Thursday, March 24, 2011

Section 39 of Patents Act: Resident in India



I have had discussions with quite a few practitioners on Section 39 of the Patents Act; there is a school of thought according to which, so long as the invention is conceptualized in India, Section 39 applies to the situation. Before I proceed further, here’s Section 39:

39. Residents not to apply for patents outside India without prior permission.
1.  No person resident in India shall, except under the authority of a written permit granted by or on behalf of the Controller, make or cause to be made any application outside India for the grant of a patent for an invention unless

2.  an application for a patent for the same invention has been made in India, not less than six weeks before the application outside India; and

3. either no directions have been given under sub- section (1) of section 35 in relation to the application in India, or all such directions have been revoked.

4. The Controller shall not grant written permission to any person to make any application outside India without the prior consent of the Central Government.

5.  This section shall not apply in relation to an invention for which an application for protection has first been filed in a country outside India by a person resident outside India.

Sub-section (1) clearly requires only a person resident in India who makes or causes to make an application for patent outside India to:
A. either seek from the Controller written exemption from first filing for an application for patent in India: or
B. File an application for patent outside India only six weeks after filing one in India

For the first filing requirement of Section 39 to apply to an individual/entity, he or it must be a “resident in India”. The Patents Act does not define “resident in India”, but Section 6 of the Income Tax Act does; the portions of Section 6 of the Income Tax Act which are relevant for this post are as follows:

Section 6: For the purposes of this Act,-
 (1) An individual is said to be resident in India in any previous year, if he - (a) Is in India in that year for a period or periods amounting in all to one hundred and eighty-two days or more; or

(c) Having within the four years preceding that year been in India for a period or periods amounting in all to three hundred and sixty-five days or more, is in India for a period or periods amounting in all to sixty days or more in that year.

(b) Being a citizen of India, or a person of Indian origin within the meaning of Explanation to clause (e) of section 115C, who, being outside India, comes on a visit to India in any previous year, the provisions of sub-clause (c) shall apply in relation to that year as if for the words "sixty days", occurring therein, the words "one hundred eighty-two days" had been substituted.

(3) A company is said to be resident in India in any previous year, if – 
(i) It is an Indian company; or
 (ii) During that year, the control and management of its affairs is situated wholly in India.

(4) Every other person is said to be resident in India in any previous year in every case, except where during that year the control and management of his affairs is situated wholly outside India.

If a person does not qualify as “resident in India” within the meaning of Section 6, I am not sure Section 39 applies to him. Further, Section 39 does not apply to all residents in India, it applies only to those residents who make or cause to make an application for a patent outside India.

Broken down into simple terms, Section 39 applies only to those residents who have the power to decide whether or not to apply for a patent outside India. In short, it applies only to applicants/assignees, but does not seem to apply to inventors.

It seems a stretch of an argument to contend that even an inventor in India could be considered as “causing to make an application”. Participating in the act of creating the invention is different from taking a decision to apply for a patent. 

An inventor, in most situations, is simply not the person who can take a call on whether or not to apply for a patent. To apply or not to apply for a patent is the call of the assignee for whom the inventor works.

Even if the inventor is aware of the fact that the invention may ultimately become the subject-matter of a patent application, I don’t think he “causes to make the (patent) application”. He merely makes or causes to make the invention, which may or may not be the subject-matter of a patent application.

What does this translate to? If there is an invention which is the product of the efforts of an entity which is situated in India, but whose control and management is situated outside India, Section 39 does not seem to apply to such entity located in India, notwithstanding the fact that the invention is made in India or the inventors are Indians. This is so because the entity located in India is not a “resident in India”, according to Section 6 of the Income Tax Act.

It’s a wholly different issue that as practitioners, prudence tells us that it is better to err on the side of caution and hence file an Indian application (only to be abandoned later); but strictly speaking, if one had to take a call on pure legal grounds, however academic, Section 39 does not seem to require non-residents to seek written permission from the Controller or file an application for patent in India first.

It is possible that Section 39’s history may allude to a different line of thought. However, legislative intent may be deciphered and used from external aids of interpretation such as legislative debates or committee reports or history of the provision, only when there is an ambiguity in the provision on a plain reading of the provision, not when ambiguity is the product of uninformed or mis-informed “office practice”.

I would like to know the opinions of our better-informed readers.

9 comments:

  1. I am rereading the original text of Section 39 with your interpretation in mind, and politely wonder what meaning you ascribe to the words "no person resident." If I am correctly understanding your proposed interpretation then, under such logic, it seems that a license would never be required in cases where a corporation causes an application to be filed.

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  2. Dear Anon,
    I think probably my post wasn't clear, but could I request you to go through the post again? When i speak of a "person resident", i have included a body corporate as well. This is why i have discussed sub-section (3) of Section 6 as well which speaks of a company. Please let me know if this addresses your query.

    Bests,
    Sai.

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  3. Thank you for providing the definition of resident in India.
    What happens when:
    An Indian scientist resident in India, working in a CRO works on an invention for a foreign company X. X owns all the rights on the IP generated from the invention and hence files teh first application in US. Here, the inventor does not have cause to make the application in the US. Does he allude thsi section? I guess not. According to me, the purpose of this section is to bar exploitation of inventions made in India.

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    Replies
    1. Yes obviously, this section is not applicable in this situation. In this situation the inventor has no rights on the invention. If invention is made by Indian scientist in the same territory and he is under agreement that the credits of invention will be given to the firm to whom he's working, the inventor is not liable to this section but if the inventor is somehow involve in credits of invention(his name is also include in the filed application), then the person is liable to inform the controller first (as invention is made in India by the Indian resident also involved in the application). this is my personal opinion.Please correct me if i am wrong.

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  4. Let me reframe my last statement:
    According to me an additional purpose of this section is to bar exploitation of inventions made in India apart from the well known purpose of "prohibition to apply under certain circumstances such as for defence purposes". It is noteworthy here to see how section 39 had been framed in the 2002 amendment of the Act which reads as 'no person' instead of 'no person resident in India'.

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  5. Dear Disha,
    In light of the express amendment wherein the word resident is not just included in the provision, but in the title to the section as well, shouldn't it be all the more clear that the scope of the section is narrowed down further? Among the cardinal principles of statutory interpretation, one is to ensure that the amended provision is not given the same meaning as the unamended provision (because that would render the amendment redundant.

    Further, it must be understood that there is another fundamental issue at play here, which I think could help us understand the provision better. We seem to impute overarching powers to the Indian Legislature to control the decision of a foreign entity notwithstanding the fact that the foreign entity has already established its ownership over the results of the contract. In other words, it would be unreasonable to argue that the Indian Act applies to even those entities who have no interest in commercially exploiting the invention in India. I don't think this can hold water.

    Bests,
    Sai.

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  6. Disha,
    Here's another situation, which could probably help us see the issue with greater clarity. If X is a resident in India, and he outsources the task of developing the invention to an entity which is based outside India, wouldn't X be bound by Section 39? If yes, wouldn't it be right to state that the applicability of Section 39 does not turn on the place where the invention is created/developed?

    Bests,
    Sai.

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  7. Practical experience in dealing with the Patent office suggests that Section 39 applies to both an applicant as well as inventor. In contrast to the view expressed by the author in these lines..... "An inventor, in most situations, is simply not the person who can take a call on whether or not to apply for a patent. To apply or not to apply for a patent is the call of the assignee for whom the inventor works", in one of the instances where the applicant was a foreign entity, the Patent office had asked the inventor to seek foreign filing licence, which shows that the person causing to make an application is the inventor and not the applicant.

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  8. Mr. Sai

    CAn you pleas throw soome light in below case... If company X is outside india and has one sister concern in india and employee of indian company had done some invention and now company X which is outside india want to file patent with company X as applicant, one inventor from india and one inventor from outside india.

    In this case also section 39 is applicable?

    Please reply with any case law if any

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