Failure to obtain foreign filing permit in India – illegality or irregularity?

A very interesting question was recently put across to a wide audience group. The questioner sought inputs on whether an applicant based out of India would be held liable under section 118 of the Patents Act, 1970 if a patent application is filed outside of India identifying the Indian entity as a joint applicant in a foreign patent application without first informing the Indian patent office. The catch being that the stated foreign application was filed without the knowledge of the Indian entity.

If the question was not very clear above, let’s simplify it. Let us assume that there are two entities, one based out of India and another out of Europe. The two entities jointly worked on an invention and the European entity proceeded to file a patent application in Europe without informing the Indian entity due to certain urgent circumstances. The Indian entity was later informed of the same. Does this make the Indian entity liable for contravention of section 39 under section 40 and section 118 of the patents act?

Before we delve into these questions, let us take a look at the sections under discussion.

Section 39 of the Patents Act is titled Residents not to apply for patents outside India without prior permission and reads as follows:

(1) No person resident in India shall, except under the authority of a written permit sought in the manner prescribed and granted by or on behalf of the Controller, make or cause to be made any application outside India for the grant of a patent for an invention unless—

              (a) an application for a patent for the same invention has been made in India, not less than six weeks before the application outside India; and

               (b) either no direction has been given under sub-section (1) of section 35 in relation to the application in India, or all such directions have been revoked.

(2) The Controller shall dispose of every such application within such period as may be prescribed:
Provided that if the invention is relevant for defence purpose or atomic energy, the Controller shall not grant permit without the prior consent of the Central Government.

(3) This section shall not apply in relation to an invention for which an application for protection has first been filed in a country outside India by a person resident outside India.

Section 40 of the Patents Act is titled Liability for contravention of section 35 or section 39 and reads as follows:

Without prejudice to the provisions contained in Chapter XX, if in respect of an application for a patent any person contravenes any direction as to secrecy given by the Controller under section 35 or makes or causes to be made an application for grant of a patent outside India in contravention of section 39 the application for patent under this Act shall be deemed to have been abandoned and the patent granted, if any, shall be liable to be revoked under section 64.

Section 118 of the Patents Act is titled Contravention of secrecy provisions relating to certain inventions and reads as follows:

If any person fails to comply with any direction given under section 35 or makes or causes to be made an application for the grant of a patent in contravention of section 39 he shall be punishable with imprisonment for a term which may extend to two years, or with fine, or with both.

According to section 39, a Foreign Filing Permit / License (FFP or FFL) is required only if the person who makes a patent application or causes the patent application to be made is a resident in India at the time of filing the application. If the applicant is not an Indian resident or the invention originated abroad, then no FFP / FFL is required. It is important to note that it is the residential status alone that is relevant and not the nationality of the person for purposes of the FFL requirement. The term “resident” is however not defined within the Patent Act and reference must be made to Section 6 of the Income-tax Act to understand who is considered to be a person resident in India.

A prima facie reading of the sections makes it quite clear and obvious that the requirement to comply with the provisions of section 39 is an absolute one and mandatory. Based on this, there is no argument that the Indian entity in the current scenario would be held liable for contravening the said provision.

While the question asked above stops at finding out the liability of the applicant, let’s take it a step forward to figure out if there is a solution to the issue at hand.

Firstly, it is important to note that there is no provision for retroactive filing of a FFL request in India. Under the US patent law however, if a proper license is not timely obtained, a petition may be filed with the USPTO seeking a retroactive foreign filing license, provided that the failure to obtain the license was in error and without deceptive intent. Several other countries like Germany, Israel, South Korea and United Kingdom also have FFL requirements but these are restricted to ‘National Security and Military Applications’. Under the UK law for instance, the FFL requirement has been greatly relaxed; criminal liability for foreign filing now only applies “to those “knowingly” filing, or causing to be filed, an application requiring clearance, and to those “reckless” in filing, or causing to be filed, such an application.”

As mentioned previously, there is no provision for retroactive filing of a FFL request in India; it is however in my opinion possible to remedy the defect by filing a petition under rule 137.

Rule 137 is titled Powers of Controller generally and reads as follows:

Any document for the amendment of which no special provision is made in the Act may be amended and any irregularity in procedure which in the opinion of the Controller may be obviated without detriment to the interests of any person, may be corrected if the Controller thinks fit and upon such terms as he may direct.

Rule 137 provides the controller the discretionary power to correct any irregularity in procedure if the Controller thinks fit. Needless to say, the reason provided to the Controller must be bonafide and without undue delay. One may argue that failure to obtain a FFL is an illegality rather than an irregularity. This however does not hold true when you distinguish the words from each other.

Although borderline, the difference between Illegality and Irregularity has been addressed by the courts on various occasions. For purposes of this article however, we take the definition of these words as found in Black’s Law Dictionary. ‘Illegality’ according to Black’s Law refers to “a vicious and fraudulent intention to evade the prohibitions of the law”, while ‘Irregularity’ is defined as “Violation or non-observance of established rules and practices.”

There are no judicial precedents in India that deal with the aspect of retroactive filing of FFL or of penalties being imposed on a party under section 118. It also appears that no opposition or revocation pleas have ever been filed against an applicant on this ground alone or jointly with any other grounds of opposition or revocation provided under the Act. It would therefore be very interesting to see how the courts would interpret the powers of the controllers under rule 137 should an occasion as the one described herein, ever arise.

Do let us know what you think in the comments section.