A patent application is a request pending at a patent office for the grant of a patent for an invention described in the patent specification and a set of one or more claims stated in a formal document, including necessary official forms and related correspondence. It is the combination of the document and its processing within the administrative and legal framework of the patent office.
To obtain the grant of a patent, a person, either legal or natural, must file an application at a patent office with the jurisdiction to grant a patent in the geographic area over which coverage is required. This is often a national patent office, but may be a regional body.Once the patent specification complies with the laws of the office concerned, a patent may be granted for the invention described and claimed by the specification.The process of “negotiating” or “arguing” with a patent office for the grant of a patent, and interaction with a patent office with regard to a patent after its grant, is known as patent prosecution. Patent prosecution is distinct from patent litigation which relates to legal proceedings for infringement of a patent after it is granted.
Importance of Patent Registration
Patent Registration is basically a process to file an application to register your invention under Patent Act. It provides you with the monopoly to use your invention for public. As it is a quite serious matter so the person should file this application seriously to avoid any future dispute regarding the infringement. Before filing for the patent, there are some key points which should be followed accordingly.
Step 1: Patent search- How to check patents? it is the most common question among people when they want to patent for an idea. So, Team Taxaj performs patent search for all the existing inventions on the idea that you are trying to patent. If there is a patent already on the idea you are considering, than patent is not granted. Patent search saves you from the effort of going through the year long registration process. You can stop if the patent is already registered.
Step 2: Patent domicile – Patent which are registered in India is only valid for India. It protects your invention in India only and does not apply to other countries. There is the possibility to protect your invention in other countries as well. For same, you need to apply for a separate application in each country.
Step 3: File Patent application – An application should be filed with the department before disclosing all the details about your invention.
Step 4: Patent Review – The Patent office of the Indian government reviews your patent application. There check for any existing patents granted on similar idea. If they find the invention unique and patentable, then they grant patent for the application.
Step 5: Patent Grant – Once the patent is granted, the application status is updated online at the Patent site. It can take from 18 months to even 50 months for a patent certificate to be granted.
Patents are techno-legal documents providing the details of new, non-obvious, and industrially applicable inventions. Once approved by the patent office of a certain country/region, the patent provides the patent owner legal rights of monopoly/ right to exclude others from using, -selling, offering for sale, importing – the patented invention in that country or exporting the patented invention from that country. If however, a third party flouts the legal rights of the patent owner (infringement) he/she/they can be sued in court of law for injunction and/or damages (compensation).
The true and first inventor(s), his assignee, or their legal representative – can apply for patent with a provisional or a complete specification either themselves or through an agent by duly submitting the application form – at the appropriate office. In India, there are 4 offices, namely Delhi, Mumbai, Chennai & Kolkata and depending on the address of the applicant where he resides, has his domicile, or has a place of business or the place from where invention actually originated, the appropriate office is applicable. In case of foreign applicants, who don’t have domicile, place of business in India, place of business or address for service in India of the patent agent appointed by them is the determining factor for appropriate office. Specific state wise details can be accessed here: http://ipindia.nic.in/ipr/patent/patjurid.htm
A complete specification is the regular patent application which is prosecuted, examined, accepted and granted by the patent office. The complete specification comprises of the full and sufficient disclosure of the invention along with the best mode of working of the invention and definitive claims enabling the legal boundary of the invention.
Following are the steps involved in patent registration in India:
– Filing of the patent application is the first step of the patent registration.
– Patent office then publishes the complete patent specification ordinarily after eighteen months from the priority date. Optionally a request for early publication can be made whereby publication happens ordinarily within one month of such request.
– The next step in the process is examination by the patent office. Unlike publication, examination of the patent application is not automatic and request has to be filed within 48 months from earlier of date of priority and filing of the application.
-Once request for examination has been made, patent office issues examination report to the applicant. Examination of the application is done based on the date of filing of the request for the examination i.e. earlier the request made for the examination, earlier is the report issued.
– After the issuance of first examination report, application is to be put in condition of allowance within 12 months by waiving the objection and complying with requirements, if any.
– After considering replies to the first or subsequent examination reports and hearing notices if any, controller grants or rejects the patent application.
-In India, patent application can be opposed before and after grant of the patent. Patent can also be revoked under some circumstances. After grant of the patent, renewal fees have to be paid to keep the patent in force.
– An appeal can be made against the decision of the patent office/controller at the Intellectual Property Appellate Board by the aggrieved party.
‘Patent applied’ or ‘patent pending’ can be used with any article sold when patent application has been filed to cover that article and application is not yet granted/rejected/withdrawn/abandoned. Patented or patent can be used with any article sold when patent has been granted which covers the product. Unauthorized use of these words can lead to fine extendable to one lakh rupees.
Ordinarily no new matter can be added to a complete patent specification. However, in such cases there is a provision of filing a patent of addition in respect of – original patent of application, and thereby claiming through the patent of addition improvements or modification to the invention.
As it stands, there is no unitary worldwide patent and the applicant has to file in respective jurisdictions separately in one of the following routes:
Paris Convention: Direct filing in another country is facilitated through Paris Convention for all members of the convention which includes India and all major countries. However, the filing through Paris convention has to be done within 12 months from priority date.
Patent Cooperation Treaty System: PCT is a vehicular system which allows an applicant to file in PCT contracting states within 30-34 months from priority date (varies from jurisdiction to jurisdiction) instead of 12 months. Not only does the PCT enable extended time period, it also simplifies logistic and formal work in terms of documentation and forms. The PCT system also provides for an International Search Report on the invention – giving the applicant a glimpse of the chances of patent grant in multiple jurisdictions. However, it is pertinent to note that the PCT application itself has to be filed within 12 months from the priority date. Also, not every Paris convention country is a PCT member and in those jurisdictions only the Paris convention route can be used for patent filing.
Yes, the following provisions have to be complied with in case of foreign filings by Indian Residents:
– If an application is filed in India, then there is a mandatory waiting period for at least 6 weeks before filing outside India, else a request for Foreign filing permit at the patent office must be submitted and only after getting the permit can the filing be done outside India.
– If the applicant wants to file directly outside India, without filing in India first, then again, a request for Foreign filing permit at the patent office must be submitted and only after getting the permit can the filing be done outside India.
Failure to take permission from IPO before filing of foreign application can lead to abandonment of the Indian Patent application and if granted, then revocation of the patent. One might even face imprisonment up to 2 years or fine or both.
Although suit for infringement can only be instituted after the grant of patent, patentee shall have privileges as if patent was granted on the date of publication of application, and when suing for infringement the patent owner can sue backdate and claim damages from the date of infringement or publication of patent application whichever is later.
The annuity/maintenance/renewal fees need to be paid only after the grant of the patent in India but in the form of accrued payment for every year right from first 2 years out of 20 years of term of patent. According to section 53 (2) of the act, renewal fees needs to be paid in order to keep patent in force at the expiration of 2 years or subsequent years from the date of patent which shall be renewal fees for the third year or subsequent year. It means that maintenance fees needs to be paid in nth year in respect of nth plus 1 year. According to section 142 (4) of the act, where a principal patent is granted later than 2 years from the date of the filing of the application, the fees which have become due in the meantime may be paid within a term of three months from the date of the recording of the patent in the register or within the extended period not later than nine months from the date of recording. This system however varies from country to country.
Generally throughout world, term of patent is twenty years from the filing date in case of domestic patents, and it is twenty years from the date of international filing date in case of national phase applications entered through Patent Cooperation Treaty (PCT). Some countries also allow patent term adjustment in case of delay from the side of patent office in grant of patent and patent term extension in case of delay from the side of regulatory bodies in case of pharmaceutical and agricultural patents. In India, no patent term adjustment or patent term extension is granted. Once term is expired, patents can’t be renewed.
The request for examination may be filed by the applicant or any other interested person, or their agents. Ordinarily, the first examination report (FER) is sent to the patent applicant and is also uploaded online for public perusal. Once the examination report is issued it is obligatory on the part of the patent applicant to respond to the FER or subsequent ERs if any, within twelve months from the date of FER issue to the applicant with the aim to put the application in order for grant.
Yes, it is possible to file representation for pre-grant opposition even though no request for examination has been filed. However, the representation will be considered only when a request for examination is received within the prescribed period. As representation for pre-grant will be considered only when a request for examination is received within the prescribed period, one can choose to file request for examination as ‘any other interested person’ so that one does not need to wait till applicant files request for examination. This will help to expedite the process and decide the fate of patent application.
A patent can be opposed even after the grant. There are different grounds available under section 25 (2) of the Patents Act, 1970. Grounds of section 25 (2) can be used to oppose patent within period of 12 months from the date of publishing of the grant of the patent. Section 64 of the Patents Act, 1970 can be used to revoke the patent. Unlike the grounds available under section 25 (2), grounds available under section 64 can be used till the expiry of the patent. Decision of the controller in the post-grant opposition can be appealed and such appeals shall be made within three months from the date of communication or receipt of the order of the appeal. Condonation of delay petition along with necessary fees can also be filed with genuine reason of delay. According to section 64, patent may be revoked on petition of any person interested or central government or patent may be revoked by high court on a counter-claim in a suit for infringement of the patent using one of the grounds of section 64.
It is the search done to find out whether a particular invention is patentable or not. In this search, study is done to check whether or not a particular invention meets all three criterias of patentability i.e. novelty, non-obviousness and industrial applicability. Considering the costs involved in the patent registration, getting this search done from professional patent consultants who use paid and non-paid databases, search patent and non-patent literature from all over the world can save lot of cost if invention turns out to be non patentable during the search. However, if one is confident enough of the patentability of the invention, this search can be skipped and patent application can be filed directly.
Tax planning / tax evasion measures are not specific to India and have been practised all over the world. Moreover, large multinational companies, conglomerates have the advantage to structure their business operations in a way to optimise taxes. There has been practices from inventors to get the patent registered in tax havens even though they are developed in a different country, thereby resulting in shifting of profits from country where it is developed and thereby the developing country could not establish its right over any income arising on such patent registered elsewhere. Therefore, in order to retain the intellectual property in host country and to promote indigenous research and development, many countries all over the world started introducing favourable treatment for income over exploitation of intellectual property.
Further, Organisation for Economic Co-operation and Development (OECD) also recognised the fact that preferential intellectual property regimes are prone to misuse and recommended nexus approach under Action Plan 5 (deals with countering harmful tax practices) in its Base Erosion and Profit Shifting (BEPS) project which involves Global 20 countries including India. As per nexus approach, income arising from exploitation of intellectual property should be attributed and taxed in the jurisdiction where substantial research and development activities are undertaken rather than the taxing it only in the jurisdiction which has legal ownership of intellectual property.
Patent Box regime was introduced in India by Finance Act, 2016 by enacting new Section 115BBF. The name ‘Patent Box Regime’ is commonly used based on the nomenclature given to it by the Country first introduced it i.e., Ireland based on its tax form as mentioned above. Further, patent is being ‘boxed’ off from others and hence justifying the nomenclature well.
Prior to introduction of Patent Box Regime (PBR) in India, there was already an input based research and development incentive in Indian tax provisions under Section 80RRB. This is referred to as front end incentive as it provided weighted deduction in respect of expenditure to assessees having royalty income and hence investment linked. However, PBR a back end incentive specifically was warranted for India for three reasons; a) Front end incentive was not able to achieve the desired result of encouraging innovation and patenting in India; and b) Government aimed at phasing out investment linked deductions and also has ‘Make in India’ mission; c) To adopt nexus approach recommended by OECD in BEPS project.
Accordingly, in order to encourage indigenous research & development activities and to make India a global Research & Development hub, the Government decided to put in place a concessional taxation regime for income from patents. The aim of the concessional taxation regime is to provide an additional incentive for companies to retain and commercialise existing patents and to develop new innovative patented products which in turn encourages companies to locate the high-value jobs associated with the development, manufacture and exploitation of patents in India.
Section 115BBF provides concessional rate of taxation at 10% on royalty income in respect of exploitation of patents. Salient features of Section 115BBF is provided below:
Applicable to Indian resident who is a patentee (eligible taxpayer);
Only such patents which are granted under Patents Act, 1970 are considered
Patentee is any person who is the true and first inventor of the invention, whose name is entered on the patent register as the Patentee as per Patents Act, 1970 (Patent Act) and also includes joint true and first inventor
Total income of eligible taxpayer must include income by way of royalty
Royalty income is in respect of patent developed and registered in India
At-least 75% of the expenditure is incurred in India by eligible taxpayer for invention
Royalty income means any consideration for the —
i. transfer of all or any rights (including the granting of a licence) in respect of a patent; or
ii. imparting of any information concerning the working of, or the use of, a patent; or
iii. use of any patent; or
iv. rendering of any services in connection with the activities referred in above clauses;
Royalty also includes any lump sum consideration (including advance payment on account of royalty which is not returnable) but excludes income in the nature of capital gains or consideration for sale of product manufactured with the use of patented process or the patented article for commercial use)
No other expenditure is allowed under the tax provisions if concessional tax rate under Section 115BBF is availed
Eligible taxpayer choosing to avail Section 115BBF benefit, is required to furnish Form No. 3CFA duly verified electronically either by digitally signing it or through electronic verification mode by person authorised to sign return of income
Form 3CFA shall be complete in all respects and be filed on or before due date for furnishing the return of income under Section 139(1)
Form 3CFA requires certain general details (such as name, PAN, address of taxpayer etc), details of patent (such as description of patent, patent number, date of grant of patent, whether granted to single person or in joint) and details of royalty income and also expenditure incurred in India and Outside India
Particulars of each eligible patent should be reported separately along with royalty income and expenditure details
The Director General Income-tax (Systems) shall specify the procedures, formats and standards for the purpose of ensuring secure capture and transmission of data and shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies to furnishing and verification of Form No. 3CFA
Terms ‘invention’, ‘Patent’, ‘patented article’, ‘patented process’ and ‘true and first inventor’ shall have the meaning assigned to them in Patents Act
First and foremost, applicability of Section 115BBF is not mandatory and eligible taxpayer has an option to avail Section 115BBF benefit
Further, once an option to avail the benefit of Section 115BBF is exercised in any year, eligible taxpayer is required to continue to avail the benefit for next 5 years. In case option is not exercised in any of such 5 years, eligible taxpayer cannot exercise the option for 5 years following such year in which option is not exercised.