The Rule relating to the Annual working statements for Patents was amended with effect from March 15, 2024 with no prior notice. The amended Rule was welcome by most stakeholders as amendments address the concerns of the stakeholders. The working statements found reference in a few leading cases including the one relating to the compulsory licence case a decade ago. These judgments gave rise to serious concerns of the stakeholders especially the overseas ones. In several cases, negative opinion was expressed by the patent holders, particularly due to the nature of information that was required to be revealed in the public domain, such as revenues, details of products supplied and/or imported with every small detail.  This was seen as an audit of the business relating to patented products and processes in India.

The pre amended law:

Timelines –The working statements were required to be filed before September 30 of each year. The working details in respect of patents granted in the immediately preceding financial year (April to March) are not required to be furnished during the year immediately following, instead in year after that. For example, the working details filed in 2023 (in the period between April to September 2023) were in respect of patents granted in the year ending March 2022 and for older patents for the financial year of April 2021 to March 2022.

A liberal regime- Under the laws prior to the recently amended one the requirement as practiced was very liberal and not strictly regulated. Several thousand patent holders and licensee never used to file working statements or file them out of time and in some cases after months even though the law required all such statements to be flied by September 30. No petitions were called for. No working statements were taken off record for filing late without petitions.  That was a very friendly approach gesture from the Patent Office.

Penalty– There was a frightfully high penalty equivalent to US$ 12,000 for failure to file working statement. Significantly not in a single case was such fine imposed or implemented

Individual forms for single patent– At all times prior to the 2020 amendment one form was required for each patent to provide the working information.  In the form one was required to tick Worked / not worked as the case may be and indicate the patent number. Where the patents were worked the patentee/licensee was required separate indicate the revenues out of manufacturing and / or importation. Also there the requirement to provide all details of the process / product made in India or imported into India. This made the stakeholders reveal their revenues and other business details which was not to the liking of the stakeholders for obvious reasons. The disturbing part was that all such declarations were made available in public domain on the filing of the required details.

Same form for multiple related patents – The law amended in 2020 provided for the filing of a single form covering multiple related patents which are worked together in a manner such that the working details of several patents cannot be isolated for example, providing 5G wireless technology, where large number of patented technology is used and it is not possible to single out the value of revenue contributed by the individual patents. For such composite data the value for all related patents taken together had to be estimated and furnished in the form. The law permitted the patent holders and licensees to file individual working statements listing the related patent details. This was a very practical approach of the law makers and has been appreciated by the stakeholders. It is however important that the related patents are owned by the same entity. The amendment of 2020 was the result of  a large number of representations from different quarters for  few years prior years prior to the amendment and eventually came the welcome change.

The amended law:

In its endeavour to further simplify the working statement requirements, the Indian Patent Office vide Patent Amendment Rules, 2020, made major changes with regard to the timelines/period and information to be submitted in FORM 27. The concerns of the stakeholders in India and abroad were factored while bringing the amendments in place. However, the amendments clearly give the message that the requirement of law must be complied with. The law has simplified the procedure and that has brought a significant relief to the patent holders and licensees.

 

FORM 27 Amended Rules
Prior to March 15, 2024	After March 15, 2024
(2) The statements referred to in sub-rule (1) shall be furnished once in respect of every financial year, starting from the financial year commencing immediately after the financial year in which the patent was granted, and shall be furnished within six months from the expiry of each such financial year.”	(2) The statements referred to in sub-rule (1) shall be furnished once in respect of each period of three financial years, starting from the financial year commencing immediately after the financial year in which the patent was granted and shall be furnished within six months from the expiry of each such period. Provided that the Controller may condone the delay or extend the time in filing of such statement for a period up to three months upon a request made in Form 4.”.

 Snapshots of the amended law :

• Timelines remain the same as with the pre-amended law
• Turnover and other financial details need not be revealed
• Use of same form for multiple related patents to continue
• September 30 continues to be the extendible last date
• Penalty amount reduced but restructured to ensure compliance of the law

Salient Features Of The Amendment to law relating to working statement requirement and its implications:

1. No More working statement filing required on annual basis: Taking note of the cumbersome effort and resources required to accumulate and file working statement data on annual basis the working statement requirement has been amended to be submitted once every three financial year*, instead of once per year.

Examples of timelines:

2027. For patents granted in financial year April 2023-March 2024, FORM 27 is required to be submitted for three financial years, that is, April 2024-March 2025, April 2025-March 2026 and April 2026-March 2027 and is required to be submitted by September 30, 2027.
2028. For patents granted in financial year 2021-22, and working statement filed for the year 2022-23, FORM 27 is required to be submitted for three financial years, that is, 2023-24, 2024- 25 and 2025-26 and is required to be submitted by September 30, 2026.

(*Financial year in India is April 1 of a year and March 31 of the following year)

1. For worked patents: Patentees no longer need to furnish the revenue/ value accrued to the patentee by manufacturing/ importing the patented invention in India because the Amended FORM 27, requires the Patentee to answer the working requirement with a simple YES/No, without any further details. The said amendment brings a lot of relief to Patentees, who were wary of their confidential commercial information being divulged.
2. For Non-worked patents: Patent Office expects that a patent granted in India is worked to its fullest extent and if not worked, requires the Patentee to provide reasons briefly for its non-working in India.
3. To enhance working prospects of a granted Patent: Amended FORM 27, requires the Patentee to state as to whether their Patent is available for licensing and to provide their contact details accordingly.
4. Extension of time: The due date of September 30 can be extended for up to three months upon a request made in Form 4 for condonation of delay. Such request can be made both before and after the date of September 30.
5. Penalty: Penalty In accordance with the provisions approved by the Indian Parliament and notified in August 2023, the below provisions have been set out u/s 122 (1)(b) of the Patents Act, for non-filing of working statement (FORM 27), within the due period:

“he shall be liable to penalty which may extend to one lakh rupees, and in case of the continuing refusal or failure, a further penalty of one thousand rupees for every day after the first during which such refusal or failure continues.”

In all likelihood the extension provision for late filings would be implemented very strictly. One has to wait and see as to how the penal provisions are implemented. It is therefore a suggestion to comply with the very friendly provisions within the timelines.