PATENT TROLLS IN INDIA

Submitted by-

Divyaraj Jain

SM0121021

Faculty in charge –

Dr. Pankaj Kumar

NATIONAL LAW UNIVERSITY AND JUDICIAL ACADEMY

GUWAHATI, ASSAM

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TABLE OF CONTENT

INTRODUCTION.................................................................................................................................3

LITERATURE REVIEW.....................................................................................................................3

SCOPE AND OBJECTIVE.................................................................................................................3

RESEARCH METHODOLOGY........................................................................................................4

1. PATENT TROLLS.........................................................................................................................4

1.1. MEANING...............................................................................................................................4

1.2. CHARACTERISTICS.............................................................................................................5

1.3. IMPACT OF PATENT TROLLS.............................................................................................5

2. INDIAN LEGAL SAFEGAURDS................................................................................................6

2.1. POST GRANT OPPOSITION.................................................................................................7

2.2. COMPULSARY LICENSE.....................................................................................................7

2.3. PATENT VALIDITY...............................................................................................................8

2.4. INTELLECTUAL PROPERTY APPELLATE BOARD.........................................................9

3. SPICE MOBILE LTD. & SAMSUNG INDIA v. SOMASUNDAR RAMKUMAR.................9

3.1. CLAIM AMENDMENTS DURING PROSECUTION..........................................................9

3.2. LACK OF NOVELTY...........................................................................................................10

3.3. LACK OF INVENTIVE STEP..............................................................................................10

CONCLUSION....................................................................................................................................10

REFERENCES.....................................................................................................................................10

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 INTRODUCTION
A patent is a monopoly right granted by the Patent Office to an inventor to exploit his invention for a
specific amount of time, in accordance with Section 2(1)(m) 1 of the Patents Act. In layman's terms, a
patent is a unique economic/commercial right that is awarded to the inventor for a set amount of time
to use, create, or even sell it, allowing him to reap the rewards of his sincere toil and labour. The
primary goals of patent law are to advance new technology, scientific research, and industrial
development. Granting for a brief time the sole right to possess, use, or sell the patented process or
item, encourages innovative commercially useful inventions. Once a person receives this privilege, no
other person may tamper with it unless he obtains a licence directly from the patent holder. This right
gives the invention general protection, preventing anyone from using it dishonestly for their own
benefit. Although it is normal practise for an inventor to enforce the patent in the commercial sector
for financial gain or other purposes. However, a lot of these inventors have been abusing this authority
by bringing infringement claims against businesses and people who use goods that are only remotely
or tangentially comparable to their patented products. This practise is known as patent trolling, and
the term "patent troll" is used to disparagingly describe innovators who engage in the practise of
generating income only through legal proceedings and licencing. This project delves into this issue in
more detail.

LITERATURE REVIEW
 Raymond Bai, "Patent Laws: Advancing Innovation for the Public or Inflating Private
Profits?", (2015)

This study examines how so-called "patent trolls" take use of this protection to reach settlements
with small and medium-sized businesses who cannot afford the related legal fees or believe that
there is too much at stake to go to court. Such practises have the consequence of depleting the
financial resources of the firms that wished to invest some money in research and development,
which ultimately has a negative impact on technological breakthroughs.

 Sitanshu Singh, “Practice of Patent Asserting Entities: Boon or Bane: Global Innovations”,
(2020).

It gives a meticulous analysis suggesting that the provisions of the Indian Patent Act has a
positive and statistically significant effect on restraintment of patent trolling practices. As per the
author in India, patent trolling does not pose any major threat to any entity seeking opportunity to
enter the Indian market in view of the amendments to the laws which fairly controls the patent
troll activity in India.

1
Patents Act, 1970, § 2(1)(m), Acts of Parliament, 1949 (India).

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SCOPE AND OBJECTIVE
The scope of this paper is limited to understanding of the phenomenon called ‘patent trolls’ under
intellectual property rights. The project firstly aims to define patent trolls. Secondly it looks at the
misuse of intellectual property rights by these trolls. Lastly it looks at the legal safe guards provided
against these trails under the Indian Patent Act.

RESEARCH METHODOLOGY
For this study, the researcher will use both doctrinal and non-doctrinal research methods. The
researcher will primarily rely on the books, papers, journals, and other works of several authors, both
Indian and foreign, whose writings have made a significant contribution to the development of the law
regarding patent trolls and their regulation. In addition to this, the researcher will also use cases and
arbitral judgements to grasp the judicial perspective on patent trolling practises.

1. PATENT TROLLS
1.1. MEANING
Patent Trolls may loosely be defined as entities that own and enforce patents without practicing or
2
making the underlying patented inventions. The coining of the term patent trolls is generally
attributed to Peter Detkin, former Assistant Counsel of Intel. He explained patent trolls as under:
“companies that buy rather than create patents and then extract disproportionately high license fees
by threatening expensive litigation in the alternative.”3 It is crucial to infer the nature of patent trolls
from the behaviours that correspond to it because patent trolls are a difficult to define complex notion.
A patent troll has no intention of using or applying the patent. It would not be smart to label such a
circumstance as a troll based solely on actual practise, as a small inventor may have a patent but may
not have the funds to utilise it. For a patent to be considered a patent troll, the sole purpose of getting
it must be to acquire licencing rights and profit from them. Such licences are secured purely to compel
third parties to buy licences, not to use the patent to produce or market goods and technological
inventions. Patent trolls are a form of Non-Practicing Entities (NPEs). Many NPEs like universities,
research organizations, and individual innovators can often be misunderstood as trolls, however, they
not only intend to obtain patents but also to create a technology of value. Many small innovators do
not have sufficient resources to practice the patent, even if they wish to. Patent trolls are often labelled
as Patent Assertion Entities (PAEs), to distinguish them from other NPEs with different motives. 4
Persons or companies involved in patent trolls are opportunists, who buy or licence patents with the
sole attention of filing infringement suits, often with no intention to manufacture or market the
patented invention, but only to collect royalty or licensing fees.

2
Edward Lee, “Patent Trolls: Moral Panics, Motions in Limine, and Patent Reform”, Stanford. Tech. L. Rev (2015).
3
Jennifer Gregory, “The Troll Next Door”, 6 J. Marshall Rev. Intell Prop.L.(2007).
4
Noella Abraham, “Defending Innovations against Patent Trolls: Why India has an Upper Hand”, Excelon IP
(2018).

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1.2. CHARACTERISTICS
Several distinguishing characteristics help identify patent trolls, which are:

 Non-Practicing Entities: Patent trolls do not utilize their patents for practical purposes, such
as manufacturing products or offering services based on the patented technology.
 Portfolio Approach: Patent trolls amass a large number of patents across various industries or
technologies, creating an extensive patent portfolio to target potential infringers.
 Litigation as a Business Model: The primary business strategy of patent trolls revolves around
filing infringement lawsuits against alleged infringers, seeking monetary settlements or
licensing fees, rather than engaging in productive innovation or commercialization.
 Aggressive Assertion of Patents: Patent trolls are known for initiating multiple lawsuits, often
targeting small or medium-sized businesses that may lack the resources to engage in lengthy
legal battles.
 Lack of Innovation Contribution: Patent trolls do not contribute to the advancement of
technology or innovation as they focus solely on acquiring and enforcing patents.

1.3. IMPACT OF PATENT TROLLS

a) Inhibited Innovation and Research:
a) Diversion of Resources: Patent trolls impose financial burdens on companies through
litigation, which diverts resources away from research, development, and innovation.
b) Fear of Litigation: Businesses may hesitate to invest in innovative projects or
technologies due to the fear of potential patent infringement claims from trolls, stifling
innovation.
c) Disrupted Collaboration: Patent trolls' aggressive tactics can discourage collaboration
between companies, hindering the exchange of knowledge and hindering technological
advancements.
b) Economic Costs and Distortions:
a) Increased Legal Expenses: Companies targeted by patent trolls often face significant legal
expenses, including attorney fees, court costs, and potential damages or settlements,
leading to financial strain.
b) Reduced Competition: Small and medium-sized enterprises (SMEs) may lack the
financial resources to defend against patent infringement claims, leading to market
consolidation and reduced competition.
c) Market Entry Barriers: The fear of patent litigation can discourage new entrants,
particularly startups, from entering the market, limiting competition and potentially
hindering economic growth.

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 d) Decreased Consumer Welfare: Higher licensing fees or settlements resulting from patent
troll activities can lead to increased product prices, affecting consumer welfare and
purchasing power.
c) Legal Uncertainties and Inefficiencies:
a) Burden on Legal System: Patent trolls contribute to the overcrowding of courts with
frivolous lawsuits, leading to delays in resolving legitimate patent disputes and straining
judicial resources.
b) Exploitation of Weak Patents: Trolls often assert low-quality or overly broad patents,
taking advantage of weaknesses in the patent system and creating uncertainties about
patent validity and enforceability.
c) Jurisdiction Shopping: Patent trolls strategically choose jurisdictions with more favorable
patent litigation outcomes, leading to forum shopping and inconsistent rulings.
d) Defensive Strategies: Companies may adopt defensive measures, such as acquiring
patents solely for protection or engaging in cross-licensing agreements, diverting
resources from innovation and development.
d) Weakened Patent System:
a) Reduced Patent Quality: Patent trolls exploit weaknesses in the patent examination
process, taking advantage of low-quality or overly broad patents, which can diminish the
overall quality and validity of patents granted.
b) Undermined Patent Rights: The abusive tactics of patent trolls may lead to a negative
perception of patents and intellectual property rights, undermining the purpose and value
of the patent system.
c) Impaired Technology Transfer: Patent trolls can hinder technology transfer by creating
uncertainties and transaction costs associated with licensing or acquiring patents. 5

2. INDIAN LEGAL SAFEGAURDS

In two key ways, the Indian patent law is problematic for patent trolls. First, a patent troll has to
obtain patents in a particular technology field in order to licence or enforce. The acquisition procedure
will take some time because different people may have different patents. The troll must wait for the
technology to advance after the portfolio is formed before acting. The Patents Act compels a patent
holder to operate or utilise a patent in India, and in the event that they do not, a compulsory licence
may be awarded. As a result, this approach might not be feasible. The legislation mandates that a
statement of a patent's working must be filed at the conclusion of each fiscal year in order to track its
effectiveness.

5
Rajkumar, “The Effect of Patent Trolls on Innovations: A Multi – Jurisdictional Analysis”, Indian Journal of
Intellectual Property Law (2008).

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The law provides such a term of non-working prior to obtaining a compulsory licence, therefore in
this case, the patent troll will need to operate within a time limit of three (3) years to avoid a
compulsory licence. Therefore, it is necessary to finish the patent acquisition process and wait for
technology adaption to mature in three years. If not, the business plan will fall short. The three-year
window might be too brief for a patent troll to operate effectively. However, a troll may think about
other options, such licencing the patents to a single organisation, at least, to meet the working criteria.
To avoid any problems with competition legislation or other laws, the partnership might be
strategically arranged.6

Regarding the remedies, India will present a second challenge for patent trolls. Indian courts are not
often recognised for being pro-patent or for granting injunctions with ease. Additionally, even if the
case was won, the awarded damages might not be enough to keep the business model viable. It is
challenging for patent trolls to remain in business because of flaws in the enforcement system. Given
the obstacles, patent trolling may not be a profitable economic strategy.

The Patents Act of 1970 does not expressly forbid patent trolls, but numerous of the Act's provisions
make it possible to substantially reduce this issue. The following Act provisions can be considered a
barrier to the operation of patent trolls in India.

2.1. POST GRANT OPPOSITION

Patent trolls are constrained by the post-grant opposition provisions of the Patents Act of 1970. Any
interested party may submit a postgrant opposition within 12 months after the date of publication of
the grant of a patent on any of the reasons listed therein by providing a notice of opposition to the
Controller, as per Section 25(2) of the Patents Act. The Controller notifies the patentee of the
opposition after receiving the notice, and a board of opposition is established to investigate the
opposition and provide recommendations to the Controller. This clause ensures that a patent may be
challenged on the grounds listed in Section 25(2) of the Act even after it has been issued. 7

2.2. COMPULSARY LICENSE

The Patents Act of 1970 has regulations regarding mandatory licencing. The fundamental idea behind
the clause is that the patent holder has a legal duty to commercialise his innovation as quickly and
fully as is reasonably practical. A compulsory licence may be granted if the patentee fails to make his
innovation accessible to the public by manufacturing it himself or by issuing licences. A patent holder
in India gets three years from the date of patent grant to work on their idea before anyone with an
interest can apply to the Controller for the granting of a forced licence. It should be noted that section
83 of the Act deals with general principles that apply to the operation of patented inventions in this
context. Clause (a) is as follows8:
6
Kartik, “Patent Troll in India?”, Banana IP Counsels (2010).
7
Patents Act, 1970, § 25(2), Acts of Parliament, 1949 (India).
8
Patents Act, 1970, § 83, Acts of Parliament, 1949 (India).

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 (a) that patents are granted to encourage inventions and to secure that the inventions are
worked in India on a commercial scale and to the fullest extent that is reasonably practicable
without undue delay;

(b) that they are not granted merely to enable patentees to enjoy a monopoly for the
importation of the patented article

Additionally, under Section 1469, the Controller has the authority to issue a written notice to the
patentee or licensee requesting that they provide the Controller with the appropriate data on the extent
to which the patented invention has been used commercially in India. When the patentee or his licence
receives such notice, they have a certain amount of time to disclose information about how the
patented invention functions. Trolls who do not use their patents are thus discouraged by the system
of compulsory licencing and the requirement of working patents.

2.3. PATENT VALIDITY

In Bishwanath Prasad Radhey Shyam vs Hindustan Metal Industries 10 , the Supreme Court observed
as under:

“it is noteworthy that the grant and sealing of the patent, or the decision rendered by the
Controller in the case of opposition, does not guarantee the validity of the patent, which can
be challenged before the High Court on various grounds in revocation or infringement
proceedings.”

The Patent Act, 1970 under section 13(4) now expressly provides that the validity of a patent is not
guaranteed by the grant of a patent.

Section 13(4) reads:

The examination and investigations required under section 12 and this section shall not be
deemed in any way to warrant the validity of any patent, and no liability shall be incurred by
the Central Government or any officer thereof by reason of or in connection with any such
examination or investigation or any report or other proceedings consequent thereon.

The burden of establishing the validity of a patent in a lawsuit for patent infringement falls on the
patentee because there is no presumption as to its validity. This is probably going to deter trolls from
filing copyright claims against purported infringers.

2.4. INTELLECTUAL PROPERTY APPELLATE BOARD

In addition to ensuring the swift resolution of intellectual property issues and lowering the expense of
litigation, the existence of specialised Boards like the Intellectual Property Appellate Board (IPAB) is

9
Patents Act, 1970, § 146, Acts of Parliament, 1949 (India).
10
Biswanath Prasad Radhey Shyam v. Hindustan Metal Industries, AIR 1982 SC 1444.

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another important factor. As a result, smaller businesses that are the targets of patent trolls can defend
themselves without being concerned about the enormous cost of legal action.

3. SPICE MOBILE LTD. & SAMSUNG INDIA v. SOMASUNDAR RAMKUMAR

The respondent had received a patent with the number 214388 in 2008. The mobile phones covered
by the invention have multiple SIM cards that are assigned to various communication networks.

Spice Mobiles Ltd. and Samsung India are asking the IPAB to revoke the respondent's patent under
section 64(1) of the Patents Act of 1970 for the following reasons in the current case 11 before it:

3.1. CLAIM AMENDMENTS DURING PROSECUTION

The first ground for revocation before the IPAB was the applicant's extensive modifications to the
patent specification throughout the prosecution of the patent application. Legal counsel for the first
applicant contended that respondent No. 1 altered the patent application in such a way that the
invention's core features—a phone that supports simultaneous communication as opposed to a Dual
SIM card phone—as originally filed and granted have been completely changed.

According to the petitioners, the law controlling changes did not permit broadening or expanding the
disclosure or claims. The current situation's scope of protection and disclosure has altered due to the
incorporation of entirely new features that were never disclosed nor claimed in the original patent
specification. The applicants claim that this goes against sections 57 and 59 of the 1970 Patents Act.
Due to the substantial changes made throughout the prosecution, the number of claims expanded from
the original 4 to 20 at the time of grant. As a result, it was contended before the IPAB that the
revisions were unlawful because they were far more expansive than the original claims made by the
respondent and that they were obtained by fraud. The IPAB in setting aside the amendments to the
respondent’s patent made the following observation:

“We are convinced that the amendments carried out during the prosecution of the application
in the specification, drawings and claims extend the scope of the disclosed matter and the
claims, which is particularly prohibited by section 59. The applicants therefore succeeded in
proving that new matter has been added by Respondent No. 1 during prosecution of the
application which was allowed by Respondent 2. The Respondent 2 ought to have sought an
explanation from Respondent 1. Respondent 2 ought to have applied his discretion more
cautiously and judiciously under section 57 especially when there are large scale
amendments as in the present case. Therefore, we are constrained to set aside the
amendments allowed during prosecution of the application.”

11
Spice Mobile Ltd. & Samsung India V. Somasundar Ramkumar, ORA/31/2009/PT/CH.

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3.2. LACK OF NOVELTY
The applicants further disputed the respondent's grant of a patent on the grounds that the innovation
had already been made, hence there was no need for an original creation. The applicants provided the
IPAB with a list of examples of prior art that existed before the respondents were created. The IPAB
decided in favour of the applicants and found that the respondents' invention was anticipated by prior
art.

3.3. LACK OF INVENTIVE STEP

The final argument against the respondents' innovation was that it lacked a creative step. The validity
of a patent may be questioned on the basis of inventive step, as defined in section 2(1)(ja) of the
Patents Act, 1970, if the claimed invention does not represent a technological advance over prior art
or is obvious to a person of ordinary competence in the field. The applicants were successful in
demonstrating that the respondent's invention was obvious by using a number of prior art references.

The IPAB cancelled the respondent's patent on the basis of the aforementioned justifications.

CONCLUSION
One of the objectives of the patent law is to strike a balance between the rights of the patent holder
and his obligation to the society that bestows these rights. The underlying principle of the Act, as
stated in Section 83, is that patents ensure an invention's application on a commercial scale in India.
Furthermore, patents aren't merely granted to grant monopolies to patent holders over the importation
of the patented goods. A patent troll fiercely disagrees with this fundamental aim of patent law. The
threat of legal action that patent trolls have generated discourages innovators who, although being
visionaries, are unable to commercialise their technology and contribute positively to society.
However, measures like the operation of patents, obligatory licencing, post-grant opposition, and the
creation of a specialised organisation like the IPAB to deal with intellectual property concerns have
considerably lessened the threat posed by patent trolls.

REFERENCES
 Sitanshu Singh, “Practice of Patent Asserting Entities: Boon or Bane: Global Innovations”,
(2020).
 Raymond Bai, "Patent Laws: Advancing Innovation for the Public or Inflating Private
Profits?", (2015)

 Jennifer Gregory, “The Troll Next Door”, 6 J. Marshall Rev. Intell Prop.L.(2007).
 Edward Lee, “Patent Trolls: Moral Panics, Motions in Limine, and Patent Reform”, Stanford.
Tech. L. Rev (2015).

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  Noella Abraham, “Defending Innovations against Patent Trolls: Why India has an Upper
Hand”, Excelon IP (2018).
 Rajkumar, “The Effect of Patent Trolls on Innovations: A Multi – Jurisdictional Analysis”,
Indian Journal of Intellectual Property Law (2008).

 Kartik, “Patent Troll in India?”, Banana IP Counsels (2010).

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