‘Non-working of patent a blot on knowledge economy’

Milind Sathe

Non-working of patents is a turbulent issue. It is made turbulent because some nations want to force their unique version of IPR on signatories of TRIPs albeit other versions of IPR and patent system are TRIPs compliant. For the purpose of this article non use also includes refusal to license or not licensing the patent. Let us have a quick review of some perspectives of non-working of patents.

Study of evolution of Crown monopoly privileges, British patents and patent system clearly and convincingly substantiate privilege and patent system to ensure working within the realm so as to increase exports, reduce imports, provide employment to native apprentices, dissemination of new technologies and to provide products at cheaper price. Statute of monopolies which is interpreted as political and policy compromise for some reasons is alleged to have shifted focus from the local working requirement. Despite this interpretation, British Patent law has always retained compulsory licensing provisions which would have same impact.

Paris convention Article 5 which is internalised by TRIPs indicates the corrective measures to be taken in case of failure of local working of the patent. It also prescribes the period within which patent has to be worked in the country and is within three years after the grant of the patent.

The Patents Act of India which is TRIPs compliant has internalised all these features of international agreements. It also stipulates the conditions of grant. Like India, many nations treat non-working of patent as an act that contradicts the law of the land. This is a perfect interpretation within the legal frame prevailing in these nations. The law in these nations suggests Compulsory Licensing (CL) to neutralise the bad effects resulting from non-working of patents. CL necessitates prior efforts and dialogue with patentee for licensing. However the US blames India and other countries in their 301 reports for alleged loose IP protections and for presence of CL provisions. It does not want India and other nations to invoke CL provisions.

The patent system is alleged to have been internalised by the US to promote the progress of science and useful arts. Early days in the US witnessed litigations where working of patent was adjudged an essential attribute of patent system1. Patents were privilege ‘conditioned by a public purpose. After Continental Paper Bag Co. v. Eastern Paper Bag Co., 210 U.S. 405, 28 S.Ct. 748, 52 L.Ed. 1122, a change in focus was observed that prioritised interest of the patentee over the public purpose of the grant. Non-working of patents, also known as non-use of patents, is litigated under competition laws in the US, which has a legal provision called 28USC1498 which allows the State to use the patents even without prior negotiation with patentee. The US has invoked this provision several times so far.

The most detrimental impact of non-working of patents is suppression of technologies, processes and products (TPP), elimination of opportunities to make versatile applications of TPP. How is this related to the objective of promoting progress of science and useful arts?

Commonly sited reasons for non-working of patents

Non-working is closely associated with the TPP protected by patent.

Competitive disadvantage, lack of market demand, and apprehension that the technology is obsolete, threat to hierarchical tiers within the company or in organogram, apprehension of impact in the market position/share/reputation of company in case of failures, threat of existing labour and machines becoming idle, threat of loss of jobs, inability to grasp and master new skills, cost of investment in internalising new TPP, high investment required albeit the new technology may be better in the long run, pace of change in the given type of TPP/industry, to block competitor (the strategy used by companies working in the field of energy, pesticides, agrochemicals), huge switching costs, to eliminate new competitor from establishing himself in the market.

Non-working of patents serves purposes which contradict national interests and sovereign priorities. It creates dependency, ensures exodus of national wealth. Competitors cannot access effective TPP. Patentee is able to continue its rule over the market. Patents of inferior TPP are also not worked to prevent introduction of cost competitive TPP and to avoid potent possibilities of price war which in most probability would impinge upon bottom lines of patentee.

Non-working contradicts public justification2, shrinks sovereign domains and promotes anti- commons3. Anti-commons prejudicially affects consumer comfort, interrupts industrial progress, and exerts detrimental impact on sectors of vital importance and arrests growth of economy.

Non-working of patent has disadvantages such as the subject population is denied the use of the invention and entrepreneurial or industry members are prevented from developing add on or incremental innovation which can result in superior technology and better more user friendly, more effective products. Thus non-use of one patented technology or patent protected product has a cascading effect which stops further inventions and arrests social, technological, industrial comfort. It kills the inventive ingenuity which the patent and patent system is preached to be providing the incentive. Diffusion of knowledge is incomplete if the TPP protected by patent is not available for consumption. Description in the patent and its quality can be understood only by those who know the game of patent drafting. Nonworking prevents optimum use of resources. Nonworking contradicts the spirit and purpose of promoting progress of science and useful arts. Nonworking contradicts public interest, denies social welfare, threatens political stability. Non-practicing patentees dent the economy of the nation, puncture entire legal system, raise level of inconvenience, create legal and administrative crises4.

How to prevent nonworking of patents

1. Publish the information collected under FORM 27 or non-worked inventions.
2. Declare non-worked patents open for CL. This will also save lot of time, social and public cost incurred in establishing Section 83, 84.
3. Treat nonworking of patents as anti-public interest activity and should be condemned professionally, socially, politically, economically, individually and collectively.

Non-working of patent is blot on knowledge economy All explanations given to justify and tolerate non-working of patents, such as “hindsight” should be effectively eliminated and patent system be made to deliver its objective of “promoting progress of science and useful arts” “dissemination of essential technologies” to ensure that WTO and TRIPs does not fail hereafter in achieving its objectives5 and preamble.

The author Milind Sathe, Deputy General Manager – Projects, Unichem Laboratories wishes to state that the views expressed in this article are his personal views.