Patent trolling: An Indian perspective

By Manisha Singh Nair and Shristi Bansal, LexOrbis
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Patent laws are enacted to stimulate innovation and invention, which ultimately leads to the benefit of the public at large. They are the negative rights that are granted not only for the personal benefits of the patentee but for the public interest, which is the underlying spirit of the Indian Patent Act, 1970.

Manisha Singh Nair LexOrbis律师事务所 合伙人 Partner LexOrbis
Manisha Singh Nair
LexOrbis律师事务所
合伙人
Partner
LexOrbis

Simply put, a patent troll is a company or business function whose primary business activity is to acquire patents for the purpose of asserting them against other companies.

The intent of patent trolling is to enforce patent rights for the sake of licensing revenues and to engage manufacturers in infringement suits to mostly seek damages or to force third parties to purchase licences. Patent trolls are variously called as Patent Assertion Entities (PAEs), Patent Holding Companies (PHCs) or Non-Practising Entities (NPEs).

Old problem

Patent Trolling is not a recent phenomenon. The term “patent trolling” surfaced in the 1990s to describe entities that aggressively filed patent lawsuits. An argument that might be made in favour of patent trolls is that they are entitled to exercise their rights against product developers because in order to obtain their patents, they are required to disclose an innovative technology that they have developed to the public.

The disclosure of the new technology thus promotes innovation, and the patent holder is merely recognised for this advancement of science. However, it has been observed that the inventions disclosed in patents filed by patent trolls are unlikely to be very innovative, and thus of questionable validity to the progress of science.

Shristi Bansal LexOrbis律师事务所 律师 Associate LexOrbis
Shristi Bansal
LexOrbis律师事务所
律师
Associate
LexOrbis

Patent trolling in India

In comparison to other countries, patent trolling was quite prevalent in India in the information technology and communications sector prior to the enactment of the amendment in 2005, and then steeply declined after the amendment.

India’s patent laws do not expressly prohibit the existence of patent trolls. However, provisions such as section 146 require that a granted patent must be worked or used in India. If a patent is not worked or used in the territory of India, compulsory licensing may be invoked.

The Act also requires the mandatory filing of a statement of working of a patent at the end of each financial year. Patent holders who fail to file such a statement may be liable for a fine and/or imprisonment.

The practise of abuse of patent rights through patent trolls is discussed under section 83(b), which states that patents are not granted merely to enable patentees to enjoy a monopoly. Clause (f) talks about promotion of technology innovation, technology transfer and prevention of abuse of patent rights to unreasonably restrain international transfer of technology.

Famous case

One of the most celebrated cases in this regard is that of Spice Mobiles and Samsung India v Somasundaram Ram Kumar (S.R.Kumar), wherein S.R.Kumar, the patentee, was granted a patent for mobile phones that could incorporate multiple sim cards.

The patentee not only registered his patent with the India Customs Authority to enforce his patent under Intellectual Property Rights (Imported Goods) Enforcement Rules, but also filed a suit for infringement, seeking injunction, which was granted.

Moreover, the patentee went a step ahead to amend the claims by adding “a plurality of headphone/earphone jacks for accepting a plurality of headphone/ earphone plugs and/or a plurality of Bluetooth devices that enabled communication on both the SIM-cards simultaneously”.

Further, the patentee served legal notices on the Excise authorities to cancel manufacturing licences granted to Samsung India. The Intellectual Property Appellate Board (IPAB) finally put an end to the antics and revoked the patent on the ground of lack of inventive step, when Samsung and Spice Mobiles filed a revocation petition.

Negative effects

The major ill effect of patent trolls is that they are in a position to negotiate licensing fees that are grossly out of alignment with their contribution to the alleged infringer’s product or service, not their non-practising status or the possible weakness of their patent claims. The risk of paying high prices for after-the-fact licensing of patents they were not aware of, and the costs for extra vigilance for competing patents that might have been issued, in turn increases the costs and risks of manufacturing.

Patent licensing is also considered as pro-competitive because in a way it encourages investment in bringing new products to market. Thus, by creating a secondary market for patents, patent trolls make the ownership of patents more easily available, thereby creating incentives to innovate and patent. Giving patents to more specialized licensing companies will facilitate access to technology by more efficiently organizing ownership of patent rights.

Conclusion

The reasons that the patent troll strategy has developed in the present patent system appear to result from judicial procedure and its adjudication in infringement cases.

It could also be due to heavy pending applications and lack of technical hands to examine patent applications. Even though trolling activities have been reduced, the problem still subsists in the software industry.

Practices such as the domestic working and reasonable period requirements, the compulsory licensing and pre-grant opposition regime, and finally the patentable subject matter, have made the Indian system fairly immune to the problem of patent trolls that have been plaguing many other countries.

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