A patent troll is an entity that does not develop or produce novel goods or services. Instead these companies (known as non-practising entities (NPEs) or patent assertion entities (PAEs)) acquire patents with the sole purpose of instituting lawsuits against infringers or licensing them aggressively. As such they add no economic value. Patent trolls are considered anti-competitive as they threaten innovation due to the lack of a product in the market and by curbing other entities from developing technology.
Before patent trolls make their way into India’s patent framework, it is important to understand whether Indian patent law is robust enough to protect itself against them.
No patents in software
One of the most significant provisions under the Indian Patents Act, 1970, is section 3(k) under which “a mathematical or business method or a computer programme per se or algorithm” is not a patentable invention. This will completely hamper the business model of a patent troll in India, as most NPE litigation centres on patents in software and business methods, which have ambiguous and vague boundaries and are the easiest targets.
In India, the domestic working requirement is mandatory and necessary for the grant of a patent. Some of the provisions of the act that take this forward are:
• Sections 83 and 89, which lay down general principles applicable to the working of a patented invention and for granting compulsory licences respectively, provide that Indian patents are granted to ensure that inventions are worked in India on a commercial scale and not merely for importation.
• Section 84(1)(c) provides that a compulsory licence may be granted on an application to the controller general at any time after the expiry of three years from the date of grant of the patent if the patented invention is not worked in India.
• Section 84(7)(d) provides that the reasonable requirements of the public are deemed unsatisfied “if the patented invention is not being worked in India on a commercial scale …”.
• Section 84(7)(e) provides that the reasonable requirements of the public will be deemed unsatisfied “if the working of the patented invention in India on a commercial scale is being prevented or hindered by the importation from abroad of the patented article” by the patentee or “persons claiming under him”.
• Section 85 provides that where two years have expired since the first compulsory licence was granted, the patent that it pertains to may be revoked on the ground that the patented invention has not been worked in India.
• Under section 146, the controller general has the power to call for information or a periodical statement (form 27) from the patentees about the extent to which the patented invention has been commercially worked in India.
Thus, the domestic working requirement has made the Indian system fairly immune to the problem of patent trolls.
India doesn’t really have any jurisprudence regarding the issue of patent trolls, which we hope shall remain the situation. As of today, there are only two such cases known of. The first involved an individual called Somasundaram Ram Kumar, who owned a patent for dual SIM mobiles and was demanding royalty payments of ₹35 (US$0.55) for every dual SIM handset sold in the country. After obtaining the patent, Kumar filed suits against several parties engaged in producing a wide range of mobile handset products. This prompted Spice Mobiles and Samsung India Electronics to file two applications in the Intellectual Property Appellate Board (IPAB) for revocation of the patent granted to Kumar. The patent was revoked.
The second significant case involved Bharat Bhogilal Patel, who owned patents in technology for laser marking and for engraving machine and sought to enforce two of his patents against multinational companies including Nokia, Hewlett Packard, LG and Hyundai. Patel sent legal notices asking the companies to procure licences, sought seizure of goods by custom authority, and filed infringement suits. The IPAB revoked the patent in 2012, but Bombay High Court set the ruling aside, directing that the matter be heard de novo by the IPAB and also that Patel should not initiate any suit against the applicant of the revocation petition.
These two examples clearly show that the Indian judicial system is well versed and cautious regarding enforcement of invalid patents. Further, under the working requirement in patent law, a compulsory licence may be granted if a patent is not worked in India and is also liable to be revoked if after two years of issue of a compulsory licence the patent is still not worked. Thus, under the current scenario it would be safe to say that the future of patent trolls in India is bleak.