Patent Trolling In India

(By Manas Vridhi manas.v@lsdavar.in )

Patent laws are enacted with the propose to motivate innovation and invention,
which ultimately leads to the benefit of the public at large. In layman language, a
patent troll is a company or business function whose primary business activity is to
acquire patents for the purpose of asserting them against other companies.

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

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

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

Patent trolling in India

In comparison to other countries, patent trolling was quite prevalent in India in the
information technology and communications sector prior to the enactment of the
amendment in 2005, and then steeply declined after the amendment.India’s patent
laws do not expressly prohibit the existence of patent trolls. However, provisions
such as section 146 require that a granted patent must be worked or used in India. If
a patent is not worked or used in the territory of India, compulsory licensing may be
invoked.
The Act also requires the mandatory filing of a statement of working of a patent at
the end of each financial year. Patent holders who fail to file such a statement may
be liable for a fine and/or imprisonment.

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

One of the most celebrated cases in this regard is that of Spice Mobiles and Samsung
India v Somasundaram Ram Kumar (S.R.Kumar), wherein S.R.Kumar, the patentee,
was granted a patent for mobile phones that could incorporate multiple sim cards.
The patentee not only registered his patent with the India Customs Authority to
enforce his patent under Intellectual Property Rights (Imported Goods) Enforcement
Rules, but also filed a suit for infringement, seeking injunction, which was granted.

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

Patent licensing is also considered as pro-competitive because in a way it encourages

investment in bringing new products to market. Thus, by creating a secondary
market for patents, patent trolls make the ownership of patents more easily available,
thereby creating incentives to innovate and patent. Giving patents to more
specialized licensing companies will facilitate access to technology by more
efficiently organizing ownership of patent rights.

The reasons that the patent troll strategy has developed in the present patent system
appear to result from judicial procedure and its adjudication in infringement cases.
It could also be due to heavy pending applications and lack of technical hands to
examine patent applications. Even though trolling activities have been reduced, the
problem still subsists in the software industry.

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