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Patents (2nd Amendment) Rules, 2020 – Indian patent office updates fee schedule
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The Indian Patent Office in its notification dated November 04, 2020 presented Patents (2nd Amendment Rules), 2020. The Amendments have come into force on November 04, 2020.
The amendments bring forth significant changes to the fee schedule. The amended rules quashes the earlier categorization of applicants, for the purposes of fees, into three categories, viz., natural person or startup, small entity and others. According to the new rules, the applicants are now categorized into two categories, viz., natural person or startup or small entity and others.
Since small entity is now included in the same category as natural person and startup, the patent office fee for small entity is reduced and shall be same as the fee for natural person or startup. You may access the new fee schedule here.
Further, sub rule (3) of rule 7 is substituted with the following:
“(3) In case an application processed by a natural person or startup or small entity is fully or partly transferred to a person other than a natural person, startup or small entity, the difference, if any, in the scale of fees between the fees charged from the natural person, startup or small entity and the fees chargeable from the person other than a natural person, startup or small entity in the same matter, shall be paid by the new applicant with the request for transfer.
Explanation— Where a startup or small entity, having filed an application for a patent, ceases to be a startup or small entity due to the lapse of the period during which it is recognized by the competent authority, or its turnover subsequently crosses the financial threshold limit as notified by the competent authority, no such difference in the scale of fees shall be payable.”
The sub rule (3) of rule 7 is amended to include small entity into the same category as natural person and startup. The new rules set forth the following:
- In a scenario where an application is filed by a natural person, a startup or a small entity and is later transferred to a person other than a natural person, a startup or a small entity, the difference in fees due to the change in applicant status shall be paid by the new applicant with the request for transfer.
- In a scenario where an application is filed by a startup or small entity, and during the prosecution of the application, the applicant changes to others, either due to lapse of period which it is recognized by the competent authority, or its turnover subsequently crosses the financial threshold limit as notified by the competent authority, no difference in fee is payable.
Further, the proviso to sub rule (5) of rule 24C is substituted with the following:
“Provided that a request for expedited examination under this rule filed by a startup or small entity shall not be questioned merely on the ground that the startup or small entity, having filed an application for a patent, ceases to be a startup or small entity due to the lapse of the period during which it is recognised by the competent authority, or its turnover subsequently crosses the financial threshold limit as notified by the competent authority.”
According to the above presented proviso, in a scenario where the applicant is a startup or small entity and a request for expedited examination was filed by the applicant and the applicant status changes to others, either due to lapse of period which it is recognized by the competent authority, or its turnover subsequently crosses the financial threshold limit as notified by the competent authority, the request made for the expedited examination is not questionable.
In conclusion, The Patents (2nd Amendment) Rules, primarily tries to reduce the burden of fees incurred by small entity. This move coupled with the expedited examination will encourage small entities to file patent applications for their inventions.
Useful links:
Qualifying as a start-up as per the Indian Patent Rules
How to claim small entity status while filing for patents in Indian Patent Office
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Amendments to Rules 21 and 131(2), and its implications
The Central Government in exercise of the powers conferred upon it u/s 159 of the Patents Act, 1970 (“The Act”) has passed the Patent Amendment Rules of 2020 (“The Rules”) on 19th of October, 2020. The rules aim to boost innovation while easing the burden on the patentee. The amendments to the Rules help in accelerating and easing the process of doing business in India for innovators. Particularly, the Rules include changes to Form 27, wherein the statements regarding the working of patented innovations on a commercial scale in India need to be filed by the Patentees or the Licensees.
The amendment has simplified the requirements related to submission of Form 27 by narrowing the compliance that need to be followed under Patent Rules by the patentee in the following manner:
- The amendment provides flexibility to the patentee for filing a single Form 27 in respect of single or multiple related patents.
- The approximate value corresponding to a single patent cannot be derived separately from approximate value corresponding to each of the related patents, and all such patents are granted to the same patentee or licensee. Accordingly, if there is a grant of patent to two or more persons, they may jointly file a Form 27.
The amended Rule 131(2) indicates that the time period for the patentee to furnish the information required in Form 27 shall now be once in every financial year i.e., within 31st of March of every year, unless specifically asked by the Controller. The information in Form 27 is required to contain details pertaining to the preceding calendar year, commencing soon after the financial year in which the patent was granted. Further, the details need to be furnished within 6 months instead of the current 3 months from the expiry of each financial year and hence the due date for filing will be 31st September of every financial year.
Further, The Rule 21 now includes compliance to additional requirements of paragraph (a), (b) or (b-bis) of rule 17.1 of the Regulations under Patent Cooperation Treaty (PCT). According to the amendment to Rule 21, the statement is regarding the verified English translation of priority document. The amendment indicates the following:
- A patentee filing an international application designating India, who has not complied with the requirements of filing priority documents under the regulations of the PCT, is required to file the priority documents with the Indian Patent Office.
- The applicant is not required to submit the priority document to the Indian Patent Office if the priority document is available in the World Intellectual Property Organization’s digital library.
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Proposed amendment to Patent Rules has the potential to dilute improvements made so far
The Indian patent regime is infamous for its slow speed of processing patent applications. The Government has over the years taken several initiatives to address this issue, primarily by increasing the number of patent examiners. The initiatives have started showing positive results.
In terms of the actual statistics, as per the Ministry of Commerce and Industry, the pendency of patent applications awaiting examination has reduced from 204,177 in March 2017 to 172,488 as on February 2018. Further, the number of applications examined in the month of February 2018 was 6235 as against 3925 during the corresponding period of the previous year. Even though the percentage improvement in the number of applications examined monthly is significant, at the rate of 6235 applications per month, the backlogs are not going to be cleared anytime soon.
While the timeline for processing patent applications was improving, an immediate relief, by way of amendments to The Patents Rules, was made available to start-ups and those who select India as ISA or IPEA in a corresponding PCT application. The amendment provided for expedited examination of patent applications on request.
Under the expedited process, examination reports started being issued within a month or two, and lately within days, as against 4 or more years taken ordinarily. However, before we conclude that the patent office is completely equipped for speedy disposal of patent applications, we have to put the speedy disposal of the applications under expedited process in perspective. As per the 2016-17 annual report (“Report”), 38,578 requests for patent examination were filed, and the number of expedited examination requests stood at 135. Hence, at least in the year 2016-17, the patent office had to deal with a very small number of patent applications under expedited examination, and consequently the speed doesn’t necessarily reflect on the preparedness of the patent office to process a large number of requests for examination within comparable timelines.
The proposed amendment to the patent rules is aimed at enabling a much wider set of applicants to avail the benefit of expedited examination. The applicants, irrespective of nationality, who will be eligible to request for expedited examination, if the amendments were to come through, are listed below.
- (Eligible even now) An applicant who has selected India as the ISA or IPEA in a PCT application corresponding to the Indian application for which expedited examination is sought
- (Eligible even now) An applicant who is considered a “startup” (refer Rule 2(fb))
- An applicant who is considered a “small entity” (refer Rule 2(fb))
- At least one of the applicants is a female, and the remaining applicants, if any, are natural persons
- An applicant who is considered a “government undertaking” (refer Section 2(h)), or is a similar entity in case of a foreign applicant
- An applicant who is eligible under patent prosecution highway
In our view, enabling the listed new category of applicants to request for expedited examination will result in workload, which will substantially limit the ability of the patent office to examine applications under expedited process at the speed at which the office is examining at present.
Consider small entities, who will be eligible. Although we do not know how many applicants have claimed small entity status while filing applications, we believe it is a significant number. Once the amendments come into force, at least a sizable number of applicants, who have claimed small entity status, and have been awaiting examination, might request for expedited examination. Hence, there is likely to be a spike in the number of expedited examination requests the office may receive soon after the introduction of the amendments. Not to forget the new applications that will be filed by small entities, who are likely to request for expedited examination, consequently adding to the queue of applications awaiting expedited examination.
Further, the number of applications awaiting examination, who have at least one female applicant, is also not know. The patent office had started collecting gender data of applicants some time back, and the patent office may have some extrapolated estimate of pending applications which have at least one female applicant. However, our guess is that it is a much smaller number compared to small entities.
Regarding government undertakings who may become eligible, might again add a much smaller number to the queue of expedited examination requests, as compared to small entities. We assume that foreign government undertakings may have filed fewer applications in India, and their inclination to file in future as well may be limited. Hence, it is mostly Indian government undertakings filing for patents in India. Considering that, as per the Report, Indian applicants filed 13,219 (30%) out of 45,444 applications in 2016-17, applications filed by government undertakings out of the 13,219 applications may relatively be a small number. Further, whether government undertakings will consider spending INR 60,000 for expedited examination instead of INR 20,000 for ordinary examination is yet another question, and in our view, very few may be willing.
Even though the inclusion of female applicants and government undertakings may not add a substantial number to the queue of expedited examination requests, we believe that the applicants who will become eligible under patent prosecution highway may add a substantial number. Even though at present India doesn’t have patent prosecution highway arrangement with any country, an arrangement with Japan is likely to take shape in the near future.
As per the Report, Japanese applicants filed 4,275 applications out of 45,444 applications filed in 2016-17, which is about 9.4%. As per an estimate, allowance rate in Japan is around 75%. Therefore, 75% of the nearly 4000 applications, i.e 3,000 applications, filed by Japanese applicants may become eligible. Further, assuming at least a 4 year waiting time in India to receive an examination report, and around a 1 year turnaround time to receive examination report in India, around 9,000 applications from Japanese may become eligible the moment the amendment is introduced.
In our view, even if 20% of the small entities and applicants eligible under patent prosecution highway were to request for expedited examination, it would cripple the patent office’s ability to examine applications at the rate the office is examining applications under expedited process.
In conclusion, the processing time of expedited examination requests is likely to be significantly impacted by inclusion of small entities and applicants eligible under patent prosecution highway. Start-ups, who have been benefiting from the expedited examination of their applications may no longer be able to get patents granted within a short period. In case the number of expedited examination requests entertained by the patent office is restricted to a certain number, then applications from start-ups may end up being a small percentage of the restricted number of applications. It may be wise to concentrate on reducing the backlog and the time taken to issues first examination reports in the ordinary course, before adding additional burden on the patent office by making a larger category of applicants eligible to apply for expedited examination.
We hope this article was a useful read.
Please feel free check our services page to find out if we can cater to your requirements. You can also contact us to explore the option of working together.
Best regards – Team InvnTree
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