The Evolving Effect of Working Requirements in Foreign Jurisdictions

The patent rules of many foreign jurisdictions contain working requirements. A working requirement is the requirement that, after a certain number of years, the patented invention be worked on a commercial scale in the country. The effect of these requirements has evolved in the last few years in many countries due to amendments to their patent laws.

Among the jurisdictions that have working requirements are India, China, Canada, and Australia. Generally, information must be submitted each year regarding the working of the invention in the country. The patent holder must disclose whether the invention is being worked in that country. If the invention is being worked, information such as whether the invention is actually worked within the country or imported, the quantity and value of the invention, and whether any licenses have been granted must be provided. Failure to submit the required information can result in a monetary fine and loss of patent protection.

In India, the working requirements were amended in 2005 to extend the term of a patent to twenty years and increase the fine for failure to file an information statement. The requirement of filing an information statement on the working of an invention in India was in place prior to 2005, but there was only a nominal fee, a few hundred dollars, assessed against a patent holder who did not file the required information. Now the fine for not filing an information statement can be up to $25,000.

The impact of these amendments can be better understood when viewed in conjunction with India’s compulsory license procedure. A person who wishes to practice a patented invention can petition the patent office to grant a compulsory license three years after the grant of the patent. One of the grounds an applicant can rely on in applying for a compulsory license is the failure to work the patented invention in India. This compulsory license procedure may be used more often than it has been in the past due to the amendments.

For instance, when the patent term was only seven years, applying for a compulsory license was likely considered an unwise decision, considering that a compulsory license can only be applied for three years after the grant of the patent and considering the time involved in obtaining the compulsory license. But now that the patent term is twenty years, the compulsory license procedure is more attractive.

Also, it is important to note that the Indian patent office does not monitor information statement filings to ensure that each patented invention is worked in India. However, whether an information statement has been submitted is checked when an application for a compulsory license is made. Considering the compulsory license procedure will likely be used more often and the substantial fine that could be imposed for failure to file, the risk of not filing may be too great to ignore.

China provides another example of these changing requirements. Amendments to Chinese patent law will take effect on October 1, 2009. Like India, Chinese patent law requires a patented invention to be worked in the country to retain patent protection and provides for a compulsory license procedure. One ground for issuing a compulsory license under the new law is the failure to work the invention, without justification, within three years from the date of issuance or four years from the filing date. The applicant for a compulsory license must show that the applicant was unable to negotiate a license with the patent holder within a reasonable time. Though obtaining a compulsory license may be difficult (China has never granted a compulsory license), the procedure still should provide patent holders an incentive to work their invention in China.

In conclusion, companies with foreign patent portfolios, particularly in China and India, should be aware of the changing rules. Failure to stay on top of the evolving working requirements could lead to unnecessary fines.

An associate at Carstens & Cahoon, LLP, Mandy Jenkins’ primary area of practice is intellectual property law and litigation. She has experience in patent and trademark prosecution, trade secret and licensing matters, and in all phases of litigation.

This blog is maintained by Carstens & Cahoon, LLP to inform readers of recent developments in intellectual property. Solely informational in nature, this blog is not intended to create an attorney-client relationship or to be used as a substitute for legal advice or opinions. For more information, please visit www.cclaw.com

By Mandy K. Jenkins

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