) written comments and notice of intent to testify at the Special 301 Public Hearing, Page 6, "US use of compulsory licensing",http://keionline.org/sites/default/files/KEI_2014_Special301_7Feb20014_FRComments.pdf, February 7, 2014, Last accessed February 10, 2015.

[2]. Colleen Chien, Cheap Drugs at What Price to Innovation, Does the Compulsory Licensing of Pharmaceuticals Hurt Innovation, Berkeley Technology Law Journal, Volume 18, Issue 3, Article 3, Page 862, "Compulsory licensing in the United States", http://scholarship.law.berkeley.edu/cgi/viewcontent.cgi?article=1429&context=btlj, June 2003, Last accessed February 10, 2015.

For more details visit https://cis-india.org/a2k/blogs/open-letter-to-prime-minister-modi

National IPR Policy Series: RTI Requests by CIS to DIPP + DIPP Responses

nehaa — 2015-04-26T08:47:00Z

In earlier blog posts, we have discussed the development of India’s National IPR Policy (“the Policy”); comments by the Centre for Internet and Society (“CIS”) to the IPR Think Tank before the release of the first draft of the Policy and CIS’ comments to the IPR Think Tank in response to the first draft of the Policy. Continuing our National IPR Policy Series, this article documents our requests to the Department of Industrial Policy and Promotion (“DIPP” / “the Department”) under the Right to Information (“RTI”) Act, 2005 and the responses of the Department.

View the PDF here.

Details of RTI Requests Filed by CIS

In February, 2015, CIS had filed three RTI requests with the DIPP. The first request was four-pronged, seeking information related to first, the process followed by the Department in the creation of the IPR Think Tank; second, details and documents of a meeting held to constitute the Think Tank; third, details and documents of all/multiple meetings held to constitute the Think Tank; fourth, details of a directive/directives received from any other Government Ministry/authority directing the constitution of the Think Tank and fifth, the process of shortlisting the members of the Think Tank by the DIPP.

In our second RTI request, first, we requested details of the process followed by the Think Tank in the formulation of the Policy; second, we requested all documents relating to a meeting held for the formulation of the Policy; third, we requested all documents held for multiple meetings for the creation of the Policy and fourth, we requisitioned all suggestions and comments received by the Think Tank from stakeholders before the release of the Policy, that is, those suggestions/comments received in November, 2014.

In our third RTI request, also filed on also filed in February, 2015, we had asked the DIPP to indicate all suggestions and comments received by the IPR Think Tank from different stakeholders in response to the first draft of the National IPR Policy (to have been submitted on or before January 30, 2015 as per DIPP’s Public Notice).

Responses by DIPP to CIS' RTI Requests

The DIPP replied to our three RTI requests in multiple stages. At first, in a letter dated 12 February, 2015, we were directed to resubmit our application , seemingly because we hadn’t addressed the Postal Money Order to the correct authority, and were directed to do the same. Funnily enough, we received three other responses – one for each of our RTI requests (the first of these is not dated; the second one is dated 19 February, 2015 and then revised to 26 February, 2015; and the third is also dated 26 February, 2015).

The First Response: On the Constitution of the Think Tank

In the first of their responses to these requests, the Department has grouped our queries into five questions and provided a point-wise response to these questions, as under:

Please indicate in detail the process followed by the Department of Industrial Policy and Promotion for the constitution for an IPR Think Tank to draft the National Intellectual Property Rights Policy under Public Notice No. 10 (22)/2013 –IPR-III dated November 13, 2014 (sic).

In its response the Department notes that it convened an interactive meeting on IPR issues which was chaired by the Minister for Commerce and Industry (Independent Charge), i.e., Ms. Nirmala Sitharaman. As per the Department’s response, this meeting was held on 22 September, 2014 (“the Meeting”) and was aimed at discussing issues related to IPRs, including finalization of the Terms of Reference for IPR Think-Tank proposed to be established (sic.) The Department also notes that representatives from various Ministries/Departments, Member of various Expert Committees constituted by the Department, besides IP experts and other Legal Practitioners (sic) were invited to the meeting. The Department then states that the composition of the Think Tank was decided on the basis of the discussions held in the department after the said interactive Meeting (sic).

If there was a meeting held to decide on the same, please include all necessary documents including the minutes of the meeting, records, documents, memos, e-mails, opinion, advices, press releases, circulars, orders etc in which the constitution of the aforesaid mentioned IPR Think Tank was decided (sic).

The Department has attached the Minutes of the Meeting held on 22 September, 2014 (“the Minutes”) and states that there were no documents or papers that were circulated at this meeting and that the participants were asked to present their views on various IP issues at this meeting.

Excerpts from the Minutes

The Secretary of the Department (Shri Amitabh Kant) refers to a (then) recent announcement made by the Minister of State for Commerce and Industry (“the Minister”) on the formulation of the National IPR Policy and the establishment of an IPR Think Tank and states that the meeting had been convened to discuss on various IPR issues with IP experts and legal practitioners so that it would provide essential inputs to the policy needs of the department (sic). The Minutes report that Mr. Kant further stated that the objective of the department was to have a world class IP system and that this included a comprehensive National IPR Policy and which takes care of various issues like IP creation, protection, administration and capacity building (sic). He is also reported to have said that such a stakeholder interaction was important for the government to seek inputs.

The Minister is reported to have said that the purpose of the meeting was to constitute an IP Think Tank that would regularly provide inputs to all IP policy needs of this department as well as advice government in disparate legal aspects (sic). The Minutes also report her to have said that the department would finalize an IP policy within ninety days of the Meeting, based on the inputs of the participants.

According to the Minutes, various issues emerged from the discussion. Inter alia, these include first, that the proposal to constitute the Think Tank was a welcome measure, along the lines of similar initiatives taken by Australia, South Kora, the United Kingdom and the United States of America; second, that in order to remove misconceptions held by foreign stakeholders about IP enforcement in India, there was a need to highlight judgments of Indian courts that were favorable to foreign stakeholders and MNCs; third, that the national policies on telecom, manufacturing and IP ought to be integrated; fourth, that the focus of the Policy should be increase in creation of IP including commercialization of IP and strengthening human capital and IP management and fifth, that empirical studies should be conducted to examine the feasibility of Utility Models protection, that there was a need to revise the law on Geographical Indications and that the Policy should include protection for traditional knowledge and guidelines for publicly funded research.

The Minister is then said to have identified six major areas during the discussion, including IP institution, legislation, implementation, public awareness, international aspects and barriers in IP growth as areas to be covered under the Policy.

Who attended the Meeting?

Attached with the Minutes was also a list of participants who attended the Meeting. Out of the thirty six attendees, I have not been able to locate a single individual or organization representing civil society. Participants include representatives from various government departments and ministries, including inter alia, the DIPP, the Department of Commerce, the Ministry of External Affairs, the Ministry of Information and Broadcasting, the Copyright Division from the Department of Higher Education of the Ministry of Human Resources Development, the Office of the Controller General of Patents, Designs and Trademarks and the Ministry of Culture. The Meeting was also attended by representatives of corporations and industry associations, including FICCI, CII and Cadila Pharmaceuticals; in addition to representatives from law firms including Luthra and Luthra, K&S Partners and Inventure IP and academics including, inter alia, faculty from the Asian School of Business, Trivandrum, Indian Law Institute, Delhi, Tezpur University, Assam, National Law University, Delhi, NALSAR University of Law, Hyderabad, the Indian Institute of Technology, Madras and the National Law School of India University, Bangalore.

If there were multiple meetings held for the same please provide all necessary documents including the minutes of all such meetings, records, documents, memos, e-mails, opinions, advices, press releases, circulars, orders etc. for all such meetings held (sic).

The Department answered, “No”; which I’m taking to mean that there weren’t other meetings held for the formulation of the Think Tank or the Policy. This is interesting, because the Minutes (referred to earlier) speak of another inter-ministerial meeting including IP experts and legal practitioners slated to be held around the 10^th of October, 2014, to discuss the framework of the Policy.

If a directive or directives were received by the Department of Industrial Policy and Promotion from any other government body to constitute such a think tank, please provide a copy of such a directive received by the DIPP from any Government authority, to constitute such a Think Tank (sic).

The Department answered, “No”; which I’m taking to mean that there was no communication received by the Department to constitute this Think Tank.

Please indicate in detail the process of shortlisting the members of the IPR Think Tank by the Department of Industrial Policy and Promotion or any other body that was responsible for the same (sic).

The Department replied that the answer to this was the same as that to the first question.

The Second Response: The Drafting of the Policy

The second of the Department's responses to our requests came in the form of separate responses to each of our four questions, as under:

Please indicate in detail the process followed by the IPR Think Tank constituted by the Department of Industrial Policy and Promotion via Public Notice No. 10 (22)/2013-IPR-III dated November 13, 2014 while framing the first draft of the National IPR Policy dated Dec. 19, 2014 (sic).

The Department stated that the IPR Think Tank conducted its meetings independently without any interference from the Department. The Department then stated that the Think Tank had received comments from stakeholders via a dedicated email id and conducted the interactive meeting with stakeholders while framing the draft on the National IPR Policy.

If there was a meeting held to decide on the same, please include all necessary documents including the minutes of the meeting, records, documents, memos, e-mails, opinion, advices, press releases, circulars, orders, suggestions etc. related to drafting of such National IPR Policy Think Tank chaired by Justice Prabha Sridevan (sic).

The Department replied that since the IPR Think Tank had decided its process by themselves (sic), the Department do not have the minutes of the meeting etc. conducted by the IPR Think Tank (sic). It attached with its reply a copy of the press releases announcing the composition of the Think Tank and asking stakeholders to submit comments to the first draft of the Policy.

If there were multiple meetings held for the same, please provide all necessary documents including the minutes of all such meetings, records, documents, memos, e-mails, opinions, advices, press releases, circulars, order suggestions etc. for all such meetings held (sic).

The Department replied that the response to this was the same as that to the earlier question above.

Please provide all the suggestions and comments received by the IPR Think Tank from stakeholders after the DIPP issued Public Notice No. 10/22/2013-IPR-III dated 13.11.2014 asking for suggestions and comments on or before November 30, 2014 (sic).

The Department replied that the comments and suggestions were received by the Think Tank directly and that therefore, the Department was not in a position to provide the same.

The Third Response: Stakeholder Comments

In its third and final response to our requests, the DIPP replied to our query as under:

Please indicate all the suggestions and comments received by the IPR Think Tank by different stakeholders on or before January 30, 2015 on its first draft of the National Intellectual Property Policy submitted by the IPR Think Tank on December 19, 2014.

The Department said that the suggestions and comments on the draft on National IPR Policy have been received by the IPR Think Tank directly. As such this Department is not in a position to provide the same (sic.).

Observation on the DIPP's Responses

Prima facie, the responses by the Department are rather curious, leading to a range of oddities and unanswered questions.

Who Will Watch the IPR Think Tank

In its response to our first RTI request, the Department quite clearly stated that it decided the composition of the IPR Think Tank based on discussions in a meeting that it convened, which was also chaired by the Minister of State for Commerce and Industry, the parent ministry of the DIPP. In the same response, the Department also stated that it had not received any directive from any other ministry/government department directing the constitution of the IPR Think Tank, leading to the conclusion that this decision was taken by the DIPP/the Ministry of Commerce and Industry itself. Subsequently however, the Department justified its refusal to furnish us with documents leading to the development of the first draft of the National IPR Policy (contained in our second RTI request) by stating that the IPR Think Tank conducted its business without any interference from the Department, and that the Department did not have access to any of the submissions made to the IPR Think Tank or any of the internal minutes of the meetings etc. that were a part of the process of drafting the IPR Policy.

Various press releases by the DIPP have stated that it has constituted the IPR Think Tank, and that the purpose of the IPR Think Tank would be to advise the Department on IPR issues. Visibly, the Department intends for the IPR Think Tank to play an active role in shaping India’s IP law and policy, including suggesting amendments to laws wherever necessary. It is concerning therefore that on the question of accountability of the IPR Think Tank, the DIPP remains silent. It may be argued perhaps, that the IPR Think Tank constitutes a ‘public authority’ under Section 2(h)(d) of the Right to Information Act, 2005 (“RTI Act”). In that case, the IPR Think Tank would have to fulfill, inter alia, all of the obligations under Section 4 of the RTI Act as well as designate a Public Information Officer. Alternatively, given that the IPR Think Tank has been constituted by the DIPP and performs functions for the DIPP, the Public Information Officer of the DIPP would have to furnish all relevant information under the RTI Act (including the information that we sought in our requests, which was not provided to us).

Who are the Stakeholders

Even a preliminary look at the list of participants at the Meeting (based on which the Department constituted the IPR Think Tank) reveals that not all stakeholders have been adequately represented. I haven’t been able to spot any representation from civil society and other organizations that might be interested in a more balanced intellectual property framework that is not rights-heavy. The following chart (based on a total sample size of 36 participants, as stated in the list of participants provided to us by the DIPP) will help put things in perspective.

What Could've Been Done?

Setting aside arguments on its necessity, let us for the moment assume that this drafting of the National IPR Policy is an exercise that needed to have been undertaken. We must now examine what might possibly be the best way to go about this.

In 2014, the World Intellectual Property Organization (“WIPO”) (based on whose approach the Policy seems to have been based- at least in part), produced a detailed Methodology for the Development of National Intellectual Property Strategies, outlining a detailed eight step process before a National IP Policy was implemented in a Member State. While this approach is one to be followed by the WIPO and might not be entirely suited to India’s drafting exercise, specific sections on the national consultation process as well as the drafting and implementation of national intellectual property strategies might prove to be a decent starting point.

(More on this in an upcoming article).d

Where Do We Go From Here?

The DIPP’s responses have left me with more questions, probably the subject of more RTI requests. Is the IPR Think Tank a public authority for the purposes of the Right to Information Act, 2005? To whom should questions of informational accountability of the IPR Think Tank be addressed, if there is no information available on the IPR Think Tank, and the DIPP claims to have no access to it? Do we need to re-examine the draft National IPR Policy given that there has been inadequate representation of all stakeholders? What were the suggestions made by different stakeholders, and (how) have these been reflected in the first draft of the Policy? Was there an evaluation exercise conducted before the first draft of the Policy was released in order to better inform the formulation of the Policy?

We will be looking at these and other questions as they arise, and sending some of these to the DIPP in the form of RTI requests. (Watch the blog for more).

For more details visit https://cis-india.org/a2k/blogs/national-ipr-policy-series-rti-requests-by-cis-to-dipp-dipp-responses

National IPR Policy Series: Quick Observations on the Leaked Draft of the National IPR Policy

nehaa — 2015-11-19T05:13:14Z

Earlier this week, the “Don’t Trade Our Lives Away” blog leaked the supposed final draft of India’s National IPR Policy (“leaked draft”). This article presents quick comments on this leaked draft.

The leaked draft (which is not final) is available here. The only official document that the Department of Industrial Policy and Promotion (“DIPP”) has released so far is the First Draft of the National IPR Policy (“First Draft”).

CIS has tracked these developments since the beginning. We have submitted preliminary comments, critical comments to the First Draft, sent multiple requests under the Right to Information Act, 2005 (“RTI requests”) to the DIPP and published their responses, discussed the IPR Think Tank as a public authority under the RTI Act, analysed the process compared to recommendations by the World Intellectual Property Organization (“WIPO”), compared the First Draft to an earlier National IPR Strategy[N1] , written a letter to the Think Tank and have now begun to track the work being done by the Sectoral Innovation Council on IPR, also established under the DIPP. At the time of writing this post, we have been unable to locate comments to the First Draft made available by the DIPP.

Since the release of the First Draft in December, 2014, this leaked document has been the first look at an updated IPR Policy for India. Not much seems to have changed since December, 2014 and this new leaked draft (which is dated April, 2015), barring the inclusion of some Special Focus Areas.

Perhaps one of the strongest criticisms of the First Draft had been that it supposed a nexus between IP and innovation, and various stakeholders had been quick to point this out as problematic, and fallacious. Unfortunately, since the language of the new draft has barely changed (I have managed to count only two-three additions), this remains the underlying issue in the new draft as well.

What continues to be worrying in both drafts is sweeping references of benefits of IP to India’s socio-economic development. What constitutes this development and how IPR, and specifically the IPR Policy will achieve it is anyone’s guess, given that there are no references to studies undertaken to assess how IPR contributes to socio-economic development, specifically in India.

Here are some other quick comments:

In the first objective on IP Awareness and Promotion, the new draft includes an additional recommended step – that of engaging with the media to ‘sensitize them on IP issues’ (sic.). Given that this is under a broader objective of encouraging IP promotion, I am inclined to believe that this could be interpreted as telling the media to print positive things about intellectual property and refrain from criticizing intellectual property (that seems to be the theme of this entire document!). What does it mean to ‘sensitize’ the media about intellectual property?
In the second objective, on IP creation, the leaked draft contains a recommendation to conduct a study to assess the contribution of various IP based industries to the economy – including employment, exports and technology transfer. No other details have been provided in the draft.
Also in the second objective, the new draft makes a mention of improving the IP output of universities, national laboratories etc. The new draft proposes to encourage and facilitate the acquisition of intellectual property rights by these labs and institutions, whereas the earlier draft recommended the protection of IPRs created by them.
In the covering letter to the leaked draft, Justice Sridevan states that the final draft includes a discussion on key focus areas – creative industries, biotechnology, ICT, energy, agriculture, health, geographical indications (“GIs”) and traditional knowledge (“TK”). These have been discussed at the end of the new draft.
Limitations and exceptions remain confined to an area of future study/research for future policy development. The ‘Creative Industries’ section of the leaked draft makes a mention of the significance of limitations and exceptions to safeguard access to knowledge and information; and the need to balance user rights and property rights. One would have liked to see this discussed more substantively in the policy and not confined only to a paragraph in the section on ‘Creative Industries’.
In a welcome move, the policy draft (new) seeks to promote the adoption of free and open standards and free and open software in the ‘Information and Communication Technology and Electronics’ section.

With the DIPP Secretary’s latest update that the new policy draft will be released in about a month’s time, one will have to wait and see what the final draft looks like.

For more details visit https://cis-india.org/a2k/blogs/national-ipr-policy-series-quick-observations-on-the-leaked-draft-of-the-national-ipr-policy

MHRD IPR Chair Series: Information Received from IIT Roorkee

Karan Tripathi and Nehaa Chaudhari — 2015-11-21T07:26:45Z

This post provides a factual description about the operation of Ministry of Human Resource Development IPR Chair’s Intellectual Property Education, Research and Public Outreach (IPERPO) scheme in IIT Roorkee.

Nehaa Chaudhari provided inputs, analysed, reviewed and edited this blog post.

The author has analysed all the data received under various heads such as income, grants from MHRD, planned and non planned expenditure, nature and frequency of programmes organised and the allocation of funds for the same. Throughout the course of observation and presentation of the analysed data, the author seeks to trace the presence of unjustified underutilisation of funds by the aforementioned university as provided by the MHRD during the period of 2003-2014.

To collect the information for the given study, an RTI application was filed to the Indian Institute of Technology, Roorkee on 6/02/2015 by the Centre for Internet and Society. The reply to RTI application was received on 16/02/2015.

These are the documents received by CIS from IIT Roorkee:

For RTI Response click here (IIT Roorkee -Receipt of RTI- 20.4.15)
For complete supporting documents click here (IIT Roorkee – Response and Report)

Hereinafter, in order to receive any information about IIT Roorkee’s RTI reply, kindly refer to the above mentioned links.

Following are the queries mentioned in the RTI application along with their replies.

Reports on the implementation of the IPERPO scheme of the Ministry of Human Resource Development and the implementation of the MHRD IPR Chair funded under the scheme at IIT Roorkee from 2003-20014
Reply: The University documented the minutes of the Departmental Faculty Committee Meeting where proposals for forming Departmental Administrative Committee, syllabus for new institute electives, duties of Departmental Research Committee, forming Institute Time Table Committee, conversion of existing LR1 computer lab and teaching scheme of autumn semester 2013 were deliberated upon. The University also organised various events such as Training of Trainers programme and International Conclave on Innovation and Entrepreneurship.
Documents indicating the date on which such an IPR Chair was set up at your institution and a copy of the application made by IIT Roorkee to the MHRD for instituting such an IPR Chair and documents received by IIT Roorkee from the MHRD approving the same
Reply: According to the Office Memorandum (dated 04 May 2012) of IIT Roorkee, Dr P.K. Ghosh had been appointed on the position of Professional Chair on IPERPO with effect from April 27 2012. A suitable financial grant of Rs. 208.02 lakhs was demanded for a period of five years.
Documents detailing the release of grants to the MHRD IPR Chairs under the IPERPO Scheme
Reply: As it appears from the reply filed by IIT Roorkee to the RTI filed by the CIS, Rs. 30,00,000.00 of the Grant in aid was sanctioned to the University by the MHRD during the financial year 2010-2011 and nil amount was utilized for the purpose of it. At the end of the year, the balance sum of Rs. 30,27,041 (including the interest) was surrendered to the Government.
Documents relating to receipts of utilisation certificates and audited expenditure statements and matters related to all financial sanctions with regard to funds granted to the MHRD IPR Chair established under the IPERPO scheme at IIT Roorkee
Reply: IIT Roorkee has replied with a series of Statement of Expenditure ranging from 2010-2014 that explains its rate of expenditure and amount of interest accumulated and surrendered to the Government along with the unutilized amount. In the financial year 2011-2012 the unutilized expenditure was 3,105,159.00 which came down to 11,74, 026.00 in 2012-2013 due to which a grant of Rs. 24,00,000.00 was extended to the University by MHRD for the financial year 2013-2014.
Documents regarding all matters pertaining to finance and budget related the MHRD IPR Chair under the IPERPOs scheme established at IIT Roorkee
Reply: CIS did not receive any sort of clarity on matters pertaining to finance and budget related to MHRD IPR Chair under the IPERPO scheme as the response for this question was coupled with the previous question on utilization certificates.
Details of the IPR Chair’s salary under the IPERPO Scheme indicating whether this amount is paid over and above the professional’s usual salary
Reply: According to the RTI reply, the position of Chair Professor is awarded for a period of three years or upto 68 years of age, whichever is earlier. The pay of Chair Professor is fixed as per the rules and guidelines of Professional Chair in the institute.

2.0 Comparative Analysis between University Response and the guidelines of MHRD Scheme Document

The Scheme Document of MHRD is a comprehensive document which consists of guidelines regarding Intellectual Property Education, Research and Public Outreach. It talks about a list of objectives, purposes, conditions and eligibility criteria for a University to ensure in order to implement IPERPO in a truest sense. This document provides the procedural as well as qualifying conditions for an Institute to ensure or fulfil before applying for the MHRD grant. Some of these conditions include maintenance of utilization certificates, audit reports, expenditure statements and event information which would be open to access on demand by MDHR or Comptroller and Auditor General of India.

A. Objectives:

As it appears from the reply statement of IIT Roorkee, each and every event organised after the establishment of IPR Chair in 2012, where the funds from the grant have been utilized, is done to promote the scholarly as well as academic interests in the field of Intellectual Property. Even before applying for the MHRD grant, the University has organised many National Seminars and has started various short term courses in order to encourage research and excellence in Intellectual Property. This fact completely resonates with the core objective of MHRD scheme document, i.e. strengthening the academic and research discourses in the field of Intellectual Property.

B. Eligibility:
IIT Roorkee is recognized by the University Grants Commission. Therefore, it fulfils the eligibility criteria mentioned in the scheme document.

C. Conditions for Grant of Assistance
There are several conditions laid down in the scheme document which need to be fulfilled by the concerned University in order to successfully receive the grant. The underlying condition is the dissemination and development in the field of Intellectual Property Rights.

According to the documents available with CIS, IIT Roorkee has organised at least 27 events in the field of IPR ranging from introduction of new electives, National Workshops and Symposiums, Expert Lectures, Infrastructure Development, Online portals for IP Administration and awareness and infrastructure development.

3.0 Financial Analysis of IIT Roorkee’s IPR Grant

According to the RTI reply, the IPR Chair at IIT Roorkee was established in the forenoon of 27th April 2012 with Dr P.K. Ghosh as its Chairman. Dr Ghosh was promised an Honorarium payment of Rs. 30,000 per month and a Contingency payment of Rs. 20,000 per month.

3.1 Financial Year 2010-2011

In this financial year, the IPR Chair was not established at IIT Roorkee. The total grant received by the University was Rs. 30, 00,000.00 out of which Rs.0 was utilized for the purpose of it was sanctioned.

At the end of the financial year, the remaining amount of Rs. 30,00,000, (due to Nil utilisation) along with the interest of Rs. 27041 was either surrendered to the government or adjusted towards the grants-in-aid payable during the next financial year.

3.2 Financial Year 2011-2012

The IPR Chair was still not established at the University. The opening balance was the amount carried forward from the previous year (30,27,041) upon which interest of Rs. 1,17,117 was received making the total receipt to be 31,144,158. Out of this, a total of Rs. 38,999 was utilised for travelling and miscellaneous expenditure. At the end of the year, the remaining of amount of Rs. 3,105,159 was either surrendered to the government or adjusted towards the grant-in-aid payable during the next financial year 2012-2013. As per the documents available with CIS, the statement of expenditure for this financial year has not been submitted by the university.

3.3 Financial Year 2012-2013

In this financial year the IPR Chair was established with Dr. P.K. Ghosh as its Chairman. The Opening balance was the amount carried forward from the previous financial year (31,05,159) upon which an interest income of Rs.1,25,376 was received along with a refund of advance amounting to Rs. 42,968. Out of the total receipt of Rs. 32,73,503 the total expenditure of the University on the current financial year was Rs. 20,99,477. The remaining amount of Rs. 11,74,026 was either surrendered to the government or adjusted towards the grants-in-aid payable during the next financial year 2013-2014.

3.4 Financial Year 2013-2014

In this financial year, the University received a grant of Rs. 24,00,000 from the government along with the amount carried forward from the previous financial year (Rs.11,74,026) upon which an interest income of Rs. 55,892 was received. Out of this, a sum of Rs. 24,01,045 was utilised as contingency expenditure. The remaining amount of Rs. 12,28,873 has been either surrendered to the government or adjusted towards the grants-in-aid payable during the next financial year 2014-2015.

In this financial year, the expenditure on library (5,00,979) is the only sum which exceeded the sanctioned amount (5,00,000). Moreover, there has been no expenditure on Outreach Program and Clinics. The honorarium payment to the IPR Chair Professor is similar to the sanctioned amount (3,60,000) but there’s a difference in his contingent payment (1,39,645 instead of 2,40,000). The total amount of expenditure in this financial year is Rs. 24,01,045.

For more details visit https://cis-india.org/a2k/blogs/mhrd-ipr-chair-series-information-received-from-iit-roorkee

Methodology: Statements of Working (Form 27) of Indian Mobile Device Patents

rohini — 2017-09-10T15:19:51Z

In India, if a patent is not locally worked within three years of its issuance, any person may request a compulsory license, and if the patent is not adequately worked within two years of the grant of such a compulsory license, it may be revoked. In order to provide the public with information about patent working, India requires every patentee to file an annual statement on “Form 27” describing the working of each of its issued Indian patents. We conducted the first comprehensive and systematic study of all Forms 27 filed with respect to mobile devices. We tried to empirically establish the extent to which patentees and licensees comply with the statutory requirement to declare information about the working of their patents. Research assistance was provided by interns Anna Liz Thomas and Nayana Dasgupta.

The research paper on patent landscape, Patents and Mobile Devices in India: An Empirical Survey, [PDF] was published in the Vanderbilt Journal of Transnational Law (2017).

The research paper on "Patent Working Requirements and Complex Products: An Empirical Assessment of India's Form 27 Practice and Compliance" has been published here (July 2017).

The dataset of all the Form 27 studied for this paper has been published here.

Research Questions

How many annual Form 27 submissions have been made to the Indian Patent Office for 4,419 granted patents identified in the landscape of mobile device patents in India?
How many patents have no corresponding Form 27 filed yet?
How many Form 27 submissions from those found are defective?
Is there an identifiable pattern in the defects and discrepancies?
Is there any discernible trend in filing of Form 27 over time and with respect to patent owners?

The objective of this paper is to quantitatively determine the extent to which patentees and licensees comply with the statutory requirement to declare information about the working of their patents according to Section 146(2) of the Patents Act, 1970 read with Rule 131 of the Patent Rules, 2003.

Section 146(2): Without prejudice to the provisions of sub-section (1), every patentee and every licensee (whether exclusive or otherwise) shall furnish in such manner and form and at such intervals (not being less than six months) as may be prescribed statements as to the extent to which the patented invention has been worked on a commercial scale in India.

Rule 131: Form and manner in which statements required under section 146(2) to be furnished

The statements shall be furnished by every patentee and every licensee under sub-section (2) of section 146 in Form 27 which shall be duly verified by the patentee or the licensee or his authorised agent.
The statements referred to in sub-rule (1) shall be furnished in respect of every calendar year within three months of the end of each year.
The Controller may publish the information received by him under sub-section (1) or sub-section (2) of section 146.

Object

The research object is Form 27 submissions made annually to the Indian Patent Office for the 4,419 granted patents.

4,052 of these patents were identified in the landscape (“the patent landscape”) developed by the Centre for Internet and Society as a part of ongoing research on patents pertaining to sub-USD-100 mobile devices sold in India. The dataset of the patent landscape can be accessed here. Another 367 patents pertaining to mobile technology identified during the landscaping exercise but excluded from it, were added to the initial set of 4,052 patents.

A blank copy of Form 27 is available here. The pro forma is defined as per Schedule II of Patent Rules, 2003.

Research Methods

[Corresponding research questions

How many annual Form 27 submissions have been made to the Indian Patent Office for 4,419 granted patents identified in the landscape of mobile device patents in India?
How many patents have no corresponding Form 27 filed yet?
How many Form 27 submissions from those found are defective?]

Outsourcing the searching of the submitted copies of Form 27 to a contractor

Owing to the repetitive nature of the process for collecting the forms, as well the large scale of the project, the task of searching was outsourced to a contractor. Price quotations were invited from five data entry operators and two firms of patent attorneys. On the basis of the quotation, deliverable time, scope and nature of the results delivered, and quality assurance, the contract was awarded to one firm. The firm offered the best price for a commensurate deliverable time and assured quality of results.

Form 27 retrieval online

Form 27 were searched from IPAIRS (Indian Patent Information Retrieval System) and InPASS (Indian Patent Advanced Search System) public databases of the Indian Patent Office.

InPASS has two features: Application Status and E-Register. We checked both features, in case forms not found through one could be located through the other. We indeed found that, sometimes, the forms not available on E-register could be found through the Application Status table, and vice versa.

Case 1: Accessing form 27 using Application Status tab on INPASS

A search portal is located at ipindiaservices.gov.in/publicsearch.

Enter the patent number in the “Patent Number” search field without the kind codes (IN) and click on “Search”. E.g., for patent number IN263932B, enter ‘263932’ in the “Patent Number” field.
Once the queried patent is displayed, select the “Application Status” tab to access the list of documents that were filed for the requested patent.

In the Application Status tab, scroll down to the bottom to view “Application Status table”. Click on the “View Documents” button to access the list of the documents filed for the queried patent. A pop-up window opens with the results.

In the window, a list of hyperlinks to various documents is displayed. Sometimes Form 27/ working statement is explicitly named so. At other times, it may have a different title. Once you click on the form 27 link, a PDF file opens in a new tab. There may be more than one Form 27 in the list of documents as Form 27 is an annual submission.

Case 2: No record of Form 27 found (Application status tab)

If the form is not present on InPASS, that is, if it has not been uploaded to the website, or if it has not been submitted to the Indian Patent Office (IPO), then it will not be displayed in the list of documents described in Case 1, step 5. Such instances have been logged as “No record found”.

Case 3: Accessing form 27 using E-Register tab on INPASS

At http://ipindiaservices.gov.in/publicsearch, a patent search portal is displayed. Enter the patent number by following the same steps as described in Case 1 until the queried patent is displayed. Select the “E-register” tab to access the e-register data corresponding to the queried patent.

In the “E-register” tab, scroll to the bottom to view the “Information u/s 146” table. The “Information u/s 146” table includes a list of Form 27 filed for the queried patent. As visible in the screenshot below, on clicking the “261762_2015” hyperlink, Form 27 for the queried patent opens. There could be multiple form 27s corresponding to different years.

Case 4: No record of Form 27 found (E-register)

If the form is not present in the E-register, that is, if it has not been uploaded to the website or if it has not been submitted to the IPO, then the E-Register tab displays “Eregister Not Available”.

Case 5: Searching on IPAIRS

Both InPASS and IPAIRS fetch forms from the same URL. However, we observed that one search engine sometimes displays the forms when the other doesn’t. The IPAIRS search engine was used when Form 27 was not found on InPASS.

IPAIRS patent search homepage: http://ipindiaonline.gov.in/patentsearch/search/index.aspx On the home page, in the Application Status tab, enter the full patent application number and CAPTCHA.
A window containing information pertaining to the patent application opens. At the bottom of the window, there is a “View Documents” button.

On clicking on “View Documents”, a new window with list of hyperlinked documents opens as described in Case 1, Step 5.

The URL for the new window displayed via “View Documents” on IPAIRS is the same as the URL displayed via “View Documents” in the “Application Status” tab on InPASS. For example, for patent number 263932, the URL for this window is the same on IPAIRS and InPASS: http://ipindiaonline.gov.in/patentsearch/GrantedSearch/viewdoc.aspx?id=Bx6eZ7YQLgsl3yH1LqKHjg==&loc=wDBSZCsAt7zoiVrqcFJsRw==

Form 27 retrieval via Right To Information (RTI) requests

CIS filed two requests under the RTI Act, 2005 with the Office of the Controller General of Patents, Designs, and Trade Marks in Mumbai.

CIS' RTI application to the Indian Patent Office in Mumbai, March 2016 [PDF]. The IPO's reply, April 2016 [PDF].

(View text: https://cis-india.org/a2k/blogs/rti-request-to-indian-patents-office-for-form-27-statement-of-working-of-patents-march-2016)

CIS' RTI application to the IPO in Mumbai, June 2015 [PDF]. The IPO's reply, June 2015 [PDF].

(View text: https://cis-india.org/a2k/blogs/rti-request-to-indian-patents-office-for-form-27-statement-of-working-of-patents-2015)

InPASS and IPAIRS yielded Form 27 for 1,999 patents out of 4,419. For Form 27 pertaining to 61 of the remaining patents, CIS made a request in March 2016 under the Right to Information Act (2005) to the office of the Indian Patent Office located in Mumbai.

How the 61 patents were chosen
37 of the 50 companies in the patent landscape owned granted patents. We took one patent from each of the 37 companies. [See Annexure 4 (PDF)of Methodology: Patent landscaping in the Indian mobile device market] The remaining were patents litigated in India, as well as patents transferred from one of the companies in the landscape to another.

IPO’s reply to the March 2016 RTI application
The IPO replied in April 2016 that it could provide CIS with forms for eleven of the requested patents. As for the rest of the forms, the IPO stated, “As thousand [sic] of Form-27 are filed in this office, it is very difficult to segregate Form-27 for the patent numbers enlisted in your RTI application as it needs diversion of huge official/ staff manpower and it will affect day to day [sic] work of this office.”

Repeating the Form 27 search online

A few days after CIS received the reply from the IPO, Form 27 pertaining to patents in the landscape started appearing on InPASS and IPAIRS E-register portal. CIS’ contractor repeated the search for forms for all 4,419 patents as some forms filed in 2016 and 2015 were found. Forms for additional 1,003 patents were found, taking the number of patents with at least one corresponding form to 3,002.

Of the 1,417 patents for which forms were not found, 481 are either expired or there is no log corresponding to them in the E-Register.

Schema for the results

Information from the Form 27 was logged into a spreadsheet with the following heads:
Serial Number -- Assignee -- Patent Number -- Status -- Application Date -- Grant Date -- Title -- Application Number -- Form 27 presence -- Multiple Forms -- Number of years -- Year -- If Worked -- Working/ Non-working Status -- Working/ Non-working Information -- Licensing Status -- Licensing Information -- Comments.

Detailed legend and process of logging the results

Assignee: Name of the company that owns the patent. Annexure 4 [PDF] lists 50 companies studied for the patent landscape. 37 of those companies owned patents in India. Thus, the assignee could be one of 37 companies among the 50 in Annexure 4. Where two assignees are mentioned, the patent was transferred from the second assignee to the first on account of sale of the patent, company merger, etc. For example, "Huawei|NEC" indicates that a patent that belonged to NEC was transferred to Huawei.

Form 27 presence: Whether or not Form 27 was found. Entries in this column are either “Yes” or “No”. If case Form 27 was not found, the subsequent columns are unpopulated.

Multiple Forms: If more than one Form 27 was found, the number of years for which it was found. In some cases, more than one form was found for the same patent for the same year. We have considered these instances as a single form for the same year and noted the defect in the “Comments” column.

Year: The year for which the form was filed. This information was found in #2 of the pro forma of Form 27. In the case of patents with Form 27 filed for more than one year, the entries for different years have been logged into consecutive rows.

If Worked: This information was found in 3(i) of the pro forma. Depending on whether the text of Form 27 states that the patent was “worked” or “not worked”, results have been logged as either “Yes” or “No”. In instances where it is not explicitly stated whether the patent has been worked or not, or where 3(i) is blank, the results are logged as “Not disclosed” with a description of the defect in the “Comments” column.

Working/ Non-working status: Corresponds to 3(i)a in the case of patents stated as “worked” and to 3(i)b in the case of those stated as “not worked”. The results have been marked as:

Description is generic (future use)
Description is generic (present use)
Description is specific
No description

Description is generic (future use): No specific information been provided as required by 3(i)a or 3(i)b. The description indicates that in the future the patentee might “work” or license the patent or do both. E.g: “May be worked in the future depending on the market demand and when technology is mature.”

“We are still assessing the commercial and technological aspects of working of this patent in India and negotiating marketing and distribution of patented product with related parties.”

“Technical developments [sic] are still continuing” or “Negotiations and technical developments [sic] are still continuing”.

Description is generic (present use): No specific information been provided as required by 3(i)a or 3(i)b. The description indicates that the patentee may be “working” the patent. E.g:, “DUE TO THE NATURE OF THE INVENTION, IT IS NOT POSSIBLE TO DETERMINE ACCURATELY WHETHER THE PATENTED INVENTION HAS BEEN WORKED IN INDIA OR NOT. Improvements in the invention are continuing to be made. The Patentee is actively looking for licensees and customers to commercialise the invention in the Indian environment.”

“... This patent is among a large number of patents in the patentee’s complex portfolio which may cover the products services and embedded technologies provided by the patentee or its licensee(s) in India. This patent might worked [sic] in India in some of the patentee(s) existing or future products, services and embedded technologies. Given the extremely Iarge number of patents that may apply to any given product or service of the patentee, it is very difficult to Identify and accurately update which of those patents would apply to the numerous products, services and embedded technologies.”

Description is specific: Specific information has been provided as required in 3(i)a or 3(i)b.

E.g, “Quantum of the patented product-303520 and value of the patented product in INR-2790524299”.

No description: 3(i)a and 3(i)b are blank.

Working/non-working information: Contains the full text of the descriptions mentioned in “Working/non-working status” column. These have been reproduced verbatim from Form 27 filings.

Licensing status: States whether or not the patent has been licensed as per 3(ii) of the pro forma for Form 27. Results are logged as “Yes” (licensed), “No” (no-licensed), “Cross-licensed” and “Not disclosed”.

“Not disclosed” indicates that the response to 3(ii) is either blank or there is an explicit statement that licensing information would not be disclosed on Form 27. E.g: “As all the licenses are confidential in nature, the details pertaining to the same are not being disclosed herein and may be provided to the Patent Office as and when the same is specifically directed by the Patent Office under sealed cover so that such details are not laid open in public domain.”

Licensing information: Contains the full text of the response reproduced verbatim from 3(ii). (Blank fields when there is no text in 3(ii))

For patents marked as licensed, this column contains the names and addresses of licensees and/ or sub-licensees.

For patents marked as not-licensed, this column is either blank or contains statements such as, “Information Not readily available; efforts will be made to collect and submit further information, if asked for.”, “None”, “No licensees”.

For patents marked as “cross-licensed”, the patentee states that it has a cross-licensing agreement with its licensees. E.g: “There is a cross license agreement between <company name> and at least one licensee, giving mutual rights to produce despite monopoly afforded by patents that are hold by any of the companies. There is no information available on whether the technology of said patent is included products sold by such licensee. As all the licenses are confidential in nature, the details pertaining to the same shall be provided under specific directions from the Patent Office.”

Comments: Contains information about defects and notable observations from the Form 27 submissions.

Validation of results

Validation of the results was done via deduplication first and then random sampling of 10% of the results.

Analysis of results

[Corresponding research questions:
4. Is there an identifiable pattern in the defects and discrepancies?
5. Is there any discernible trend in filing of Form 27 over time and with respect to patent owners?]

The results logged into the spreadsheet were analysed to find a pattern in the defects in the submissions. Visualisations will be created, if necessary.

Prior Art

Extraordinary writ petition in the matter of a public interest litigation, filed in the High Court of Delhi, Shamnad Basheer vs Union of India and others, C.M. No. 5590 of 2015 http://spicyip.com/wp-content/uploads/2015/05/FORM-27-WP-1R-copy.pdf

The petitioner(s) “sought to investigate the commercial working of certain patented inventions in India, particularly in relation to three key areas”. One of these areas include telecommunications technology. Para 53 to 58 of the writ elucidate on the petitioners’ observations and findings on “High technology patents and trolls”, while para 59 and 60 refer to the linkage between patents and products. Annexure P-8 of this petition contains copies of Form 27 filed by Ericsson in India. Annexure P-11 contains a “summary of findings of Form 27 investigations conducted by the petitioner”. Annexure P-4 (II. Telecommunications Sector) contains a list of 58 patents pertaining to the telecommunications domain in India. 21 of these are coincide with the patent landscape mentioned in “Research Object”.
Basheer had published a report in 2011 based on the findings of his RTI investigation of Form 27 pertaining to pharmaceutical patents in India. The report titled “RTI Applications and “Working” of Foreign Drugs in India?” is available at: http://www.spicyip.com/docs/Workingpatents.doc The report sheds light on lack of filing, incomplete filing and violation of patent working norms by pharmaceutical companies. He states having encountered difficulties during the RTI process: The RTI process was a very arduous one, with the patent office refusing information or claiming missing files in some cases. We had to resort to the appellate procedure in almost all cases. And in one case concerning the drugs Tarceva and Sutent, both the CPIO (Delhi office) and the appellate authority refused to provide information. We had to then take the matter up directly with Controller General PH Kurian who immediately ordered that the information be provided. Upon his instructions, the information was provided within 24 hours. However, we received this information only on the 4^th of April 2011, more than 6 months since we began the RTI process! (Source: Drug Firms and Patent "Working": Extent of Compliance with Form 27 http://spicyip.com/2011/04/drug-firms-and-patent-working-extent-of.html

Limitations

If Form 27 is not found on InPASS or INPAIRS, it is not possible to determine if the form has not been submitted to the IPO or it has been submitted but the IPO has not uploaded it. There is no publicly available database or log where such information is available.
Technical issues with the IPAIRS website hampered the speed of searching for and downloading Form 27. At the time of trial run in May 2015, the website was not available for nearly a week. Technical issues also lead to conflicting search results on IPAIRS and INPASS at times. For example, the form may be available via one search engine but not via another, even though they are fetched the files from the same database. Runtime errors occur due to browser caching.

Edited, September 10, 2017: To add -- URLs of the research paper on Form 27 published in July 2017, and of the dataset containing raw data, which was published and licensed CC-BY-SA 4.0.

For more details visit https://cis-india.org/a2k/blogs/methodology-statements-of-working-form-27-of-indian-mobile-device-patents

Methodology: Patent Landscaping in the Indian Mobile Device Market

rohini — 2017-02-15T14:05:38Z

Through the patent landscaping exercise, we have identified patents pertaining to Internet-enabled mobile devices sold in India for USD 100 or less. The findings from this exercise are being used to develop legal strategies to reduce patent-based impediments to the widespread and rapid proliferation of this beneficial technology throughout India. The research methodology adopted for the patent landscaping exercise has been delineated here. This document is a work in progress.

1. Research Questions

Are there indications of increasing patent filing over time by the mobile device industry in India?
What patents pertain to capabilities commonly found in networked mobile devices sold in India for USD 100 or less?
What are the existing patent pools for each of the capabilities identified in question 2? What do we know about these patent pools?
Would the existing patent pools be sufficient to ensure that:

consumers continue to have access to inexpensive devices?
manufacturers operating in the budget segment are not snuffed out by patent litigation or do not pass on losses caused by patent litigation to their consumers?
the rights of patent holders are not infringed upon? If not, why?

Which of these patent pools could go into an India-based mobile device patent "pool of pools" formed possibly through government intervention and having a royalty level supportable by the domestic Indian consumer market for mobile devices?
What is the design and manufacturing flow of a finished Internet-enabled low-cost mobile phone sold in India?

2. Objective

The objective of the chapter is to exhaustively determine the number of patents that apply to an Internet-enabled mobile device that costs the equivalent of USD 100 or less in the Indian retail market. The set of patents is restricted to those that apply to technologies which are commonly found in such a device. This set of patents could be included in a patent pool for Indian manufacturers of mobile phones.

3. Object

[2. What patents pertain to capabilities commonly found in networked mobile devices sold in India for USD 100 or less?]

Eight mobile phones [Annexure 1 (PDF)] have been procured for identifying the technical standards implemented in them. These are phones manufactured in China and sold in the white or grey market in India either by Indian brands or by Chinese ones. The research object also includes the Indian patent database, documentation published by standard setting organisations, and the practices of Indian manufacturers of Internet-enabled mobile devices in the sub-USD-100 segment.

3.1. The phones were used to determine “capabilities commonly found in networked mobile devices sold in India for USD 100 or less” as described in research question 2. These capabilities were identified by (a) examining the physical components of the phone, (b) by running emulators which identified details about the hardware, (c) verifying the findings from (a) and (b) with the users' manual, packaging box, or any other documentation published by the manufacturer.

3.2. Criteria for Choosing the Mobile Phones

The handsets cost less than USD 100 (INR 6,000 approximately), connect to the Internet, and are sold in physical Indian markets.
Every handset has at least one feature that differentiates it from the rest of the set. For example, in-built support for multiple Indian languages; 50 kilowatt battery (as published on the carton and battery label); camera with CMOS sensor.
The universal set for the mobile phones of interest for this research can not be defined as the phones are sold in grey or black markets. Catalogues, online listings, company websites, and other documentation for this universal set are not available. Hence, it is not possible to definitively identify mobile phones that are 'representative' of the handsets of interest. Handsets that help one get a richer sense of the population of the sub-USD-100 mobile phone market in India have been chosen.

4. Rationale

Though India has not yet witnessed patent litigation of the same scale as developed countries, litigation over standard essential patents in India has already led to injunctions against nine homegrown and Chinese manufacturers^[1]. The mobile device landscape in India uncovered through this research will be applied to the development of policy recommendations that aim to ensure that consumers continue to have access to inexpensive devices, that manufacturers operating in the budget segment do not end up shutting shop due to patent litigation, and the rights of patent holders are not infringed upon.

5. Research Method

[1. Are there measurable indications of increasing patent filing by the mobile device industry in India?

2. What patents pertain to capabilities commonly found in networked mobile devices sold in India for USD 100 or less?]

Fifty Indian and non-Indian companies most likely to hold telecom-related patents in India were identified by CIS. [Annexure 4]. Two patent searchs firm were contracted the task of searching the database of the Indian Patent Office by the names of the fifty companies for patents granted and applied for.

5.1. Procedure for selecting law firms/ patent attorneys:

Ten law firms and patent search agencies from different parts of India were identified as potential contractors after preliminary meetings with several patent attorneys and representatives of law firms.
Price quotations were invited from the ten organisations after holding one or more meetings with each.
On the basis of the quotation, deliverable time, scope and nature of the results delivered, and quality assurance, the contract was awarded to one firm of patent attorneys (Hourglass Research, Mumbai) and one law firm. The firms offered the best price for a commensurate deliverable time and assured quality of results.

5.2. Patent Firm 1 (Hourglass Research) Search Strategy:

Step 1: A taxonomy that comprehensively covers different technologies implemented in an Internet-enabled mobile phone was drawn up [Annexure 5]. The taxonomy was split into categories (Level 1) and sub-categories (Level 2).

Step 2: The Derwent World Patents Index (DWPI) assigns one or more manual codes (MC) to each patent depending on the technology described by the patent. The patent firm matched manual codes pertaining to mobile technology with categories in the taxonomy. Thus, each manual code corresponded to one or more categories in the taxonomy.

Step 3: Subsequently, search strings [listed in Annexure 6] were used to find published applications as well as granted patents from the Thomson Innovation (TI) database. The search strings comprise permutations and combinations of the manual codes [Annexure 7], fifty assignees , keywords, and IPC classes and sub-classes. The search results were extracted on February 23, 2015. Hence, the patents granted or published till then have been included in the landscape. The start date is January 1, 2000 as the Thomson Innovation Database does not contain earlier records from the Indian Patent Office database.

Step 4: Then, manual codes for each patent in the results were extracted. Each patent was assigned a category corresponding to its manual codes. This automated categorisation was manually reviewed and validated by reading the claims, abstract, DWPI use, and DWPI novelty. In instances where the patent could not be categorised based on the information contained in the claims, abstract, DWPI use, and DWPI novelty, the detailed description associated with the patents (i.e., the column entitled "Description" in the dataset) was read.

Step 5: The TI database yields International Patent Documentation (INPADOC) families. In instances where one or more patents from the same family appeared in the search results, granted patents were chosen over non-granted ones as "representative" of the family.

Step 6: The results were deduplicated first on the basis of the publication number and then on the basis of the application number. In five instances, two or more different patents were assigned the same application number. This was resolved by manually reading the patent and determining the most relevant patent.

4,052 patents and 19,517 patent applications relevant to the mobile phone were found at the end of the patent landscaping exercise.

5.3. Schema for identified patents and patent applications: Name of Assignee -- Patent Number -- Application Number -- Status of application (Granted/ Published) -- Application Date -- Publication Date -- Grant Date -- Database Searched -- Title -- Abstract -- Category (Level 1) -- Sub-category (Level 2) -- Infrastructure/ User Equipment/ both -- Title (DWPI) -- Abstract (DWPI) -- Abstract DWPI Novelty -- Abstract DWPI Use -- Comments/ Remarks

5.4. List of IPC classes and sub-classes and DWPI Manual Codes excluded from the patent search: [Annexure 8], [Rejoinder to Annexure 8]

These classes, sub-classes and manual codes were excluded as they were very overarching for the research question. Class H04, for instance, pertains to "electric communication techniques". It is likely to comprise a comparatively large number of patents not pertaining to mobile device technology. Instead, certain sub-classes of H04 that are the most relevant to mobile device have been considered. As another example, the sub-classes of G01 pertain to measurements of physical quantities (length, area, thickness, et al). The number of patents pertaining to mobile technology in these sub-classes will be small compared with the number of patents in the sub-class.

5.5 Patent Search Firm 2

Patent Search Firm 2 used Questel and Questel Orbit databases to search for patents and patent applications filed in India from January 1, 2005 to January 1, 2015. The results delivered by this firm did not fulfill our quality standards. Hence, they were dropped from the research. We intended to compare the results of the two search firms to determine the difference.

5.6. Identifying telecom standards implemented in mobile phones:

[2. What patents pertain to capabilities commonly found in networked mobile devices sold in India for USD 100 or less?]

Using documentation available from standards-setting organisations and industry consortia, and from the nine handsets, 322 technical standards [Annexure 2] implemented in a networked mobile device have been identified by CIS. These technical standards support commonly found capabilities in a networked mobile handset. By dismantling the phones, their components were identified [Annexure 3]. The list of components and standards was used to determine the patent pools, standard-setting organisations and standard development organisations of interest for research questions 3 and 4 as well as for the literature survey.

6. Validation of Results

The results of the patent landscaping exercise turned in by the patent search firm were validated by performing the following steps:

Checking for duplicate application numbers via MySql
Checking for duplicate publication numbers via MySql

No duplicates were found.

7. Analysis of Results

[2. What patents pertain to capabilities commonly found in networked mobile devices sold in India for USD 100 or less?]

7.1. Data Analysis: Breakdown of 23,569 patents and patent applications

Number of patents and patent applications combined in the different Level 1 categories,

Number of patents and patent applications combined in Level 2 categories (i.e., sub-categories).

7.2. Visualisations: Graphical representations of the patent landscape

1. Number of patents in each Level 1 category
2. Number of published patent applications versus granted patents in each Level 1 category
3. Number of patents in each sub-category of “Communication”
4. Number of patents in each sub-category of “Operational Blocks”
5. Number of patents in each sub-category of “Sensors”
6. Number of patents in each sub-category of “Energy Storage”
7. Number of patents in each sub-category of “Sound, image, and video”
8. Number of patents in each sub-category of “Display”
9. Number of user equipment patents, infrastructure patents and infrastructure and user equipment patents.
10. Number of patents held by each of the fifty assignees
11. Number of patent filings by the fifty assignees from the year 2000 to the year 2014
12. Number of patents in each Level 1 category filed over the years (time intervals: 2000-2003, 2004-2007, 2008-2011, 2012-2014)
13. Number of patents filed annually from the year 2000 to 2014 for all Level 1 categories combined
14. Top 10 assignees in Communication
15. Top 10 assignees in Operational Blocks
16. Top 10 assignees in Software
17. Top 10 assignees in Sensors
18. Top 10 assignees in Sound, Image, and Video
19. Top 10 assignees in Display
20. Number of patents in each Level 1 category held by each assignee in the top 10. (The ten assignees with the most number of patents in the overall dataset of 23,569.)
21. Number of patents filed from the year 2000 to 2014 in each sub-category of Communication
22. Number of patents filed from the year 2000 to 2014 in each sub-category of Operational Blocks
23. Sub-categories (Level 2 categories) with the highest number of filings [Baseband; Bandwidth; Call and data management; Signalling, routing and switching]
24. Top 10 assignees in Baseband
25. Top 10 assignees in Bandwidth
26. Top 10 assignees in Call and data management
27. Top 10 assignees in Signalling, routing and switching

8. Confidential Research and Anonymised Interviews

[6. What is the design and manufacturing flow of a finished Internet-enabled low-cost mobile phone sold in India?]

CIS conducted and published anonymised interviews with semiconductor chip manufacturers in Taiwan in September 2014. A confidential research exercise was conducted with original equipment manufacturers (OEMs) and white-label assembly lines in China in 2014. The two research exercises have contributed to the mapping of the downstream flow of manufacturing a finished, Internet-enabled, low-cost mobile device.

9. Literature Survey

[3. What are the existing patent pools for each of the capabilities found in a low-cost networked mobile device? What do we know about these patent pools?

4. Would the existing patent pools be sufficient to ensure that consumers continue to have access to inexpensive devices, that manufacturers operating in the budget segment are not snuffed out by patent litigation (or pass on losses caused by patent litigation to their consumers), and the rights of patent holders are not infringed upon. If not, why?]

Research questions 3 and 4 will be answered via a comprehensive literature survey.

10. Prior Art

A list of 2,300 patents from different jurisdictions (US, Japan, India, Korea, Sweden, Taiwan, Europe, China, Finland, France, Norway, UK, Germany, Singapore) searched by keyword/ keystring was compiled in 2013 ^[2].

Clairvolex, a market research firm based in Gurgaon conducted a patent landscaping exercise of mobil technologies in India in 2010. The search was based on IPC classes: http://www.clairvolex.com/pdf/communication.pdf

11. Narrative:

The chapter for the book takes the form of a story of an Indian businessperson travelling to Shenzhen in China to procure a consignment of mobile phones for selling them in India. The businessperson puts together a configuration of hardware and software for the mobile phone and sets out to find the royalties he would need to pay for it.

Numerical data has been presented using visualisations.

12. Assumptions:

The chapter assumes a direct link between the patent regime and the availability of inexpensive Internet-enabled mobile devices, whereas the latter is affected by several other factors outside the scope of this research, for example, trademark infringement litigation.

13. Limitations:

The patent landscape only encompasses the patents and patent applications filed by 50 major brands in India. It does not take into account patents held by other vendors, universities, and educational institutions.
The patent landscaping exercise was conducted for patents granted and applications filed between January 1, 2000 and February 23, 2015 as earlier data for Indian patents was not available in the Thomson Reuters database. As the lifespan of a patent is 20 years, live patents granted between 1995 and 2000 in India are not present in the landscape.
IPC classes, sub-classes and DWPI manual codes listed in Annexure 8 were not included in the patent landscape as they were very overarching for the research question. Class H04, for instance, pertains to "electric communication techniques". It is likely to comprise a comparatively large number of patents not pertaining to mobile device technology. Instead, certain sub-classes of H04 that are the most relevant to mobile device have been considered. As another example, the sub-classes of G01 pertain to measurements of physical quantities (length, area, thickness, et al). The number of patents pertaining to mobile technology in these sub-classes will be small compared with the number of patents in the sub-class. Owing to the presence of a relatively large number of patents superfluous to the research, these classes were not included in the interest of time, effort, and monetary cost.

Edited, April 8, 2015: To add -- Procedure for selecting law firms/ patent attorneys for this task, Patent database searching by company name, List of companies

Edited April 27, 2015: To update -- Annexure 2, List of standards and specifications found in sub-USD-100 Internet-enabled mobile phones sold in India.

Edited, May 23, 2015: To remove "Scope: Software patents will not be considered" as software patents granted in India have been found.

Edited, July 25, 2015: To remove steps "Patent database searching by standard" and "patent database searching by keyword" as they would have increased the time and costs needed for the landscaping without adding significant value. Hence, removed the research question, "What degree of standards implemented in the mobile device technology sold within India compared with that in the US is currently covered by patents?"

Edited, November 7, 2015: To edit – Research question 1. Are there measurable indications of increasing patenting activity in the mobile device industry in India?

2. What patents are absolutely necessary to keep a networked mobile device which costs less than USD 100 in India running?

3. What are the existing patent pools for each of the standards identified and what do we know about them?

4. Question trifurcated.

5. Which of these patent pools could go into an India-based mobile device patent "pool of pools" formed possibly through government intervention and having a royalty level supportable by the domestic Indian mobile device market?

Research Objective: The set of patents is restricted to those that apply to technologies that are absolutely necessary for the functioning of such a device.

To add in “Research Object”: The research object was used to determine “ features commonly found in networked mobile devices sold in India that cost less than USD 100” as described in research question 2.

To add sections on Analysis of Results, Confidential Research and Anonymised Interviews, and Literature Survey.

Edited, November 17, 2015: To add section on Limitations.

Footnotes:

[1]. Compilation of Mobile Phone Patent Litigation Cases in India, Rohini Lakshané, March 15, 2015, http://cis-india.org/a2k/blogs/compilation-of-mobile-phone-patent-litigation-cases-in-india, Last accessed November 7, 2015.

[2]. Mobile Phone Patents: Prior Art Survey, Nehaa Chaudhari, October 23, 2013, http://cis-india.org/a2k/blog/mobile-phone-patents, Last accessed November 7, 2015.

For more details visit https://cis-india.org/a2k/blogs/patent-landscaping-in-the-indian-mobile-device-market

Methodology: Access to Music through the Mobile

maggie — 2014-12-08T16:22:41Z

Like its predecessors the vinyl, the cassette tape, the CD, and the MP3 player, the mobile phone as the most recent musical carrier have been well documented to be a disruptive technology, one which has made earlier carrier technologies virtually obsolete. The mobile phone has transformed the music industry and its supporting infrastructure — dramatically altering the roles of various intermediaries and stakeholders who enable the creation, distribution, and consumption of musical content.

Context

For the first time in 13 years, the music business is growing again, with consumption of musical content at an all time high due to innovations which have provided more affordable and convenient platforms for accessing music than ever before. These include web-based and mobile-based applications which have arisen to compete with piracy through "free", "feels-like-free" and "fermium" business models.[1]

Given the pervasiveness of the mobile phone, especially in India where it is the only mode of access for over 50% of the population [2], these innovations along with expanding broadband and data services seems to be a mark of success in bringing access to music and other media content to those formerly priced out, and geographically excluded from the legal market.

However, Indian web and mobile-based applications such as Gaana and Saavn, and its U.S. counterparts like Spotify and Pandora have continuously operated at a loss, often sustained by venture capitalist funding or a larger corporate backing.[3] Although many online platforms, such as the recently shut down Flyte (funded by Flipkart) cite piracy as the official reason for its closure, industry insiders have allegedly noted exorbitant licensing fees demanded by rights holders as the case.[4]

Research Problems

1. It is uncertain whether legal access to affordable music through the mobile will remain.

As an access issue, this is problematic due to the potential disappearances of these platforms, which have with varying success provided an alternative to unauthorized file sharing while increasing the ease of consumers' access to a larger volume and variety of legal content. Some of these applications provide a "direct-to-fan" platform for musicians to upload their own music online without having to 'break in' to a relatively closed entertainment industry, particularly in the Indian market where the mass majority of music is dominated by the film industry. Access to increased volume and variety is also not a guarantee, particularly in light of some musicians' indignation over the intermediaries' profits from their content, and the little revenue received in return.

2. Numerous stakeholders are entering the technologically advancing, digital music industry resulting in uncertainty of optimal business models and increased complexity of revenue and royalty distribution.
Thus, given evolving business models due to the transitioning physical to digital music industry, no consensus has yet been found on which platforms or revenue models offer an optimal solution for access to, and production of music. The potential for monetization in all levels of the value chain - from production, to content aggregation, to content distribution, and consumption -- has resulted in an increase in the number of intermediaries, further complicating the ecosystem.

All stakeholders fulfill different roles in the industry while expressing the common challenge of 'monetization'.

Web and mobile based content distributors are attempting to find the right price points at which Indian consumers are willing to pay, particularly in a market whose billing model is largely based on mobile credits and cash-on-delivery since only 1% of the population have access to credit. [5] Globally, criticisms for streaming distributors like Spotify are highly publicized, not paying enough royalty to artists despite claims that 70% of their revenue is spent on content licensing.[6]

Content aggregators are attempting to monetize services such as music fingerprinting, meta-data tagging, and other analytics tracking to identify and capitalize on consumer behavior and consumption trends. Meanwhile, telecom companies and mobile phone manufacturers are attempting to provide integrated services and music bundle packages to increase the interoperability of these platforms for a more frictionless experience for consumers.

Content owners - vast majority being music labels -- are attempting to maintain their relevance in the industry through its powerful artist and repertoire marketing role, amidst criticisms that stakeholders like multi-channel networks and self-publishing content distributors (i.e. SoundCloud, Youtube, etc.) will deem it irrelevant. Many distributors globally note the vast ownership of content leading to the potential abuse of bargaining power, as exemplified by the Competition Commission of India's recent ruling that Super Cassette Industries' (or T-Series, who own 70% of Hindi film music) practiced unfair and discriminatory charging practices for a radio broadcasters due to their demand for minimum guarantees.[7]

The content producers -- lyricists, composers, performers, and more are struggling to monetize and finance the production of their music. Down the valuation stream, the contractual agreements between content owners and distributors affect the livelihoods of these artists. India's music industry is particularly unique in that the vast majority of content are film music, which means the common financier of music production are the film industry, rather than music labels or publishing houses. Additionally, given a one-time, work-for-hire agreement was commonplace in the Indian film industry during music production, a contractual agreement stipulating royalty division was slow to materialize.

3. Continued violation of law due to lack of legitimacy of Copyright Board, Copyright societies, and 2012 Copyright Amendment.

The entire music ecosystem is governed by the framework of copyright, which necessitates legal mechanisms to ensure proper regulation and balance between the protection of rights holders and access to content for consumers.

The 2012 Copyright Amendment attempted to address the imbalance of bargaining power through preventing the first author's transfer of right to royalty, amongst others. This amendment was also passed in response to alleged corruption and collusion between the content owners (music labels), various judiciaries, and the former copyright societies (Indian Performing Rights Societies ("IPRS") and the Indian Phonographic Publishing Limited ("PPL")), resulting in an absence of royalty payments to lyricists and composers for many years.[8]

Despite this, the Copyright Amendment have not been as effective in correcting the issues on the ground, and are still allegedly being circumvented via advanced royalties, backdated agreements, and waiver of performance royalty rights.[9] Other inefficiencies cited have been poor transparency of royalty payments, lack of publicly available analytics on web and mobile-based platforms, and untimely responses by the Copyright Board to conduct investigations into the allegations.

Amidst these allegations, some industry analysts also claim the Copyright framework itself needs to catch up with the technological potential that the internet, and these new services provide. This may be an alternative perspective to be explored.

*(Tentative) Research Questions and Methodology

Thus, given uncertainty of the sustainability of affordable, legal access; the increasing complexity of business models and royalty distribution, and the continued violation of Copyright law due to lack of legitimacy, the policy question is:
How can legal and institutional mechanisms ensure an enabling environment for access to, and production of music for all mobile phone users in India?

"Legal mechanisms" - Copyright Act, Copyright Board, licensing mechanisms
"Institutional mechanisms" - Copyright societies, music industry norms, corporate policies
"Access" - equitable, fair, easy access to quality and quantity of music
- Potential barriers to access (to music, through mobile):
- Political: Legal constraints (Goonda Act?), intermediaries prevent copying, licensing bodies
- Economic: Lack of availability of older repertoire, access to mobile device
- Social: Use or access of materials involving loss of privacy, lack of quality production
- Technological: TPMs, compatibility, broadband/data access, payment gateways, geographic barriers, lack of net neutrality

Access necessitates "production" - ability to create content with little entry barriers; balance right of artists to earn, and consumer access

Barriers to production and distribution:
Uncertainty of business models in age of digital music
Ineffectiveness of Copyright regulation: Copyright societies, Copyright board
Controversy surrounding Copyright Act
Lack of finance/income -- intermediaries taking share of pie ?? Inefficiencies in music industry?

"Mobile phone users in India" - smartphone users able to access web and mobile based platforms

How do the stakeholders in the Indian music industry work together to facilitate access to music via the mobile phone?

Who are the stakeholders of the music industry in India?
What are their roles and their objectives?
How have their roles changed given the digital transition of the music industry?

Method: Conduct a stakeholder analysis mapping the physical to digital transition. Secure information via literature review (academic and grey) and expert interviews secured via snowball sampling.

Content Creation

Lyricists/composers (film, non-film)
Performers (film, nom-film)
Film Producer
Sound Producer
Publisher
Self-production (Remix artists, DJs, independents)

Content Aggregation and Distribution
- Content Aggregation:

Music labels (International/film/indie)
Mobile aggregators (VAS companies)
Tech aggregators (back-end for digital platforms: meta-data tagging, analytics, etc.)

Content distribution (digital)

Online stores (e.g. iTunes)

Mobile/Web-based

Webcast/Radio (e.g. MumbaiOne Radio)
Digital Stores (e.g. Amazon, iTunes, eMusic, Google Play, Flyte, OKListen, etc.)
Interactive streaming (e.g. 8tracks, Gaana, Hungama, Raaga, Rdio, Spotify, etc.)
Bundled telco-music stores (formerly Nokia MixMusic)

Copyright Board
Copyright societies (e.g. IPRS (Indian Performing Rights Society), PPL (Phonographics Performance Limited, ISRA (Indian Singers Rights Association))
Associations (e.g. MCAI (Music Composers Association of India), SIMCA (South Indian Music Companies Association), IMI (Indian Music Industry - ass. of producers), etc.)

Financiers:
- Venture capitalists
- Brands/advertisers
- Corporate backing
- Multi-channel networks
  - Technical intermediaries
    - Telecom operators
    - Internet service providers
    - Data providers
    - Payment gateway providers

Mobile phone manufacturers

Consumers

Types of music listeners (Ovum research taxonomy)
- Active fans (lean forward/niche)
- Core enthusiasts (lean forward/mainstream)
- Indie followers (lean back/niche)
- Lean-back listeners (lean back/mainstream)
Class distinction / price sensitivity?

What are the current business models for web and mobile-based content distributors? How does this impact each stakeholder in the music industry?

What are the new business models of the digital music industry in India?
- How are the new intermediaries/stakeholders in the web/mobile targeted music industry impacting business models?
- Literature review (media, industry reports) and expert interviews

What is the revenue distribution in the music production value chain for the web/mobile-based platforms in India?
- Method: International comparison of new digital music business models worldwide:
- Online MOOC Course & lectures (Coursera - West Virginia University ; YouTube - Future of Music Coalition[11] )
- Literature review (academic, white, grey, media, industry repots, etc.)
- Method: Replicate FMC's study for Indian context: Music and How Money Flows[12]

Who are the consumers that access music via mobile/web-based platforms in India?

Is there a socio-cultural-economic dimension distinguishing those willing and able to pay? Who actually pays and how much?
- Method: Literature review, expert interviews, surveys??
- Are there different levels of musical engagement which translate to consumer behavior (active fans, core enthusiasts, indie follower, lean back listeners) and subsequent willingness to pay? What percentage of listeners fall in each category in India?
  - Method: Questionnaire to current users of web/mobile-based music distributors supplemented by expert interviews
  - What kind of economic good is digital music in India? Inferior, luxury, normal? Complementary, substitute? Public, merit, private, free?
    - Method: Literature review, theoretical economic analysis supplemented by user survey and expert interviews

Considering the stakeholders in the digital music industry, consumer behavior in India, how should music copyrights be regulated to provide optimal access of music through the mobile to consumers and fair renumeration to first authors?

What role do legal mechanisms currently play in the distribution of royalty revenue in the music industry (on the ground)?
- Method: Mapping of copyright processes and agreements (oral, contractual, or otherwise) between stakeholders in the music industry, noting specifically role of Copyright Board, and (former) Copyright societies; expert interviews
What role do codified laws (2012 Copyright Amendment, case law) stipulate should be the legal mechanisms to distribute royalty in the music industry?
- Method: Legal literature review, expert interviews
- How have the 2012 Copyright Amendment impacted the stakeholders in the music industry? Are the laws effectively enforced? Has the Copyright Amendment been designed/defined/articulated in an optimal way for all stakeholders? Why or why not?
- Method: Literature review
- How should copyright be organized? Who should distribute royalty revenues? What process?
  - Method: Consider stakeholder analysis, context of India music/film industry, consumer demand and price-sensitivity, and conduct cross-jurisdictional comparison
  - What industry norms should be set for a more transparent, efficient supply chain to ensure rights holders receive fair compensation?
    - Method: International comparison of industry norms for copyright organization and distribution

[1].Amba Kak, Fighting Free with Free - The Legal Music Market in India as a Response to the Digital Age (Centre for Internet and Society, to be published.)

[2].Avendus Capital, India’s Mobile Internet: The Revolution Has Begun: An Overview of How Mobile Internet Is Touching the Lives of Millions, Industry (Avendus Capital Private Limited, September 2013), http://www.avendus.com/Files/Fund%20Performance%20PDF/Avendus_Report-India’s_Mobile_Internet-2013.pdf.

[3].Amba Kak, Fighting Free with Free - The Legal Music Market in India as a Response to the Digital Age (Centre for Internet and Society, to be published.)

[4].Nikhil Pahwa, “Why Flipkart Shut Down Flyte Music,” News and Analysis of Digital Media in India, MediaNama, (May 29, 2013), http://www.medianama.com/2013/05/223-why-flipkart-shut-flyte-music/.

[5].Reserve Bank of India, as cited in IFPI, India: Nearing an all-time high http://www.ifpi.org/india.php

[6].James Duffett-Smith, Music Licensing Study: Notice and Request for Public Comment (United States Copyright Office 2014).

[7].Ashok Chawla, M.L. Tayal, and S.L. Bunker, HT Media Limited v. Super Cassettes Industries Limited (Competition Commission of India 2014).

[8].Prashant Reddy, “Did the Big Music Companies on IPRS & PPL Collude to Deny Lyricists and Composers Crores of Rupees in ‘ringtone Royalties’ – An Investigation,” http://spicyip.com/2011/02/did-big-music-companies-on-iprs-ppl.html, SpicyIP, (February 14, 2011)

[9].Anonymous, “Ghost Post: The myriad ways in which the Copyright Amendment Act, 2012 is being circumvented” http://spicyip.com/2014/01/ghost-post-the-myriad-ways-in-which-the-copyright-amendment-act-2012-is-being-circumvented.html, SpicyIP, (January 18, 2014)

[10].https://www.coursera.org/course/gpsmusic

[11]. https://www.youtube.com/playlist?list=PL471E012D03E9BA03

[12]. https://futureofmusic.org/blog/2013/06/18/music-and-how-money-flows

Click to download the PDF

For more details visit https://cis-india.org/a2k/blogs/methodology-access-to-music-through-mobile

Joining the Dots in India's Big-Ticket Mobile Phone Patent Litigation (Updated)

rohini — 2018-05-06T03:51:49Z

An analysis of the significant commonalities and differences in various big-ticket lawsuits in India over the alleged infringement of mobile device patents.

This blog post has been merged with another on the same topic and published as a paper. The paper was last updated in October 2017.

View paper on SSRN.

For more details visit https://cis-india.org/a2k/blogs/joining-the-dots-in-indias-big-ticket-mobile-phone-patent-litigation

Interviews with App Developers: [dis]regard towards IPR vs. Patent Hype – Part II

samantha — 2014-08-19T03:51:39Z

The following is a second post within a series reporting on interviews conducted with 10 of Bangalore's mobile app developers and other industry stakeholders. Within this research, CIS attempts to understand how they engage with the law within their practice, particularly with respect to IP. Here we examine how these developers responded to a question on legal protection for their works.

Before one can identify the solution, one must first identify the problem. Yet, in order to understand the problem, we must first understand the individuals involved and the how the problem affects these individuals. We hope that the findings of this preliminary research initiative will provide sufficient groundwork to understand the problems that exist and the different ways of approaching them before determining the most suitable prospective option in changes at the policy level. In this case, the individuals under study are the key contributors to the mobile app space within India; and the problem, being those faced by them as they attempt to navigate an emerging and ambiguous ecosystem.

Previously, we looked at responses that were given across these mobile app developers interviewed which revealed how they orient notions of intellectual property within their practice and own products, specifically. Findings that were made included deductions that the majority of those interviewed developed mobile app products for clients, and in turn assigned ownership of their products to their clients. Just as well, they commonly shared an interest in leaving the services sector to create products of their own, with some of them already having made the transition within their business model.

Question 2: “How is your IP protected?”

Next, we asked how they go about protecting their intellectual property to get a feel of who is protecting their apps and who is not. In asking this question, we hoped to learn how they go about protecting their work via legal means. Across their various responses, we observed many patterns and contradictions which are conveyed here with reference to comments made across interviews. It is important to note, however, that no causal relations intend for be argued for, only suggested correlations.

How they responded

When asked, those interviewed responded with a variance in answers. Some simply stated that their work is not protected, while a few mentioned that they acquired trademark or intend to apply for trademark protection. One interviewee had a patent pending in India and the US, as well. In many of our conversations, developers mentioned that their code for their apps is under open source licenses, and a couple others entailed sharing that the content is under creative commons licenses, “individual licenses,” or joint copyright. Additionally, within one interview, one mentioned the use of encryption tools as a technical means of protection for their work.

“The concept of securing IP is relatively new within the Indian context... it becomes a question of priority between innovation and protection" — Aravind Krishnaswamy, Levitum

Of the developers interviewed, many exhibited some sort of confusion or misunderstanding related to the protection of their works by means of intellectual property rights (IPR). Those interviewed seemed to either express an interest to acquire IPR in the future for their products in the forms of patent or trademark protection, or expressed their appreciation for openness source licensing—or both! Beneath these immediate responses, however, many repeated patterns, as well as contradictions, are revealed. Conversations that followed within these interviewed entailed the opportunity to hear from personal experiences and opinions on different areas within their practice intersecting IPR.

Reasons for IPR protection

If a startup or SME is bootstrapped with very little cash flow to begin with, what would provoke or inspire one to pursue the process of acquiring patent protection then? Aravind Krishnaswamy of startup, Levitum, considers “the concept of securing IP is relatively new within the Indian context.” So if this is the case, why did so many developers interviewed express an interest in IPR?

For those who did express interest in acquiring IPR as protection for their mobile app products, most seemed to express an interest in proving ownership over their work, or preventing problems in the future. One developer's commented on how the mobile app market is a “new and potentially volatile area for software development.” For this reason, it was imperative that he and his team attempted to avoid trouble in the future, and ensure that they going about mobile app development the right and moral way.

Within another interview, developer, John Paul of mobile app SME, Plackal, explains his motives for seeking to acquire patent protection, the application for which is currently pending in India and the US: "For us, applying for a patent is primarily defensive. And if it does get infringed upon, it would give us a good opportunity to generate revenue from it." For the company's trademark, they sought to be able to enforce their ownership over their product's brand: “As a precautionary, we've trademarked the app so that should there be a situation where the app is pirated, we can claim ownership for that app.”

Security not so easily attainable

“To some extent, IPR law is only accessible after moving away from the startup phase."—John Paul, Plackal

However, for the startup especially, such protection does not come without a cost. For this reason, IPR is generally perceived as a gamble or tradeoff. It becomes a “question of priority between innovation and protection,” says Krishnaswamy. He continues in saying that, "I feel like even if it’s a great idea if someone else copies it, that’s some level of validation, but as a small company I’d rather be nimble in terms of how we build it up and get it to a certain point. We're trying to move fast and get something going, and then figure it out.” For Krishnaswamy and his team, securing a patent on an area where they feel they feel they have unique work is on their list of things to do, “It's something for us to revisit in the future.”

Paul explains that he and his team didn't always have IPR within reach: “To some extent, IPR law is only accessible after moving away from the startup phase.” So what discourages startups from acquiring IPR, or simply seeking it out?

Patent attorney and IP consultant, Arjun Bala explains that “there is a lot to figure out. One aspect is filling it out, the other is how you write it so that it is easily granted and gives you the right sort of patent protection you are looking for. It is a very complex process that requires a lot of technical and legal expertise.” But even if one successfully manoeuvres the IPR system, is protection guaranteed?

Business Financial Strategist of Out Sourced CFO & Business Advisory Services, Jayant Tewari, illustrates the lack of security for the SME in the patent system, specifically, in saying, “Since a patent becomes public domain on filing, it can be effectively infringed based on the filing, even before it is granted.” Tewari continues in stressing the irrelevance of patents for SMEs due to the difficulty of enforcement: “the infringement will be adjudicated after 2 years at an immense cost to the SME patent-holder, who will go commercially belly-up due to the infringement. The regime does not protect the SME at all.”

“It is easy to say 'this is the method and no once can copy', but unless the look and feel is the same, it is very hard to demonstrate that you have been infringed on.”
—Samuel Mani, Mani Chengappa & Mathur

Nevermind enforcement...

Not only did our interviews shed light on the difficulty for a startup developer to apply for and be granted protection for their intellectual property, but also for the enforcement of such. Partnering Lawyer, Samuel Mani, of technology-focused law firm, Mani Chengappa & Mathur, speaks to us about the extensive procedure required to prove one's ownership over their IP: “To demonstrate copyright infringement, it requires going into millions of lines of code—unless it is the interface that is copied, which is easily visible.” Mani continues on the enforcement of patent protection by saying, “For a patent, the scope is even wider. It is easy to say 'this is the method and no once can copy', but unless the look and feel is the same, it is very hard to demonstrate that you have been infringed on.”

Planting the initial seed

If there is arguably so much risk associated with applying for IPR protection, as well with enforcement, what specifically gets startups thinking about IPR initially within their practice? What experiences help them formulate their opinions on the matter, and which forms of IPR do they seek out?

Across interviews conducted, one particular observation entailed the tendency for developers to have worked in the past for corporate employers that have dealt with cases of infringement or have acquired IP protection. Almost half of those interviewed shared the fact that they worked for a corporate employer and became better familiar with different notions of intellectual property through that experience. It may not be too farfetched to suggest, then, that for the developer the idea of acquiring IPR protection is one that may be reinforced from previous employers or other successful development companies with IPR of their own.

Cofounder and developer for a medium-sized software development enterprise, Anoop[1] explained that it wasn't until after the success of his enterprise's first application with $1 million in sales, that they started thinking about intellectual property and began to understand the value of it. This newly attained understanding, however, had not been enough to sufficiently equip his team with the knowledge to properly secure protection. For them, going after patent protection turned out to be a pursuit in vain.

Loss of faith in patents for SMEs

Anoop shares his disappointing experience after attempting to secure a patent for one of their mobile apps:

“We burned our fingers with patents. We spent a lot of money for a game we invented about 3 years ago. We had a law firm in the US to help us. We applied for it, and it went through 3-4 revisions, costing us $25-30,000. We finally closed the file when we could not get it due to an existing patent. We were really surprised."

After much disappointment from not being successful in their attempts to acquire patent protection, however, Anoop came out of the experience with a new outlook on patents and their role for SMEs:

“They're meant for large companies as means to bully your competitor. Only big players with the capacity to file for a patent as soon as it takes off benefit. The existing system doesn’t really work for startup companies. In India and anywhere. It’s an expensive process. If you’re a startup who’s just bootstrapping, there’s no guarantee that you will get it. It’s going to take you years.”

Patent hype
Anoop is a prime example of developers in the startup space that fall victim to the promises of the patent system—only to be spat back out having exhausted their time and earnings. Already being aware of the probability for failure, Mani strongly discourages going after patent protection as a means of staying in the race. “With people spending millions on litigation, it is a recipe for disaster, especially considering the inherent delay of the Indian system.” For this reason, Mani stresses the importance of applying for the right protection.

Mani also suggests that the patent debate is driven by self-interest—people who simply make money off of application filing, regardless of whether or not the case succeeds. As a lawyer in the IT space, Mani claims to have turned away several prospective clients looking to patent their products when he insisted that such means of protection was not suitable for their product and interests...which brings us to an additional area of heated debate: the patentability of mobile apps.

Can mobile apps be patented?[2]

One concept that seemed to receive contested responses across interviews is that of the patentability of mobile apps in the first place. When asked if mobile apps could be patented, former lawyer and startup founder, Vivek Durai, of HumblePaper, put it blatantly in responding, “absolutely not.” Others offered explanations of the Indian Patent Law nuances regarding when a mobile app is patentable and when one is not.

While consulting a SME with their own patent application, Bala explains their approach to ensure the mobile app's eligibility for patent protection, while providing some insight into the Indian patent system:

“One approach that we've taken to getting a patent in India is it's not just a pure software, but a software plus a hardware—as in it requires a specific hardware to function. If [the software] makes the hardware perform better, then it has a technical effect... In which case, we have a better chance of getting a patent in India. If your software is agnostic to hardware, however, it is much more difficult to receive a patent in India.”

To patent or not to patent? (or any IPR for that matter)
To Tewari, on the other hand, the question of whether a mobile app can be patented is one entirely irrelevant. The question Tewari introduces into the developer's market strategy is not 'can I patent my app?' but instead, 'should I do so?' In response to which; he would predominantly reply: No.

“How [startup] mobile app developers regard IP laws—or better yet, disregard—is fine for their sake,” argues Tewari. Alternatively, he suggests developers learn how to maneuver the laws, to prevent themselves from arriving at any sticky situations after unknowingly using another's code. To his clients who have mobile apps of their own, he advises to use an open source equivalent of a piece of code if they do not have the rights to it. Doing so will help keep infringement upon others at a minimal and prevent litigation against oneself.

“How [startup] mobile app developers regard IP laws—or better yet, disregard—is fine for their sake."—Jayant Tewari, Out Sourced CFO & Business Advisory Services

Not all developers interviewed, however, aspired to acquiring patent protection. In fact, some strongly opposed software patents, while expressing their appreciation for openness across the developer community. The other side to the IPR-Open Source dichotomy will be examined in the blog post to follow, after which, we will then look at accounts of infringement and threats of litigation across mobile app developers interviewed.

To recap

By looking closely at the individual experiences across mobile app developers interviewed, we hope to begin to map out the mobile app ecosystem and the ways in which industry players engage with each other regarding their IPR. We also hope to begin to shed light on the different attitudes towards the law within one's practice, and how they shape their decisions related to their work. Only after doing so, may we be able to sufficiently assess how India's current IP laws govern this landscape.

Stay tuned for the next in this blog series! We hope that you may benefit from our findings in your own practice as a mobile app industry player or enthusiast, as well.

Notes:
[1] Name changed to protect the interviewee's identity

[2] In conducting interviews, our goal was not to test the legitimacy of responses, but instead, to map them out across various industry stakeholders. For this reason, this blog series will not be able to sufficiently respond to legal question, such as whether or not mobile apps are patentable to begin with. We intend to, however, undergo legal analysis of the Indian IPR system at its intersection with the mobile app space in India at a later stage in this project.

For more details visit https://cis-india.org/a2k/blogs/interviews-with-app-developers-dis-regard-towards-ipr-vs-patent-hype-2013-part-ii

Intellectual Property in Mobile Application Development in India

sinha — 2015-08-31T14:33:06Z

A steady rise in smart phone penetration in India has led to a corresponding growth of the mobile application development industry. Mobile application development like all technological implementations is subject to intellectual property issues. However, very little is understood about the effect of existing patent and copyright law on this niche industry. I aim to develop an understanding of the mobile applications industry, and how it is governed by current Indian patent and copyright regime. I will also use this research to inform the optimal ways in which policymakers may ensure the continual emergence of the mobile applications industry. This blog post lays down a document delineating the research methodology and research questions within the Intellectual Property in Mobile Application Development in India chapter under the Pervasive Technologies Project. The document is a work in progress.

Introduction to the “Intellectual Property in Mobile Application Development” chapter

Software companies in India were traditionally operating on the software as a service (SAAS model). Service contracts signed within this industry ensured that all IPR developed during a project was owned by the client. With the advent of the smart-phone, many software developers left SAAS enterprises in pursuit of developing their own mobile application products (“mobile apps”). Several developers began to aggressively acquire or create patent portfolios around their products.¹ However, it has been observed that mobile apps continue to be increasingly produced in imitation of other products or services or by more discrete means of copying source code or content without the right to do so.

The overall objective of this chapter is to develop a holistic picture of the mobile apps development ecosystem in India in order to portray the decisions developers are making within their practice as a function of how India's intellectual property regime operates within this ecosystem. I will also examine whether existing regimes of intellectual property interact inhibit or accelerate the growth of the mobile applications development ecosystem in India, especially in conjunction with market and cultural forces arising as a result.

Research Questions and Methodology

1. What are the decisions developers are making within their practice in terms of location of their enterprise and clients, scale of audience, funding, business models and mobile apps marketplace (app stores) ?

1.1. Who is the primary actor in the mobile applications development cycle in India?

Method: Analysis of the quantitative research conducted by Samantha Cassar across 267 mobile applications developers.²

Create a new survey instrument and supplement with relevant external expert interviews obtained from Samantha Cassar's qualitative research.

The interviews shall be conducted with respondents based out of Mumbai, Pune and Hyderabad
The exercise targets 10 developers in each city

The analysis of the interviews and results of Samantha's web survey shall be verified by an expert well-versed with the analysis of qualitative and quantitative data

1.2 Is the mobile apps marketplace organically developing into a Bazaar model, or a Cathedral model?

Method: Literature review

1.3. What are the contractual terms between the enterprise and the employee? What is the typical nature of agreements in the mobile apps development industry between enterprise-employee and enterprise- client?

Method: Analysis of the quantitative research conducted by Samantha Cassar and supplement with relevent external expert interviews obtained from her qualitative research.

What is the nature of innovation emerging from the mobile app industry? What is the awareness of the mobile applications developer and its enterprise of rules concerning code, content and design? How does re-use and sharing of code, content and design occur in the mobile application developer ecosystem ? What is the perceived impact of the Indian IPR regime on the aforementioned aspects? Finally, do the emerging trends in re-use and sharing of code run afoul of Indian IP law?

Method: Analysis of Indian Patent and Copyright regime to assess the legality of prevailing practices in the ecosystem.

Analysis of the quantitative research conducted by Samantha Cassar and supplement it with relevant external expert interviews obtained from Samantha's qualitative research.

3. The apps marketplace is extremely important since they are the gatekeepers enabling access to apps. What is the nature of the apps marketplace? What are the limitations associated with it ? How do the existing regulatory models intersect with this relatively new marketplace? What is the enforcement carried out by these app stores in terms of IP?

Method: Literature review and analysis of the new survey instrument.

   4. How does Indian Copyright law and patent law apply to the mobile applications development ecosystem, in respect of the various business models operating in the industry?

       Method: Literature review

4.1. The patent regime is grounded on a laboratory model of innovation. What does the niche mobile applications development industry (working on a micro-creativity model of innovation) require differently from the patent regime to foster growth?

Method: Literature review

4.2. Similarly, copyright law has a distinct design for digital objects. Examine the design and its suitability to regulate a mobile application.

Method: Literature review to trace the development of copyright law. Copyright was designed to regulate a physical book publishing industry. By extending its application to myriad objects, the design has gone through significant changes. Also, conduct expert interviews in the field to understand the practice and gather qualitative data.

1 See Lava aims for 100 mobile apps, available at http://spicyip.com/2013/01/guest-post-lava-aims-for-100-mobile-app.html

2 Out of 267 respondents, 93 responded in full and 164 responded partially

3See Question 1.2 of this document

For more details visit https://cis-india.org/a2k/blogs/intellectual-property-in-mobile-application-development-in-india-1

India's Obligations under Bilateral Investment Treaties (Part A): “Bilateral Inhibiting Treaty?” — Investigating the Challenges that Bilateral Investment Treaties pose to the Compulsory Licensing of Pervasive Technology Patent Pools

gavin — 2013-09-02T14:45:08Z

In this blog post, the first of a series of three, Gavin Pereira attempts to address the challenges that India's obligations under Bilateral Investment Treaties may pose to the establishment of a patent pool in the country. The author thanks Puneeth Nagaraj for his guidance and inputs on this paper.

"And finally, many states, unfortunately, see investment treaties as a diplomatic photo opportunity without being fully aware of the actual legal implications."
Nathalie Bernasconi-Osterwalder[1]

Introduction
Continuing from the Indian government’s Economic Reform Program, which had started in 1991,[2] are India’s Bilateral Investment Promotion and Protection Agreements. Generally referred to as Bilateral Investment Treaties or "BITs," these agreements seek to provide for conditions that are “favourable for greater investment by investors of one State in the territory of the other State”[3] in hopes that this would lead to "stimulation of business initiatives and increase in prosperity."[4]

Since 1996, India has signed a total of 82 BITs, of which 72 have come into force.[5] At the time of signing them, BITs were generally hailed as a means to increase foreign investor confidence during the liberalisation of India’s economy.[6]

Recently however, several notices of disputes were filed or threatened to be filed under these treaties by companies such as Vodafone B.V.[7], Telenor[8] and Sistema.[9] These filings lead to the review of all the BITs signed by India, a procedure that was called upon by the Indian government’s Department for Industrial Policy and Promotion,[10] as well as the composition of an amended model BIT by the Ministry of Finance to increase the threshold requirements for an investor to initiate arbitration.[11]

Such discord between thestate and investors protected under BITs is not unique to India. There has been a steady rise in the number of investment disputes brought to international arbitration with the highest number of known treaty-based disputes filed in 2012. This has been revealed through a review of the claims filed in the International Center for Settlement of Investment Disputes (ICSID) and an inspection of United Nations Conference on Trade and Development (UNCTAD).[12] In the history of investor-state dispute resolution, the highest reward to the tune of $1.77 billion in Occidental v Ecuador[13] was awarded last year.

In order to better contextualize this background of increasingly assertive investor claims, my essay will first attempt to ascertain the meaning of intellectual property (IP) rights as defined as investments within BITs and explore their effect on the compulsory licensing of information and communication technology patent pools. I will then discuss the relation between covenants that India is a signatory to, Indian copyright law and BITs with an aim to propose measures by which BITs should be suitably amended to allow for India’s burgeoning growth in the budget smartphone market.

BIT Claims Against India
There are a total of 12 known and 17 estimated[14] treaty claims against India, the 11th highest number of claims in the world.[15] Given the strict confidentiality thatcovers these proceedings, this is merely the tip of the iceberg, as there may be several other claims against India that are not available in the public domain.[16]

The tribunal in White Industries v Republic of India [17] — the first investment treaty award against India — held India liable for breaching its obligation to provide “effective means of asserting claims and enforcing rights” pursuant to 4(2) of the India-Australia BIT, read with 4(5) of the India-Kuwait BIT. India was ordered to compensate White Industries a total amount of approximately four million Australian dollars plus interest.[18]

The tribunal attributed the inordinate delay by Indian courts, especially the Indian Supreme Court in enforcing an arbitral award in favour of White Industries as a denial of effective means to enforce their right to their investment.[19]

In 2012, Vodafone B.V. filed a notice of dispute, a prerequisite to commence arbitration under the India-Netherlands BIT, claiming that the Indian government’s decision to enact the Indian Finance Bill 2012 would be a failure to accord ‘fair and equitable treatment;’ the reason being that the amendment sought to retroactively tax the 2007 share-purchase agreement between Hutchinson Telecommunications International Ltd. and Vodafone[20] despite the Supreme Court ruling in favour of Vodafone on that issue.[21]

Telenor and Sistema have filed or threatened to file notices of dispute under BITs Following the cancellation of 122 2G spectrum telecom licenses by the Supreme Court.[22] Within these filings was the alleging that the act of the Supreme Court undermined the license allocation process and was a form of indirect expropriation of their investments.[23]

In March 2012, the Children’s Investment Fund (CIF) filed a notice of dispute in a letter addressed to the Minister of Finance, invoking both the India-UK BIT and the India-Cyprus BIT in response to the “seriously impaired business activities and operations of the company” by virtue of their investment in Coal India.[24] They alleged that Coal India’s sale of assets to private companies at below-market price, on the directive of the Government, has caused a huge loss to the Coal India and in effect, to the company’s share value. This claim is unprecedented as CIF is a minority shareholder essentially suing Coal India for greater dividends.[25] CIF has since soldalmost 20% of their shareholding in Coal India.[26]

Intellectual Property and BIT
The Indian model text of BIT’s, and therefore all 82 BITs that have been drafted based on the model text, define "investment" inter alia as "intellectual property rights, in accordance with the laws of the contracting party."[27] This enables investors protected to file BIT claims against India for any action that directly or indirectly adversely affects their IPR, subject to certain other conditions. It was only a matter of time before the full extent of the scope of claims that may be brought forward against India under the numerous BITs had begun to unravel. Two distinct but equally important IP-related court judgments have signaled the possibility of the intervention of investment treaties on India’s IP regime, and in the context of this paper, on affordable smartphones.

The first is the interim injunction passed by the Delhi High Court in Ericsson v Micromax[28] that acknowledged that the plaintiff (Ericsson) has "made out a prima facie case in its favour and balance of convenience…also entirely in its favour." Accordingly, if interim compensation in accordance with a temporary Fair Reasonable and Non-Discriminatory (FRAND) license between Micromax and Ericsson were not granted, "irreparable harm would be caused to the plaintiff."[29]

The resulting interim arrangement included the execution of a FRAND license, based on FRAND terms, with Micromax agreeing to pay Ericsson between 1.25% and 2% of the sale price of their phone models to Ericsson.[30]

The second of the two court judgments to be looked at is comprised of a series of pharmaceutical patent disputes between global pharmaceutical companies and Indian generic drug producers regarding the compulsory licensing of critical drugs related to cancer and HIV. In March 2012, the Controller General of Patents, Designs and Trademarks relied on the patentability clause of the Patents Act, 1970[31] to authorise an Indian generic drug producer, Natco Pharma,to manufacture and sell copies of Nexavar, a patented drug sold globally by Bayer.[32]

In April 2013, the Supreme Court allowed Indian generic drug manufacturers to manufacture a version of the cancer drug, Glivec (also known as “Gleevec”), referring to the same patentability clause of the Patents Act in coming to the conclusion that it did not have a feature that qualified it as a true invention.The court emphasised the importance of referring to the evolution of India’s patent regime, specifically the influence of what they term “important milestones,” such as the Justice Bakshi Tek Chand Committee Report, the Justice Ayyangar Committee Report, the growth of India’s domestic pharmaceutical industry after the enactment of the 1970 Patents Act, and the signing of the TRIPS agreement in determining whether a compulsory license should be granted.[33]

Interestingly enough, an immediate reaction to these regulatory and court decisions in the area of pharmaceutical patents included press releases from large law firms discussing the benefits for multinational pharmaceutical companies in seeking dispute resolution under Bilateral Investment Treaties.[34] While there is a WTO Dispute Resolution Mechanism under TRIPS, where contracting parties may request for consultation under Article XXII or initiate dispute resolution under Article XXIII of the GATT, there are a number of reasons why investors chose to file claims under BITs,[35] an aspect that will be discussed in the next post.

Internationally as well, the intertwining of issues of Intellectual Property with BIT claimsis a new development, at the forefront of which is the Australian tobacco plain packaging international arbitration. Australia enacted the Tobacco Plain Packaging Act that increased the Graphic Health Warnings on the front of the packaging from 30% to 75%, and which prescribes every aspect of the appearance, size and shape of tobacco packaging and prohibits the use of trademarks, symbols or graphics other than the brand and variant name in plain font. Philip Morris Asia Limited (PMAL) filed a notice of arbitration under the Hong Kong-Australia BIT arguing that their intellectual property and goodwill were infringed by the Plain Packaging Act.[36]

Pervasive Technology and India’s Growth
The Report of the Special Rapporteur of the Human Rights Council on the Promotion and Protection of the Right to Freedom of Opinion and Expression emphasised the importance of the internet, not only to enable individuals to exercise their right to freedom of expression but to promote the progress of society as a whole. The report called upon member states to make the internet widely available, accessible and affordable to all segments of society.The cutting off of users from Internet access, including on grounds of violation of IP,was described as disproportionate and in violation of the reasonable limitations to freedom of expression clause of the International Convention on Civil and Political Rights.[38]

It is in light of these international developments and global arbitral awards in the area of IP that the compulsory licensing of budget smartphone patents in India needs to be evaluated.

[1]. Latha Jishnu, India’s many investment treaties make it vulnerable, Down To Earth, Jan 31, 2012.

[2]. For a commentary on the slew of FDI measures taken as part of India’s liberalisation, see M.S. Ahluwalia, Economic Reforms in India since 1991: Has Gradualism worked?,16(3) J. Econ. Perspectives 67, 73 (2002).

[3]. See e.g. Preamble to, Agreement for the Promotion and Reciprocal Protection of Investments, India-Arg., Aug. 20, 1999, Ministry of Finance-Government of India, http://finmin.nic.in/bipa/Argentina.pdf; Preamble to Agreement for the Promotion and Reciprocal Protection of Investments, India-China, Nov. 21, 2006, Ministry of Finance-Government of India, http://finmin.nic.in/bipa/China.pdf.

[4]. Id.

[5]. Ministry of Finance-Government of India, Bilateral Investment Promotion and Protection Agreements, http://finmin.nic.in/bipa/bipa_index.asp?pageid=1 (last visited July 17, 2013); ICSID Database of Bilateral Investment Treaties, International Centre for Settlement of Investment Disputes, https://icsid.worldbank.org/ICSID/FrontServlet (last visited July 18, 2013).

[6]. Id;India-Germany sign bilateral investment pact, INDIAN EXPRESS, July 16, 1998; YashwantSinha, Foreword to Agreement for the Promotion and Reciprocal Protection of Investments, India-Ger., July 10, 1995, Ministry of Finance-Government of India, http://finmin.nic.in/bipa/Germany.pdf.

[7]. Vodafone.com, News Release: Vodafone serves Notice Against Indian Government Under International Bilateral Investment Treaty, http://www.vodafone.com/content/index/media/group_press_releases/2012/bit.html (last visited July 23, 2013).

[8]. Siddharth, Telenor seeks arbitration, claims $14 bn from govt in 2G case, Times of India, Mar. 27, 2012.

[9]. ShauvikGhosh, Sistema asks why India wants to delay arbitration proceedings, Live Mint, Oct. 1, 2012.

[10]. S. Bhushan & Puneeth Nagaraj, Need to align Bilateral Investment Treaty regime with Global Reality, THE HINDU, Jan. 6, 2013; Surabhi, Govt. to review bilateral ties to avoid legal battle with telcos, Indian Express, Apr. 13, 2012.

[11]. Deepshikha Sikarwar, Government to draft model treaty on MNC’s mediation rush, Economic Times, Jul. 9, 2013.

[12]. UNCTAD, INTERNATIONAL INVESTMENT ARBITRATION ISSUE NOTE: RECENT DEVELOPMENTS IN INVESTOR-STATE DISPUTE SETTLEMENT (2013).

[13]. UNCTAD, UNCTAD publishes its review of investor-state dispute settlement, http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=453&Sitemap_x0020_Taxonomy=Investment%20and%20Enterprise;#607;#International Investment Agreements (IIA);#20;#UNCTAD Home (last visited Aug. 2, 2013).

[14]. Sikarwar, supra note 11.

[15]. Id. at 29.

[16]. Latha Jishnu, A treaty too many, DOWN TO EARTH, May 15, 2013 (few details are available of the Enron-Dabhol Investment Arbitration under the India-Mauritius Bilateral Investment Treaty).

[17]. White Industries Australia Ltd. v Republic of India, UNCITRAL, Final Award, Nov. 30, 2011.

[18]. Id. at ¶ 16.

[19]. Id. at ¶ 14.3.5. For an understanding of the implications that the White Industries case has for India’s Investment Treaty program, see Prabhash Ranjan, The White Industries Arbitration: Implications for India’s Investment Treaty Program, INVESTMENT TREATY NEWS, Apr. 13, 2012 available at http://www.iisd.org/itn/2012/04/13/the-white-industries-arbitration-implications-for-indias-investment-treaty-program/.

[20]. Vodafone.com, supra note 7. For an analysis of Vodafone and India’s investment arbitration claims, see RAAG YADAVA ET. AL., VODAFONE AND INDIA: A REVIEW OF CLAIMS IN INVESTMENT ARBITRATION (2012).

[21]. Vodafone International Holdings B.V. v. Union of India & Anr., Civil Appeal No. 733 of 2012, arising out of S.L.P. (C) No. 26529 of 2010, Supreme Court of India.

[22]. Dr. Subramaniam Swamy v. Union of India & Ors., W.P. (Civil) No: 423 of 2010 with W.P. (Civil) No: 10 of 2011. Supreme Court verdict on 2G spectrum allocation, The Hindu, Feb. 2, 2012.

[23]. Siddarth, supra note 8; Ghosh, supra note 9.

[24]. Sam Jones, TCI initiates legal action against India, Financial Times, Mar. 27, 2013.

[25]. Debjoy Sengupta, UK-based The Children's Fund demands higher dividend from Coal India, The Economic Times, Feb 19,2013.

[26]. See, http://www.vccircle.com/news/commodities/2013/06/25/childrens-investment-fund-sells-fifth-its-holding-coal-india.

[27]. Department of Economic Affairs – Ministry of Finance, Indian Model Text of Bilateral Investment Promotion and Protection Agreements (BIPA), available at http://finmin.nic.in/the_ministry/dept_eco_affairs/icsection/ Indian%20Model%20Text%20BIPA.asp?pageid=1.

[28]. Telefonaktiebolaget LM Ericsson v. Mercury Electronics & Anr, I.A. No. 3825/2013 in CS(OS) 442/2013, Delhi High Court.

[29]. Id.

[30]. Telefonaktiebolaget LM Ericsson v. Mercury Electronics & Anr, I.A. No. 4694/2013 in CS(OS) 442/2013, Delhi High Court.

[31]. Section 3(d) - the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant.

[32]. Vikas Bajaj & Andrew Pollack, India orders Bayer to license a Patented Drug, NYT, March 12, 2012.

[33]. Novartis AG v Union of India &Ors., CIVIL APPEAL Nos. 2706-2716 OF 2013 with Natco Pharma Ltd. v. Union of India & Ors. CIVIL APPEAL No. 2728 OF 2013 with M/s. Cancer Patients Aid Association v. Union of India & Ors. CIVIL APPEAL Nos. 2717-2727 OF 2013, Supreme Court of India (2013).

[34]. See e.g. TREATY PROTECTION FOR GLOBAL PATENTS: A RESPONSE TO A GROWING PROBLEM FOR MULTINATIONAL PHARMACEUTICAL COMPANIES, JONES DAY (October 2012).

[35]. GENERAL AGREEMENT ON TRADE AND TARIFFS , XXII and XIII (1994).

[36]. NOTICE OF ARBITRATION, BETWEEN PHILIP MORRIS ASIA LIMITED AND THE COMMONWEALTH OF AUSTRALIA (2011).

[37]. U.N.G.A. - Report of the Special Rapporteur of the Human Rights Council on the Promotion and Protection of the Right to Freedom of Opinion and Expression, U.N. Doc A/HRC/17/27.

[38]. Id. at 21-22. Article 19 (3) of the ICCPR - The exercise of the rights provided for in paragraph 2 of this article carries with it special duties and responsibilities. It may therefore be subject to certain restrictions, but these shall only be such as are provided by law and are necessary:(a) For respect of the rights or reputations of others; (b) For the protection of national security or of public order (ordre public), or of public health or morals.

For more details visit https://cis-india.org/a2k/blogs/bilateral-inhibiting-treaty-investigating-challenges-that-bilateral-investment-treaties-pose-to-compulsory-licensing-of-pervasive-technology-patent-pools