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ABSTRACT
A patent is a monopoly right giving exclusive commercial use of an invention for a specified time period.
Patents have benefits and drawbacks.
Patents are legal documents that give inventors the exclusive right to a product design or idea. With a
patent, companies can protect product designs they've worked on, using the legal system. While many
companies take out patents on their work -- often years before they actually release products -- the patent
system has its downside as well. This is especially true for companies that are first entering a market, or
don't have significant assets to invest in protecting their patents.
Before applying for a patent it is important to decide whether a particular innovation should be protected
by a patent or retained as a trade secret. An invention can not have patent protection and be kept secret.
Part of the patent process is publishing a complete description of the invention.
Patent Scenario in Indian is similar to European Patent Law where according to Article 52(4) of the EPC,
in-vitro diagnostic methods are found to be patentable. However the exact scope of such exclusion is not
clearly defined at the moment due to the lack of the interpretation of the Courts unlike in Europe where
the extent of the auspices of patentable subject matter is litigated a large number of times in Courts. Under
US Patent Law, all medical methods including Diagnostic Methods are patentable.

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1. INTRODUCTION
A patent is a monopoly right giving exclusive commercial use of an invention for a specified time period.
Patents have benefits and drawbacks.
Patents are legal documents that give inventors the exclusive right to a product design or idea. With a
patent, companies can protect product designs they've worked on, using the legal system. While many
companies take out patents on their work -- often years before they actually release products -- the patent
system has its downside as well. This is especially true for companies that are first entering a market, or
don't have significant assets to invest in protecting their patents.

Patents apply to inventions and processes and cannot protect logos or concepts. The type of inventions that
can be patented is large and includes the following:
A new product
A new process of manufacturing
An improvement to an existing product or process
A new method or process relating to the testing or control of an existing manufacturing process
Improvements in computer technology
New chemical compounds or compositions
To qualify for a patent, an invention must meet certain criteria relating to novelty, inventiveness and
utility. In short, it must be new. It should also have an industrial application and contain an inventive step
that is non-obvious.
1.1 PATENT OR TRADE SECRET
Before applying for a patent it is important to decide whether a particular innovation should be protected
by a patent or retained as a trade secret. An invention can not have patent protection and be kept secret.
Part of the patent process is publishing a complete description of the invention.
For example, if a food processor invents a new low cost, energy efficient refrigeration process for freezing
vegetables they have to decide whether to patent the process or keep it secret. Patenting it will give them a
window of opportunity to decrease costs relative to competitors and they can either pass this on to
customers in the hope of increasing market share or create a higher margin on goods to increase profits.
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Alternatively, the company could choose to keep the new process a trade secret. By doing so the process
would have no legal protection but the company could extend their competitive advantage for longer than
the patent period, e.g. 20 years, providing the new process remains secret. By keeping the process secret
the company runs the risk of a competing company discovering the same process which they could then
patent and have exclusive rights over. This could mean that the original inventors may not be able to use
the process without buying the patent or license to use it from the competing company.
An inventor may also choose not to patent a process but focus resources on marketing the invention while
continuing to refine it to stay ahead of competitors.
1.2 ADVANTAGES AND DISADVANTAGES OF PATENTS
Benefits gained by patent protection include:
The patent holder has exclusive commercial rights to use and license the invention.
Legal action can be taken against anyone who tries to use the invention without the patent holders
consent.
The existence of the patent may be enough to deter would-be infringers.
The patent can be sold.
Drawbacks of patent protection include:
A full description of the invention is published and can be viewed by anyone applying to the
appropriate patent administration office.
After the exclusive patent period other people or businesses can freely use the invention without
needing permission from or making a payment to the inventor.
The cost of the patent may out-weigh the financial advantages of the invention.
Inventors may choose to capitalise on inventions that could benefit the wider public, such as a new
low carbon emitting energy source, rather than allowing the inventions to be used widely.
1.3 BUYING AND SELLING PATENTS
A patent is a business asset that can be bought, sold, transferred or licensed like most other property. They
can be sold at any time during the specified exclusivity period. Some inventors do not actually
manufacture their patented inventions but rather trade and profit from licensing their patents to others. For
example, a person could enjoy inventing new machinery but not have the resources or interest in
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manufacturing the products for sale to the public. Benefit can still be gained from their inventions by
selling or licensing the new machinery to others to manufacture.
On the other hand, a business may not have the expertise or resources to create inventions and are willing
to purchase inventions from inventors. Buying a patent or the license to use a patented innovation may be
more cost effective for some companies than running a research and development department.

1.4 COMPETITIVE ADVANTAGE
When it has a patent, a business has a legal right to stop any competitors from copying its patented idea or
product. This means that the business holding the patent is the only one that can use the patented idea. If
the idea sells well with customers, the original business can corner the market and use the patented idea to
produce profits.
1.5 RESEARCH TIME
Patents last for a specific amount of time, and usually for at least several years. Businesses are able to
renew some types of patents for even longer. This space of time before competitors can start copying the
patent gives the original business time to analyze its own idea, make improvements, and add new features
(which can also be patented). This provides a competitive advantage even when the patent runs out.

1.6 EXTRA PROFIT
A patent gives a business the ability to make extra profit in several different ways. The patent acts as an
asset for the business, and like other assets it can be sold to produce extra profit. Business can license out
or sell their patent ideas to other companies.
1.7 FIRST MOVER ISSUES
One disadvantage of a patent is that patent-holding companies are often first movers, or the first ones to
enter or create a market with a new idea. The first mover position has many disadvantages. The business
must deal with customer needs and concerns that no one has encountered before. Competitors, meanwhile,
can watch the pioneering business and learn from its potentially costly mistakes.
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1.8 COMPETITOR PRODUCT CREATION
Patents only partially protect a product idea. Competitors who see a successful product can often copy it
just enough to avoid a patent infringement lawsuit by producing a similar version, but using different
materials and designs. This makes the patent essentially useless, especially if competitor products prove
better than the originals.
1.9 TIME ISSUES
A company that holds a patent must be willing to defend it. It must investigate competitor products and
be willing to spend the time and money to bring competitors to court over patent violations. Businesses
may not have the time to spend defending the patent in this way.
1.10 OVERVIEW OF PATENT OFFICES WORLDWIDE AND THE TRILATERAL OFFICES

The European Patent Office (EPO)
The "big three"-the European Patent Office, the United States Patents and Trademarks Office and the
Japan Patent Office (known collectively as the Trilateral Offices)-have dominated the global patent
landscape in the past, other offices in rapidly growing economies such as India and China are catching up.
These three offices set up the Trilateral Offices 25 years ago to debate common concerns. EPO established
in 1977 by the European Patent Convention (EPC) to create a centralized patent application and grant
system on behalf of all member states. At present EPC has effect in more than 30 European nations
including all European Union member states. At the end of 2006, the EPO had 6,500 staff members, with
approximately 3,500 examiners. The number of filings increased from 1, 81,000 in 2004 to approximately
2, 80, 000 in 2006.

United States Patents and Trademarks Office (USPTO)
USPTO was established to promote the progress of science and useful Arts, by securing for limited period
to authors and inventors the exclusive right to their respective writings and discoveries. It is the largest
Patent Office in the world, having around 7, 300 employees. Of these, about 3,000 are patent examiners
and 400 are trademark examining attorneys, with the rest is support staff. The total number of applications
increased from 2, 50,000 in year 2000 to over 4, 00,000 in the year 2006.

Japan Patent Office (JPO)
Since 2002, the Japanese government intensified its efforts towards the realization of a "Nation Built on
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Intellectual Property". The JPO, a Federal agency has 2,651 staff which includes 1,358 examiners and
approximate annual budget estimated at EUR 800 million. The annual number of patent applications filed
in Japan remained steady at more than 4,00,000 since 1998. Korea, China and India are the leaders among
the other developing nations in filing and granting patents.

IP Australia
IP Australia is the Australian Government agency responsible for administering patents, trade marks,
designs and Plant Breeder's Rights. By granting these rights, and contributing to the improvement of
Australian and international IP systems. IP Australia is supporting Australia's economic development. IP
Australia incorporates the Patent, Designs, Trade Marks and Plant Breeder's Rights (PBR) Offices. It is a
prescribed agency within the Department of Innovation, Industry, Science and Research (DIISR) but
operates independently and reports directly to the Minister. The list of regulatory and advisory bodies
under IP Australia are of the following : Advisory Council on Intellectual Property (ACIP), Intellectual
Property and Competition Review Committee, Professional Standards Board for Patent and Trade Marks
Attorneys, Patent and Trade Marks Attorneys Disciplinary Tribunal, Disputes with agents or legal
representatives, The Plant Breeder's Rights Advisory Committee.

Korean Intellectual Property Office (KIPO)
The KIPO has a staff of 1,517, which includes 728 patent examiners. The Korean office has no official
backlog and has even reduced times for patent examinations. In 2004, KIPO examined roughly 1,60,000
patents, and outsourced half of them. Korean firms such as Samsung and LG are among those with the
most patent applications to the EPO.

Indian Patent Office (IPO)
The major growth reported from the country's IT and services sectors. The Indian Patent Office has
approximate staff strength of 200 with 135 examiners. In 2005, Indian Patent Office examined
approximately 14,500 patent applications. There are number of pilot projects between the USPTO, JPO,
KIPO and Canadian, UK Patent Offices. In this list, the USPTO and the EPO have decided to speed up
patent-granting process at two offices by launching a project similar to a Patent Prosecution Highway
(PPH). It is the first PPH--type project that the EPO has taken part in. A new Global IP Index developed
by law firm Taylor Wessing in association with Z/Yen Limited, with the support of Managing IP rates
UK, US and Germany as the top three major three jurisdictions in the world for IP protection, while China
is ranked bottom. Among the best-rated countries, the UK is rated top except in copyright, where it is
beaten by the US. The US is rated only 6th out of the 22 countries for trademarks. The Index gives each of
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the 22 jurisdictions a rating of 1,000 in three sub-categories of patents, trademarks and copyright. Each
jurisdiction receives an overall IP rating which places it in one of tiers. Despite the UK and Germany are
in tier 1 and the Netherlands, France in tier 2, Poland and Italy in tier 4. The highest ranked Asian country
is Singapore, which appears in tier 2 and Japan in tier 3. The so-called developing BRIC markets, Brazil,
Russia, India and China make up tier 5 in all three sub-categories and the main index. China is ranked
bottom in each one.

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2. PATENT SYSTEM OF INDIA
2.1 INTELLECTUAL PROPERTY RIGHTS
Intellectual Property Rights are statutory rights once granted allows the creator(s) or owner(s) of the
intellectual property to exclude others from exploiting the same commercially for a given period of time.
It allows the creator(s)/owner(s) to have the benefits from their work when these are exploited
commercially. IPR are granted to an inventor or creator, designer in lieu of the discloser of his/her
knowledge.
Governing Laws in India for IPR as follows:
1. Patent Act 1970
2. Trade Marks Act (1958 original) 1999
3. The Copyright Act 1957
4. The design Act 2000
5. Geographical Indication of Goods (Registration and Protection) Act 1999
6. Plant Variety and Farmers Right Protection Act 2001

2.2 INVENTION/INNOVATION
An invention means: a new product or process involving an inventive step and capable of industrial
application. An Innovation means: The successful exploitation of new ideas in the form of a useful
machinery or process, by any person, using own intellect is called as innovation. Every innovation may
not be patentable invention but every invention is an innovation. All the inventions are the innovations and
are patentable, but all the innovations are not the patentable inventions.
The Patent System
A patent is a contract between the inventor or applicant for the patent and the State, whereby the inventor
or applicant gets a monopoly from the State for a certain period in return for disclosing full details of the
invention. The patent system thus ensures that information on new inventions is made available for
eventual public use so as to encourage technical and economic development and discourage secrecy. If an
inventor or company has an invention, which they consider to be novel and inventive, they may apply for
a patent. This may be granted only after a detailed examination by a patent office. Once the patent is
granted the inventor or applicant has the sole right to make, use or sell the invention for a limited period.
This period is usually twenty years.
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There can also be confusion about what exactly can be protected by the patent system. Patents can
only be applied to inventions. These usually have an industrial dimension. An invention is normally a
new product, which involves a new principle of operation or an improvement to an old principle.
Alternatively it may refer to a new or improved industrial process. Things, which do not involve
manufacture, are not usually considered to be inventions. For example, a new scientific theory or a
new surgical procedure would not be considered to be patentable for this reason.
Novelty and Inventiveness
In order to be suitable for patenting, an invention must be novel and inventive. An invention is
considered to be novel if it has not been disclosed to the public at the time that the patent application
was made. As long as the date of the patent application precedes any disclosure of details of the
invention to the public, the invention can be validly patented. If however, details of the invention have
been disclosed to the public before applying for a patent, then the invention is no longer considered to
be novel in a patenting sense and it will not be possible to protect it validly through the patent system.
It is important to be aware of the danger of premature disclosure of details of an invention. Even after
a patent application has been filed, details of the invention should only be disclosed as part of a
planned programme of commercial exploitation.
Another requirement for a valid patent is inventiveness. This means that the invention must contain an
inventive step. This can be the most difficult thing to show. A patent examiner may decide that the
invention is obvious i.e. that somebody knowledgeable in the subject area, when familiarised with all
earlier patents or other technology in the area, would have immediately been led to the same
conclusion.
Commercialization of Inventions
Many inventors feel that filing a patent application is the most important and first thing they must do
once they have an idea. This is rarely the case. Patenting an invention is not the only consideration and
rushing to file an application may actually be the wrong thing to do first.
Patents are of no value unless the commercial worth of the product or technology can be demonstrated
and exploited. Many patentable inventions have failed not because they didn't work, or because they
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had been invented before, but because the inventor was unable to exploit them commercially.
Inventing is increasingly being seen as a business. You must invest in the business if you wish to make
a return, and management and marketing skills are every bit as important as technical skills. If the
inventor does not have all the skills required, it may be necessary to put together a team or partnership
to exploit the project or to license the invention to an existing company who already has related
products. If one does successfully commercialise an invention however the rewards can be substantial.
A number of successful companies' world over own patents, which protect them against, copied
products home or imported. This is an important factor in present day international trade. Most other
traditionally used barriers to trade are being removed in the interests of fair competition. Patents are
one of the few mechanisms that companies can legally use to protect their market share. Having
foreign patents also allows Irish companies to protect their products in export markets.
Where a product is unsuitable for export because of distance, cost or other factors, a licensing strategy
can be used. The Indian company can use the patents to license the manufacturing/marketing rights for
their invention to a foreign manufacturer. In return they receive a royalty, which increases their profits.
Licensing for both the home and export markets to Indian and/or foreign companies is also the
appropriate strategy for inventions made by non-manufacturing companies or by universities and
colleges.
To succeed, an inventor does not have to have a great deal of business or technical expertise. He/she
must however adopt a businesslike approach to the project. The first thing is to realise that there are
several stages in the inventive process. It is vital to realise what stage one is at and what one needs to
do next.
The stages of development of a successful invention are:
Identification of a problem that needs to be solved.
Inventing a solution to the problem, which works.
Developing a prototype or being able to demonstrate the invention to prove how it works.
Filing a patent application to protect the invention so that it can be disclosed to other people.
Arranging the manufacturing and marketing of the invention either through one's own company or
through licensing.
Each stage requires its own particular expertise and resources. It is essential that the early stages are
satisfactorily completed before moving on. Experience shows that taking short cuts does not pay. For
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example, it is hard to get investors or potential licensees to appreciate the benefits of a particular
invention if the prototype is very crude and does not work properly. Similarly there is little point in
filing a patent application until one is satisfied that the invention can be shown to work. There can be
some overlap between the last two stages however. If it is possible to make some progress with
manufacturing and marketing without compromising the patent position, then one should do this. As
mentioned elsewhere, very often the later one files the patent application the better.

Disclosing an Invention
Details of an invention should not be disclosed to outsiders until such time as a patent application has
been filed. However, many people make the mistake of filing patent applications too early. Because
they are afraid that somebody else may invent the same thing, they file an application as quickly as
possible without having any clear plan as to what they are going to do next. They then find that many
months pass before they are in a position to commercially exploit the invention, and they have not left
enough time to obtain the necessary finance to cover international patent filings. In general, it is better
to complete the development of the invention and file the patent application when it becomes
necessary to make disclosures as part of a planned programme of commercial exploitation. If it is
necessary to talk to technical specialists or others in order to obtain assistance during the development
of the invention, this should be done on the basis of confidentiality. People should be informed that the
information is strictly confidential and asked to sign a simple document undertaking not to disclose the
information until given permission to do so.
Adopting a proper commercialisation strategy involves considering all aspects at the same time,
technical, commercial and legal. At the initial stages proper attention should be given to the technical
aspects, but once the patent application is filed, the commercialisation should proceed as quickly as
possible within the limited time scale provided by the patent system. Once an application has been
filed in Ireland, applications in other countries must be made within twelve months if the best
protection is to be obtained. As is explained below, an international patent programme can be a very
expensive business. Funding for it from either private or public sources is unlikely to be obtained
unless there are definite commercial plans for the invention which are well advanced. Setting up ones
own manufacturing company or identifying potential licensees and reaching agreement with them can
take time. A period of longer than twelve months is usually required to complete either of these
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activities. Thus if one has filed ones patent application too early one will inevitably run into financial
difficulties in trying to keep it going.
Another reason why it can be a mistake to file too early is that development of the invention may not
be completed. Designs may change during development or other inventive features may be introduced.
If the patent specification has been drafted too early it may not be possible to amend it to reflect the
changes made. One can end up with a patent, which does not really cover the final commercial
product.
Academic Research
People carrying out academic research are frequently under pressure to publish the results of their
research for academic reasons. Researchers should, at all times, bear in mind the possibility of
commercial results from their research. If a researcher sees a commercial application from his or her
research, it would be wise to delay publication until a patent application has been filed.
Applying for a Patent
The first step that people usually take in applying for a patent is to file a preliminary application in one
country. When the application is filed, the date of application is recorded and this is called the
"priority date". The first application can be quite basic and does not have to include a set of claims (see
below). It is still an important document and specialist advice from a patent agent should be obtained
in preparing it.
Most countries are signatories to an international convention, which guarantees that the priority date of
an invention filed in one country will be respected in other countries, provided an application is filed
in the other countries within twelve months of the date of filing the first application. This is why the
first document filed can be very important later.
The system of filing an application in one country initially can be of great benefit to inventors
provided they have timed it correctly. It allows up to twelve months before foreign applications must
be filed. During this time the inventor can assess the commercial prospects of the invention, carry out
improvements on it, and arrange the necessary finance for international patenting and commercial
exploitation through manufacture and sale. This period is also used to assess the market potential for
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the invention in various countries and to decide in which countries the expense of patenting is
justified. Note though the comments earlier about the dangers of underestimating the time it takes to
do these things and the dangers of filing too early.
2.3 PATENT SPECIFICATIONS
The patent system is complex, and great skill is required in reducing the principle of an invention to
words, which will have legal effect. Patent agents have detailed knowledge of the complex procedures
in the various foreign patent systems and work with other patent agents throughout the world to obtain
patent protection for an invention in different countries.
A patent specification is written in a certain format, which may not be immediately obvious to the
casual reader. The specification usually contains a preamble, which describes the background to the
invention. Then comes a statement of invention, which is a legal statement of the scope of the
monopoly sought. This is followed by a detailed description of the invention, usually drawings or
examples of how the invention is carried out. The final part of the specification includes a set of
claims. These are not normally required in the preliminary application but are a vital part of the final
document. A claim in this sense has nothing to do with the conventional use of the word, and does not
relate to the advantages or performance of the invention. A patent claim is where the patent agent sets
out the scope or extent of the monopoly, which he claims on behalf of the inventor. In other words,
one is claiming a territory of technology within which other people may not stray without infringing
the patent. The scope of the patent is very important. One can imagine that a patent for a completely
new type of engine would have a very broad scope whereas a patent for an improvement in one
component of that engine might be quite limited in scope.
Examination
When patent specifications have been filed in the various countries the patent examiners in those
countries examine them. These examiners carry out a search through previous patent specifications
and other literature in order to ascertain if the invention is novel. They also look at the question of
inventiveness in relation to the "prior art". As a result of the patent search, an examiner may feel that
certain features of the invention have already been disclosed in previous specifications.
Correspondence then ensues between the patent examiner and the patent agent until the examiner is
satisfied that the claims for the patent are allowable. This can often mean an amendment or narrowing
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of the scope of the patent claims until the Patent Office in question is satisfied that it does not overlap
the "territory of technology" claimed by previous inventors. This stage of the patenting procedure is
called "prosecution" and can involve the inventor or applicant in considerable expense depending on
the amount of work required to be done by the patent agent. As part of the patent examination
procedure, the specification filed by the applicant is published, usually eighteen months after the
priority date. The Patent Office also publishes a list of previous patents, which were found to be of
relevance in the patent search. Thus, even if an inventor has not disclosed the invention in any way up
to this point, the patent system itself will make a disclosure and destroy its novelty at this time. It is for
this reason that inventions once disclosed cannot be the subject of subsequent patent applications
either by the inventor or by anybody else.
When the Patent Office has satisfied itself concerning the scope of the claims, which are to be granted,
notice of allowance of the patent will be issued and the patent will be granted. In some countries (not
in Ireland) there is a period however during which interested parties may oppose the granting of the
patent by lodging their grounds for opposition with the Patent Office. If no one is successful in
opposing the grant of the patent, the Letters Patent Document is issued and the patent comes into
force.
Infringement
If anybody attempts to make, use, or sell an invention, which is covered by a patent which is in force
in a certain country, he or she may be sued in that country for infringement by the patentee. If
infringement is proved, damages may be awarded to the owner of the patent. Patent litigation is
notoriously expensive, and is not entered into lightly. The greater the commercial potential of an
invention, the higher is the chance that the patent will be infringed or contested. The fact that a patent
is granted does not automatically mean that the inventor is given full protection. A granted patent can
in certain circumstances be invalid because certain information did not come to the attention of the
patent examiner during the course of the examination. This could show, for example, that the
invention was not in fact novel. A court decision may ultimately be needed before the inventor finds
out whether he is protected or not.

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2.4 PATENTABILITY - IN INDIAN SCENARIO

Two factors are the essential ingredients for an Invention an inventive step and capability of
Industrial applicability as defined under Indian patent Act.
There are a few conditions which need to be met to consider an invention as patentable:
1. Inventiveness
2. Novelty
3. And usefulness

Inventiveness
An inventive step should be involved in the proposed invention means that the invention is not
obvious to a person skilled in that domain. The prior art (already available knowledge) should not
point towards the invention. The simplicity of the inventive step does not have any bearing on the
grant of any patent.

Novelty that is quite simple

Before discussing what is novelty, one should know what is prior art. The prior art is everything that
has been published, presented or otherwise disclosed in any manner to the public. It includes, the
documents published in any language or country in any format. A novel invention is that which has
not been disclosed in the prior art.

Usefulness One of the most ignored criteria
Theoretically no patent will be granted if its of no use to the public at large.

Now let us look into the patentable and non patentable inventions in India:
The following types of inventions are patentable in India:
A) Art , Process or method of Manufacture
B) Machine, apparatus or substances produced by manufacture which includes any new and useful
improvements to prior art

The following types of inventions are NOT patentable in India:
1. Inventions contrary to well established natural laws
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2. Inventions contrary to morality or law or public health
3. Mere discovery of a scientific principle
4. Mere discovery of new property/use of existing substances/process
5. A substance obtained by mere admixture
6. Mere arrangement/rearrangement of known devices
7. A method or process of testing
8. A method of agriculture or horticulture
9. Any process for medical treatments
10. Inventions relating to atomic energy
2.5 LICENSING OF PATENTS
The objective of licensing a patent is to evidence the application of the technology and benefits by
reducing human efforts and solving a problem and there by monetizing the invention. In the recent
years the Indian market has evidenced a paradigm shift in terms of the companies and institutions
openness in licensing a patent.
From the technological market point of view; a company or an institution would be in a dilemma
whether to commercialize (license or sell) a patent or not. It is a tricky situation since the revenue
generation by application of it would be at stake or the patent could be used along with other patents to
bring out a new technology.
It is quite possible that technologies with shorter innovation cycles could get commercialized
aggressively and the technologies with longer innovation cycles could go for a moderate
commercializing pattern. In most cases the invention will be held within the firm to maintain the
unique selling proposition and differentiation from other products in the market.
Looking at the parameters influencing the Patent Licensing process; the parameters could be internal
or external to an organization. Broadly classifying the parameters as catalysts and barriers of licensing;
the factors that influence are listed below:
Catalysts to Patent Licensing
Revenue Generation and business model developments.
Scope for further efforts in development of technology on the subject
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Government regulations and policy changes with respect to a particular industry
Trade policy changes between nations
Barriers to Licensing
Market Uncertainty
Government policies and regulations
Uncertainty and risks involved in licensing a patent; where further developments would bypass the
existing patents.
Practicalities of developing a business model around the life cycle of the technology.
In the Indian scenario the telecom sector is much open for innovation and investments; hence naturally
the technological developments are much aggressive, faster and advances. Whereas in the Railway
transportation sector the organization is closed for investments; naturally a barrier to technological
growth and implementation.

2.6 LACK OF INTEREST
The number of patents filed by Indian companies in 2011 stood at 37,000; a meager increase from the
34,000 applications filed in 2010. The total number of patents for trademarks stood at 1.7 lakh, and the
growth for the number of patents filed is an impressive 11 percent.
According to Bindu Sharma, Patent Attorney, Origiin IP Solutions, The prime reason because of
which India is lagging behind when it comes to filing patent application is the lack of IP awareness;
we still believe in sharing knowledge without money. The time-line to get a patent in India is too long,
as thousands of applications are still pending which is another reason that discourages patent filing.
The time required for getting a patent in India is around 36 to 48 months; while in U.S. it is a
minimum of 22 months and can go upto 45 months; and in France the minimum waiting time is 22
months.
Sharma also says, The enforcement of law is very poor and there are a lot of challenges in
commercialization of the invention, as Government policies are not very conducive.
However, a patent would enforce a startup against its competitors, prevent the theft of intellectual
property by others, and the most important generate licensing revenue. Having received a patent or a
having one pending would enable a startup to attract investors as they would expect the startup to be of
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some value before putting in their money. A patent would help a startup to deter patent infringement
lawsuits and increase leverage over the partners.
The emergence of India in the field of filing patents has been raised highlighted by Pari Natarajan,
CEO, Zinnov Management, who stated that India is actively contributing to the development of new
products and it becomes imperative to evaluate the state of innovation and intellectual property in
India. It is essential to bring all the constituents of the ecosystem to a common platform, which can be
done by the creation of an independent institutional entity to cater to the IP related needs of the Indian
industries.
China is targeting to file two million patents, annually by 2015, which would make it difficult for other
countries to catch up with it. Patents are a powerful economic weapon for any country and with China,
U.S., and Japan taking the top three positions; it would be tough for India to emerge as a superpower.
But the scenario is not that bad as it seems. Praveen Bhadada, Director, Zinnov Management
Consulting says, The ecosystem is maturing and there are a lot of startups coming up, MNCs are
becoming more innovative and the number of PHDs has gone up significantly, which is contributing to
the increase in the number of patents filed in India. Though the number of patents filed is less as
compared to the other nations, still there is an increase by around 30-35 percent, which is a good sign.
The Indian market has become a key focus area and the companies are able to scale up rapidly, which
can be attributed to the large number of VC investments. There is a growing respect for IP by the
startups and that clubbed with the growing interest from VCs is helping the patent scenario evolve.
In order to bring India at par with the other countries, the university curriculum has to be aligned with
the industry requirements and the entrepreneurial activity has to be encouraged. The good news is that
India is a good testing field, the startup activities have increased significantly, new IITs, IIMs and IP
Protection institutes are coming up, which would help to strengthen the IP base in India. Thus, there
has to be a proper backing by the government in making the people aware of the benefits of filing
patents, and setting up of more institutions, which would cut down the patent-pending time. These
would ensure that India not only jumps on the track with more patents, but also leads the other
countries.

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3. PATENT WARS AND THE INDIAN SCENARIO
THE past few months have been quite important for developments in the patents front. Most of the
action has come from the US, with the US Supreme Court giving two important judgements on the
scope and reach of patents. On the software front, Microsoft has started what was on the cards for
quite some time a threat of patents war. It has claimed that the Free and Open Source Software
(FOSS) community has breached 235 of its patents, a claim that Fortune magazine called as
Microsofts declaration of war against the Free World! All in all, it shows that the patents regime is
changing even in the US, which had hitherto considered almost everything as patentable, even Yoga
asanas. Obviously, the crisis of the patents system, which we have been talking about for some time, is
now beginning to catch up even in the homeland of global capital.
This brings us to the second issue we need to address. The now discredited Mashelkar Committees
report talked about incremental versus breakthrough innovations and also on what is not TRIPS
compliant in terms of patentability. In this, they provided little argument or evidence to substantiate
their belief that making only New Chemical Entities patentable would not be TRIPS compliant. The
recent US Supreme Court judgement focuses its attention on when does incremental innovation
becomes patentable and shows that Masheklar Committee did not apply its mind on the issue.
3.1 US SUPREME COURT VERDICTS
Let us take the US Supreme Court judgements first. One was on the global reach of US patents. The
US Supreme Court has rightly held that US patent regime does not extend beyond the US. This was
the Microsoft Vs AT&T case, in which AT&T had sued Microsoft for violating its US patents while
shipping software to other countries. The second is KSR vs Teleflex case and involved whether
combining two elements in this case a gas pedal and an electronic sensor passes the test of non-
obviousness. The Supreme Court ruled that combining two elements, which are independent
innovations, if obvious to a skilled practitioner of the art, couldnt be patented. In this, they overturned
the judgement of the Court of Appeals for the Federal Circuit (CAFC), the specialised Federal Court
Bench that oversees all patent case appeals in the US. The CFAC had set up some tests of non-
obviousness, in which it was not enough to show that the patent claim was obvious, but it had also to
be shown in writing that people had suggested or taught about it earlier. The US Supreme Court held
20
that this test should not be followed rigidly, but should be flexible enough to take into account
common sense.
This brings us to an important issue. The US system of patents did not change over the years by
changing its patents law. The three major changes that came about in the patenting system in the US
patenting life forms, software and business methods all came from the way either the law was
interpreted by courts or the way law was administered by the US patents office. This also shows that in
India too, the threat of patenting everything could come not from the law in which we have now
introduced various limitations, but the patents office and from courts interpreting the law. And lest we
think that this is not an immediate threat, let me share what a project done by some of our colleagues
has accidentally uncovered. The Indian Patents Office has granted a patent for a broom or the lowly
jhadoo! From the claims, it does nothing more than any other jhadoo does. It appears that if we are not
careful, the Indian Patents Office, now being trained by experts from the European Patents office and
elsewhere, will give us a world class patents system in which we will have the same problems that
now exist in the developed world.
In the developed countries, the belief that having lost their manufacturing base, they need to protect
their economic interests by strengthening Intellectual Property Rights has made the patents system
there dysfunctional. The scope of patenting was increased by allowing software and life form patents;
even methods of doing business are now patentable. This has resulted in a rush to patent any and
everything under the sun, and a spate of law suits. For bigger companies, the threat has been less. Each
have a patent pool and this can be used to negotiate a mutual truce of not suing each other. These are
called cross-licensing agreements. The smaller companies, threatened by big companies quite often
pay up even if they know the claim is bogus. The cost of going to war with big guys with deep pockets
effectively allows an extortion racket to be played by those with large patent holdings.
3.2 SOFTWARE PATENTS
The software patents in the US started when a patent, in which software was used in conjunction with
hardware to vulcanise rubber. This 1982 decision of the US Supreme Court was broadened in the 90s
to allow stand-alone software also to be patented and subsequently included business method patenting
also.
21
Unlike other areas, software patents not only has the problem of creating a monopoly, but also the
completely uncertain nature of the monopoly. The patent system arose from allowing inventors a
limited time monopoly in lieu of public disclosure. The invention was supposed to be an artefact and
the patent offices initially required models of the invention to be submitted along with the written
description. Patents were therefore for ideas converted to tangible form. Software patents, unlike other
areas, are patents for ideas without a tangible form. The code is not what is patented but the idea
behind the code. Going though any software patents makes clear the difficulty in understanding what
is being claimed neither the nature nor the extent of the claim can be defined concretely when it
comes to ideas.
The key argument against software patents has been that it is equivalent to patenting algorithms. A
computer program is nothing but a sequence of instructions to a machine. This sequence of
instructions is therefore an algorithm for solving specific problems. As laws of nature and algorithms
cannot be patented, therefore software unless it is specifically embodied in hardware and is only a
component of a larger invention cannot be patented. This is the position in law in most countries
including the US. Unfortunately, the US Federal Court effectively de-railed the patent regime by
allowing software patents, even without any hardware.
Initially, the software companies were quite happy with the changed patents regime. The older players
like IBM had a large body of patents that it could and did exploit. The system of big players living
ever happily after in an oligopoly, the rule of the few, could have continued in this way. There were
many reasons why this scenario changed. The most significant was the birth of the Free Software
Movement, which showed that good quality software could emerge by people working together in a
collaborative way without claiming special proprietary rights. In fact, the GPL license was explicitly
designed in a way that nobody could privatise what the software community was jointly creating. With
the power of Microsoft growing, increasingly other software companies found the answer to
Microsofts portfolio not in products within their fold but in the Gnu/Linux community. It was no
longer possible to fight the Microsoft behemoth without taking the support of the Free and Open
Source Software (FOSS) community. Today, all the major companies in the world have Gnu/Linux
powering their business in some way, either in their Internet servers or in the data centres. Even if the
desktop market has remained largely with Microsoft, the server market has been largely taken over by
Gnu/Linux. This meant that if Microsoft declares war on Gnu/Linux, they also would need to attack
the most powerful companies in the world. This is why their declaration of war claiming that 235 of
their patents are being violated by the FOSS community has not gone down well in the business world.
22
It is no longer a war against just the FOSS community. The collateral damage will engulf the rest of
the world too. That is why Fortune, generally a mouthpiece of big business, was so unsympathetic to
Microsofts claims. The bigger gain from all this is the general realisation in software companies that
they need to move away from software patents and their willingness to work together with the free
software community for these objectives.
3.3 INDIAN SITUATION
Let us get back to India. As far as software patents are concerned, we are as well protected in law as
much as currently TRIPS allows. Software per se cannot be patented and we have explicit provisions
against patenting of algorithms and business methods. Certainly, we have a strong position in law for
preventing software patents. However, the patent office has also to accept that this is the position in
law and not grant such patents. There was a small window of time, in which software patents could
have been considered valid that between the Patent Amendment Ordinance allowing some forms of
software patents and passing of the amendments in parliament, when this clause was modified. A
number of software patents were filed before and during this window. The patents office should now
reject all such applications. A number of companies have continued to file business method and
software patents in spite of an adverse position in law. The patent office must reject all such patents.
We should also keep an oversight of all such cases so that software patenting does not arrive from the
backdoor, particularly when it is fading out elsewhere!
The other issue is Mashelkars claim regarding incremental innovation versus breakthrough
innovation, and how it is in Indias national interest to have incremental innovation to be patentable,
not only breakthrough innovations. It is in this light the argument of not restricting patentability to just
New Chemical Entities but also to others was presented. We have already argued that Mashelkars
brief was to only examine whether restricting patents in pharmaceuticals to New Chemical Entities
would violate TRIPs. Instead of examining this question, he took up the question of what is in Indias
national interest, which was not within his scope.
However, let us take up the Mashelkars argument regarding incremental innovation versus
breakthrough innovation. The Patents Act defines what is innovation that is patentable. In this, any
incremental innovation that meets the criteria of non-obviousness, novelty and usefulness can be
patented. Whether this makes the innovation breakthrough innovation or an incremental innovation
is not a matter of law but of its significance in the field. If we take Mashelkars argument seriously,
23
what Mashelkar seems to be saying is that Indian companies are incapable of making major
innovations and therefore the bar of what is patentable should be lowered. Whether his judgement on
Indian companies is right or not is not the point at issue. The consequence of lowering the bar of
patenting would mean a virtual floodgate of trivial patents and considerably strengthen the monopoly
position of capital against the consumers.
The argument for not allowing chemical entities that are not new does not flow from the non-
obviousness provision of the Patents Act. The Patents Act defines the degree of innovation that would
be required to qualify to be a patent. The US Supreme Court now agrees that giving patent protection
to ordinary progress incremental innovation in Meshelkars words retards progress. However, in
the chemical world, we could limit patentability to only New Chemical Entities (NCEs) on the basis
not of obviousness but of novelty. Patent laws world over make specific provisions for specific areas.
The biotechnology area has seen internationally such provisions. It is therefore permissible for India to
declare that only NCEs would pass the test of novelty.
3.4 REVIEW TRIPS
Would this be TRIP compatible? TRIPS allows different countries to set up different patentability
criteria. It also allows differences such as whether the patent should be considered on first to file
basis or first to discover basis. TRIPs is not a harmonisation of Patents Laws. It only prescribes
certain elements that must be incorporated in all patent laws. This pertains to granting of product
patents, no discrimination between domestic and foreign companies, no discrimination between
different sectors and a common duration of the patents. As chemicals entities are specific only to
pharmaceuticals and agro-chemicals, etc., it is possible to introduce area specific criteria such as New
Chemical Entity for defining patentability. This would not violate discrimination between sector
clause of TRIPs.
Of course, the global MNCs would cry foul and so would their parent governments. This would also
help in taking up the matter of TRIPs review. It is now obvious that AIDS, malaria, TB are major
killers in the developing countries. The economic consequence of a patent regime that helps drug
MNCs at the expense of the people cannot be allowed to continue. The developed countries today give
as aid and charity, money which ultimately subsidises the global pharma companies. Billions of
dollars given for AIDS treatment sources medicines from global pharma companies at 50-100 times
24
the price of its actual cost of production. This is a rip-off not only of the poor in developing countries
but also of the tax payers in the rich countries.
This is what the government needs to put in its agenda. The current patent regime has yet not caught
up with us as we have the window that if the drugs were discovered before 1995, they cannot be
patented here. This position is going to change soon, as newer pharma entities would now be patented
as they were discovered after 1995. What are we going to do when diseases resistant to non-patented
drugs make their appearance? If we want to protect the health of the people, we need to take up on a
multiple front the challenge of TRIPs and the patent regime. One is to seek review of TRIPS,
specifically on public heath issues. The second is to tighten up the patent provision in pharmaceuticals,
agro-chemicals and food even further. The third is to prepare for compulsory licensing in those areas
where the disease load is significant, posing a public health danger. It is time that the Indian
government views the world from the lens of the people and not through those provided by
pharmaceutical companies.

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4. INSURANCE PATENTS: INDIAN SCENARIO
The importance of intellectual property is well recognized in various industries but the Indian
insurance industry has not yet opened its door to intellectual property. Whereas insurance companies
world-wide are patenting various aspects of insurance products, the Indian insurance industry finds
excuse in the argument that the Patents Act in India does not allow insurance products to be patented.
Insurance is a contract that pledges payment of an amount on the happening of the event insured
against. The Indian insurance industry dates back to ancient times and finds mention in the writings of
Manu (Manusmrithi), Yagnavalkya (Dharmasastra) and Kautilya (Arthasastra).1 These ancient texts
describe pooling of resources that could be re-distributed in times of calamities, such as fire, floods,
epidemics and famine. Life insurance business in India started in
the year 1818 and the general insurance business is more than 160 years old. At present, the products
offered by Indian insurance companies can broadly be divided into three categories, namely, life
insurance, general insurance and health insurance. Despite the long duration of the existence of the
insurance industry and the wide range of products offered by them, no Indian insurance company has
tried to protect the innovative products designed by them. The constitution of Insurance Regulatory
and Development Authority (IRDA) in 1999 and the subsequent opening of the insurance sector for
private companies, following the recommendations of the Malhotra Committee, have not brought
about any major changes in this aspect. One of the various objectives of IRDA is to promote
competition among insurance companies, so as to enhance customer satisfaction through increased
consumer choice and lower premiums. It seems that IRDA, too, like the Indian insurance companies,
is unaware of what intellectual property can do in promoting competition, else some kind of protection
would definitely have been sought for by insurance companies to protect their innovative products.
IRDA being a regulator, the responsibility to encourage the insurers to build innovative products and
effectively protect them, squarely falls on its shoulders. Innovation is a key component in insurance
market, be it through designing completely new products, or re-engineering existing products. Focus
on innovation indirectly benefits conventional classes of business and brings in more business with
better and more stable results.
Importantly, it brings higher satisfaction to customers. The Indian insurance industry has long been
serving millions of people. Now, they have the onus of protecting their intellectual property, as it will
encourage them to produce more advanced products. The Indian liberalized insurance market presently
has 24 general insurance companies, including the ECGC and Agriculture Insurance Corporation of
India, and 24 life insurance companies which are yet to
26
understand that their business shall be complemented by intellectual property.

Intellectual Property in the Insurance Sector
Intellectual property (IP) is no longer an unfamiliar term, but for the Indian insurance industry. While
the economic benefits of a strong IP are well-known and, beyond any doubt; strong IP promotes
innovation, forms an important part of a companys portfolio and helps in acquisitions and mergers.
But, the Indian insurance industry appears to be oblivious to the above facts. As compared to the US
insurance industry, where the number of patents has increased many fold after the State Street case2,
there has been no increase in patenting activity in the Indian insurance sector. The Indian insurance
industry, in general, has never placed much value on ingenuity or invention.

Forms of IP Protection
A patent, by definition, is an exclusive right granted by the government to make, use or sell the
patented products. In other words, none other than the patent holder can manufacture or market the
patented product. This in itself appears to be a sort of insurance. A patent is the best form of IP to
protect insurance products.
Copyrights protect the expression of ideas rather than the idea itself. Although obtaining a copyright is
less stringent than a patent, it is advisable to obtain a patent rather than a copyright for an insurance
product because the claims are well defined in a patent. Trademarks identify the source of the goods or
services, rather than the goods or services themselves. A trademark is any word, name, symbol, sound,
etc. that one uses in commerce to identify and distinguish ones goods from that of others. For instance
LIC is synonymous with and the trademark of Life Insurance Corporation of India. A trademark (or
service mark) is ideal to generate goodwill to the supplier. Trade secrets are similar to patents in the
type of material covered, but only last so long as the material or concept is secret. A trade secret is a
formula, pattern, device or compilation of information used in business that gives one an opportunity
to get an edge over competitors. Trade secrets can be of unlimited duration but their essence is
secrecy.

Patent Insurance vs Insurance Patent
Patent insurance is an insurance policy provided by insurance companies to protect or insure a patent.
Patent insurance is of two types: patent liability insurance and patent pursuance insurance. Patent
liability insurance is a defensive instrument, which helps the insured fight an infringement lawsuit
27
filed by a rival company. It is also called patent infringement defence insurance. In this case, the
insurance company pays a part of the legal expenses incurred and/or the damages imposed. Patent
pursuance insurance, on the other hand, is an offensive instrument, which aids the insured fight against
a patent infringing company. This is also called the patent enforcement insurance or offensive patent
insurance. In this case, the insurer pays a portion of the legal expenses incurred by the insured
company.
Insurance patent on the other hand is patenting an insurance product. It is just another kind of patent
obtained for an insurance product. Insurance patents largely comprise of business method patents.
Patenting insurance policies and other financial vehicles is a growing trend world-wide. Insurers,
investment bankers and money managers patent aspects of policies and their administration, pricing
and underwriting, as well as innovative financial products and services. A patent can be obtained in
various areas of insurance, like reversionary annuity, loan repayments in the event of disability, better
methods to market insurance products, methods for insurance underwriting, new methods of
calculating premium, etc. Such a trend could transform the Indian
insurance industry, which has traditionally been a follow-the-leader market.
Both patent insurance and insurance patents are largely unknown in India; the latter will be described
more in detail in this paper.

Dearth of Patents in the Indian Insurance Industry
The reason cited by the Indian insurance companies for lack of patents is that patenting insurance
products is not allowed by the Patents Act of India. But nowhere in the Patents Act 1970, or its various
amendments, is there a reference to insurance products as being non-patentable subject matter. The
companies cite Section 3(k) of the Patents Act, which prescribes that a mathematical or business
method or a computer program per se or algorithms are not patentable. In the world of insurance,
innovation leading to a patentable invention almost always
involves what is called a business method. A business method is an abstract idea of a new or better
way to do business. But, an abstract idea alone is not patentable. Typically in the insurance industry,
the abstract idea is made practical as a computer implemented business method. Nevertheless, patents
cannot be filed under business method category in India as the Patents Act does not recognize business
methods as invention. The only option left for insurance companies is to file the patents under the
computer programs category. Needless to say, patenting of computer programs per se is not allowed,
but their application may be patented and hence the computer implemented business method can be
28
patented under the application category of computer programs. Since most of the innovations in the
insurance sector involve computer programs, this may be a viable solution for patenting insurance
products, yet it must be clarified that insurance patents need not be necessarily associated with a
computer.

Computer Programs and Insurance Patent
There is considerable ambiguity regarding patenting of computer programs under the Patent Act
in India. According to Section 2(1)(j) of the Patents Act, an invention means a new product or process
involving an inventive step and capable of industrial application. The new process ought to include
software processes, if it is new, involves an inventive step and capable of industrial application.
Significantly, the Patents (Amendment) Act, 2005 does not define a mathematical / business method, a
computer program per se or an algorithm. Thus, there is wide scope for development of new insurance
products and improvement of existing products. For example, improved method of underwriting, a
new method for evaluating claims, inflation provisions in
annuity related policies, etc. could be insurance product innovations.
The business of insurance involves the projection of the outcome of stochastic processes, of future
contingent events, such as:
-Claims development (for general/property and casualty insurance)
-Mortality/morbidity (for life and health insurance)
-Investment returns (for all types of insurance) and
-Investment contracts
In addition, insurance involves asymmetric risk. As a result, actuarial estimates can be enhanced in
many cases by the use of stochastic modelling. In insurance, the process or method of developing a
product can be patented through smart drafting of the claims. There is extensive use of software and
calculations in designing an insurance policy. A software program that merely manipulates numbers
will not fulfill the patentability criteria, but if the resulting numbers can
make a useful product then the software does qualify for a patent. The importance of a patent based
business transaction is well evidenced in the following case where in November 1997, Texas
Instruments paid a staggering US$ 395 million to acquire Amati Communications, a small California
based company founded by Prof Cioffi at Stanford University. The figure surprised many, as it
appeared extremely high, given Amati Communications annual sales and financial situation. Why did
29
a large semiconductor company pay such a high price for a small Silicon Valley start-up? The answer
was simple. Amati Communications held 25 key patents on digital
subscriber line (DSL) technology, which Texas Instruments considered crucial for entering the DSL
market. The 25 patents covered some important areas of next-generation modem technology which
have been adopted by the American National Standards Institute as the standards for DSL. Owning
Amati Telecommunications patents allowed Texas Instruments to acquire a leading position in the
new technology as well as promising profits from licensing
the technology to other firms.
The most apt example for the insurance companies is the patent no 221272 (ref. 3) granted by the
Indian Patent Office. The patent was issued for a computerized system and method of performing
insurability analysis. The invention relates generally to insurance underwriting and, particularly, to a
computerized system that gathers underwriting information, evaluates risk, and produces a point-ofsale
decision on a clients insurability. Automated underwriting systems ask for personal details needed to
make underwriting decisions. A risk assessment interview begins with questions designed to prompt
the applicant to disclose pertinent conditions. These questions are the same as the questions printed on
a traditional insurance application form. Depending on
the answers to the opening questions, known automated systems prompt the disclosure of further
information about various conditions. Often, each condition disclosed by an applicant will have a set
of associated perceptive question which are designed to gather further specific details in a controlled
manner. The applicants characteristics and his or her answers to previous questions determine the
order in which questions are asked in the assessment. For each applicant, questioning continues until
an underwriting decision can be made. Conventional underwriting,
including automated underwriting using such an interactive risk assessment questionnaire, yields an
underwriting decision for various conditions based on detailed information about each disclosed
condition. It is also known to refer complex cases to manual underwriting. The system thus reduces
the time span between proposal submitted and its acceptance. Insurance patents need not be merely
software or algorithms. In United States, Progressive Insurance, for example, recently patented its pay
as you go auto insurance invention. The patent describes logical steps
to determine the insurance cost for a vehicle based on the operator profile and monitored driving
characteristics. The invention uses a computerized GPS plus cell phone system to monitor driving
characteristics. Since this is the first method to implement a pay as you go auto insurance product,
Progressive Insurance has been able to claim exclusive right to any method of insuring a vehicle that
30
incorporates all its steps, irrespective of whether or not a computer or any other specific piece of
equipment is used to carry it out.

US Case Studies
Innovative business processes could not be patented in the US until 1998. The patent-protection
landscape changed radically in 1998 after a federal court struck down a decade old doctrine that held
that business methods and processes fall outside the purview of the US patent system. The 1998
decision also held that nearly all inventions implemented by a computer software program were
potentially patentable so long as they produced a useful, concrete, and tangible result. The case
involved two Boston-based companies: State Street Bank and Trust, the largest mutual fund data
processing organization in the United States, and Signature Financial Group (SFG), a small firm that
had developed a system for implementing an investment structure for the administration and
accounting of mutual funds, which allowed mutual fund companies to pool assets in an investment
portfolio, providing economies of scale with regard to cost. When licensing negotiations broke down,
State Street filed suit claiming SFGs patent was invalid. Visa and MasterCard, filing friend of the
court briefs, backed State Street. The financial services community claimed SFGs new model was a
threat to its operational freedom. But the software
companies argued that they needed the creative latitude to protect innovation. Without patent
protection, they claimed it would be difficult to finance the development of new products, concepts
and technology. The trial court agreed with State Street, holding the patent invalid because the
invention involved software for the mathematical processing of data and because that processing
amounted to a method of doing business. An appeals court overturned the decision and held that
inventions based on mathematical algorithms, formulas, or calculations can be patented so long as they
produce a useful, concrete and tangible result. The court also
held that business methods were patentable, expanding the definition of what can be protected to
include new business methods. The ruling gave innovators a new tool to enhance their value, and
small companies who pioneer new business models can now conduct business on an equal footing
with competitors many times their size.
Interest in patenting insurance products or concepts has been continuously growing in US.4 Insurance
related patents in US are patented under subclass 4 of class 705 reserved for insurance business
methods, which are described as computer implemented systems or methods. These methods include
31
processes for writing insurance policies, processing insurance claims, marketing insurance, and ways
of structuring or packaging insurance products so as to produce new
and useful results, such as insurance at reduced cost, reduced or spreading of risk, tailoring benefits to
specific needs or claim exposures.

Indian Government
Section 3, Clause (k) of the Indian Patents Act stipulates that a computer program per se, (besides
certain other restrictions) shall not be an invention. Since India is a party to the TRIPS Agreement, it
should provide equal protection accorded in other countries in line with the purpose of paragraph 1 of
Article 27 of TRIPS Agreement, which provides that any inventions, whether products or processes,
in all fields of technology shall be patentable subjectmatter. The onus rests on the government to
modify the Patents Act so that business methods become patentable subject-matter; thereby
encouraging the insurance industry to innovate. Moreover, there is a lack of complete clarity in the
Patents Act regarding patenting of software and computer programs. Hence, the government of India
should make necessary modifications in the Patents Act to clear the cloud of confusion and promote
innovation.


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5. PATENTING IN THE INDIAN PHARMACEUTICAL INDUSTRY
The Pharmaceutical Industry in India has experienced implausible development. The Indian Industry
has been able to formulate all essential drugs covering a wide range of therapeutic groups. The
industry also has the potential of producing adequate amount of bulk drugs for worldwide export.
Patents in pharmaceuticals play a significant role in bringing new products to market. Patent protection
for pharmaceutical products is more essential in contrast with other industries because the actual
manufacturing process is easy to imitate and can be replicated with a merely small investment than
that required for the research and clinical testing.
Indian Law & Trips Compliance
Patent Act of 1911 facilitated patenting all the known processes of manufacturing a drug. Later Patent
Act of 1970 excluded patent protection for pharmaceutical product and allowed granting of patent for
only one process or method used in the actual manufacturing for a period of 7 years. This act provided
Indian manufacturer the benefit to make patented drugs by other method and market them in India.
The scenario again changed when India being a signatory to WTO was obliged to comply with the
provisions of TRIPS to incorporate product patent. Additionally, with this agreement, the patents will
provide the rights of protection for 20 years. For developing countries including India, a transition
period of 10 years from 1995 to 2005 was provided to integrate the laws. In this view, India introduced
"mailbox" provision so as to provide inventors a means of filing applications for pharmaceutical
product during the transition period and which will be examined upon termination of the transition
period. Further, Exclusive Marketing Rights were granted for a term of 5 years in the transition period.
Thus, the mailbox provision permitted Indian applicants to file for patents and thereby establish filing
dates, while at the same time allowed India to differ the granting of patents for pharmaceutical
products. Still, another concern was regarding the availability of drugs in poor countries. This issue
was addressed by introducing compulsory licensing as a requirement laid down under Doha
declaration of TRIPS Agreement. Compulsory licensing of pharmaceutical products allowed member
countries to issue compulsory license to export generic versions of patented medicines to countries
with insufficient or no manufacturing capacity in the pharmaceutical sector. In developing country
such as India, compulsory licensing is probably the most effective safeguard against the potential
abuse of monopoly by patentees.

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Current Scenario
Due to legal and regulatory changes in the Indian pharmaceutical industry, pharmaceutical companies
have adapted well and have evolved as globally competitive companies. Indian companies have
continued to invest extensive resources in the development of generic drugs thus establishing
themselves as leaders in the global generics business. Today Leading global pharmaceutical firms are
confronting difficulty as a major number of patents for branded drugs will be expiring over the next
few years. Generic drugs are 40 to 75 percent cheaper in costs as compared to patented drugs and
provide higher profit than branded drugs. Once the patent expires, each product's individual
characteristics and market position will affect its market share. Consequently Indian pharmaceutical
companies have the opportunity to gain a larger share of the growing generics market.
Indian Statistics
IP scenario of Indian Pharmaceutical Industry has changed significantly since 1st January 2005. The
innovation capability of the domestic pharmaceutical industry has witnessed an increase in both,
research and patenting. The number of patent applications filed in the Indian Patent Office has
consistently increased with annual growth averaging 9% per annum from 2005-2010. Over the entire
period a total of 16459 applications in Drugs have been filed. The leading players in the Indian
pharmaceutical market comprise both India-based and MNCs. Top 10 Assignees who have been
granted maximum number of product patent by Indian Patent Office during 2005-2010 includes
Aventis Pharmaceuticals (190 Patents) followed by Roche (146 Patents) and Novartis (136 Patents).
India's leading pharmaceutical companies are competing not only in the domestic market, but also in
the global market for both generic drugs and original products. India's top five pharmaceutical
companies, who have been granted majority of product patents from 2005-2010 are Glaxo, CSIR, Dr.
Reddy's, Cipla and Cadila. These companies manufacture a wide range of generic drugs (branded and
non-branded), intermediates, and active pharmaceutical ingredients (APIs).
PRACTICE POINTER SERIES: BRIEF ON PATENTING DIAGNOSTIC METHODS
IN INDIA
Patenting of medical methods is prohibited in India according to Section 3 (i) of the Indian Patent Act,
which states that any process for the medicinal, surgical, curative, prophylactic [diagnostic
therapeutic] or other treatment of human beings or any process for a similar treatment of animals to
render them free of disease or to increase their economic value or that of their products. This
34
flexibility has been conferred by TRIPS in its Article 27(3) which states that members may also
exclude from patentability diagnostic, therapeutic and surgical methods for the treatment of humans or
animals.
Among various medical methods as described in Section 3 (i), such as surgical and therapeutic
methods, patentability of diagnostic methods in particular has been questionable and is not objectively
interpreted.
This article tries to focus on understanding the Indian patent scenario with respect to patenting of
diagnostic methods and providing some key points for more efficient protection of the same.
The Indian Manual of Patent Office Practice and Procedure describes that Diagnosis is the
identification of the nature of a medical illness, usually by investigating its history and symptoms and
by applying tests. Further the Manual explains that determination of general physical state of an
individual (for example a fitness test) is not considered to be diagnostic if it is not intended to identify
or uncover pathology. Thus, the diagnostic methods excluded from Patentability include methods
which determine or identify existence of a disease or disorder. However, if a method does not include
the identification of a disease or disorder, then the method would be patentable. Had this been the
case, the scope of diagnostic methods excluded from patentability would have been construed very
narrowly. However the Indian Patent Act provides a flexibility in a form such that only diagnostic
methods practiced on the living body are not patentable and the diagnostic methods performed on
tissues or fluids which have been permanently removed from the body are not be excluded, that is the
in-vitro methods are patentable.
Thus, the Patent Scenario in Indian is similar to European Patent Law where according to Article 52(4)
of the EPC, in-vitro diagnostic methods are found to be patentable. However the exact scope of such
exclusion is not clearly defined at the moment due to the lack of the interpretation of the Courts unlike
in Europe where the extent of the auspices of patentable subject matter is litigated a large number of
times in Courts. Under US Patent Law, all medical methods including Diagnostic Methods are
patentable.
Additionally, under the Indian Patent Law, there have been instances when the examiners have
rejected the in-vitro diagnostic methods too under the pretext of Section 3 (d) of the Act citing lack of
inventive step involving mere use of a known process.
35
For example, if the detection method per se as well as the biomarker in the sample are already known
and the proposed invention only identifies use of the marker in the detection of a disease, there are
high chances that the method would not be patentable. Thus, where the method involves a novel
biomarker or one or more novel detection method steps, the chances of patentability become high.
Indian Granted Patent IN 228031, for example, claims a rapid method for heat mediated ELISA
characterized in using an activated solid support for detection of minute quantities of biomolecules
such as antigen, antibody etc. The method has a profound technical advancement of reduction in the
total time required for ELISA to around 3 h. Another Indian granted Patent IN 223553 claims an in
vitro method of determining an expression level of a plurality of genes in the sample consisting of
gene No. 1 to 562 in predicting the prognosis of a biological condition in animal tissue. The Indian
Patent IN 220274 claims a method for detecting a risk of gastro esophageal reflux disease on assaying
the analytes pepsinogen I, fasting gastrin-I7 and a marker for Helicobacter pylori infection. Another
Indian Patent claims a method of for detecting antibodies to INGAP 104-118 peptide contacting test
sample with the peptide bound to solid support. The Indian Patent IN 233723 claims a new
Scintillation Proximity Assay for the detection of peptidoglycan synthesis. Thus we have seen that all
these granted patents describe one or more novel procedural steps in the diagnostic methods described
therein. However, subject to the lack of the exact scope, the patenting of diagnostic methods in India is
still decided more often on a case-by-case basis.

36
6. PATENT CASES IN INDIA

Case 1--Basmathi Rice:
Basmathi is a variety of long grown rice. It was famous for its fragrance and delicate flavor. India is
the largest cultivator and exporter. They have a relative low yield, but produce high-quality grains and
command high prices in the domestic and international markets. Two varieties are white rice and
brown rice. Rice Tec, Texas based company granted patent for certain strains of rice, named basmati
687, sufficiently novel to grant it patent # 5,663,484, entitled "Basmati Rice Lines and Grains", giving
Rice Tec exclusive rights to any basmati hybrid grown anywhere in the western hemisphere. It was
related to the crossbred rice lines and grains developed by the U.S. Company. In total, the company
made 20 claims, including a method for the development of novel rice lines. Claims 15 to 17 of the
patent were threatening India which defined rice grains without any limitations or territory or
photoperiod insensitivity. These claims worded very broadly, so that they included 90% of rice
germplasm and even traditional rice lines like Bas 370, Taraori Basmati, Karnal local and other
varieties. After realizing the threat posed by claims 15 to 17, India filed a request on April 28, 2000,
and urged the USPTO to re-examine the claims. This was forced Rice Tec to withdraw four of the
contentious claims including 15 to 17. Based on the documentary evidence submitted by India,
USPTO issued notice to Rice Tec on March 27, 2001 a substantial question of patentability affecting
all the remaining claims. Subsequently, in 2002 Rice Tec withdrew 15 out of 20 claims except those
related to the specific rice lines developed by it and not to any varieties or lines grown in India and
also USPTO ordered title of the patent to be changed to "Rice Lines Bas687, RT1117 and RT1121".
Today more than 600 patents filed on rice. Indian government introduced IP legislation on
Geographical Indication (GI) of the origin of the origin of agricultural products. Out of nearly 5,000
patents granted by USPTO, 80% were plants of Indian origin.

Case 2--Neem Patent Battle
Over 70 per cent of our agriculture practices are based on traditional knowledge. The European Patent
Office (EPO) granted the patent on Neem as a fungicide to the United States Department of
Agriculture and Multinational W.R. Grace in 1995. In 1995, WR Grace patented Neem-based bio
pesticides, including Neemix, for use on food crops. Neemix suppresses insect feeding behaviour and
growth in more than 200 species of insects. After India's appeal against this patent in 2000, EPO
revoked this patent in 2000. However the multinational went in for an appeal against the patent
37
revocation which rejected after India led by environmentalist Ms. Vandana Shiva presented further
evidence to support that use of Neem in varied forms is a part of traditional Indian knowledge and not
a novel product, who heads the Research Foundation for Science, Technology and Ecology. The
documented evidences presented by India included research performed by two scientists prior to 1995
on use of Neem, known for its medicinal properties, for making several products like fungicide.
Merely digitalizing ayurvedic knowledge is not sufficient. There is a need to provide patent protection
for all traditional knowledge to stop product piracy. She was part of India's successful bid to protect
Basmati, a traditional long-grained aromatic rice variety grown only in India and Pakistan, from being
patented in the US. Extensive testimony witness by expert Mr. Abhay Dattaray Phadke of Pune, India,
the 4-person panel judged that the claimed "invention" was lacking an "inventive step", which is a
prerequisite to obtaining patent protection. The panel had earlier ruled that the USA/ Grace Neem
fungicide product was lacking in "novelty," another patent criterion, 'and established that its properties
and use were "prior art" years before the "proprietors" applied for a patent. The winning challenge
comes after years of campaigning and legal efforts against so-called "bio-piracy". India won a 10-year
long battle at the European Patent Office (EPO) against a patent granted on an anti-fungal product,
derived from Neem.

Case 3--Turmeric Patent Battle
Turmeric is a tropical herb grown in East India, and the powdered product made from the rhizomes of
its flowers has several popular uses worldwide. Turmeric powder, which has a distinctive deep yellow
color and bitter taste, is used as a dry, a cooking ingredient, and litmus in a chemical tests, and has
medicinal uses as well. A U.S. patent on turmeric was awarded to the University of Mississippi
Medical Center (UMMC) on March 28 1995, particularly for the "use of turmeric in wound healing".
UMMC filed application for patent on December 28, 1993. This patent granted them the exclusive
right to sell and distribute turmeric. In June, 1996 Council of Scientific and Industrial Research (CSIR)
challenged the novelty of the University's "discovery" through a petition to USPTO. Followed this, the
USPTO investigated the validity of this patent. In this investigation, USPTO learnt that in India,
turmeric has been used for thousands of years; concerns grew about the economically and socially
damaging impact of this legal "bio-piracy". In August 13, 1997, the patent was revoked after the patent
stood for two years although the process was non-novel and had in fact been traditionally practiced in
India for thousands of years, as was eventually proved by ancient Sanskrit writings that documented
turmeric's extensive and varied use throughout India's history.
38

Case 4--JUTE Patent Battle
A British company, Geohess, received the European patent under the head of invention for use of
hessian cloth which gave it exclusive rights in almost all European countries and it charged around 60
% and more royalty. This patent was challenged jointly by The IJMA, JMDC and Indian Jute
Industries Research Association after they learnt from a firm which was billed by Geohese to pay
royalty for using hessian cloth for covering waste. JMDC and others in consultation with the Patent
Attorneys, S. Majumdar & Co. and their associate Attorney in the UK, Roberts & Co., challenged the
Geohess patent on grounds of lack of novelty and lack of inventive merits. Geohess exclusively sold
about 4.5 million sqm hessian for use as covers for waste and dumping grounds and about 1.1 million
sqm as grant of license, though the patent was initially granted on June 1999. Geohess, taking
advantage of global environment concerns and anticipating a huge market demand for biodegradable
covers for waste filed an application in 1994 claiming novelty and inventive merits in use of hessian, a
variety of jute cloth. Geohess granted European Patent No. 0728048, the use of hessian cloth / sheet to
cover waste/dumping grounds. The provisional patent right on pending European patent applications
allowed in some EU countries enabled Geohess patent in Europe.

Case 5--TVS Motor Co. Ltd. Vs Bajaj Auto Limited
Bajaj Auto in 2007 filed suit against TVS, for violating Bajaj's patent on certain small engine
technology and court also in its initial round of investigations stopped TVS Motor from making an
selling its flashy 125cc flame motorcycle. The charge is that TVS pinched Bajaj's Digital Twin Spark
Ignition (DTSi) technology for its new 125cc bike called the Flame. DTSi technology that was used by
Bajaj for Pulsar and Discover models was registered in July 2002 under the Patent No. 195904. DTSi
technology uses two spark plugs at the two ends of the chamber. The patent violation by TVS related
to terms of the purpose for which it was being used, the manner in which it was done, and the kind of
customers who were being targeted. The TVS model Flame is being powered by an engine using CC-
VTi technology. The battle is still going on.

Case 6--Infosys Vs Infosys France
Indian IT giant Infosys may be forced to call it in some other name in France, as a court found that it
infringed upon the trademark as well as business and corporate identities of another firm "Infosys
France". "Infosys France" is a technology and consulting firm based in France and is part of an
39
integrated management consulting services .provider "Groupe Infodis." Infosys told that the ruling in
France, or a similar ruling in any jurisdiction where it operates, "could disrupt our ongoing business,
distract our management and employees, and affect our future business." Infosys further added that the
ruling in France, or a similar ruling in any jurisdiction where it operates, "could disrupt our ongoing
business, distract our management and employees, and affect our future business."

Expectations from Government of India
To meet challenges faced by Indian Industries and general public, Government of India should provide
needed assistance to Indian Patent Administration to come up with more Patent Offices in the major
cities like Ahemdabad, Bangalore, Hyderabad and Lucknow. All Patent Offices must be digitized, well
connected and should provide speedy online access of the data in public domain. Patent examiners
must have access to all the databases spread across the world to make the search more meaningful and
to make sure that "Good Patents" being granted. The Patent Office must provide easier access to
Patent Database of all granted patents and published applications with it like USPTO. Such a database
should be searchable, error-free and must have the entire text. The partnerships between Public and
Private sectors should be developed to motivate patenting and speed up the granting process.
Coordination committees should be formed to study success stories and to implement lesions learnt in
other needy domains.
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CONCLUSION
This report indicates the history of the Intellectual Property Regime and the growth of patenting
regime in India for the past 150 years. The involvement and concerns of Government of India in the
growth and protection of Patent regime have been discussed. The various changes in the Indian patent
regime for the past three decades have been dealt in detail and also their impact discussed with
statistics. The various reforms have been undertaken by the Government of India for the past five
years and their impact in the patent filings is also shown. The awareness and interest on patents among
Indian nationals and organizations towards protecting nation's rights stated with battles won by Indian
Organisations in USPTO and EPO for Basmathi Rice, Neem, Turmeric and Jute cases. Eventhough
India has amended thrice it's patent laws, it is still far behind compared to developed and nations like
China in filing and protecting rights of the innovations. The continuous reforms by Government of
India and other organizations with the involvement of private players would strengthen Indian Patent
Regime and would improve the filing rate in the next five years.
As technology advances in leaps and bounds, the business world including insurance business, takes
rapid strides. New product development requires investment of manpower and capital and there is
always a need to ensure that the fruits of development go as far and as long as possible to maximize
return on investment. Innovations need to be protected at any cost and the current laws or regulations
should not come in the way of innovative spirit. In the highly regulated insurance industry, companies
might resort to the idea of insurance development labs which shall focus only on developing insurance
products. With the establishment of insurance development labs, an insurance company might become
a pure product manufacturer by getting rid of its product
development function and costs and buying or licensing products from others. This already has
happened in the pharmaceutical industry where pure product development companies are playing a
wider role in the drug discovery process. It is well known that a patent adds value to an invention. It is
for Indian insurance companies to stop neglecting intellectual property in product development. The
rules have to change if the insurance companies want to offer to their customers innovative products at
lower premiums and increase their market share in the highly competitive business they are in. The
insurance sector is a colossal one and is growing at a rate of 15- 20 per cent and if it is to continue at
this rate, then the insurers and their agents must be prepared to succeed and be profitable in a new
environment, in which intellectual property will be protected by more than just the traditional
trademark or a copyright.
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The change in pharmaceutical patent system became precursor for variation in industry dynamics. The
changing industry dynamics both at the domestic level as well as the international level has forced the
pharmaceutical players to reevaluate their conventional business strategies. India with its essential
competitive advantages remains as one of the most preferred outsourcing destinations and now is
playing a vital role in manufacturing as well as drug development chain of various innovator
companies.
The diagnostic methods are patentable in Indian provided they are not practiced on living body and are
performed on tissues or fluids which have been permanently removed from the body. Further, for the
best protection, either the biomarker or any of the steps involved in the method should be novel,
involving inventive step and deviating away from the mere use of the known process rejection.
The scope of the Patentability of Diagnostic methods in India is still not clearly defined due to the lack
of the interpretation of the Courts unlike in Europe where the extent of the auspices of patentable
subject matter is litigated a large number of times in Courts.

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Practice Pointer Series: Brief On Patenting Diagnostic Methods In India
http://iiprd.wordpress.com/2012/01/14/practice-pointer-series-brief-on-patenting-diagnostic-
methods-in-india/