In the last few years, the Indian government has taken various steps to reform the patent filing process in India and strengthen the Indian IP ecosystem. In the latest series of developments, the Ministry of Commerce and Industry (“MoCI”) published draft Patents (2nd Amendment) Rules, 2024 (“the draft Rules“) on January 2, 2024, seeking comments from the public and/or any stakeholders. Public comments to the draft Rules are invited until February 2, 2024.
The draft Rules provide procedures for — filing complaints against contraventions or defaults under specific sections of the Patents Act, 1970 (“the Patents Act”), the appointment of Adjudicating officer, adjudication of complaints, deciding penalties and filing an appeal against the decision of the Adjudicating officer.
Offences covered by the Draft Patent Rules 2024
The draft Rules provide for adjudication of penalties for:
i. falsely representing that the article sold is patented in India or is the subject of an Application, under Section 1201 of the Patents Act;
ii. refusal or failure to submit a statement of the working of a patent (Form 27) or submitting false information therein, under Section 1222 of the Patents Act; and
iii. practicing as a Patent Agent without registering himself as such with the Indian Patent Office, under Section 1233 of the Patents Act.
In August 2023, the MoCI, with an aim to facilitate and promote the ease of doing business in India, notified the Jan Vishwas Act, 2023 (“JV Act”). The JV Act sought to amend 42 laws, including the Patents Act, by decriminalizing certain offences provided therein. The JV Act decriminalized the offences under Sections 120, 122, and 123 of the Patents Act by imposing a huge financial penalty instead of the fine and imprisonment provided in the Patents Act prior to the amendment. The JV Act also provided for the appointment of an adjudicating officer for holding an inquiry and imposing penalties, and it included provisions for appeals against the order of the adjudicating officer.
In order to bring these provisions into effect, the Draft Patent Rules 2024 provide for the procedure, timelines and fees for filing and adjudicating such complaints including:
i. Who can file the complaint?
According to the draft Rules, any person may file a complaint with the adjudicating officer regarding any contravention or default committed by any person of the provisions contained in sections 120, 122, or 123 of the Patents Act.
ii. How to file a complaint?
The draft rules provide a new Form 32 for filing complaints. The complaint shall be accompanied by a statement setting out the facts upon which the complainant relies and evidence in support of the statement.
As per the draft rules, the complaint must be accompanied by an official fee of Rs. 10,000 for natural persons, start-ups, small entities, and educational institutions, and Rs. 50,000 for other entities.
iii. Who will adjudicate the complaint?
One or more controllers will be authorized to act as adjudicating officers for holding an inquiry and imposing penalties on any person who has committed the contravention or default. Where more than one adjudicating officer is appointed, the complaint filed by the complainant(s) will be automatically and randomly allocated by the computer resource system to the Adjudicating officer.
iv. What is the procedure for handling complaints?
The draft rules provide for summary proceedings for handling complaints. The procedure includes first assessing whether a prima facie case for the maintainability of the complaint is made. The complaint shall be quashed and dismissed if a prima facie case is not made.
However, if a prima facie case for the maintainability of the complaint is made, the adjudicating officer shall serve a copy of the notice to the alleged violator, give the alleged violator an opportunity to file written submissions against the notice, hear the parties, and conduct an inquiry (if required) before passing a decision. The draft Rules also provide a definite timeline for each of the steps.
v. What are the factors that will be considered while judging the quantum of compensation?
The draft rules also provide the factors that shall be considered while judging the quantum of compensation. The factors are-
a) the amount of gain from unfair advantage, wherever quantifiable, made as a result of the default;
b) the amount of loss caused to any person as a result of the default;
c) the repetitive nature of the default; and
d) extension of the time period.
The contraventions provided for under Sections 120, 122, and 123 of the Patents Act have never been enforced. It remains to be seen whether the draft rules, upon notification, provide a catalyst for the enforcement of said contraventions.
1 Section 120 – Unauthorised claim of patent rights
If any person, falsely represents that any article sold by him is patented in India or is the subject of an application for a patent in India, he shall be liable to penalty which may extend to ten lakh rupees, and in case of the continuing claim, a further penalty of one thousand rupees for every day after the first during which such claim continues…
2 Section 122 – Refusal or failure to supply information
(1) If any person refuses or fails to furnish-
(a) to the Central Government any information which he is required to furnish under sub-section (5) of section 100.
(b) to the Controller any information or statement which he is required to furnish by or under section 146, he shall be liable to penalty which may extend to one lakh rupees, and in case of the continuing refusal or failure, a further penalty of one thousand rupees for every day after the first during which such refusal or failure continues.
(2) If any person, being required to furnish any such information as is referred to in sub-section (1), furnishes information or statement which is false, and which he either knows or has reason to believe to be false or does not believe to be true, he shall be liable to penalty for a sum equal to one half per cent. of the total sale or turnover, as the case may be, of business or of the gross receipts in profession as computed in the audited accounts of such person, or a sum equal to five crore rupees, whichever is less.
3 Section 123 – Practice by non-registered patent agents
If any person contravenes the provisions of section 129, he shall be liable to penalty, which may extend to five lakh rupees, and in case of the continuing default, a further penalty of one thousand rupees for every day after the first during which such default continues.