If you ask any patent agent or attorney to explain the concept of patents in two words, they will tell you that it is an “exclusionary right”. As is true in law and life, with rights come duties and responsibilities.  So when you are given the right to exclude others from making your patent accessible to the public without your permission, you are obligated to ensure that you make your patent accessible to the public.

The fundamental aspect of the grant of patents (or grant of governmental protection to any other form of intellectual property) is that such invention is used for the benefit of society. Think of the ubiquitous give-and-take policy. But how does the Government get to know if the patent is being actually used for the benefit of the society? This is where the “Statement of Working” comes into the picture.

What is a Statement of Working?

A Statement of Working is a yearly declaration to be made by the patent-holder and the licensees (if the patent has been licensed for its commercial use) attesting the fact that the invention has indeed been commercially worked for the benefit of the public.

Legal speak

The legal provisions pertaining to the submission of Statement of Working are under Section 146 of the Patents Act, 1970 and Rule 131 of the Patent Rules, 2003. Section 146 is two-pronged. The first part provides that the Controller (the ultimate authority in respect of the Intellectual Property Office) may seek information from the patent-holder or the licensees regarding the commercial working of the patented invention.

The second part of Section 146 deals with the Statement of Working to be declared by the patent-holder and the licensees (if any). This statement or declaration, according to Rule 131, needs to be filed in Form 27 (as provided in the schedule to the Rules) and must be voluntarily provided to the Patent Office within 6 months of the end of each financial year i.e. by September 30 of the subsequent year. In any event, the statement could be filed earlier than this “deadline” but the interval between two such statements ought to be at least 6 months.

To determine whether a patented invention has been “worked” (i.e. made accessible to the public for its benefit), Form 27 seeks the following information:

  1. Whether or not the patented invention was worked in India.
  2. If not worked, the reasons for not working.
  3. If worked, the following details need to be provided:
    1. Quantum and monetary values of the patent products (which includes products made through patented processes) manufactured in India and imported from other countries.
    2. Licenses or sub-licenses if any that were granted in respect of the patented invention
    3. If the reasonable requirements of the public had been met either partly, adequately or to the fullest extent possible
    4. If the patent invention was made available to the public at reasonably affordable prices.

Importance of filing the Statement of Working of Patents in India

The Indian Patent law also envisages a scenario where the patent-holders or licensees would choose not to file (or fail to file) the declaration with the Patent Office. The fine imposed for such transgression is INR 10 Lakhs (~ USD 18000). Further, there is also a catch for those patent-holders or licensees who choose to file false information with the Patent Office in order to “comply” with the mandate of filing the declaration. Such false declarations could attract imprisonment with or without fine.

For the curious

Interestingly, before an amendment to the law in 2005, the penalty for not filing a statement was a relatively paltry sum of INR 20,000 (~ USD 350). The sudden and enormous hike in the fine was clearly a move to deter and discourage such choices and failures.  However, whether this hike has proved to be so is debatable. That being said, given the unpredictable nature of the Intellectual Property Office in enforcing the letter of law, it is better to err on the side of caution and file such statements.

Also read about the Indian Patent (Amendment) Rules, 2020: Simplifying Statement of Working of Patents – Form 27

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