PART TWO: The Law on Patents, Utility Models and Industrial Designs

I. Patentability

▪ Patentable Inventions

Any technical solution of a problem in any field of human activity which is new, involves an
inventive step and is industrially applicable shall be Patentable. It may be, or may relate to, a
product, or process, or an improvement of any of the foregoing. (Sec. 21, IPC)

- The elements of patentability are as follows:

1. It must be new (novel)

2. involves an inventive step
3. industrially applicable
4.

(A) it must be new (novel) - An invention shall not be considered new if it forms part of a prior
art. (Sec. 23, IPC)

▪ What is prior art? Prior art shall consist of:

1. Everything which has been made available to the public anywhere in the
world, before the filing date or the priority date of the application claiming the invention;
and
2. The whole contents of an application for a patent, utility model, or industrial design
registration, published in accordance with this Act, filed or effective in the Philippines, with
a filing or priority date that is earlier than the filing or priority date of the
application: Provided, That the application which has validly claimed the filing date of an
earlier application under Section 31 of this Act, shall be prior art with effect as of the filing
date of such earlier application: Provided further, That the applicant or the inventor
identified in both applications are not one and the same. (Sec. 24, IPC)

▪ What is Non-prejudicial disclosure? The type of disclosure to the public that will not affect or
prejudice the novelty requirement of a particular invention. The law states that the disclosure
of information contained in the application during the twelve (12) months preceding the
filing date or the priority date of the application shall not prejudice the applicant on the ground
of lack of novelty if such disclosure was made by:

1. 2. The inventor;
2. A patent office and the information was contained (a) in another application filed by the
inventor and should not have been disclosed by the office, or (b) in an application filed
without the knowledge or consent of the inventor by a third party which obtained the
information directly or indirectly from the inventor; or
3. A third party which obtained the information directly or indirectly from the
inventor. (Sec. 25, IPC)

(B) involves an inventive step - An invention involves an inventive step if, having regard to prior
art, it is not obvious to a person skilled in the art at the time of the filing date or priority date
of the application claiming the invention. (Sec. 26, IPC)

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▪ A person skilled in the art – an ordinary practitioner aware of what was common general knowledge
in the art at the relevant date. He is presumed to have knowledge of all references that are
sufficiently related to one another and to the pertinent art and to have knowledge of all arts
reasonably pertinent to the particular problems with which the inventor was involved.

▪ Thus, one who merely draws obvious conclusions from already existing inventions and
then actualizes them does not make any significant contribution to the state of the art and
is not eligible for patent protection.

(C) industrially applicable - An invention that can be produced and used in any industry shall
be industrially applicable. (Sec. 27, IPC)

▪ An invention is industrially applicable when it can be produced and used in any industry.

▪ Thus, under the law, the applicant of a patent shall disclose the invention in a manner
sufficiently clear and complete for it to be carried out by a person skilled in the art.

- These criteria may apply to:

(a) products
(b) processes
(c) improvements of either products and processes

▪ Non-patentable inventions

The following shall be excluded from patent protection:

(a) Discoveries, scientific theories and mathematical methods;
(b) Schemes, rules and methods of performing mental acts, playing games or doing
business, and programs for computers;
(c) Methods for treatment of the human or animal body by surgery or therapy and diagnostic
methods practiced on the human or animal body. This provision shall not apply to products and
composition for use in any of these methods;
(d) Plant varieties or animal breeds or essentially biological process for the production of
plants or animals. This provision shall not apply to micro-organisms and non-biological and
microbiological processes. Provisions under this subsection shall not preclude Congress to
consider the enactment of a law providing sui generis protection of plant varieties and animal
breeds and a system of community intellectual rights protection:
(e) Aesthetic creations; and
(f) Anything which is contrary to public order or morality. (Sec. 22, IPC)

- The element of novelty is an essential requisite of the patentability of an invention or

discovery. If a device or process has been known or used by others prior to its application or
discovery by the applicant, an application for a patent therefore should be denied, and if the
application has been granted, the court, in a judicial proceeding in which the validity of the patent
is drawn in question, will hold it void and ineffective. It has been repeatedly held that an invention
must possess the essential elements of novelty, originality and precedence, and for the patentee
to be entitled to the protection the invention must be new to the world. (Manzano vs. CA, G.R.
No. 113388, September 5, 1997)

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 - It has been repeatedly held that an invention must possess the essential elements of novelty
, originality and precedence and for the patentee to be entitled to protection, the invention must be
new to the world. Accordingly, a single instance of public use of the invention by a patentee
for more than two years (now for more than one year only under Sec. 9 of the Patent Law)
before the date of his application for his patent, will be fatal to, the validity of the patent
when issued. (Maguan vs. CA, 146 SCRA 107 [1986])

II. Right to Patent

▪ The right to patent belongs to the inventor, his heirs or assigns. (Sec. 28, IPC).

▪ The First-to-file Rule - In case two or more inventors of the same invention, the patent shall
belong to the person who first filed an application. If there are two or more applications, the
patent shall belong to the applicant who has the earliest filing date or the earliest priority
date. (Sec. 29, IPC)

▪ Filing Date - The filing date of a patent application shall be the date of receipt by the Office of
at least the following elements:

(a) An express or implicit indication that a Philippine patent is sought;

(b) Information identifying the applicant; and
(c) Description of the invention and one (1) or more claims in Filipino or English.
If any of these elements is not submitted within the period set by the Regulations, the application
shall be considered withdrawn. (Sec. 40, IPC)

▪ The Priority right - An application for patent filed by any person who has previously applied
for the same invention in another country which by treaty, convention, or law affords similar
privileges to Filipino citizens, shall be considered as filed as of the date of filing the foreign
application: Provided, That:

▪ (a) the local application expressly claims priority;

▪ (b) it is filed within twelve (12) months from the date the earliest foreign application was
filed;

▪ and (c) a certified copy of the foreign application together with an English translation is filed
within six (6) months from the date of filing in the Philippines. (Sec. 31, IPC)

▪ Commissioned invention – The person who commissions the work shall own the patent
unless otherwise provided in the contract. (Sec. 30.1) NOTE that in copyright, in the case of a
work commissioned by a person other than an employer of the author and who pays for it, the

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 copyright remains with the creator unless there is written stipulation to the contrary. (Sec. 178.4,
IPC)

▪ Inventions in the course of employment - In case the employee made the invention in the course
of his employment contract, the patent shall belong to:

(a) The employee, if the inventive activity is not a part of his regular duties even if the employee
uses the time, facilities and materials of the employer.
(b) The employer, if the invention is the result of the performance of his regularly-assigned duties,
unless there is an agreement, express or implied, to the contrary. (Sec.30.2, IPC)
III. Patent Application

▪ The Application - The patent application shall be in Filipino or English and shall contain the
following:

(a) A request for the grant of a patent; (Sec. 34)

(b) A description of the invention; (Sec. 35)
(c) Drawings necessary for the understanding of the invention;
(d) One or more claims; (Sec. 36) and
(e) An abstract. (Sec. 37)

▪ Unity of invention - The application shall relate to one invention only or to a group of
inventions forming a single general inventive concept. (Sec. 38.1,IPC) The fact that a patent
has been granted on an application that did not comply with the requirement of unity of invention
shall not be a ground to cancel the patent. (Sec. 38.3)

IV. Procedure for Grant of Patent

1.
Where to File

The application for registration of a Philippine Patent is filed with the Bureau of Patents (BOP) of
the Intellectual Property Office (IPO) through the Receiving Section/Counter of the
Administrative, Financial and Human Resource Development Services Bureau (AFHRDSB)
located at the ground floor of the IPO Building.

2.
What to File

To obtain a filing date, a Request Form for a Grant of Philippine Patent must be filed,
containing the name, address and signature of the applicant. If the applicant is a non-resident, the
name and address of its resident agent must also be indicated. A description of the invention and
one or more claims must accompany the application, including any drawings explaining the
invention. THE SUBMISSION OF THE FOREGOING REQUIREMENTS ALREADY ENTITLES
THE APPLICANT TO OBTAIN A FILING DATE.

However, there are still additional formal requirements for the application, such as the payment of
the filing fee which may be paid during application filing or within one month from the date of filing.
Filing fees shall be P1,380 for Small Entities and P2,760 for Big Entities Although the payment of
filing fees is not necessary to obtain a filing date, the application shall be deemed automatically
cancelled/withdrawn in case it is not paid on time. The abstract of the invention must also be
submitted and, in case the priority of an earlier filed application is being claimed, the filing date, file
number and country of origin of the claim must also be indicated.

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3.
Examination Process

(a)
Formal Examination

The purpose of this examination is to determine if the application satisfies the formal requirements
for the grant of a filing date. During examination, the examiner shall check if proper fees have
been paid and shall proceed to classify the invention as to the field of technology it belongs.
A search is conducted to determine prior art and identify similar or identical inventions pending
with the IPO.

(b)
Publication of Application

The application is published in the IPO Gazette after 18 months from the filing or priority
date, in order to allow the public to inspect the application documents and submit their
written observations and comments regarding the patentability of the invention. The
applicant is given the opportunity to defend the patentability of his against these comments and
objections. A patent application, which has not yet been published, and all related documents,
shall not be made available for inspection without the consent of the applicant. (Sec. 46, IPC) The
applicant shall have all the rights of a patentee under Section 76 against any person who, without
his authorization, exercised any of the rights conferred under Section 71 of this Act in relation to
the invention claimed in the published patent application, as if a patent had been granted for that
inventionThe applicant shall have all the rights of a patentee under Section 76 against any person
who, without his authorization, exercised any of the rights conferred under Section 71 of this Act
in relation to the invention claimed in the published patent application, as if a patent had been
granted for that invention. (Sec. 46)

(c)
Substantive Examination

The applicant should request for a substantive examination within six (6) months from the
date of publication, otherwise the application shall be deemed withdrawn and all fees shall
be forfeited. During the substantive examination, the examiner determines if the application meets
the requirements of Sections 21 - 27 and Sections 32 – 39 of the Intellectual Property Code. The
right to substantial examination is only available for inventions and NOT for application for utility
model and industrial design.

(d)
Amendment of Application

Based on the findings of the examiner, the applicant is allowed to amend his application in
order to comply with requirements of, or clarify patentability issues with, the examiner.

(e)
Grant of Patent

If the application meets all the requirements and there is no reason for the examiner to deny the
application, the examiner issues a decision to grant the patent registration.

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 (f)
Publication of Patent

The grant of a patent including related information shall be published in the IPO Gazette within
six (6) months. Any interested party may inspect the complete description, claims, and drawings
of the patent on file with the Office.

4.
Contents of Patent

The patent is issued in the name of the Republic of the Philippines under the seal of the IPO and
shall be signed by the Director and registered together with the description, claims and drawings
in the records of the IPO.

5.
Annual Fees

An annual fee shall be paid upon expiration of four (4) years from the date the application
was published and on each subsequent anniversary of such date, otherwise the patent
application or the patent, as the case may be, shall be deemed withdrawn or cancelled,
respectively. (Sec. 55.1; 55.2)

6.
Patent Term

The term of a patent shall be twenty (20) years from the filing date of the application. (Sec.
54)

7.
Appeals

Appeals may be directed to the Director of Patents within two (2) months from the mailing
date of the final refusal by the examiner to grant the patent. The decision or order of the
Director shall become final and executory fifteen (15) days after receipt of a copy by the
appellant unless within the same period, a motion for reconsideration is filed with the Director
or an appeal to the Director General is filed. The decision of the Director General may be
appealed to the Court of Appeals and finally to the Supreme Court. = director to director gen to
ca to sc

V. Cancellation of Patents; Substitution of Patentee

▪ Grounds for cancellation - Any interested person may, upon payment of the required fee, petition
to cancel the patent or any claim thereof, or parts of the claim, on any of the following grounds:

(a) That what is claimed as the invention is not new or Patentable;

(b) That the patent does not disclose the invention in a manner sufficiently clear and
complete for it to be carried out by any person skilled in the art; or
(c) That the patent is contrary to public order or morality. (Sec. 61, IPC)
(d) In the case provided under Sec. 67 & 68 of IPC

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▪ Where the grounds for cancellation relate to some of the claims or parts of the claim, cancellation
may be effected to such extent only. (Sec. 61.2, IPC)

▪ Petition for cancellation must be filed with the IPO particularly with the Bureau of Legal
Affairs. (Sec. 10.1, IPC)

▪ The rights conferred by the patent or any specified claim or claims cancelled shall terminate. Notice
of the cancellation shall be published in the IPO Gazette. Unless restrained by the Director
General, the decision or order to cancel by Director of Legal Affairs shall be immediately executory
even pending appeal. (Sec. 66,IPC)

▪ Cancellation of Patent in an Infringement Action - In an action for infringement, if the court shall
find the patent or any claim to be invalid, it shall cancel the same, and the Director of Legal Affairs
upon receipt of the final judgment of cancellation by the court, shall record that fact in the register
of the Office and shall publish a notice to that effect in the IPO Gazette. (Sec. 82, IPC)

V I. Rights of Patentees and Infringement of Patents

▪ Rights conferred by Patent - A patent shall confer on its owner the following exclusive rights:

(a) Where the subject matter of a patent is a product, to restrain, prohibit and prevent any
unauthorized person or entity from making, using, offering for sale, selling or importing that
product;
(b) Where the subject matter of a patent is a process, to restrain, prevent or prohibit any
unauthorized person or entity from using the process, and from manufacturing, dealing in,
using, selling or offering for sale, or importing any product obtained directly or indirectly
from such process. (Sec. 71, IPC)

▪ A person or entity who has not been granted patent over an invention and has not acquired any
right or title thereto either as assignee or as licensee, has no cause of action for infringement which
depends on the existence of the patent. (Creser Precision Systems vs. CA, 286 SCRA 13 [1998]).

▪ When a patent is sought to be enforced, "the questions of invention, novelty, or prior use, and each
of them, are open to judicial examination." The burden of proof to substantiate a charge of
infringement is with the plaintiff. Where, however, the plaintiff introduces the patent in evidence,
if it is the due form, it affords a prima facie presumption of its correctness and validity. The decision
of the Commissioner of Patents in granting the patent is always presumed to be correct.
The burden then shifts to the defendant to overcome by competent evidence this legal
presumption. With all due respects, therefore, for the critical and expert examination of the
invention by the United States Patent Office, the question of the validity of the patent is one for
judicial determination, and since a patent has been submitted, the exact question is whether the
defendant has assumed the burden of proof as to anyone of his defenses. (Vargas vs. Chua, G.R.
No. L-36650, January 27, 1933).

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▪ Patents or applications for patents and invention to which they relate, shall be protected in the
same way as the rights of other property under the Civil Code. (Sec. 103.1, IPC)

▪ Patent owners shall also have the right to assign, or transfer by succession the patent, and to
conclude licensing contracts for the same. (Sec. 71.2, IPC)

▪ Assignment of inventions or any rights and interests pertaining must be in writing and must
be properly recorded with the IPO in order to be binding to third persons. (Sec. 105, IPC)

▪ Joint-owners - If two (2) or more persons jointly own a patent and the invention covered thereby,
either by the issuance of the patent in their joint favor or by reason of the assignment of an
undivided share in the patent and invention or by reason of the succession in title to such share,
each of the joint owners shall be entitled to personally make, use, sell, or import the invention for
his own profit: Provided, however, That neither of the joint owners shall be entitled to grant
licenses or to assign his right, title or interest or part thereof without the consent of the
other owner or owners, or without proportionally dividing the proceeds with such other
owner or owners. (Sec. 107, IPC)

▪ Limitations of Patent Rights - The owner of a patent has no right to prevent third parties from
performing, without his authorization, the acts referred to in Section 71 hereof in the following
circumstances:

(a) Using a patented product which has been put on the market in the Philippines by the
owner of the product, or with his express consent, insofar as such use is performed after that
product has been so put on the said market;
(b) Where the act is done privately and on a non-commercial scale or for a non-commercial
purpose: Provided, That it does not significantly prejudice the economic interests of the owner of
the patent;
(c) Where the act consists of making or using exclusively for the purpose of experiments
that relate to the subject matter of the patented invention;
(d) Where the act consists of the preparation for individual cases, in a pharmacy or by a medical
professional, of a medicine in accordance with a medical prescription or acts concerning the
medicine so prepared;
(e) Where the invention is used in any ship, vessel, aircraft, or land vehicle of any other country
entering the territory of the Philippines temporarily or accidentally: Provided, That such
invention is used exclusively for the needs of the ship, vessel, aircraft, or land vehicle and
not used for the manufacturing of anything to be sold within the Philippines. (Sec. 72, IPC)
(f) Prior user - any prior user, who, in good faith was using the invention or has undertaken serious
preparations to use the invention in his enterprise or business, before the filing date or priority date
of the application on which a patent is granted, shall have the right to continue the use thereof
as envisaged in such preparations within the territory where the patent produces its
effect. (Sec. 73, IPC)

(g) Use of invention by Government - A Government agency or third person authorized by the
Government may exploit the invention even without agreement of the patent owner where:

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 1. The public interest, in particular, national security, nutrition, health or the
development of other sectors, as determined by the appropriate agency of the
government, so requires; or
2. A judicial or administrative body has determined that the manner of exploitation, by
the owner of the patent or his licensee is anti-competitive. (Sec. 74, IPC)

VII. Remedies of Person with Patent

▪ Application by persons not having right to patent – If a person referred to in Sec. 29 other than the
applicant, is declared by final court order or decision as having the right to the patent, such person
may, within three months after the decision has become final:

(a) prosecute application as his own in place of applicant;

(b) file new patent application in respect of the same invention;
(c) request that application be refused; or
(d) seek cancellation of patent, if already been issued. (Sec. 67, IPC)

▪ Remedies of True and Actual Inventor – When true and actual inventor is deprived of patent without
his consent or through fraud, and so declared by final court order, court shall order for his
substitution as patentee, or at the option of the true inventor, cancel the patent, and award
actual and other damages in his favor as warranted. (Sec. 68, IPC)

▪ The actions indicated in Secs. 67 and 68 shall be filed within one year from date of
publication. (Sec. 70, IPC)

VIII. Infringement of Patent

▪ What constitutes Patent Infringement? The making, using, offering for sale, selling, or importing a
patented product or a product obtained directly or indirectly from a patented process, or the use of
a patented process without the authorization of the patentee constitutes patent infringement. (Sec.
76.1, IPC)

▪ Protection against infringement - The law will protect a patentee against imitation of his patent
by other forms and proportions. If two devices do the same work in substantially the same
way, and accomplish substantially the same result, they are the same, even though they
differ in name, form, or shape. (Godines vs. CA, 226 SCRA 338)

▪ Proof of Infringement - To establish an infringement, it is not essential to show that the defendant
adopted the device or process in every particular; Proof of an adoption of the substance of the
thing will be sufficient. (Godines vs. CA, 226 SCRA 338).

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▪ Civil Action for Infringement - Any patentee, or anyone possessing any right, title or interest in and
to the patented invention, whose rights have been infringed, may bring a civil action before a court
of competent jurisdiction, to recover from the infringer such damages sustained thereby, plus
attorney's fees and other expenses of litigation, and to secure an injunction for the protection of
his rights. (Sec. 76.2, IPC)

▪ Damages - If the damages are inadequate or cannot be readily ascertained with reasonable
certainty, the court may award by way of damages a sum equivalent to reasonable royalty. (Sec.
76.3, IPC) The court may, according to the circumstances of the case, award damages in a sum
above the amount found as actual damages sustained: Provided, That the award does not exceed
three (3) times the amount of such actual damages. (Sec. 76.4, IPC)

▪ Limitation on Damages - No damages can be recovered for acts of infringement committed

more than four (4) years before the institution of the action for infringement. (Sec. 79, IPC).

▪ Requirement of Notice - Damages cannot be recovered for acts of infringement committed before
the infringer had known, or had reasonable grounds to know of the patent. It is presumed that the
infringer had known of the patent if on the patented product, or on the container or package in
which the article is supplied to the public, or on the advertising material relating to the patented
product or process, are placed the words "Philippine Patent" with the number of the patent. (Sec.
80, IPC)

▪ Other relief - The court may, in its discretion, order that the infringing goods, materials and
implements predominantly used in the infringement be disposed of outside the channels of
commerce or destroyed, without compensation. (Sec. 76.5, IPC)

▪ Contributory Infringer - Anyone who actively induces the infringement of a patent or

provides the infringer with a component of a patented product or of a product produced
because of a patented process knowing it to be especially adopted for infringing the patented
invention and not suitable for substantial non-infringing use shall be liable as a contributory
infringer and shall be jointly and severally liable with the infringer. (Sec. 76.6, IPC)

▪ Infringement Action by Foreign National - Any foreign national or juridical entity who meets the
requirements of Section 3 and not engaged in business in the Philippines, to which a patent has
been granted or assigned under this Act, may bring an action for infringement of patent, whether
or not it is licensed to do business in the Philippines under existing law. (Sec. 77, IPC)

▪ Defenses in Action for Infringement - In an action for infringement, the defendant, in addition to
other defenses available to him, may show the invalidity of the patent, or any claim thereof, on any
of the grounds on which a petition of cancellation can be brought under Section 61 hereof. (Sec.
81, IPC)

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▪ Patent Found Invalid for Infringement - In an action for infringement, if the court shall find the patent
or any claim to be invalid, it shall cancel the same, and the Director of Legal Affairs upon receipt
of the final judgment of cancellation by the court, shall record that fact in the register of the Office
and shall publish a notice to that effect in the IPO Gazette. (Sec. 82, IPC)

▪ Criminal Action for Repetition of Infringement. - If infringement is repeated by the infringer or

by anyone in connivance with him after finality of the judgment of the court against the
infringer, the offenders shall, without prejudice to the institution of a civil action for
damages, be criminally liable therefor and, upon conviction, shall suffer imprisonment for
the period of not less than six (6) months but not more than three (3) years and/or a fine of
not less than One hundred thousand pesos (P100,000) but not more than Three hundred
thousand pesos (P300,000), at the discretion of the court. The criminal action herein
provided shall prescribe in three (3) years from date of the commission of the crime. (Sec.
84, IPC)

▪ What is the doctrine of patent exhaustion? - The patentee, having in the act of sale received all
the royalty or consideration which he claims for the use of his invention in that particular machine
or instrument, it is open to the use of the purchaser without further restriction on account of the
monopoly of the patentee.

▪ What is the doctrine of equivalents? – It provides that an alteration in a patented

combination which merely substitutes another old ingredient for one of the ingredients in
the patented combination is an infringement of the patent if the substitute performs the
same function as well known at the date of the patent as a proper substitute for the omitted
ingredient. (Godines vs. CA, 226 SCRA 338).

▪ Burden of proof on Process Patents - If the subject matter of a patent is a process for obtaining a
product, any identical product shall be presumed to have been obtained through the use of the
patented process if the product is new or there is substantial likelihood that the identical product
was made by the process and the owner of the patent has been unable despite reasonable efforts,
to determine the process actually used. In ordering the defendant to prove that the process to
obtain the identical product is different from the patented process, the court shall adopt measures
to protect, as far as practicable, his manufacturing and business secrets. (Sec. 78, IPC)

▪ Administrative action for Infringement – Before the Bureau of Legal Affairs (Sec. 10.2, IPC)

IX. Voluntary Licensing

▪ Voluntary licensing is the grant by the patent owner to a third person of the right to exploit
the patented invention. (Sec. 85,IPC) I search niiiiiiiiiiiiiiiiiiiiiiiiiiiiiii

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▪ The law requires certain provisions to be stated in voluntary license contracts, as follows:

(a) That Philippine law shall govern the interpretation of the contract.
(b) That in the event of litigation, the venue shall be the proper court in the place where the
licensee has it principal office;
(c) That continued access to improvements in the licensed technology shall be made available to
the licensee during the term of the contract;
(d) That arbitration, if stipulated, shall be conducted in accordance with the procedure provided
in the Arbitration law of the Philippines, or the rules of the United Nations Commission on
International Trade Law (UNCITRAL), or the rules of conciliation and arbitration of the International
Chamber of Commerce (ICC);
(e) That the place of arbitration shall be the Philippines or any neutral country; and
(f) That Philippine taxes due on all payments under the contract shall be borne by the
licensor. (Sec. 88, IPC)

▪ Certain clauses are also prohibited in voluntary license because they are deemed prima facie to
have an adverse effect on competition and trade. Examples are:

(a) Obliging the licensee to acquire goods, materials and other technology only from a specific
source;
(b) Obliging the licensee to permanently employ personnel indicated by the licensor;
(c) Where the right to fix the selling prices of the licensed products is reserved by the licensor;
(d) Where the volume and structure of production of the licensed products are restricted. (Sec.
87, IPC)

▪ Effect of non-conformity of the provisions of Secs. 87 & 88 – It will automatically render the
technology transfer arrangement unenforceable, unless the same is approved and registered with
the Documentation, Information and Technology Transfer Bureau (DITTB) as an exceptional or
meritorious case under Section 91 (when substantial benefits will accrue to the economy).

▪ Voluntary license contracts are not required to be registered with DITTB unless they do not
conform with Secs. 87 & 88.

▪ In the absence of any provision to the contrary in the technology transfer arrangement, the grant
of a license shall not prevent the licensor from granting further licenses to third person nor from
exploiting the subject matter of the technology transfer arrangement himself. (Sec. 89, IPC)

▪ The licensee shall be entitled to exploit the subject matter of the technology transfer arrangement
during the whole term of the technology transfer arrangement. (Sec. 90, IPC)

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 X. Compulsory Licensing

▪ Compulsory Licensing is the grant by the Director of Legal Affairs of a license to exploit a
patented invention, even without the agreement of the patent owner, in favor of any person
who has shown his capability to exploit the invention, under any of the following circumstances:

(a) When there is a national emergency or other circumstances of extreme urgency; or

(b) Where the public interest, in particular, national security, nutrition, health or the development
of other vital sectors of the national economy as determined by the appropriate agency of the
Government, so requires; or
(c) Where a judicial or administrative body has determined that the manner of exploitation by the
owner of the patent or his licensee is anti-competitive; or
(d) In case of public non-commercial use of the patent by the patentee, without satisfactory reason;
(e) If the patented invention is not being worked in the Philippines on a commercial scale, although
capable of being worked, without satisfactory reason: Provided, That the importation of the
patented article shall constitute working or using the patent. Or
(f) Grounds of compulsory license based on interdependence of patents - If the invention
protected by a patent within the country (the “second patent”) cannot be worked without infringing
another patent (the “first patent”) granted on a prior application or benefiting from an earlier priority,
subject to certain conditions. (Sec. 93 and 97, IPC)

▪ The legislative intent in the grant of a compulsory license was not only to afford others an
opportunity to provide the public with the quantity of the patented product, but also to prevent the
growth of monopolies. (Smith Kline vs. CA, G.R. No. 12167, October 23, 2001)

▪ Compulsory license is not tantamount to deprivation of property without just compensation - Even
if other entities like private respondent are subsequently allowed to manufacture, use and sell the
patented invention by virtue of a compulsory license, petitioner as owner of the patent would
still receive remuneration for the use of such product in the form of royalties. (Smith Kline
vs. CA, G.R. No. 12167, October 23, 2001)

▪ Requirement to Obtain a License on Reasonable Commercial Terms. - The license will only be
granted after the petitioner has made efforts to obtain authorization from the patent owner
on reasonable commercial terms and conditions but such efforts have not been successful
within a reasonable period of time. (Sec. 95.1, IPC). However, this requirement shall not apply
in the following cases:

(a) Where the petition for compulsory license seeks to remedy a practice determined after judicial
or administrative process to be anti-competitive;
(b) In situations of national emergency or other circumstances of extreme urgency;
(c) In cases of public non-commercial use. (Sec. 95.2, IPC)

▪ Licensee’s Exemption from Liability – Any person who works a patented product, substance
and/or process under a compulsory license, shall be free from any liability for infringement;
Provided: That in case of voluntary licensing, no collusion with licensor is proven. This is without
prejudice to rightful patent owner to recover from licensor whatever he may receive as royalties
under the license. (Sec. 102, IPC)

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