What Is The Importance Of “Statement Of Working” For Patenting System In India?

Soniya Khanna

25 Jun, 2023

To start with the importance of statement of working, first, we need to gather knowledge of the basic terms in relation to the patenting system in India. A patent is an exclusive right over the invention with a person who invents that invention. That person is called a patentee, who has to make disclosure in the form of a statement of working to the Indian patent office regarding the commercial exploitation of a patent in India.

Brief Explanation of Statement of Working

The Statement of Working is submitted by the patentee or licensee with the Indian Patent Office stating the commercial exploitation of a patent in India. It also verifies whether the patent meets the reasonable requirements of the public besides stating the commercial exploitation of patent registration.

It ensures that if a patent does not come into execution for 3 years from the date of grant or the reasonable requirement of the public is not met; then a third party be given an opportunity.

Legal Provisions of Statement of Working

As per section 146 (2) and Rule 131 of the Indian Patent Act, a Statement of Working needs to be submitted with the IPO (Indian Patent Office).

The following details must be provided along with Form-27 (Statement of Working):

• If the invention is not worked, then the reason for not working and steps taken
• If the invention is worked, then the value of the patent manufactured in India or the value of the patent imported from another country
• Details of the license & sub-license granted
• Whether the public requirement has been met

Compulsory License

At the time of taking a decision of granting a compulsory license, details provided under the statement of work is used. IPAB (Intellectual Property Appellate Board), India considers the information provided under the statement of working while granting a compulsory license in India. This decision had been taken by the IPAB in the case of “Bayer Corporation v. Natco Pharma Ltd”.

Penalty Provisions in case of Non-Compliance

The legal status of the patent is not affected by the non-filing of a statement of working or filing of a “not worked” statement; thus, it is not deemed as abandoned or cancelled. 

However, it may attract criminal penalties in case of non-filing of a working statement or knowingly furnishing of the incorrect statement. There are penalty provisions prescribed under Section 122(1)(b), if the patentee or licensee fails to submit information under Section 146. The fine penalty may be extended up to Rs. 10 lakhs.

In case of wrongful information, imprisonment may be imposed for up to six months or a fine or both under Section 122(2). As per section 85 of the Indian Patent Act[1], a patent can also be revoked on the ground that the patented invention is not under working.

Patent Litigation

At the time of considering infringement suits, the important factor is the working or non-working of a patent. As per section 108 of the Indian Patent Act, the patentee can claim damages and injunction and/or an account of profit as relief in case of suits relating to patent infringement.

The court may use a statement of working for the information in order to estimate the actual damages claimed. The alleged infringer may argue that the patentee might not have encountered any damages in case a statement of work is not filed.

Read our article:Patent Registration Process in India

Publication of Statements of Working

The statement of working is very important as it gives us insights regarding the effectiveness of the patenting system in India. There are various companies, industries and other business entities that use the invention in their course of business.

Statement of Working is publically available on the website of the Indian Patent Office, which has been submitted by the patentee in the preceding year. The power of the controller is mentioned under section 146(3) regarding the publication of such information received by the Indian Patent Office as per section 146(1) and (2).

Publication of the information defined under the Statement of Working reflects the effectiveness of the patenting system in India. Such information can be utilized by academicians, lawmakers and potential licensees in order to improve the Indian patent law.

Publication of a statement of work also helps in patent evaluation, and besides this, it encourages the science and technology domain development. It also gives business and trade advantages.

Statement of working in relation to a patent helps in the evaluation of the value of the patent; therefore, a potential licensee can negotiate the fee for obtaining a license on the basis of a value of a patent.

From the perspective of a business merger or a business takeover, a Statement of Working is also important. On the basis of the information received from a statement of working, resources occupied in research and development may be customized by the industries. We can acquire the following information from the working statements:

• The commercial viability of Inventions
• Compulsory License
• Valuation of Patent Portfolios and
• Effectiveness of Inventions

The Ending Road

According to Indian Patent Laws, it has become very important to provide information regarding the working of patent. In India, the main purpose of granting a patent is to encourage invention, or, you can say, innovation and research and technology. It is also ensured that the invention of the patentee is being commercialized for the benefit of the public at large.

By submitting a Statement of Working with the Indian Patent Office, periodic information is disclosed in relation to the commercialization of the patented invention in the Indian Jurisdiction. This has been done in order to prevent non-commercialization/non-use or misuse of patented inventions. The information provided under the prescribed form helps in the evaluation of compulsory licensing; and in taking business decisions.

Accordingly, Form 27 is a mandatory requirement which must be followed by the patentee. In our opinion, strict action must be taken by the Indian patent office in case of violation of the Indian patent law.

Read our article:How to File an Application Patent Registration India?