A patent is property, and can be dealt with like property — sold outright, licensed, mortgaged, left by will, transferred on a merger. Indian law puts two conditions on the dealing that trip people up: it must be in writing, in a document that sets out the full terms, and that document has to be recorded at the Patent Office before it counts for anything in court.
Quick reference
| What can be dealt with | The patent, a share in it, or an application before grant |
| Form of the deal | In writing, all terms in one duly executed document |
| Recordal | Form 16 with the document, to the Controller |
| Unrecorded | Not admissible as evidence of title, except by leave |
| Deadline | None fixed — but record promptly |
| Stamp duty | Payable under the State’s stamp law |
| Licensee’s own duty | File the statement of working |
The writing requirement
An assignment, a mortgage, a licence, and any other interest in a patent is valid only if it is in writing, and the agreement between the parties must be reduced to the form of a document embodying all the terms and conditions governing their rights and obligations, duly executed.
Three things follow. An oral licence is not a licence. A term sheet or an exchange of emails is not enough; the terms must be in one executed document. And a document that leaves out material terms — royalty, territory, term, exclusivity — invites the argument that it does not embody all the terms and so does not satisfy the section.
Recordal on Form 16
A person who becomes entitled to a patent or a share in it, or to a licence or other interest, applies to the Controller to register the title or interest. The application is on Form 16, with the fee and the executed document. The Controller, on being satisfied, enters the assignee as proprietor or co-proprietor, or records the licence or interest, in the Register of Patents.
The Register is public. Anyone can inspect it, and a prospective buyer or licensee will.
The Act sets no deadline for recordal. The old requirement to record within six months was removed in 2005, and any guidance that still cites it is out of date. But the reason to record promptly is not a deadline; it is what follows.
Why an unrecorded document is a problem
A document in respect of which no entry has been made in the Register is not admissible in any court as evidence of the title of any person to a patent, or to a share or interest in it, unless the court or the Controller, for reasons recorded, directs otherwise.
That is the sanction, and it bites when it matters most. An assignee who has paid for a patent and then sues an infringer must prove title. If the assignment is not recorded, the assignment deed is not admissible to prove it, and the suit stalls on standing. A licensee who wants to enforce, or to resist a challenge to its right to use, is in the same position. The court can excuse it, but a party who has to ask for that indulgence has started badly.
Stamp duty
An assignment of a patent is a conveyance for stamp purposes and attracts stamp duty under the law of the State in which it is executed, at that State’s rate — the rates differ from State to State. An unstamped or under-stamped instrument is not admissible in evidence until the duty and penalty are paid. Licences may attract duty too, depending on the State and how the licence is framed. It is a question to settle before execution, not at recordal.
Dealing with an application
An application can be assigned before grant. The change of applicant is recorded by a request to the Controller with the document establishing the transfer, and the application then proceeds in the new applicant’s name. Where the transfer is to a person who does not qualify for the reduced fee rate, the difference in fees becomes payable.
The licensee’s obligations
A licence is not only a bundle of rights. Every licensee — exclusive or not — must file its own statement of working at the Patent Office on the same three-year cycle as the patentee, and the patentee’s filing does not cover it. A licence agreement that is silent on which party does what, and by when, produces a compliance gap.
An exclusive licensee can bring infringement proceedings in its own name, joining the patentee. A non-exclusive licensee cannot, and depends on the patentee to sue.
Terms the Act will not enforce
Certain conditions in a patent licence, or a contract for the sale or lease of a patented article, are void however clearly they were agreed. The Act strikes down terms that require the licensee to buy other goods from the patentee or from a nominated source, that prohibit buying goods from anyone else, or that prohibit using a rival process or article. Tying arrangements built into a patent licence, in other words, are unenforceable in India whatever the parties signed.
A licence that runs beyond the life of the patent is also open to challenge for the period after expiry, on the basis that there is nothing left to license.
Frequently asked questions
Does a patent assignment have to be in writing in India? Yes. An assignment, mortgage, licence or other interest in a patent is valid only if it is in writing, in a duly executed document that embodies all the terms. An oral licence or an informal exchange does not satisfy the requirement.
How is a patent assignment recorded in India? By applying to the Controller on Form 16 with the executed document and the fee. The Controller enters the new proprietor, or the licence or interest, in the Register of Patents.
What happens if an assignment is not recorded? The document is not admissible in court as evidence of title to the patent unless the court or the Controller directs otherwise. An unrecorded assignee who sues for infringement will struggle to prove standing.
Is there a deadline for recording a patent assignment? No. The former six-month requirement was removed in 2005. Recording promptly is still advisable, because an unrecorded document cannot be relied on to prove title.
Is stamp duty payable on a patent assignment? Yes, under the stamp law of the State in which the document is executed, at that State’s rate. An under-stamped assignment is not admissible in evidence until the duty and penalty are paid.
Does a licensee have to file Form 27? Yes. Every licensee, exclusive or non-exclusive, files its own statement of working on the three-year cycle. The patentee’s filing does not discharge the licensee’s obligation.
Useful official resources
- IP India — patents — Form 16 and fees
See our related notes on the statement of working every licensee must file and the fee consequences of a transfer.
Buying, selling or licensing a patent, and want the document to hold up when it is tested? Talk to us.