CHAPTER - II

BASIC PRINCIPLES OF PATENT LAW

 CHAPTER-II
BASIC PRINCIPLES OF PATENT LAW

Patent law is primarily concerned with balancing private and public

interests involved in the process of economic development. Patent protection is

considered to be a necessary precondition for private investment in research and

development activities, which is necessary for the growth of pharmaceutical

sector. At times excessive patent protection may adversely affect public interest

involved in promotion of public health, safety and welfare of the people.

2.1 Nature of patents

A patent may be defined as a grant by the state of exclusive rights for a

limited period in respect of a new and useful invention. These rights are in general
* •
limited to the territory of the state granting the patent, so that an inventor wishing

protection in number of countries must obtain separate patents in all of them. The

name patent is a contraction of Tetter patent’, which means a document issued by

or in the name of the sovereign, addressed to all subjects and with the great seal

pendant at the bottom of the document so that it can be read without breaking the

seal.1

The Delhi High Court observed that patent is an exclusive right, which the

inventor has over his invention as a reward in return of the disclosure of his

invention to the public for the benefit of the society. The exclusive right of the

1 Philip W. Grubb, Patents for Chemicals: Pharmaceuticals and Biotechnology, 4th ed., Oxford
University Press, 2004, p.3.
 17

inventor over his invention includes his right to assign his invention or transfer

any interest in his invention in favour of any other person in consideration of

monetary gain. Thus “a monopoly of the patent is the reward of the inventor”.

It is important to realise that the rights given by a patent do not include the

right to practice the invention, but only to exclude others from doing so. The

patentee’s freedom to use his own invention may be limited by legislation or

regulations having nothing to do with patents, or by the existence of other patents.

It is very often heard that patent allows company to do something or other. But it

does not, it only allows them to stop someone else from doing it. The right to

prevent others from carrying out the invention claimed in a patent may be

enforced in the courts. If the patent is valid and infringed the Court can order the
• $

infringer to stop his activities as well as providing other remedies such as

■j

damages.

It is also important to distinguish between ownership of an invention or a

patent and ownership of goods, which incorporate the invention or fall under the

patent. The question of who owns the goods is completely different from that of

who owns the patent. Unlike the situation with regard to copyright, infringing

goods do not become the property of the patentee, and even if the patentee

manufactured the goods, once he has sold them, he can retain no control over their

subsequent use or resale. The fundamental distinction between the ownership of

2 Telemecanique and Controls (I) Ltd v. Schneider Electric Industries 2002 (24) PTC 632 (Del.).
3 Supra note 1, at p.4.
 18

patents and the ownership of things, which are patented, is often misunderstood or

deliberately misrepresented. So that for example patents granted for transgenic

animals are described as giving ownership of ‘life’ and patents for isolated human

genes are talked of as if they gave property rights over human beings.4

2.1.1 Property right

A patent is nevertheless a piece of property and may be a very valuable one.

Although intangible property, it may be dealt with in the same sort of ways as

tangible property such as real estate. Just as the owner of a house may live in it

himself, sell or rent it to another, mortgage it, or even have it demolished. So a

patentee may keep his patent rights, assign the patent to some one else, grant some

one else a licence to do something covered by the patent, mortgage the patent or of
t

course abandon the patent to the public. Abandonment of patent right is very

common in the great majority of countries in which renewal fees often rise steeply

as the age of the patent increases, and only those patents, which are of real

commercial importance, are kept alive for their full term.

2.1.2 Limited duration

In any event no patent can go on indefinitely. It is a point basic to the

whole concept of patents that the exclusive rights are granted only for a limited

period of time and that once this term has expired the general public is free to use

the invention. In Britain patents were granted generally for a term of 14 years. In

1919 the term became 16 years and extensions were possible in exceptional

4
Id, at p.4.
 19

circumstances, for example if the patentee was unable to exploit his invention

because of war time conditions or if he had a particularly deserving invention on

which, through no fault of his own, he had not made sufficient profit. A

combination of these two grounds enabled the British patent for a pioneering

invention relating to colour television to be extended to a total term of 32!4 years:

unfortunately for the patentee, his infringement action against producers of colour

television sets was unsuccessful, the patent being finally held invalid.

In U.S.A. and Canada the term of patent was until fairly recently 17 years

from the date of grant, which meant that the longer the patent office took to grant

the patent, the later was the expiry date. In most other countries, the term ran

form the date of application and so the expiry date was fixed irrespective of how
• *

long the process of grant might take. A term of 20 years from the filing date was

set for European Patents by the European Patent Convention, which came in to

force in 1978, and the Patents Act 1977, which came into force on the same day,

set the same term for British National Patents. This has become the international

standard set by the GATT-TRIPs agreement and is now adhered to by most

countries.6 In India, initially the term of patent was 14 years with respect to all

inventions except the inventions relating to food and drugs. For such inventions

only process patents were available for a period of 5 years. But after 2002

5 Vatensi v. British Radio Corp. Ltd, (1973) RPC 337 (CA).

5 Supra note 1, p.6.
 20

amendment to the Patent Act 1970, the term of patent has become 20 years for all

inventions.

The term of available patent protection is more important in some

industries than others. In the pharmaceutical industry for example, where it takes

many years for a product to reach the market, and where the same product, once

introduced, can usually be sold for 20 years or more, it is vital to the patentee to

obtain as long a patent term as possible. On the other hand in an industry in

which products can be brought to the market quickly but are rapidly replaced by

newer products, the patentee is more interested in obtaining rapid grant of an

enforceable patent than in prolonging patent term. For products, which require a

long approval process before marketing, such as pharmaceuticals and

«
agrochemicals, *
it is now possible to obtain extensions of the standard patent term

in the U.S.A., Europe, and Japan.7

2.1.3 Patents and monopolies

A clear distinction is to be made between a monopoly of an existing

commodity and the exclusive rights given by a patent for a new invention. The

old definition of monopoly given in Blackstone’s commentaries is still a good one.

A licence or privilege allowed by the king for the sole buying and selling,

making, working or using of anything whatsoever, where by the subject in general

is restrained from that liberty of manufacturing or trading which he had before.

1 Id, atp.7.
 21

According to this definition, exclusive patent rights are not a monopoly

because, being for a new invention, they cannot possibly take from the public at

large any right, which the public previously had. Even when the term ‘monopoly’

is given the broader meaning of any exclusive right to make, use or sell, the

distinction between a monopoly in an existing commodity and a patent monopoly

in respect of a new invention should be kept in mind. The two were clearly

distinguished in English law as long ago as 1624, although today it is still being

alleged, for example, that patents on new products obtained from the neem tree

will stop Indian peasants from using traditional neem remedies.8

2.2 History and evolution of patents

The Intellectual Property Rights as a legal regime has its origin in the
• »

Western Europe in Venice, France and British regions. Later it was adopted in the

American system and spread to the other regions of the world. The system is said

to be originated in the Alps region in the early 1300 AD where the property rights

were established for mining, use of timber and water for ore mining. Such special

rights to encourage mining is said to have given the birth of Intellectual Property

Rights (IPRs). One of the recorded rights was that of the special rights to a

German miller to build a grain mill in Venice by the Government to be a

forerunner of protecting an innovative idea as an intellectual property rights.9

8 Ibid.
9 Martin J. Adelman et.al., Cases and Materials on Patent Law 1 (1998).
 22

Later in 1488, the State of Venice brought the satuto mineraria where it

prohibited emigration of skilled workers and certain products from being exported

from Venice and also rewarded skilled emigrant workers from other parts of the

Europe to settle in Venice by providing them with tax holidays for two years. In

this period the state of Venice has given more than 100 special privileges to

encourage manufacturing and is said to have set the foundation of the later day

intellectual property rights. The later day British and French systems were

influenced by the development of the intellectual property system of the Venice

and its practices.10

2.2.1 Evolution of patents in U K

In the British domain, the Crown controlled the trading rights to be given to
f

the various companies. This monopoly irked the Parliament and the Courts where

they tried to restrict the same. Queen Elizabeth is said to have given monopoly

rights to various manufacturers ranging from salt, knives to playing cards. The

monopolies given were more a favouritism of the Crown than on any systematic

principles. This led to clash between the Crown and the Parliament. In 1602, the

King’s Bench for the first time over turned a monopoly right given to a playing

card seller stating that it was already in public domain and hence will not qualify

for monopoly right.*11 This decision set the principle that what is already in public

domain will not qualify for a patent, which is also the principle in modem day

10 Ibid.
11 Duty v. Allein, (1962) 1 WPC 1 (Court of Queen’s Bench).
 23

intellectual property rights. This was followed by the developments in the later

legislations by the British Parliament curbing the powers of the Crown on

indiscriminate monopolies of rights. In 1624 Parliament sought to declare these

exercises of royal prerogative void. In 1628 it enacted the Statute of Monopolies,

which suggested not only the growing significance of trade in the country’s

economy and the beginnings of the long political campaign to favour competition

at the expenses of monopoly; it also shows the readiness of the political force

represented in Parliament to challenge policies of convenience to the Crown.

Section 6 of the Statute of Monopolies, which exceptionally, allowed patent

monopolies for 14 years up on “any manner of new manufacture” within the realm

to the “true and first inventor” has its own character. Section 6 also expressed the
< 4

desire to impose some qualification upon the system in the name of higher public

interests. The protected manufactures were not to be contrary to the law nor

mischievous to the state, by raising prices of commodities at home, or hurt of trade

19
or generally inconvenient.

A half century later courts were requiring the patentee to make sufficient

statement of his conception as “consideration” for the monopoly granted to him.

200 years after the Statute of Monopolies, the patent system developed through the

work of lawyers and judges in the courts without Government Regulations. In the

reign of Queen Ann, the Law Officers of the Crown established as a condition of

12 W.R. Cornish, Intellectual Property, Patents, Copyrights, Trademarks and Allied Rights, 3rd
ed., Delhi: Universal Law Publishing Co. Pvt. Ltd., 2002, pp 92-93.
 24

grant that “for patentee by an instrument in writing describe and ascertain the

nature of the invention and the manner in which it is to be performed”. This

instrument became known as “specification”. However, by the mid 19th century

Britain’s patent system had become extremely inefficient. The great exhibition of

1851 accelerated demands for patent reforms. Up to that time, prospective

patentee had to present application to not less than seven offices and at each state

to pay certain fees.13

To meet the public concerns over the state of affairs the patent office was

established by the Patent Law Amendment Act 1852, which completely

overhauled the British Patent System and laid down simplified procedure for

obtaining patents for inventions. Legal fees were substantially reduced and the
t »

issuing of separate patents for each nation of the union was replaced by the

publication of single U.K. Patent. For the first time description of patent had to be

filed on applying for a patent. This could be a complete specification giving

merely outlines to be completed later, within fixed period after grant. An

important step forward was that the patent was dated from its application date, so

that a disclosure of the invention during the application procedure would no longer

invalidate the patent. As more and more patents were granted, it became

necessary to clarify what the patentee thought was crux of his invention, for which

he claimed monopoly and the practice grew up of doing this by means of a

separate part of the specification referred to as claims. At that time specifications

13
Ibid.
 25

were still heard before a jury, who had to decide on the basis of the specification

what was the scope of monopoly, and the claims served only to point the jury in

the right direction.14 Claims grew in importance with the reorganisations of the

courts in 1875, which transferred jurisdiction in patent cases to the chancery

division of the High Courts, and with the Patent Act of 1883, which required the

specification to contain at least one claim.15

Throughout the nineteenth century, patents were granted in U.K. without

anything more than a purely formal examination. Only in 1902 was a novelty

examination provided for, and not until five years later could the patent office

actually refuse an application on the ground that invention was not new.

The Patent Act 1977 introduced major changes to British Patent Law,

primarily to bring the national law into harmony with the European Patent

Convention. Among other changes this Act lengthened the term of patents from

16 to 20 years. Subsequent legislations in U.K., has had only minor effects. 16

2.2.2 Evolution of patents in USA

The earliest grants of a patent for an invention in the United States seems to

have been by the Massachusetts Bay Colony in 1640s. Although pre­

independence patent custom in the American Colonies owes much to the English

Statute of Monopolies of 1628, which restricted the right of the Crown to grant

monopolies so that hence forth they could be granted only for a limited period and

14 Lord Russel in EMlv. Lissen, (1938) 56 RPC 23 (HL).

15 Supra note 12.
16 Supra note 1, pp 19-20.
 26

17
only for a manner of new manufacture. The Statute of monopolies was never

made directly applicable to the American Colonies.

During the period of confederation after independence had been achieved

(1783) but before the adoption of Federal Constitution of the United States (1789),

most of the states had their own patent laws. However, as noted by James

Madison in the federalist “the states cannot separately make effectual provision”

for protection of invention and so in drafting the Constitution of the U.S.

responsibility for providing such protection was entrusted to the Congress of

United States.18

The constitutional basis for federal patent and copyright system is to be

found in the Constitution of the United States. Article 1, section 8, clause 8 which

states “Congress shall have power... to promote the progress of science and useful

arts by securing for limited time to authors and inventors the exclusive right to

their respective writings and discoveries”.

The first United State’s Patent Act was passed in the year 1790. It was a

short Act of 7 sections only entitled “An Act to promote the progress of useful

Arts”.19 Under it’s terms any two of the Secretary of State, the Secretary of War

and the Attorney General were empowered to grant patents for terms of up to 14

17 This had the effect of limiting the power of Crown to the grant of monopolies only for limited
period and most importantly only for manner of new manufacture that were introduced into the
realm by the recipient of the monopoly. Such grants were, however, conditioned on their not
being mischievous to the state or generally inconvenient
18 Ladas and Parry, “A brief history of Patent Law of the United States”,
http://www.webmaster@ ladasparry .com Dec.2001.
19 A similar title was used for all acts relating to patents before the consolidation of 1870.
 27

years for inventions that were “sufficiently useful and important” provided that an

inventor submitted a specification describing the invention to the Secretary of

State at the time of the grant.

In 1793 this Act was repealed and replaced by a slightly longer Act, the

drafting of which is largely attributed to Thomas Jefferson, who was at the time

Secretary of state and therefore intimately involved in the administration of the

1970 Act. The Act is notable for its definition of what constitutes patentable

subject matter in the United States, which definition is almost unchanged upto

now and states: “Any useful art, machine, manufacture or composition of matter

and any new and useful improvement on any Art, machine, manufacture or

composition of matter”.20
» •

A short description had to be filed with the application. However, before

grant could occur it was necessary to submit a written description of the invention

and of the manner of using or process of compounding the same in such full, clear,

and exact terms, as to distinguish the same from all other things before known and

to enable any person skilled in the art or science of which it is a part, or with

which it is most nearly connected, to make a compound and use the same.21

What was meant by the term ‘new’ in the early statutes varied somewhat

but after 1800 the courts considered simply whether the invention was known

before the date on which the applicant for a patent claimed to have made his or her

20 A Patent Act 1993 Section 1, the term ‘art’ was replaced by ‘process’ in 1952 but this term is
itself defined as a “process art or method” 35 USC 101.
21 Section 3 of Patent Act 1793.
 28

invention. In 1829 the Supreme Court in the case of Pennock v. Dialogue,22

recognised the potential dangers of such an approach, which enabled the inventor

to delay filing a patent application until competition was imminent and construed

the statutes so as to create a statutory bar to deny patent protection to one who had

previously publicly used his invention.

A major review of the law was undertaken in 1836. Under this revision

patent office was set up as a part of the state department and a specification had to

be submitted to it and be examined for novelty before a patent would be granted.

The 1836 Act finally removed all limitations on the nationality or residence of

those who could obtain United State’s patents. However, it did not end all

discrimination on this score. U.S. citizens or residents intending to become

citizens were charged $3000, British subjects were charged $500,0 and all other

foreigners $300,00.23

In 1870 the legislation relating to patents were consolidated into a single

Act but without many significant amendments as to substance. Among the

changes that were made the following are important. Removal of the requirement

that if the patent had been granted abroad a U.S. application had to be filed within

six months and replacement by a provision that the U.S. patent must expire at the

same time as foreign patent, subject to a maximum term of seventeen years from

the grant of U.S. patent, codification of a requirement that the specification

22 27 U.S. 1 (1980).
23 Section 9 of Patent Act 1836.
 29

described the best method or mode known to the applicant for “applying the

principle” of his invention; set up a mechanism for resolving disputes as to who

had first invented a particular invention. It was also made clear that any public

sale or use of the invention before the start of the two-year grace period was

destructive of novelty irrespective of whether that sale or use was by the applicant

for the patent.24

In 1930, the Plant Patent Act provided for the possibility of patent

protection for asexually reproduced plants. In 1940 the duration of the grace

period relating the inventor, which were to be excused as novelty destroying acts,

was reduced from two years to one year.25 The two major changes were

introduced in the year 1952 to include in the statute for the first time a requirement
i »

that to be patentable an invention not only to be novel but also it must satisfy other

two conditions, namely, inventive step and industrial application, and to include

the definition of infringement which had hitherto been left to the courts.

Since 1952 law has been amended several times. These amendments were

significant in determining the present shape of the world patent system. In 1968

Patent Cooperation Treaty was singed. In 1975 the name “the patent office’

changed to the Patent and Trademark Office. In 1987 Supreme Court upholds the

patentability of a genetically modified bacterium quoting a congressional Report

24 Lads and Parry, supra note 18.

25 Ibid.
26 The definition specifically stated that the “patentability shall not be negative by the manner in
which the invention was made”, apparently to ensure that; issues of obviousness were assessed
objectively and that invention did not have to be the result of a “flash of genius’.
 30

leading up to the 1952 Act that “anything made by man under the sun” should be

patentable.27

More important than any of these was the Drug Price Competition and

Patent Restoration Act of 1984, commonly known as the Hatch-Waxman Act,

which provided for extensions of patent term for human drugs, food additives, and

medical devices who’s commercialisation had been delayed by regulatory

procedures and at the same time made registration easier for competitors when

patent protection expired and provided that testing for regulatory approval

involving a patented drug did not amount to patent infringement.

There have been a number of legislative changes to the U.S. patent law

since then, most of them fairly minor, but the most important was certainly the

Uruguay Round Amendments Act (URAA) of 1995, which made changes

necessary in order to bring U.S. law into line with the TRIPs agreement.

2.2.3 Evolution of patents in India

India since time immemorial has been the forerunner in the fields of science

technology, medicine, dance, arts, literature etc. The ancient books and

manuscripts like Vedas and Upanishads not only provide spiritual solace but also

serve as sources for the evolution of all science and art. These various sciences

have developed over a period of hundreds of years when the other civilisations in

the world were in their rudimentary stages. Though India had been the hub of

27 Diamond v. Chakrabarty, 206 USPQ, 193.

28 Supra note 1, p.23.
 31

human wonders in ancient days, today our technology in most of the fields cannot

be compared itself with the best in the world. The ancient knowledge at some

point of time has not been folly passed to the future generations by our ancestors.

Whatever scientific and technical knowledge were possessed was occupied and

stolen by the western countries. Our ancestors while being generous in

propagating such vital information for the benefit of the mankind did not have the

forethought of protecting their inventions and innovations, which in the course of

years proved fatal.29

Knowledge is considered to be the product of individual creativity today

but earlier knowledge was considered as the most precious gift, which knew no

limitations of space or time, was freely given to the aspirants from the guru and

this tradition was known as guruparampara. The guru got the knowledge from his

guru and after adding his expertise and experience passed it to his students, this

was true with all ancient traditional knowledge. “Let noble thoughts come to us

from every where let all beings live happily, free from the fear of death and

diseases” and many more such ideals were the guidelines for the scientists who

worked for the betterment of every living creature. They were so selfless that

thinking of petty personal benefits was unknown, unheard and unthinkable too.

Indian society has inherited a rule that each individual owed at least three

debts or rinas. One was to his parents, second was to his guru and the third is

towards motherland or society for all that has been bestowed upon him. When a

29 http://www.en.wikipedia.org/wik/patents.
 32

person is repaying his debt by contributing something to the society what can he

expect in return except the feeling of intense fulfillment.

So in ancient India the invention of anything and everything useful to the

society was offered as a salutation to the god, guru, parents or the ruler and in turn

blessed with further progress or the ruler would award him with material benefits

or title and engrave the details of such invention either on stone or other

inscriptions for the benefit of the whole society.30

But gradually the situation changed and the idea of protecting knowledge

emerged in India as a result of influence of British on India. Therefore India’s

patent system is drawn from British system. Unlike Great Britain where the

concept of patent originated from the exercise of the royal prerogative to grant
• *

monopolies, in India a patent for invention has always been the sole creation of

statutes of Indian legislature.

The first Act relating to patent rights was passed in 1856, which granted

certain exclusive privileges to inventor of new manufacture for a period of 14

years. This Act was found defective and was therefore re-enacted with some

modifications in 1859. The provisions of this Act were founded on the English

Patent Act 1852. Under the Act of 1859 patent monopolies were called “exclusive

privileges”. An inventor of a new manufacture could under the provisions of this

Act, by filing a specification of his invention obtain the exclusive privileges of

30 Dr.Shantala Priyadarshini, “Indian Copyrights, let Indian Science Flourish IPR Perish", http://
www.ayurvedah.com.
 33

making, selling and using the invention in India and authorising others to do so for

the term of 14 years.

In 1872 the Patterns and Designs Protection Act was passed, followed by

the Protection of Inventions Act of 1883. These Acts were consolidated by the

Inventions and Designs Act 1988. Subsequently the Patents and Designs Act 1911

was passed repealing all the previous Acts. This Act established for the first time

in India a system of patent administration under the management of the controller

of patents.

After independence, the government of independent India decided to

reform the patent law. In 1948, a Committee headed by Dr.Bhakshi Tekchand, a

retired Judge of the High Court of Lahore was appointed by the Government of
» «

India to review the patent law in India, with a view to ensure that the patent

system is more conducive to national interest. The Committee submitted its

Report in April 1950. Tekchand Committee Report revealed that the Indian

Patent system had failed in its purpose namely to stimulate invention among

Indians and to encourage development and exploitation of new inventions for

industrial purposes in the country, so as to secure benefits thereof to the largest

section of the people. On the basis of this report a bill consisting certain

amendments to the Act of 1911 was introduced in the Parliament in 1953. This

31 Dr.Tekchand Committee’s recommendation was incorporated in the amendments that were

introduced to the 1911 Act in the year 1950.
 34

Bill was based on 1949 U.K. Patent Act. The Bill was not however proceeded

with and therefore lapsed.32

Subsequently in 1957, the Government of India requested Justice N.

Rajagopal Ayyangar assisted by Dr.Venkateshwaran to advice the Government on

the question of revision of the patent law. This Committee submitted its Report in

1959, keeping in mind the factors of economic development and public interest.33

The Report observed, firstly, that with all the handicaps, which the system

involves in its application to under developed countries; there are no alternative

methods for achieving better results... I consider that the patent system is the most

desirable method of encouraging inventors and rewarding them. Secondly, the

Committee noted that foreign patentees were acquiring patents not in the interest
*

of the economy of the country granting the patents or with a view to manufacture

there but with the object of protecting an export markets from competition from

rival manufacturers particularly those in other parts of the world. Thus India is

deprived of getting in many cases, goods... at cheaper prices from alternative

sources because of the patent protection granted in India. The Report concluded

that foreigners held 80 - 90 % of the patents in India and were exploiting the

system to achieve monopolistic control of the market. The Committee suggested

that a patent system that focussed on access to resources at lower price would be

32 P.Narayanan, Patent Law, 3rd ed., New Delhi: Eastern Law House, 1998, pp 4 -5.
33 The Report of this Committee is considered to be the backbone of the Indian Patent Law that
was enacted in the year 1970.
 35

beneficial to India.34 On the basis of this Report a Patent Bill was introduced in the

Loka Sabha in 1966, which however lapsed.

An Amendment Bill was introduced again in 1967, which culminated in

the Patent Act 1970. The draft patent rules were also published in 1971. The Act

and final rules came in to force on 20th April 1972. The Indian Patent Act 1970

follows the U.K. Patent Act of 1949 in many respects.36 Parliament enacted the

Patent Act 1970 after considerable debate and it appears that the predominance of

public interest over the interest of individual inventor was implicit in the

provisions of the Act.

During the 1970s there was a general weakening of patent protection in

developing countries, particularly in the pharmaceutical field, for which protection

was totally or effectively abolished in a number of countries. A classic example of

this is Indian Patents Act 1970.37

This law reduced the term of protection generally from 16 to 14 years, and

provided for government use without compensation, and even government

expropriation of patents. Furthermore all patents for chemical inventions were

automatically endorsed with ‘Licence of Right’ three years after grant. Patents

granted for processes for the manufacture of any food or medicine had a maximum

term of only 5 years from the grant, and the royalty payable on a licence of right

34 Supra note 32.

35 A Joint Parliamentary Committee was formed to study the Bill, the Committee made various
changes to the Bill and it was tabled again as the Patent (Amendment) Bill 1965.
36 Supra note 32.
37 Supra note 1, p.38.
 36

granted on such a patent was limited to 4 percent of the bulk sales price of the

product. For this class of inventions not only was the patent life reduced to a point

at which the patent would normally have expired well before the product came on

the market, but if there was any patent term left, a competitor could operate under

the patent on payment of a nominal royalty. Erosion of patent rights was also very

marked in Latin America, for example in Brazil, where patent term was reduced
■>Q

and all patent protection for pharmaceutical inventions was abolished.

Amendments were carried on by India to survive the onslaught of global

competition earlier, in order to re-enforce her inventiveness as well as strengthen

and efficiently use the patent system. But in order to fulfil TRIPs obligations

India introduced the first patent amendment to the Indian Patent Act 1970 in April
« «

1999. Two key aspects of this amendments were the “provision for a mailbox” to

file applications for product patents in India and the “provision for exclusive

marketing rights”, for products related to drugs, pharmaceuticals and agro

chemicals.

The Patent (Second Amendment) Bill 2002 carried changes in the scope of

patentable inventions, grant of new rights, extension of the term of protection,

provisions for reversal of burden of proof in case of process patent infringement

and conditions for compulsory licences.

The third amendment to the Indian Patent Act 1970 was introduced on

March 23, 2005 to comply with WTO agreement. Its main feature are: the product

38
Ibid.
 37

patent regime for all inventions, and the deletion of section 5 of the Principal Act.

As a result an Indian company has lost the opportunity to develop processes for

patent protected drugs in the country, preventing domestic drug manufacturers

from making low cost generic copies of patented drugs. There are over 8000

product patent applications (mail box) pending in India, which could now be

granted. Indian firms may have to wait for three years before they can apply for

compulsory licences of newly patented drugs to meet an emergency need and

Indian firms currently making generic versions of these drugs would have to pay

royalties.39

It has introduced the provision of granting compulsory licences to supply

drugs to countries which have no manufacturing capacities to meet their acute

«

public health problems as per the Doha Declaration on TRIPs agreement and

Public Health and to strengthen issues related to national security. It has replaced

pre-grant opposition by post grant opposition but introduced third party

intervention or representation on patentability before the grant of patent. Further

introduced direct grant of patent without a sealing request, to expedite the grant of

patent and has introduced a provision for early publication on request of applicant.

The compulsory licensing provisions of the Patent (Amendment) Act 2003 is of

fundamental importance to ensuring competition on competitive prices not only

for domestic supply but also to supply drugs to countries, which have no

manufacturing capacities to meet their acute health problems.40

39 Vandana Vaidya, “Legal Menaces”, Vijaya Times, Sunday, 19th Feb. 2006, p.4.
40
Ibid.
 38

2.3 Evolution of pharmaceutical patents

The patent system was apparently devised to encourage inventions and

enable the public to enjoy the benefits of the new inventions. It is legally

enforceable right which grants an inventor by the government of a country,

exclusive privileges and rights for working and selling the patented product for a

limited period of time, provided it fulfils the triple criteria of novelty, non

obviousness and industrial applicability. Ostensibly, the philosophy of patent is

not to grant monopoly but to enable the full utilization of a product or process in a

country, which has granted the patent rights. As far back as the middle ages

patents were granted by the crown to entice foreign workers to come and settle in

England and in 1551, Venetian Thesco muto was granted a patent for a ten- year
«

monopoly for the manufacture of type of Venetian glass ware but it was in the

drug industry, the patents realised it’s fullest potential. As the Kefaver

Committee, investigating the patent system in the U.S.A. in 1959 stated,

pharmaceutical patents lead to high profits. Ironically, the founder of Seimens

and Hoechst, who were members of a Special Committee appointed by Bismarck

in 1876 to study the possible impact of the patent system on industries, had

warned against the tendency to monopolise production/ invention as well as the

possibility of abuse of patent rights.41

In the 1870s Britain had come close to abandoning the patent system

altogether because it was considered to be protectionist in nature and was opposed

41 Suman Sahai, “Knowledge without Power”, Down to Earth, Sept.30, 1997, p.30.
 39

by free trade advocates including the economists.42 Having passed that crisis, the

patent system in the U.K. increased gradually in strength until it took its first

backward step in 1919, up to then patents had been granted as a matter of course

for new chemical substance. However, British Chemical industry felt itself

technologically inferior to that of Germany, which before First World War had

dominated the dyestuffs market. British industry pressed for abolition of patent

protection for chemical as such, and limitation of patent protection to that for

specific processes for the preparation of chemicals. In this way British firms

hoped to be free to imitate a German dyestuff appearing on the British market so

long as they could find an alternative process for its preparation, a task of good

deal easier than that of inventing a new and better dyestuff themselves. This
* •

change in the law was duly made in 1919, together with the further weakening of

patent protection for pharmaceuticals by allowing compulsory licences to be

granted virtually on demand for patents relating to medicines. The first of these

retrograde steps was abolished after the Second World War in 1949, the second

only in 1977.43

Worldwide, national governments in the past used their sovereign

prerogative to evolve their own approach towards their patent systems, particularly

for drugs and pharmaceuticals. They gradually modified the patent laws related to

their stage of development. Intellectual property rights laws in these countries

42 M. Coulter, Property in Ideas: The Patent Question in Mid-Victorian England, (Thomas

Jefferson University Press, 1991).
43 Supra note l.p.19.
 40

therefore, compatible with their developmental objectives. The right to sub serve

the public interest in these countries prevailed over the intellectual property right

whereas in the developed countries the welfare objectives are no longer their

concern - profiteering is the sole objective of the transnational corporation

through patent monopolies. In this background the patent systems of countries as

such differed widely from one another. National laws have been gradually

upgraded in the developed countries to provide for greater protection to their

scientific and technological achievements. For example Italy, U.K., Germany

Switzerland and Japan changed over to the product patent from process patent

system in the Pharmaceutical field only recently. The evolution of intellectual

property rights standards has been particularly tangible following changes in the
4 < A A
relative technological strength in different industries in these countries.

Historically, intellectual monopoly in pharmaceuticals has varied

enormously over time and space. The patent lobbyists have lobbied long and

successfully, to increase patent protection for pharmaceutical products. Here are

some of their accomplishments.

In the U.S. drugs have been patentable since the beginning for the very

simple reason that chemical products have always been patentable. The U.S.

recognises two distinct forms of patents. The process by which a drug is produced

may be patented independently of the chemical formula for the drug. Until 1984

U.S. patent law treated medical discoveries in the same way as other innovations,

44
Ibid.
 41

and special treatment was reserved for drugs. In more recent years, the USPO and

the Federal Court of Appeal have began to allow longer and more frequent

extensions for drug patent than they do for the rest of patented innovations. For

example, the Drug Price Competition and Patent Term Restoration Act of

September 24, 1984 (the Hatch-Waxman Act) was designed to compensate for

regulatory requirements that delay the introduction of new drugs. It is estimated

that it increased effective length of patent protection for pharmaceuticals by about

five years.45

In most of continental Europe, until recent years, only the process of

producing a drug could be patented, so once a drug was discovered, a second

producer could also produce it provided they found a different ways of doing so.
4

The rationale behind process versus product patents was given by the German

Association of Chemical Industry. They point out that the same chemical product

can be obtained by different processes and methods and even starting from

initially different materials and components. Hence, there is social value in

patenting a specific product, as this excludes all others from producing it, even

through different processes. It should be noted that though this did not prevent

German chemical companies from patenting their products where possible, i.e., in

United Kingdom and the United States.46

45 http://www.whosea.org/listfelies/reports -HSD-2-8 patent pdf.

46 Boldrin & Levine, “Against Intellectual Monopoly”, at http://www.levinc.ssencl,uua.edu
papers/ IP.ch.9 in 1004 pdf.
 42

In France, under the law of July 5, 1844 pharmaceutical inventions could

not be patented. Legislation then evolved, keeping the prohibition for patenting

products but allowing patents for process. The executive order of February 4,

1959, and then the law of January 2, 1966 finally introduced limited protection for

pharmaceutical products in France; the ban on patenting drugs was completely

lifted only in 1978. In Germany the law of May 25, 1877 introduced patents for

both chemical and pharmaceutical process, while products were explicitly

excluded. The law of April 4, 1891 extended patent protection to products

obtained via a patented process. Finally, the law of September 4, 1967 introduced

general patentability of chemical and pharmaceutical products in Germany.47

In Italy, pharmaceutical patents were prohibited until 1978, when the

• •

Supreme Court ruled in favour of eighteen pharmaceutical companies, all

requesting the enforcement of foreign patents on medical products in Italy.

Despite this complete lack of any patents protection, Italy had developed a strong

pharmaceutical industry; by the end of the 1970s it was the fifth world producer of

pharmaceuticals and the seventh exporter.48

Pharmaceuticals are also covered by variety of international agreements.

The contemporary era of patenting began with the Convention of the Union of

Paris in 1883 following the Vienna Conference of 1873. More recently, the Patent

Cooperation Treaty was signed in Washington on June 19, 1970, which started a

47 Ibid
48 Ibid.
 43

process of international extension of stronger patent protection for medical

products. The Munich Convention of October 3, 1973 implemented since October

7, 1978 defines the notion of an “European Patents”. Further revisions and

modifications of the original basic agreements led, eventually, to the definition of

a European Community Patent, based on a Convention signed in Luxembourg on

December 15, 1975, while the latter was not ratified by Denmark, Ireland, Greece,

Portugal and Spain it has been fully implemented and accepted by E.U. member

states since 1992.49

In India patent rights were introduced in 1856 and later modified in 1859,

along with lines of the English Patent Act of 1852. In 1872, the Patent and

Designs Protection Act was introduced and was replaced with the Patents and
« •

Designs Act in 1888. The Indian Patents and Designs Act, was passed in 1911

and several amendments were made to this Act between 1911 and 1970.

Subsequently, the Patents Act 1970 was passed repealing all of the previous

legislations. India is also a signatory to the Paris Convention for the protection of

Industrial Property 1883 and the Patent Cooperation Treaty 1970.

India had a product patent regime for all inventions under the Patents and

Designs Act 1911. Under this Act product patents were granted for all inventions

including pharmaceuticals. However in 1970, the Indian Government introduced

the new Patents Act, which excluded pharmaceuticals and agrochemical products

from patenting. This exclusion was introduced to overcome India’s dependence

49
Ibid.
 44

on imports for bulk drugs and formulations and to establish a self-reliant

indigenous pharmaceutical industry.50

In the absence of product patents for pharmaceuticals, the pharmaceutical

industry grew rapidly by developing cheaper versions of a number of patented

drugs for the domestic market and eventually moved aggressively into the

international market with generic drugs produced at low cost.51

The establishment of the World Trade Organisation (WTO) has led to a

tremendous paradigm shift in world trade. The Agreement on Trade Related

aspects of Intellectual Property Rights (TRIPs) was negotiated during the Uruguay

round of negotiations of the General Agreement on Tariffs and Trade (GATT) and

one of the reasons for incorporating intellectual property issues in to the GATT

framework was the pharmaceutical industry. India became signatory to the GATT

on 15 April 1994, thereby making it mandatory for it to comply with the

requirements of GATT, including TRIPs Agreement.

The so-called developing countries were given a transition period of 10

years to bring their national laws in accordance with TRIPs. Indian government

passed two amendments, one in 1999 and the other in 2002 to the Patent Act 1970

to prepare the groundwork for full implementation of TRIPs Rules.

In December 2004 the Indian Government issued a Presidential Ordinance

to bring the country into mandatory compliance with TRIPs by January 1, 2005.

50 Supra note 29.

51 Patent Act and access to medicines, http://www.listskabissa.org.
 45

The Government had six months to codify this Ordinance by obtaining the

approval of the Parliament. This was done on March 23, when after virtually no

public debate India’s Parliament passed the third amendment to India’s 35-year-

old Patent Act. Under the new amended Act product patents are also available for

inventions relating to food and drugs.52

2.4 Need for patent system

In the course of time both “individual” and “public” justifications have

played prominent roles in the arguments in favour of patents for invention and for

other kinds of intellectual property rights. At various periods the idea of a patent

as an instrument of justice to the inventor has proved attractive, and the power of

this sort of argument is by no means exhausted. Yet rewarding inventive

ingenuity may seem little •more than an incidental consequence of modem patent

systems. They do not protect each inventor who conceives an invention. Only the

first comer is entitled in most systems, indeed, it is the first to apply for a patent,

rather than the first to invent, who is given priority. The protection is then good

not only against those who derive their information from that patentee but also

against those who work it out independently. The period of protection, moreover,

is very short compared to other forms of “intellectual property”. If a major object

were to give the inventor his just reward, a system more closely akin to copyright

with its “property” like duration and it’s protection of all original creations, but
53
only against copying - would seem more appropriate.

52 http://www.touchbriefings.com/pdf/15/pg031.
53 Supra note 12, p.108.
 46

Today the debate over patent systems tends to concentrate upon their role

as a “public” instrument of economic policy. Patents are looked upon to provide

two kind of aid towards the technical efficiency, and hence the growing wealth, of

the community as a whole. They are intended to encourage the making of

inventions and the subsequent innovative work that will put those inventions to

practical use; and they are expected to procure information about the invention for

the rest of the industry and the public generally, which otherwise might be

withheld, at least for a period that could be crucial.54

2.4.1 Patents as incentive to invent and innovate

Patents have also been justified by the fact that they provide an incentive

for the production of new inventions. As Lord Oliver said in Asahi, the
4 4

‘underlying purpose of the patent system is the encouragement of improvements

and innovation’. In return for making known his improvement to the public the

inventor receives the benefit of a period of monopoly during which he becomes

entitled to prevent others from performing his invention except by his licence.

More specially, it is said that as patents provide the possibility for inventions to be

exploited for a twenty-year period, this means that inventors will be more willing

to fund research and development. In this sense, patents act as a vector that links

scientific and technical research with commercial spheres. Arguments of this

nature have proved to be particularly important in situations where an invention

54 Cornish & Llewelyn, Intellectual Property: Patents, Copyright, Trademarks and Allied Rights,
5th ed., London: Sweet & Maxwell, 2003, pp 130-131.
55 Asahi Kasei Kogyo Kabushiki Kaisha's Application (1991) RPC 485, 523.
 47

can be readily ascertained (or reverse-engineered) from the product, which is put

on the market.56

One persistent argument against patents in the nineteenth-century

controversy was this: since inventions are there to be discovered, industries that

have progressed to a certain point will inevitably make them, and so artificial aids

are unnecessary. It was line of argument that carried some conviction when the

bulk of inventions concerned relatively simple mechanical contrivances that were

often worked out as a by-product of ordinary manufacturing. In the face of

increasingly systematic organisation of research and development, and the

extensive process of education, which precedes it, this point of view is harder to

maintain.57

2.4.2 Patents as an information system

In Britain the policy of making the patent system a source of technical

information has been deliberately pursued since the early industrial revolution.

For many years the results have justified treating this aspect of the system as more

than a useful by-product. Patents do make available a large quantity of information

about the latest technical advances, and they are regularly consulted by those

concerned with development in many industries. Nevertheless, exaggerated

expectations need to be avoided. If the inventive concept is one that has to be

embodied in a marketed product, the patent may give earlier access to the

56 L. Bentley and B.Sharman, Intellectual Property Law, 2nd ed., New York: Oxford University
Press, 2004, p.328.
57 Id, at p. 132.
 48

information and perhaps a more explicit statement of what the invention is. Only

if the invention is one that need never be revealed to the rest of the industry in the

course of exploiting it does the patent provide a clear long-term gain in terms of

publicity? But this, of course, is the case where secrecy offers a real alternative- a
ro
route that despite the danger of leak, may seem simpler and cheaper to pursue.

The information aspect of patents is not a policy that is altogether easy to

implement. There is an obvious temptation to any patentee to omit from his

specification information that may seem incidental but is infact useful or important

to commercial success. When this effect can be achieved the patent system is

reduced to an index of sources from which further information may be had on

application and payment. This leaves the policy maker, whether legislator, patent

office administrator or judge, with a choice: either to recognise that the system

cannot hope to provide more information, or to insist that it should be declaring

such patents invalid. Countries with examining offices have arrived at rather

varied results in their approach to this dilemma. The typical American

specification is noteworthy for its dogged attention to pedestrian detail; a German

specification may be hazy about practical steps but is more likely to reveal basic

concepts. One decision of the English court of Appeal leans in the former

direction; it holds that a specification about basic ideas in a new technology should

teach it’s principles to second rank technicians rather than to leading researchers in

58
Supra note 12, p.l 13.
 49

the field.59 This sort of insistence carries with it the danger that really significant

developments may be the subject of invalid patents. Yet to give up a real effort to

police the disclosure requirement may be to surrender the one public advantage of

the patent system that remains relatively uncontroversial.60

2.4.3 Adapting the patent system: new technology

The emergence of each major technology requires adjustments in the patent

system, and is, therefore, likely to stir up arguments about underlying rationale

and specific policy objectives. The coming of computers first activated symptoms

of denial, with a series of moves to place computer programs beyond the reach of

the system; latterly, there has been growing industrial pressure to take the opposite

position. Over a much longer period resistance to the idea of monopoly over

something as fundamental as chemical substance (particularly where it is

pharmaceutical) has gradually given way. A set of rules on the disclosure

requirement have enabled claims of commercially significant breadth to be made;

but at the same time, where necessary, biological material has to be made

available to others through culture collection.61

A half-century after Crick and Watson’s uncoiling of living structures,

genetic knowledge and techniques of genetic manipulation have undergone a

series of remarkable advances. Once revealed, each procedure has been rapidly

taken over by laboratories everywhere, spuming quantities of competitive

59 Valensi v. British Radio (1973) R.P.C. 337.

60 Supra note 12, p.l 14.
61 Id, at pp. 114-115.
 50

research. In particular medical applications of biotechnology have attracted a rash

of new business, often spinning out of academic research. There have been rushes

to patent, accompanied by demands for very wide claims modelled on those of the

initial master patents by now familiar in organic chemistry. Courts in the United

Kingdom have shown a tendency to react slowly and cautiously to this. Patent

officers, by contrast, have been ready to embrace the new technologies. In Europe

that attitude must be sharpened by the fact that there are competing routes to

patent protection. However, over the last fifteen years, they have faced a growing

barrage of objection, which has made the issue far more prominent and is leading

to a some what more critical attitude towards what should fall within the patent

system under what conditions.

Each invention has a multiplier effect. A single invention, when patented is

not the end of technological development. It is the basis for further research and

increasing technical development.

2.4.4 Economic justification

If there were no patent system, it would be possible for any one to copy a

new invention and profit from it without having to bear the costs of developing the

invention. Since the cost of copying many inventions will be substantially less

than the development costs, this would allow the copier to sell the invention at

lower price than the original inventor, which may make it impossible for the

inventor to profit from the invention.

62
Ibid.
 51

This could mean that business or individuals would have little incentive to

invest in research and development or would invest only in those inventions,

which could be kept secret. If businesses are not provided with adequate incentive

to invest in research and development, economic growth may be inhibited.

Patent is a form of industrial property conferring monopoly right on a

person, who invents a product or a process to exclusively produce it or to use the

said process for a pre-determined period of time. It is a reward given by state to

the inventor for input of his intellectual labour with something useful to the public.

By granting patent, the promise of the state is that there will be an exclusive right

to use the invention and recover the costs and make reasonable profits.

To get patent right, the inventor has to disclose his invention while

applying for patent registration. The disclosure of the invention can be helpful to

the public to work upon the invention once the patent term expires. This can also

be of great help in enhancing the industrial and in turn, the economic growth of the

society.63

2.5 Patentability of inventions

Patents do not protect each and every inventor who conceives an invention.

Every legal system insists upon certain conditions for an invention to get patent

right. Although the requirements vary in different legal systems, certain basic

common features do exist. They are novelty, inventive step/non obviousness and

63 Basic Principles ofPatent Law, Paer-1 Basic Principles & Acquisition ofIntellectual Property
Rights, Bangalore: CIPRA National Law School of Indian University, p. 18.
 52

industrial application. These standard requirements that existed from earlier times

of patent regime were given a new dimension by the legislative and judicial

interventions.64 An analysis of these basic requirements of patentability will be of

great help in understanding the patent regime.

2.5.1 Novelty

No patent system grants valid patents for inventions that are already

known; that would be to encumber industry with constraint upon the use of

information without any sufficient return. Accordingly, the present law requires a

patented invention to be new in the sense of forming no part of the state of the art,

that is it must not be found at the priority date65 in any “matter which has at any

time been made available to the public by oral or written description, by use, or in

any other way”.66 This concept draws no distinction between information

published by the inventor and by some one unconnected with; if the inventor were

protected from prejudicing himself, he might delay his patent until it was

commercially most advantageous to apply. Prior publication involves publication

in earlier patent specifications or any other material available to the public prior

64 Id, atp.19.
65 There shall be a priority date for each claim of a complete specification. The priority date of a
patent is the date on which it is tested against “the state of the art”. Where a complete
specification is filed in pursuance of single application accompanied by a provisional
specification and the claim is based on the matter disclosed in such specification the priority date
of that claim shall be the date of filing of relevant specification.
66 Supra note 12, p.148.
67 Supra note 53, pp 174 -175.
 53

publication bar is grounded on the principle that once an invention is in the public

domain, it is no longer patentable.

In India, as in U.K., there is no direct statutory definition of novelty.

Section 2(1 )(i) as amended by the Patents (Amendment) Act 2002 defines

invention as including any new product or process involving an inventive step and

capable of industrial application. The word “new” found even before the

amendment emphasizes the requirement of novelty in inventions to be patented.

The question of novelty includes an inquiry as to whether there was ‘prior

publication or prior use’. But in 1888, the question arose as to whether the secret

use of a process of manufacture before the patent application would amount to a

use. The court held that selling of product produced by a secret method amounted

to public use. But, this rigid approach laid down by the Calcutta High Court was

diluted by the Bombay High Court. The Court accepted the principle that sale of

products made in secret amounted to public use, but the court also added that if the

process applied was not traceable by the examination of the product in the market,
/"Q

the secret use could not be held as public use.

Further, the Bombay High Court held that availability of an invention for

public reference is sufficient to constitute prior publication. It is not necessary that

the public or the persons connected with the trade must have an actual knowledge

of the invention.69

68 Lallubhai Chakubhai Jariwala v. Shamaladas Sakalch and Shah, A.I.R. (1934) Bom. 407.
69 Lallubhai Chakkubhai Jariwal v. Chimanlal Chunilal & Co, A.I.R. (1936) Bom. 99.
 54

Further the question was whether an invention, which “was not itself new”

would be entitled for a patent, it was held that the particular use of the invention

for the purpose described in combination with other element of the system for

producing advantageous results would be a sufficient element of novelty to

support the patent. A new invention may consist of a new combination of all

integers so as to produce a new or important result or may consist of altogether

new integers. The claim for anticipation has to be either by prior use or by prior

publication. This was the principle laid down in 1978.71 Indian courts have

insisted on the requirement of novelty based on the investigation into prior

publication and prior use.

2.5.2 Inventive step/non obviousness

Non-obviousness /inventive step measures the technical accomplishment

reflected in an invention. It attempts to measure an even more abstract quality

than novelty and utility. Non-obviousness asks whether an invention is an

adequate technical advancement to merit the award of a patent. Even if an

invention is new and useful, it does not deserve a patent if it represents merely a

trivial step forward in the art. The objective of the patent system is the

advancement of science. It aims to protect those, which would not be obvious to

anyone skilled in the art if they had put their mind to it. It is regarded as the final

gatekeeper of the patent system.

70 Ram Narain Kher v. Ambassador Industries A.I.R. (1976) Del. 87.

71 Raj Prakash v. Mangat Ram Chowdhary, A.I.R. 1978 Del. 1.
 55

The philosophy underlying the concept of inventive step is similar to that in

novelty. By granting monopoly over an obvious thing, the public should not be

prevented from doing anything that is merely an obvious extension or workshop

variation of what was already known.

In 1985, in the classic case, the Court propounded four-step test to

determine the inventive step in an invention. They are as follows:

(i) the Court must identify the inventive concept embodied in the patent;

(ii) it must assume the mantle of the normally skilled but unimaginative

addressee in the art at the priority date and impute to him what was, at that

date, common general knowledge in the art in question;

(iii) it must identify what, if any, differences exist between the matters cited as

being “known or used” and the alleged invention;

(iv) it must ask itself whether, viewed without any knowledge of the alleged

invention, those differences constituted steps which would have been

obvious to the skilled man or whether they required any degree of

invention.

This test laid down in Windsurfing case, stands as the guidepost in

determining whether an invention involves inventive step or not.

The Patents Act, 1970 as amended in 2002 defines invention as a new

product or process involving an inventive step and capable of industrial

72 Supra note 63, p.27.

73 Windsurfing International v. Taburmarine (1985) R.P.C. 159, CA.
 56

application.74 Further, inventive step is defined as a feature that makes the

invention not obvious to a person skilled in the art.75

The Bombay High Court formulated the rule regarding the inquiry as to the

existence of the inventive step. The test was “was it for practical purposes

obvious to a skilled worker, in the field concerned in the state of knowledge

existing at the date of the patent to be found in the literature then available to him,

that he would or should make their invention the subject of the claim

concerned?”.76

It was held that for improvement or a combination of something known

before to be patentable, it must involve an inventive step and should be something

more than a mere workshop improvement. The ingenuity, independent thought

and skill of the inventor must be assessed to judge the degree of inventive step.

There must be the exercise of some inventive faculty over the collection of more

than one integer for it to qualify the grant of patent. Thus the test is formulated in

the following terms, “the material question to be considered is whether the alleged

discovery lies so much out of track of what was known before as not naturally to

suggest itself to a person thinking on the subject, it must not be obvious or

77
material suggestion of what was previously known”.

74 Section 2 (1) (j) of Patent Act 1970.

75 Section 1(1) (ja) of Patent Act 1970.
76 Hoechst v. Unichem (1969) R.P.C. 55
77 M/s Bishwanath Prasad Radhey Shyam v. Hindustan Metal Industries (1979) 2 S.C.C. 511.
 57

Thus the existence of inventive step is a question of fact, while assessing

the existence of the inventive step at that particular point of time, it must be

enquired whether the invention would be obvious to the notional skilled worker

aware of the existing knowledge about the subject matter of invention. Any

assessment must be done based on the content of information and the state of

technology that the notional worker could have used.

2.5.3 Industrial application

One of the prerequisites that the purported invention must possess before it

can be patented is that it must be capable of industrial application, i.e. it must

perform some function of positive benefit to society. To comply with the utility

requirement, an invention need not be superior to existing products or process.

But it must operate to perform the functions and secure the result intended. It is

not necessary to establish the commercial success of the product or process, even a

small degree of utility is sufficient. An invention does not lack utility merely

because the particular embodiment disclosed in the patent lack perfection or

performs crudely. The purpose of the utility requirement is to assure that society

obtains a “quid pro quo” in the form of substantial utility and specific benefit in

currently available form before granting monopoly to the invention.

The Phrase “capable of industrial application” clearly indicates that for an

invention to be patentable in India, it should satisfy the criterion of utility. The

78 Supra note 63, p.24.

79 Id., at p.27.
 58

test has been now statutorily expressed in the definition of the expression ‘capable

of industrial application’ in Sec.2(l) (a) as meaning the invention must be capable

of being made or used in an industry. This means that an invention must take the

practical form. Industry should be taken in its broad sense as including any useful

practical activity as distinct from purely intellectual or aesthetic activity and does

not necessarily imply the use of a machine or the manufacture of an article. It

includes agriculture.80

2.6 Inventions not patentable

The limitations of patent system have forced it to keep laws of nature,

Physical phenomena, and abstract ideas outside the purview of patent system. The

legal system has always kept the welfare of the society in the forefront. It was

always against anything that would go against the public order and morality. On

that ground, certain types of inventions were excluded from patent regime. These

were mainly policy decisions by the states as to what should be excluded from the
O]

patent system and for what reasons.

The TRIPs agreement mandates the member countries to grant patents for

all inventions, whether be product or processes irrespective of the field of

technology, provided they are new, involve an inventive step and capable of

industrial application. But the member countries are free to exclude from

patentability, inventions whose commercial exploitation would be dangerous to

80 Ibid.
81 Supra note 62, p.31.
82 Article27 of the TRIPs Agreement.
 59

public order and morality, including human animal or plant life or health or which

causes serious prejudice to the environment. Also every member country may

exclude from patentability, diagnostic, therapeutic and surgical methods for the

treatment of humans and animals, plant and animals other than microorganisms

and essentially biological processes for the production of plants or animals other

than non-biological and microbiological process. The member countries were to

provide protection for plant varieties either by patents or by effective sue generis

systems or by combination of both.83

The UK Patents Act 1977 excluded certain subject matters from the patent

system. The Act gives an exhaustive list of what does not constitute an invention

in UK and therefore not entitled to patent protection.84 They are: a discovery,

scientific theory or mathematical method; a literary, dramatic musical or artistic

work or any other aesthetic creation; a scheme, rule or method for performing a

mental act, playing a game or doing business, or a program for a computer; the

presentation of information; an invention the publication or exploitation of which

is offensive, immoral or anti-social and; any plant or animal variety or any

biological process for the production of plants and animals.85

In USA, the basic requirement for patentability is that the invention should

fall within the scope of patentable subject matter as defined under section lOlof

US code. As per this section, any new and useful invention or discovery, which is

83 Ibid.
84 Sections 1 (2) to 1 (5) of U K Patents Act 1977.
85 Supra note 62, p.32.
 60

a process, machine, manufacture or composition of matter is patentable. It also

includes any new and useful improvements made to an existing invention. The

Courts have construed the terms process, machine, manufacture and compositions

of matter very broadly. In Diamond v. Chakrabarty, the US Supreme Court

stated that every thing under the sun made by man is patentable.

The statute does not expressly bar any subject matter from patentability, the

courts have held physical phenomenon, abstract ideas and products of nature to be

outside the scope of patentability. The Atomic Energy Act of 1954 excludes the

patenting of inventions useful solely in the utilization of special nuclear material

• • * 87
or atomic energy in an atomic weapon.

In India, Patents Act 1970 as amended in 2005 prescribes what all are not
on

inventions. They are as follows:

(i) An invention which is frivolous or which claims anything obviously

on

contrary to well established natural laws.

The patent regime needs to exclude all that which is contradictory to

natural laws. No intellectual property system can afford promotion of

anything, which goes against the interest of the public. Any invention

which is not sufficient on its face or which is of little importance is

considered frivolous.

86 447 U.S. 303 (1980).

87 42 U.S.C.2181 (a).
88 Section 3 of Patent (Amendment) Act 2005.
89 Section 3 (a) of Patent Act 1970.
 61

(ii) An invention the primary or intended use or commercial exploitation of

which could be contrary to public order or morality or which causes serious

prejudice to human, animals or plant life or wealth or to the environment.90

For an invention to be patentable it must be useful. Only an

invention which is beneficial to the society and which is not injurious can

be treated as useful.

(iii) The mere discovery of a scientific principle or the formulation of an abstract

theory or discovery of any living thing or non-living substances occurring

in nature.91

Mere ideas are not patentable, some physical manifestation is

necessary to obtain patent protection. Both discovery and invention adds to

the human knowledge. But discovery merely discloses something whereas

invention involves a concrete manifestation, whether be a product or

process. Patent system is intended to promote industrial innovations

thereby encouraging commercial exploitation. Also patents cannot be

granted over something, which already exists in the nature, whether living

or non-living since it is already known to the public.

(iv) 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

90 Sec.3 (b) of Patent Act 1970.

91 Sec.3 (c) of Patent Act 1970.
 62

known process results in a new product or employs at least one new

92
reactant.

For an invention to be patentable there must be the use of knowledge

and ingenuity for the purpose of producing a new and useful product and

process. There should be some novelty in the adaptation of the old process

to the new use or there must be a new method of producing an old thing or

result to get patented.

(v) A substance obtained by a mere admixture resulting in the aggregation of

the properties of the components thereof or a process for producing such

substance. 93

(vi) The mere arrangement or rearrangement or duplication of known devices

each functioning independently of one another in a known way.94

A mere alteration in the arrangement or duplication of known

devices each performing functions independently of one another in a known

way or admixture thereby resulting in an aggregation of the properties of

the components and the process involved for producing such substance is

not an invention. Since no new product is evolved in mixing these

integers, no patent can be obtained. But in cases where, by way of

rearrangement or duplication of known integers something new or better is

92 Sec.3 (d) of Patent Act 1970.

93 Sec.3 (e) of Patent Act 1970, Example: A detergent composition consisting of an active
ingredient and a carrier where in the carrier does not possess any activity and does not play any
part in the activity of the composition.
94 Sec.3 (f) of Patent Act 1970.
 63

obtained; it is entitled to patent protection. Mere collection of known

integers without the exercise of the inventive faculty does not qualify an

invention for the patent monopoly.

(vii) A method of agriculture or horticulture.95

A method of agriculture or horticulture is not a manner of

manufacture, it is only a function of natural phenomenon, therefore it

cannot be patented.

(viii) Any process for the medicinal, surgical, curative, prophylactic, diagnostic,

therapeutic or other treatment, of human beings or any process for a similar

treatment of animals to render them free of disease or increase their

economic value or that of their products.96

Patents are meant to promote industrial innovations and are

concerned with the production of goods, which may be sold or used for

industrial purposes. A process for the treatment of human beings or a

process for a similar treatment of animals is of no industrial application nor

is a process of manufacture.

(ix) Plants and animals in whole or any part thereof other than micro organisms

but including seeds, varieties and species and essentially biological

processes for production or propagation of plants and animals.

95 Section 3 (h) of Patent Act 1970.

96 Section 3 (i) of Patent Act 1970.
97 Section 3 (j) of Patent Act 1970.
 64

Plants and animals including seeds, varieties and species and

essentially biological process for production and propagation of plants and

animals are not patentable. Non-biological and microbiological processes

are patentable. Thus a distinction is drawn between products of nature,

whether living or not, and man made inventions.

(x) A mathematical or business method or a computer program per se or

algorithms.98

Computer program is a set of instructions or commands or data

given to a computer to obtain specific result. It is input in a machine-

readable medium in order to cause the computer to perform a particular

task. Algorithm is described as a formula, a series of formulae and is a

mathematical function. Thus computer program is essentially a

mathematical algorithm. Computer program is considered as a literary

work under copyright law and is copyrightable. It cannot be protected

under patent law.

(xi) A literary, dramatic, musical or artistic work or any other aesthetic creation

what so ever including cinematographic works and television productions.99

These are excluded since they are not a new manufacture as the

invention. They consisted solely of matter having literary or artistic

connotation, which can be protected under copyright.

98 Section 3 (k) of Patent Act 1970.

99 Section 3 (1) of Patent Act 1970.
 65

(xii) A mere scheme or rale or method of performing mental act or method of

playing game.100

No patents are granted for ideas or phenomena of nature. It is not

the idea that is patentable, but it should have industrial applicability.

(xiii) Presentation of information.101

A presentation of information is not an invention to be patentable

because they are not manufacture.

(xiv) Topography of integrated circuits.102

Layout designs of the integrated circuits are not patentable. Article

36 of the TRIPs agreement provides for a separate law to offer special

protection to integrated circuits.

(xv) An invention which in effect, is traditional knowledge or which is an

aggregation or duplication of known properties of traditionally known

103
component or components.

Patents cannot be granted for something, which is already known, to

the public. It should have the element of novelty within it. Something

known from ancient times cannot be conferred patent protection.

100 Section 3 (m) of Patent Act 1970.

101 Section 3 (n) of Patent Act 1970.
102 Section 3 (o) of Patent Act 1970.
103 Section 3 (p) of Patent Act 1970.
 66

Further section 4 absolutely prohibits the grant of patent in respect of an

invention relating to atomic energy. This is in consideration of national security of

India.

2.7 Procedure for the grant of patents

Every patent system establishes a definite procedure for the grant of

patents. The procedure for obtaining patent protection is highly relevant from the

perspective of an inventor. The patent Act provides a full-fledged procedure to

ensure that patent is granted to a person who applies for a patent and to make it

sure that the patent rights are not misused. The patent procedure comprises four

main steps, namely: application for the patent; examination of the application;

opposition to the grant of patent and finally grant of patent.104

2.7.1 Application for the patent

An applicant wishing to file an international patent application has to go

through the procedural formalities laid down in the patent co-operation treaty.

According to patent law in India, an application for a patent can be made by any

person claiming to be the true and first inventor of the invention, any person being

the assignee of the person claiming to be the true and first inventor or by the legal

representative of any deceased person who immediately before his death was

entitled to make such an application. Thus it is not mandatory that only an

inventor can apply for and get a patent over an invention.105

Supra note 63, p.37.

105 Section 6 of the Patents Act 1970.
X
 67

An assignee has to furnish evidence of assignment of right to apply for a

patent in his favour before making such application. An application must contain

the fact that the applicant is in possession of the invention and shall name the

owner claiming to be the true and first inventor, and where the person so claiming

is not the applicant or one of the applicants, the application must contain a

declaration that the applicant believes the person so named to be the true and first

inventor.106

An application for a patent can be made for only one invention and should

be in the prescribed form. The application must be accompanied by a provisional

or complete specification.107

The first to file system is employed, in which among persons having filed

for the same inventions, first one is granted a patent, therefore a patent application

should be filed properly after conceiving the invention. Therefore it is advisable

to apply for a patent as soon as the inventor’s idea of the nature of the invention

has taken a definite shape, they need not wait until their inventions are fully

developed for commercial working before applying for patents.

It is permissible to file an application for a patent accompanied by a

“provisional specification” describing the invention. The application may

therefore be made even before the full details of working of the invention are

developed. The filing of an application for a patent disclosing the invention would

106 Section 7 of the Patents Act 1970.

 68

secure priority date of the invention, and thereby, enable the inventor to work out

the practical details of the invention and to file “complete specification” within 12

months from the date of filing of provisional specification.108

2.7.2 Appropriate office for filing an application and for other proceedings

Application is required to be filed according to the territorial limits where

the applicant or the first mentioned applicant in case of joint applicant for a patent

normally resides or has domiciled or has a place of business or the place from

where the invention actually originated. If the applicant for the patent or party in a

proceeding having no business place or domicile in India, the appropriable office

will be according to the address for service in India given by the applicant or party

in a proceeding. The appropriate office once decided in respect of any

proceedings under the Act shall not ordinarily be changed. The four patent offices

are located in India at Kolkota, Mumbai, Delhi and Chennai.

2.7.3 Publication and Examination of Patent Applications

All the applications for patent, except the application prejudicial to the

defence of India or abandoned due to non filing of complete specification within

12 months after filing the provisional specification or withdrawn within 15 months

of filing the application, are published in the patent office journal just after 18

months from the date of filing of the application or the date of priority whichever

is earlier. The publication includes the particulars of the date of the application,

application number, name and address of the applicant along with the abstract.

108
Section 9, Patents Act 1970.
 69

The applications for patent are not open for public inspection before publication.

After the date of publication of the application, the complete specification along

with provisional and drawing, if any, abstract, application on any form or plain

paper and any correspondence between the office and applicant may be inspected

at the appropriate office by making a written request to the controller in the

prescribed manner and on the payment of prescribed fees.109

2.7.4 Early request for publication

The applicant may also file a request for early publication in form-9 with a

prescribed fee of Rs.2500/- or Rs. 10,000/- for natural person and other than

natural person respectively. The above application is published ordinarily within

one month from the date of the request the applicant shall have provisional right

from the date of publication.

2.7.5 Request for Examination

No application for patent will be examined if no request is made by the

applicant or by any other interested person in form-18 with prescribed fees of

Rs.2500/- or 10,000/- for natural person and other than natural person respectively,

within period of 48 months from the date of priory of the application or from the

date of filing of the application, whichever is earlier. Where no request for

examination of the application for patent has been filed within the prescribed

109
Section 11 A Patents Act 1970.
 70

period, the application will be treated as withdrawn and, thereafter, an application

cannot be revived.110

2.7.6 Examination

Where the request has been made by the applicant or by any other

interested person, the application for patent will be taken up for examination

according to the serial number of the requests received on form-18. A First

Examination Report (FER) stating objections / requirements is communicated to

the applicant or his agent according to the address for service ordinarily within six

months from the date of request for examination or date of publication whichever

is later. Application or complete specification should be amended in order to meet

the objections or requirements within a period of 12 months from the date of First

Examination Report. No further extension of time is available in this regard. If all

the objections are not complied with within the period of 12 months, the

applications shall be deemed to have been abandoned. When all the requirements

are met the patent is granted after 6 months from the date of publication, entry is

made in the register of patents and it is notified in the patent office journal.*111

2.7.7 Withdrawal of patent application

The application for patent can be with drawn at least 3 months before the

first publication which will be 18 months from the date of filing or date of priority

whichever is earlier. The application can also be withdrawn at any time before the

110 Section 11 E Patents Act 1970.

111 Section 2 Patents Act 1970.
 71

grant of the patent. The application withdrawn after the date of publication cannot

be refiled as it is already laid open for public inspection. However, application

withdrawn before the publication can be refiled provided if it is not opened to

public otherwise.

2.7.8 Opposition proceedings to grant of patents

The main purpose of the provisions, which provides for opposition, is to

ensure that patents are granted only for inventions and not for discoveries and

patents are granted only for those inventions, which fulfil the legal criteria of

patentability.

For this purpose, Indian Patents Act has provided for opposition
11 "7
proceedings. Any one can give notice of opposition to the grant of patent to the

controller on any of the grounds stipulated in section 25 of the Act. Generic

Companies have already filed number of pre-grant oppositions. Besides

companies, patient groups and public interest organisation are also working to

oppose patent applications for essential drugs.

This provision also gives an opportunity to the true and first inventor to

raise objection to the grant of patent if the applicant for the patent has wrongfully

obtained the invention or any part thereof from the inventor. Even after the grant

of patent he can attack the validity of patent through post grant opposition.

112 Section 25 of the Patent (Amendment) Act 2005 provides for both pre-grant and post-grant
opposition. This section sets out the grounds on which the notice of opposition can be given to
the controller. The grounds for pre-grant as well as post-grant opposition are the same.
 72

2.7.9 Pre-grant opposition

Where an application for patent has been published but patent has not been

granted, any person may, in writing represent by way of opposition to the

controller against the grant of any patent. The representation shall be filed at the

appropriate office and shall include a statement and evidence, if any, in support of

the representation and a request for hearing if so desired.

The above representation may be made on the following grounds.

a) that the applicant for the patent or the person under or through whom he

claims, wrongfully obtained the invention or any part thereof from him or
1 | ”3
from a person under or through whom he claims;

b) that the invention so far as clamed in any claim of the complete specification

has been published before the priority date of the claims;114

c) that the invention so far as claimed in any claim of the complete specification

is claimed in a claim of complete specification published on or after the

priority date of the applicants claim and filed in pursuance of an application

tor a patent in India, being a claim of which the priority date is earlier than

that of the applicant’s claims;115

d) that the invention so far as claimed in any claim of the complete specification

was publicly known or publicly used in India before the priority date of that

claims;116

113 Section 25 (i) (a) of Patent Act 1970.

1,4 Section 25 (i) (b) of Patent Act 1970.
115 Section 25 (i) (c) of Patent Act 1970.
116 Section 25 (i) (d) of Patent Act 1970.
 73

e) that the invention so far as claimed in any claim of the complete specification

is obvious and clearly does not involve any inventive step, having regard to

the matter published as mentioned in clause (b) or having regard to what was

used in India before the priority date of the applicant’s claim.117

f) that the subject of any claim of the complete specification is not an invention

within the meaning of this Act, or is not patentable under this Act;118

g) that the complete specification does not sufficiently and clearly describe the

invention or the method by which it is to be performed;119

h) that the applicant has failed to disclose to the controller the information

required by section 8 or has furnished the information which in any material

particular was false to his knowledge;120

i) that in the case of convention application, the application was not made

within 12 months from the date of the first application for protection of the

invention made in a convention country by the applicant or a person from

whom he derives a title;121

j) that the complete specification does not disclose or wrongly mentions the
122
source or geographical origin of biological material used for the invention.

117 Section 25 (i) (e) of Patent Act 1970.

1,8 Section 25 (i) (f) of Patent Act 1970.
119 Section 25 (i) (g) of Patent Act 1970.
120 Section 25 (i) (h) of Patent Act 1970.
121 Section 25 (i) (i) of Patent Act 1970.
122 Section 25 (i) ij) of Patent Act 1970.
 74

k) that the invention so far as claimed in any claim of the complete specification

is anticipated having regard to the knowledge, oral or otherwise, available

within any local or indigenous community in India or elsewhere, but on no

other ground.123

The controller shall, if requested by such persons for being heard, hear him

and dispose of such representation. If the opposition is decided in favour of the

applicant, the patent is granted, the grant of patent is published in the patent office

journal there by opening the application, specification and other related documents

for public inspection on payment of prescribed fee.

2.7.10 Grant of patent

When all requirements of the First Examination Report are met or in case
* *

of opposition under section 25(1), if the opposition is decided in favour of the

applicant, the patent is granted, after 6 months from the date of publication under

section 11 A, the letter of patent is issued, entry is made in the register of patents

and it is notified in the patent office journal.124

2.7.11 Term and date of patent

Term of every patent will be 20 years from the date of filing of patent

applications, irrespective of whether it is filed with provisional or complete

specification. Date of patent is the date on which the application for patent is

filed. 125

123 Section 25 (i) (k) of Patent Act 1970.

124 Section 43 Patents Act 1970.
125 Sections 53 & 45 of Patent Act 1970.
 75

2.7.12 Post grant opposition

Any interested person can file notice of opposition (along with written

statement and evidence, if any) anytime after the grant of patent in the patent

office journal. The above notice under section 25 (2) shall be filed on Form 7

along with a fee of Rs.1500 or 6000/- for natural person and other than natural

person respectively, in duplicate at the appropriate office. The grounds of

opposition under section 25 (2) are the same as given before in case of pregrant

opposition. The post grant opposition is decided by an opposition Board followed

by, a hearing and the reasoned decision by the controller.

2.8 Conclusion

A patent is a limited monopoly given to individuals/ corporations for

i i

limited number of years for technological inventions/innovations by preventing

others from using the patent technology. It is granted at the request of the

applicant by the patent office in respective countries. Hence the patent right is

available within the territory of the granting countries. Patents are tools of public

policy that are supposed to guarantee that society as a whole benefits from any

innovation. Patents have been developed in order to achieve two aims:

Firstly, to promote the publication of ideas, inventions and creations in

order to make them available to others.

Secondly, to provide economic incentive for people to invent or to engage

in creative efforts. The patent system was apparently devised to encourage

inventions and enable the public to enjoy the benefits of the new inventions.
 76

Therefore patents should be worked to meet the full demands of the domestic

market.

Much of the Indian patent law is derived from English. In U.K. the concept

of patent originated from the exercise of royal prerogatives to the grant of

monopoly. In India, patent for an invention has always been the sole creation of

the statutes. The idea of conferring market monopoly as an incentive to innovate

has old roots. In the course of time both individual and public justifications have

played a prominent role in the arguments in favour of patent protection for

inventions.

The conferment of intellectual property right in the form of patent is

justified both from the perspectives of the inventor and the general public. From

the perspective of the person who invented it, these rights act as an incentive for

him to invent and will encourage him to invest in working on new inventions. The

requirements of patentability ensure the general public that the invention is not

kept out of their reach. Thus the patent system attempts to harmonise the interests

of inventor and public at large.

Patents do not protect each and every inventor who conceives an invention.

Every legal system insists upon certain conditions for an invention to get patent

right. Although the requirements vary in different legal systems, certain basic

common features do exist. They are novelty, utility or industrial applicability and

inventive step.
 77

Ever>' patent system has excluded law of nature, physical phenomena and

abstract ideas from patentability and kept certain other inventions outside patent

system on the ground that they are against public order and morality.