Unit IV: Indian Patent Laws and FEMA, 1999

Intellectual property rights (IPR)

Intellectual property rights (IPR) refers to the legal rights given to the inventor
or creator to protect his invention or creation for a certain period of time. These
legal rights confer an exclusive right to the inventor/creator or his assignee to
fully utilize his invention/creation for a given period of time.
Meaning of patent
A patent is an exclusive right granted by the Government to the inventor to
exclude others to use, make and sell an invention in a specific period of time. A
patent is also available for improvement in their previous Invention. The main
motto to enact patent law is to encourage inventors to contribute more in their
field by awarding them exclusive rights for their inventions. In modern terms,
the patent is usually referred to as the right granted to an inventor for his
Invention of any new, useful, non-obvious process, machine, article of
manufacture, or composition of matter. The word “patent” is referred from a
Latin term “patere” which means “to lay open,” i.e. to make available for public
inspection.

There are three basic tests for any invention to be patentable:

 Firstly, the invention must be novel, meaning thereby that the

Invention must not be in existence.
 Secondly, the Invention must be non- obvious, i.e. the Invention must
be a significant improvement to the previous one; mere change in
technology will not give the right of the patent to the inventor.
 Thirdly, the invention must be useful in a bonafide manner, meaning
thereby that the Invention must not be solely used in any illegal work
and is useful to the world in a bonafide manner.

4.3.2 What is Not Patentable?

The main categories, which do not qualify for patentability under the IPA are:

• An invention, whose use could be contrary to the public order or morality or

which causes serious prejudice to human, animal or plant life or health or to the

environment. For example, a new type of gambling machine.

• Inventions relating to atomic energy. This is so because the Central
Government

has the sole responsibility for the development of atomic energy and for obvious

reasons will not like its programmes to be hampered by patent claims.

• An invention which is frivolous or which claims anything obviously contrary

to

well established natural laws. For example, an invention that claims a perpetual

motion machine will not be patentable because the claim would be contrary to

well-established laws of nature.

• The mere discovery of a scientific principle or the formulation of an abstract

theory. For example, a discovery merely unveils a hidden thing; it does not

involve an act that makes it useful; it is therefore not an invention and hence not

patentable. Similar reasoning applies to the formulation of an abstract theory.

• Discovery of any living thing or non-living substances or objects occurring in

nature;

• A substance obtained by a mere admixture of the components, or a process of

producing such mixture;

• Mere arrangement or rearrangement or duplication of known devices, each

functioning independently of one another in a known way without changing the

end results;

• An invention which in effect is traditional knowledge;

• A mathematical or business method or a computer programme per-se or

algorithms.

Besides these rather obvious items the following items are also not inventions
within
the meaning of the Patents Act, as a matter of policy and are therefore, not
patentable:

• A method of agriculture or horticulture;

• Any process for the medicinal, surgical, curative, prophylactic, diagnostic,

therapeutic or other treatment of human beings and animals;

• Plants and animals in whole or part thereof other than micro-organisms;

• Seeds and biological processes for production of plants and animals;

The following two categories belong to different fields of intellectual property

and are not subject matter of patents:

• A literary dramatic, musical or artistic work including cinematographic work

and television productions (covered by copyright);

• Topography of integrated circuits (separate field).

In the case of substances falling within certain categories no claim for patenting
the substance can be entertained; however, claims for the methods or processes
of manufacture of these substances can be patented. Such categories of
substances are:

• Substances which could be used as food or medicine or drug;

• Substances prepared or produced by chemical processes (which include

biochemical, biotechnological and microbiological process).

However a claim for patenting a substance can be entertained if the substance

itself is intended for use as medicine or drug – excepting chemical substances
which are ordinarily used as intermediates in the preparation or manufacture of
any medicines.

Computer programmes and microorganisms have emerged as two special

categories where patent protection is increasingly sought.
Procedure of Patent

 Step 1: Write about inventions (idea or concept) with each and every
detail.
Collect all information about your Invention such as:

1. Field of Invention
2. What does the Invention describe
3. How does it work
4. Benefits of Invention
If you worked on the Invention and during the research and development phase,
you should have some call lab records which are duly signed with the date by
you and the concerned authority.

 Step 2: It must involve a diagram, drawing and sketch explains the

Invention
Drawings and drawings should be designed so that the visual work can be better
explained with the invention work. They play an important role in patent
applications.

 Step 3: To check whether the Invention is patentable subject or not.

Not all inventions can be patentable, as per the Indian Patent Act there are some
inventions which have not been declared patentable (inventions are not
patentable).

 Step 4: Patent Discovery

The next step will be to find out if your Invention meets all patent criteria as per
the Indian Patent Act-

1. The invention must be novel.

2. The Invention must be non- obvious.
3. The Invention must have industrial applications.

 Step 5: File Patent Application

If you are at a very early stage in research and development for your Invention,
then you can go for a provisional application. It offers the following benefits:
 1. Filing date.
2. 12 months time for filing full specification.
3. Lesser cost.
After filing a provisional application, you secure the filing date, which is very
important in the patent world. You get 12 months to come up with the complete
specification; your patent application will be removed at the end of 12 months.

When you have completed the required documents and your research work is at
a level where you can have prototypes and experimental results to prove your
inventive move; you can file the complete specification with the patent
application.

Filing the provisional specification is an optional step if you are in the stage
where you have complete knowledge about your Invention you can go straight
to the full specification.

 Step 6: Publication of the application

Upon filing the complete specification along with the application for the patent,
the application is published 18 months after the first filing.

If you do not wish to wait until the expiration of 18 months from the filing date
to publish your patent application, an initial publication request may be made
with the prescribed fee. The patent application is usually published early as a
one-month form request.

 Step 7: Request for Examination

The patent application is scrutinized only after receiving a request for an RFE
examination. After receiving this request, the Controller gives your patent
application to a patent examiner who examines the patent application such as
the various patent eligibility criteria:

1. Patent subject
2. Newness
3. Lack of clarity
4. Inventory steps
5. Industrial application
6. By enabling
The examiner makes the first examination report of the patent application upon
a review for the above conditions. This is called patent prosecution. Everything
that happens for a patent application before the grant of a patent is usually
called patent prosecution.

The first examination report submitted to the Controller by the examiner usually
includes prior art (existing documents prior to the filing date) that are similar to
the claimed invention and is also reported to the patent applicant.

 Step 8: Answer the objections

Most patent applicants will receive some type of objections based on the
examination report. The best thing is to analyze the examination report with the
patent professional (patent agent) and react to the objections in the examination
report.

This is an opportunity for an inventor to communicate his novelty over the prior
art in examination reports. Inventors and patent agents create and send a test
response that tries to prove that their Invention is indeed patentable and meets
all patent criteria.

 Step 9: clearance of objections

The Controller and the patent applicant is connected for ensuring that all
objections raised regarding the invention or application is resolved and the
inventor has a fair chance to prove his point and establish novelty and inventive
steps on other existing arts.

Upon receiving a patent application in order for grant, it is the first grant for a
patent applicant.

 Step 10:
Once all patent requirements are met, the application will be placed for the
grant. The grant of a patent is notified in the Patent Journal, which is published
periodically.

Patent Infringement
Patent infringement is a violation which involves the unauthorized use,
production, sale, or offer of sale of the subject matter or Invention of another’s
patent. There are many different types of patents, such as utility patents, design
patents, and plant patents. The basic idea behind patent infringement is that
unauthorized parties are not allowed to use patents without the owner’s
permission.
When there is infringement of patent, the court generally compares the subject
matter covered under the patent with the used subject matter by the “infringer”,
infringement occurs when the infringer Uses patent material from in the exact
form. Patent infringement is an act of any unauthorized manufacture, sale, or
use of a patented invention. Patent infringement occurs directly or indirectly.

Direct patent infringement: The most common form of infringement is direct

infringement, where the Invention that infringes patent claims is actually
described, or the Invention performs substantially the same function.

Indirect patent infringement: Another form of patent infringement is indirect

infringement, which is divided into two types:

 Infringement by inducement is any activity by any third party that causes

another person to infringe the patent directly. This may include selling
parts that can only be used realistically for a patented invention, selling
an invention with instructions to use in a certain method that infringes on
a method patent or licenses an invention that is covered by the patent of
another. The inducer must assist intentional infringement, but does not
require intent to infringe on the patent.
 Contributory infringement – where there is an intentional
participation/assistance by one party in an act of infringement to the other
party making them vicariously liable for the acts of the infringer.
It is a type of indirect infringement, where a person or corporation is held
liable for infringement even if they have not actively participated in
infringing activities. Therefore, it happens when a party sells a product
which they know is used in the infringing product. In usual cases, this
product will have no commercial standing out of its use in the infringing
product.
Contributory infringement is triggered when a seller provides a part or
component that, while not itself infringing any patent, has a particular use
as part of some other machine or composition that is covered by a patent.

Patent not Renewed on time / Patent Lapsed

If the patentee does not submit the renewal fee at Indian Patent Office (IPO)
within the prescribed period and also do not pay renewal fee within the
extendable period of 06 months by applying extension of time, the patent
thereafter ceases to have effect or that patent gets lapsed from the date of
expiration.
In cases where any individual/ company do not pay renewal fee, the patent may
thereafter get lapsed or ceased to exist. The patent and the subject matter
covered in the patent thereafter will come into public domain and not protected.
The subject matter of the concerned patent may be used by any person without
any fear of infringement. Further, the lapsed patent may be restored within 18
months from the date of lapse.

Requirements for Applying Restoration of Lapsed Patents

1. Form – 15 is required to be filled with prescribed fees (u/s 60, Rule 84).
2. Evidences / Proofs are required to be submitted to prove the fact that the
non-payment of renewal/maintenance fee was unintentional.

Surrender of Patents
Section 63 of the Patents Act, 1970 allows a patentee to surrender a patent. The
patentee can offer to surrender his patent by giving notice to the Controller. The
offer to surrender the patent should be published by the Controller, and every
person interested in the patent must also be notified of the same.
After the publication, any interested person can oppose the surrender, by giving
notice to the Controller which should be notified by the Controller to the
patentee. If the patentee or the opponent wants to be heard, the Controller, on
being satisfied that the patent may be surrendered and after the hearing, may
accept the offer and revoke the patent by order.
The notice of opposition must be given to the Controller within a period of 3
months from the date of publication of the notice to surrender the patent. If the
patentee’s offer to surrender the patent is accepted by the Controller, he may:
 direct the patentee to return the patent; and
 on receiving the patent revoke it by order; and
 publish the revocation of the patent.
 Foreign Exchange Management Act 1999
FEMA came into effect on the 1st of June, 2000, replacing the Foreign
Exchange Regulation Act (FERA). The intentions of the Foreign Exchange
Management Act are to perhaps, revise and unite laws that relate to transactions
of foreign exchange and encourage an orderly maintenance and development, of
the foreign exchange markets in India. FEMA is not as restrictive as some of the
FERA regulations, and in line with India's economic liberalization policies.
FEMA
consolidate and amend the law relating to foreign exchange
facilitating external trade and payments
promoting the orderly development and maintenance of foreign exchange
market in India
49 sections (with sub sections) divided into 7 chapters in the Act

Objectives of FEMA

The main objectives of FEMA in India are to regulate foreign

exchange transactions in a manner that promotes economic growth, maintains
the stability of the foreign exchange market, ensures compliance with regulatory
requirements, and prevents illegal activities. Following are some of the
objectives of the Foreign Exchange Management Act (FEMA 1999):

 To facilitate external trade and payments: FEMA aims to promote

external trade and payments by regulating foreign exchange transactions
and simplifying the process of conducting foreign exchange transactions.
 To conserve foreign exchange reserves: FEMA seeks to conserve
foreign exchange reserves by regulating the inflow and outflow of foreign
exchange, promoting foreign investment, and ensuring the optimal
utilization of foreign exchange reserves.
 To promote orderly development and maintenance of the foreign
exchange market: FEMA aims to promote an orderly and stable foreign
exchange market in India by regulating foreign exchange transactions and
ensuring transparency, and efficiency in such transactions.
 To comply with international obligations: FEMA aims to ensure that
India’s foreign exchange transactions are consistent with its international
obligations and comply with international laws and regulations.
  Current Account Transactions: Current account transactions include
trade in goods and services, remittances, and payments, and are mostly
allowed without any restrictions.
 Capital Account Transactions: Capital account transactions include
investments in securities and immovable property and are subject to
certain restrictions and regulations.
 To prevent illegal activities: FEMA aims to prevent illegal activities
such as money laundering, financing of terrorism, and other unauthorized
foreign exchange transactions by providing a legal framework for the
monitoring, investigation, and enforcement of foreign exchange
transaction.

Main Features of Foreign Exchange Management Act, 1999

1. It gives powers to the Central Government to regulate the flow of
payments to and from a person situated outside the country.
2. All financial transactions concerning foreign securities or exchange
cannot be carried out without the approval of FEMA. All transactions
must be carried out through “Authorised Persons.”
3. In the general interest of the public, the Government of India can restrict
an authorized individual from carrying out foreign exchange deals within
the current account.
4. Empowers RBI to place restrictions on transactions from capital Account
even if it is carried out via an authorized individual.
5. As per this act, Indians residing in India, have the permission to conduct a
foreign exchange, foreign security transactions or the right to hold or own
immovable property in a foreign country in case security, property, or
currency was acquired, or owned when the individual was based outside
of the country, or when they inherit the property from individual staying
outside the country.

Definition of important terms

“Authorised Person” As per Section 2(c) of FEMA, “Authorised person”
means an authorized dealer, money changer, offshore banking unit, or any other
person which is authorized under Section 10(1) of FEMA to deal in foreign
exchange or foreign securities.
“Currency" includes all currency notes, postal notes, postal orders, money
orders, cheques, drafts, travelers cheques, letters of credit, bills of exchange and
promissory notes, credit cards or such other similar instruments, as may be
notified by the Reserve Bank

“Foreign Currency" means any currency other than Indian currency.

“Foreign Exchange" means foreign currency and includes,- deposits, credits
and balances payable in any foreign currency, drafts, travelers cheques, letters
of credit or bills of exchange, expressed or drawn in Indian currency but
payable in any foreign currency, drafts, travelers cheques, letters of credit or
bills of exchange drawn by banks, institutions or persons outside India, but
payable in Indian currency
“Foreign Security" means any security, in the form of shares, stocks, bonds,
debentures or any other instrument denominated or expressed in foreign
currency and includes securities expressed in foreign currency, but where
redemption or any form of return such as interest or dividends is payable in
Indian currency

Offences and penalties

1. Penalties [Section13(1)]
A person failing or contravening the provisions of RBI shall be imposed a
penalty up to thrice the sum involved in such contravention where such amount
is quantifiable or up to INR 2 lakhs where the amount is not quantifiable.
If contravention is of continuing nature, further penalty up to INR 5000 per day
during which the contravention continues can be imposed.
The adjudicating authority handling the matter may impose additional penalty
over and above existing penalty by confiscating currency, security or property
involved.

2. Confiscation of Money or Property [Section 13 (2)]

 In case the Adjudicating Authority finds contravention to Section 13 in
connection with any currency or security or any other money or property, then
that currency, security or any other money or property on which the
contravention has taken place, shall be confiscated by the Central Government.
 The adjudging authority may direct the defaulting person that such property
shall be brought back into India or shall be retained outside India in accordance
with the directions made in this behalf.

3. Enforcement of the Orders of Adjudicating Authority [Section 14]

 If any person fails to make full payment of the penalty imposed on him
under section 13 within a period of ninety days from the date on which
the notice for payment of such penalty is served on him, he shall be
liable to civil imprisonment under this section.
 However, no order for the arrest and detention in civil prison of a defaulter
shall be made unless the Adjudicating Authority has issued and served a notice
upon the defaulter calling upon him to appear before him on the specified date
and to show cause why he should not be detained in the civil prison.