Patents

Patents: What are they?

Patent is the exclusive right for disclosure of a new and useful process. Patents are available for any inventions, whether products or process in all fields of technology provided they are new, involve an inventive step and are capable of Industrial application.

Patents are territorial in nature, though they have an international relevance. The inventor has to file his application in each country where he seeks to protect his invention. It means that an MNC having a patent right for a process or product in the US has to get a fresh patent registered in India to enforce its patent rights in India. Patent registration is a document, issued by a patent registration office, which describes the invention and creates a legal right in favour of the patentee, enabling him to exploit the same.

According to legal and regulatory framework in India, patent is granted for any invention of a new product or process involving an inventive step and capable of Industrial application. The 2 features necessary for the validity of a patent are novelty and utility, but the real test is of the novelty of invention.

The Patent Amendment Act 2005, does not allow the patenting of a new form of a known substance, unless it is significantly different in properties with regard to its efficiency. The underlying object is to help genuine innovations to get market protection. The Act specifically mentions forms such as salts, esters, ethers, polymorphs, metabolites, mixtures of isomers, complexes, combinations and other derivatives of known substances under this conditional exclusion. Protection of health by ensuring easy access of medicines at an affordable price is in accordance with the Right to Life enshrined under Article 21 of the Constitution on India.

Patent for Improvement

Patents for improvement are allowed, if the improvement some ideas that was not covered by the patent of the underlying technology. Many firms are often working more or less in parallel on related research. Multiple firms may each apply for patents for what are, in effect different versions of the same ideas or set of ideas. A problem is that which firm should be given the patent rights. It should be that each of the firm should be entitled to patents only on those aspects of their creation that are unique and truly new. In practice,it is difficult to implement.

What is likely that each will be granted a patent that describes the invention n a way that leaves considerable ambiguity as to whether the inventions of the other firms are covered or not? One of the important aspects of the Patents (Amendment) Act, 2005 is to check and prevent ‘ever greening of patents’. Ever greening of patents means continuing market monopoly over the old patented medicine by getting new patents on other formulations of the same medicine. The unlimited scope of patentability enables the MNCs to seek patents for one form or another by marginal modifications in older drugs at different points of time to extend their monopoly beyond the 20 years of the first patent.

The new definition of the patentable invention has now been clearly worded to prevent loopholes for extending the life of the patents.

Protection of Innovation

Patents are the outcome of the intellectual endeavor. They are invaluable assets for gaining and maintaining a competitive advantage in industries and businesses. There are a number of issues over which controversies can arise, such as:

1. Ownership right to the patent development by employees and outsider specialists.
2. Terms and conditions relating to transfer of rights in respect of patents developed jointly with a contractor.
3. Enforcing the agreement for ownership right and commercial ventures such as use, transfer and licensing.
4. New product developments and innovations not covered by the existing license.

To prevent misunderstandings, it is desirable for companies to ensure that the issue of intellectual property ownership is clarified in the agreement with the employee or the independent contractor, and it Is preferable to do so with the help of an intellectual property specialist or advisor.

Industrial houses relying on their employee scientists for the patents assume that they automatically own the rights on the newly developed patents on the principle " I paid for it, therefore I own it". This may not be every time correct. In fact, the legal ownership of patent may vary from country to country, depending on the law and the circumstances of the employer- employee relationship. In many countries, the employers have a right to own an invention made b an employee.

Conversely, in some countries such rights belong to the employee inventor. In US, the employee inventor may retain the rights to exploit the invention, but the employer is often given a non- exclusive right to use the invention for internal purpose. This is referred to as "Shop rights". Generally companies grant their employee inventors the right to a fair and reasonable compensation for their invention, if the employer takes rights to the invention.

In most countries, companies engage independent contractors to develop a new product or process with a condition that the company would own all rights to the invention developed under the contract. This would mean that unless the contractor has a written agreement with the company assigning the invention to that company, the company will have no ownership rights to what is developed, even if the company paid to the contractor for the development of new patent.

Guidelines for Avoiding Disputes

Protecting and safeguarding intellectual property rights is one of the most acute challenges facing the business and the corporate world. It is essential for successful protection of these rights to ensure that the owners are the only ones who reap the benefits of the invention. Some golden rules to avoid disputes with the employees and independent contractors for development of a patent are as under:

1. Obtain competent legal advice on the matters of ownership rights because the law varies from one country to another. Legal advice should be obtained before entering into any agreement with employees or independent contractors.
2. Conclude a clear and written agreement. It should be clear in the agreement that as to who will own the patent right created by an employee or independent contractor, whether an when will the transfer of ownership take place.
3. Include confidentiality clauses in the agreements. A proper and a clear confidentiality and non- disclosure clause should be included in the contracts with the employees and the independent contractors to prevent them from joining with the competitors.
4. Adopt and maintain upto date internal policies and regulations on employee inventions made by the employees of the company.

The amendments to the patents rules represents yet another major step forward in India’s endeavor to develop a vibrant and user friendly intellectual property regime, which would facilitate as well as encourage innovation and creativity. The upgradation of infrastructure and simplification of procedures will result in substantial reduction in the time period of the grant of patents.

Companies have to evolve and adopt an effective enforcement strategy for protection of intellectual property rights. The strategy must be pro active and multi faceted. It should be tailored to match the business objectives of the IP owners and must include strong elements of internal control, risk assessment and staff education. It is also necessary to implement procedures for monitoring the activities of the competitors and for identifying the cases of potential infringement.

Arbitration is the popular way of resolution of disputes in the intellectual property rights. It is advisable for the parties having the rights in intellectual property to include in their contracts an arbitration clause for the resolution of the disputes, if the need arises.