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Contrast between Sec.47 and Sec.99 of - The Patents Act,1970

Analyzing the contrast between Sec.47 and Sec.99 of - The Patents Act,1970

Section 99 defines what constitutes “use of an invention for the purposes of government” according to which, an invention is said to be used for the purposes of government if it is made, used, exercised or sold for the purposes of the Central Government, State Government or a Government undertaking. While, Section 47 of the Patent Act enumerates certain conditions to which the grant of a patent would be subjected to. It allows, both in the case of a product or a process patent importation by or on behalf of the government, making by or on behalf of the government for the purpose merely of its own use.
The project will be an effort to compare contrasts between Section 47 and Section 99 to understand the phrase “for the purposes of” as given under the latter pro
It is important to refer the bare provisions i.e. Sec.47 and Sec.99 before we begin two differentiate between the two provisions.

Sec.47-Grant of patents to be subject to certain conditions.

The grant of a patent under this Act shall be subject to the condition that-
(1) any machine, apparatus or other article in respect of which the patent is granted or any article made by using a process in respect of which the patent is granted, may be imported or made by or on behalf of the Government for the purpose merely of its own use;

(2) any process in respect of which the patent is granted may be used by or on behalf of the Government for the purpose merely of its own use;

(3) any machine, apparatus or other article in respect of which the patent is granted or any article made by the use of the process in respect of which the patent is granted, may be made or used, and any process in respect of which the patent is granted may be used, by any person, for the purpose merely of experiment or research including the imparting of instructions to pupils; and

(4) in the case of a patent in respect of any medicine or drug, the medicine or drug may be imported by the Government for the purpose merely of its own use or for distribution in any dispensary, hospital or other medical institution maintained by or on behalf of the Government or any other dispensary, hospital or other medical institution which the Central Government may, having regard to the public service that such dispensary, hospital or medical institution renders, specify in this behalf by notification in the Official Gazette.

Sec. 99-Meaning of use of invention for purposes of Government.

(1) For the purposes of this Chapter, an invention is said to be used for the purposes of Government if it is made, used, exercised or vended for the purposes of the Central Government, a State Government or a Government undertaking.
(2) Without prejudice to the generality of the provisions of sub- section (1),-
(a)the importation, by or on behalf of the Government, of any invention being a machine, apparatus or other article covered by a patent granted before the commencement of this Act, for the purpose merely of its own use; and
(b) the importation, by or on behalf of the Government, of any invention being a medicine or drug covered by a patent granted before the commencement of this Act-
(i) for the purpose merely of its own use; or
(ii) for the purpose of distribution in any dispensary, hospital or other medical institution maintained by or on behalf of the Government or in any other dispensary, hospital or other medical institution which the Central Government may, having regard to the public service which such other dispensary, hospital or medical institution renders, specify in this behalf by notification in the Official Gazette, shall also be deemed, for the purposes of this Chapter, to be use of such invention for the purposes of Government.

(3) Nothing contained in this Chapter shall apply in respect of any such importation making or using of any machine, apparatus or other article or of any such using of any process or of any such importation, using or distribution of any medicine or drug, as may be made by virtue of one or more of the conditions specified in section 47.

Now to put it simply Sec. 47deals with the right to import or make a patented article or use a patented process for a specified purpose for specified purposes under defined circumstances without any payment of royalty to the patentee. It is a condition of grant under the Act. While Sec. 99 defines the scope of use of inventions for the purpose of Government. This definition under Sec.99 applies only to the provisions contained in Section 99 to 103 of the Act.

Differences between Section 47 and Section 99

Payment of Royalty
Use of patented invention without payment of royalty.- The use of a patented invention may be made by or on behalf of the Government on behalf of the Government without payment of royalty in the circumstances mentioned below. A distinction has been made between patents granted under the Act of 1970 and those granted under the Act of 1911, and also patents relating to medicines and drugs and other patents in regard to the nature of use.

(i) Right to use resulting from the conditions of grant.In respect of patents granted under the Act, the Central Government or any State Government may import or make the patented article for the purpose merely of its own use (Sec. 47(1)). It may also use any patented process merely for its own use (Sec. 47(2)).

(ii) In case of patents relating to any medicines or drugs, the medicine or drug in question can be imported by the Central or State Government for its own use or for the distribution to government dispensaries, hospitals or other medical institutions or similar institutions specified by the Central Government by notification. It can however, only import and distribute the medicine or drug and cannot manufacture it in India for distribution. There is no power to sell the patented article, whether relating to medicine or drug or otherwise.

The use of invention under Sec.47 is without payment of royalty. This follows from the fact that such use is made a condition of the grant. Besides, such use is also exempted from the operation of s. 100 dealing with payment of royalty.

Right to use resulting from prior record or trial of the invention by the Government.-Section 100 and Section 99(1).
Where an invention has been recorded, tested or tried on behalf of the Government or Government undertaking, before the priority date of the relevant claim of the complete specification or otherwise than as a result of a communication from the patentee, it may be used for the purpose of Government without payment of any royalty (Sec. 100(2)). This applies to the patents granted under the Act of 1911 and the Act of 1970. The use may be made by the Central Government, any State Government or a government undertaking (Sec. 99(1)). The right to use the invention includes the right to make, use exercise, vend and sell on non-commercial basis the goods made in exercise of that right (Sec. 100(6)). The patented Article may also be imported on behalf of the Government for its own use (s. 47 and s. 100(6)).

Although there is no specific provision empowering the Government to sell the patented articles imported by it by virtue of the statutory powers conferred on it, such power would appear to follow from the definition of the expression “use for the purposes of Government” under s. 99(1).

Use of invention on payment of royalty.In all cases other than those referred to in the preceding paras, the use of an invention for the purpose of Government will require payment of royalty or other remuneration to the patentee. Payment of royalty will, however, arise only in respect of an invention which has not been recorded, tried or tested on behalf of the government before the priority date of the relevant claim otherwise than in consequence of a communication of the invention from the patentee (Sec. 100(3)).

Thus in the following classes of cases royalty payments are required:
(1)Where the invention has been recorded, tried or tested on behalf of the Government before the priority date of the relevant claim in consequence of a communication of the invention from the patentee.
(2)Where the invention has not been so recorded, tried or tested.

In both these classes of cases royalty payment is required if the patent relates to one granted under the Act of 1911.

Royalty payments are not required if the use is confined to those specified in s. 47, which consists of importation or making the patented article or using the patented process merely for the use of government (i.e., Central or State Government but not a Government undertaking), or in the case of patents relating to drug or medicine, in addition, importation of the goods (not making them) for the purposes of its own use or for distribution to specified institutions. If, however, the Government or a Government undertaking wants to import or make the patented article for sale, then royalty payment will be required, whether the patent relates to medicine or drug or otherwise. In respect of medicines, drugs or articles of food, the patentee will be paid not more than adequate remuneration in the circumstances of each case, taking into account the economic value of the use of the use of the patent, proviso to s. 100(3) as amended by the Act of 2002. In respect of all other cases the royalty may be determined by agreement or by the court (s. 103)

Notifying the patentee of the use.When an invention has been used under the authority of the Central Government for the purpose of Government under s. 100, the government should notify the patentee as soon as practicable of the fact and furnish him with information as to the extent of use from time to time as he may reasonably require. Where the invention has been used by a Government undertaking, the Central Government may call for the information necessary for this purpose from such undertaking. No notice regarding the use is necessary in case of national emergency or other circumstances of extreme urgency or for non-commercial use (s. 100(5)). Though in case of sec. 47 the patentee need not be notified as such use by government is a condition precedent for the grant of patent.

Moreover in both the sections patentee’s authorization is not needed as in s. 47 he has already given implied consent when he accepts the patent and u/s 99 the provisions state that the patentee authorization is not needed.

Phrases “for the purposes merely of its own use” and“use of an invention for the purposes of government”
The precise meaning of the expression “for the purposes merely of its own use” is a matter for interpretation. It would appear to include use by government departments like Railways, Communication, Defence, Health Government owned hospitals, dispensaries and medical institutions. Use by government undertakings run by the governments departments may also constitute use by government for the purpose merely of its own use.While Section 99 defines what constitutes “use of an invention for the purposes of government” according to which, an invention is said to be used for the purposes of government if it is made, used, exercised or sold for the purposes of the Central Government, State Government or a Government undertaking

Meaning of the phrase “behalf of the Government” in Sec. 47 and Sec.99
The difference can be best understood by going through the judgmentGarware - Wall Ropes Ltd. v. M/s. A.I. Chopra, Engineers & Contractors and Konkan Railway Corporation Ltd. [2008 (3) MAH.L.J 599]
The patents in question in this case are on “Steel Wire Rope Net System” and “Spiral Lock System”. The “Steel Wire Rope Net Syatem is jointly owned by Garware and the Konkan Railway Corp (KRC) and is a product primarily used in mountainous terrains for protection against boulder rock fall, mudslides and avalanche.

The “Spiral Lock System” is used to bind two adjacent panels of boulder nets with each other, specifically to prevent rocks from falling through the junction of two nets. Garware alleged that the first respondent A.I. Chopra infringed the patents by vending/using identical/substantially similar products to obtain government contracts, particularly in a tender issued by KRC seeking bids from manufacturers of such products.

Garware sought an ad interim injunction during the pendency of the suit which was denied by the trial court. Consequent to the rejection of the request for interim injunction, Garware preferred an appeal to the Nagpur Bench of the Bombay High Court where the following issues were raised for consideration before the Court:
1.Whether the products patented as ‘Steel Wire Rope Net Systems’ and ‘Spiral Lock Systems’ are allegedly in use and in fact being used for more than two decades?
2.What is the scope and effect of Section 100 of the Patents Act, 1970 (as amended) and its impact in the present case?

The highlight of this case is the defence of the defendants under section 100 of the Patents Act, 1970. A.I. Chopra EC submitted that since the contract with the Railways had been inked in the name of the President of India, its use of the patented inventions fell under the provisions of government use defined in Sections 99 and 100 of the Act which gave it a safe harbour from infringement. He further claimed that the subject-matter of the patents had allegedly been in use for more than two decades.

This judgment gives an opportunity to elaborate on not much discussed sections – Sections 99 and 100 which fall under Chapter XVII of the Patents Act, 1970 (Use of Inventions for Purposes of Government and Acquisition of Inventions by Central Government).

Section 99 defines what constitutes “use of an invention for the purposes of government” according to which, an invention is said to be used for the purposes of government if it is made, used, exercised or sold for the purposes of the Central Government, State Government or a Government undertaking. Section 2(1) (h) of the Patent Act defines a Government undertaking and of the categories listed under it, Konkan Railway Corporation falls under the category of an industrial undertaking carried on by a Government company as defined in Section 617 of the Companies Act, 1956. Subsection 2 of Section 99 states that no provision of chapter XVII would be applicable to any act which falls under the conditions specified under Section 47 of the Patent Act.

Section 47 of the Patent Act enumerates certain conditions to which the grant of a patent would be subjected to. It allows, both in the case of a product or a process patent importation by or on behalf of the government, making by or on behalf of the government for the purpose merely of its own use.

This requires us to compare contrasts between Section 47 and Section 99 to understand the phrase “for the purposes of” as given under the latter provision. The Court while elaborating upon the legislative intent behind the provisions opined that the words "merely of its own use" would mean use for the purposes of the Government by any department of the Government and use by servants and agents of the Government in performance of their duties/in discharge of their duties assigned to them irrespective of who is benefitted by such use. This would not include use by any other person like contractor of railways and the meaning is strictly restricted to the direct use by any department of the Government or its servants in the performance/in the discharge of their duties. On the contrary, the Court held that Section 99 does envisage in no uncertain terms the use of the invention to the Central Government, State Government or a Government Undertaking in accordance with the terms and conditions as laid down in the Chapter XVII. Under these provisions even a third person i.e. a contractor (A.I. Chopra) can be allowed to use the patent for the purposes of Government or Government Undertakings.

Further, the Court held that Section 100 contemplates a direct authority in writing from the Central Government and its departments and rejected the contention of the respondents that the contract with the Railways in itself was an authorization as required by S.100. Another important aspect of S.100 is that it does not require the consent of the patentee for such authorization.

The judgment of the Bombay High Court is another foundation stone in the making of the jurisprudence on patents.
(1) K. Ramu v/s Adyar Ananda Bghavan Muthulakshmi Bhavan [MIPR 2007 (1) 0352].
(2) Telemecanique & Controls (I) Ltd. v/s Schneider Electric Industries SA [2002 (24) PTC 632 (Del) (DB)].
(3) Midas Hygiene Industries (P) Ltd. & another v/s Sudhir Bhatia & Ors [(2004) 3 SCC 90].
(4) Bishwanath Prasad Radhye Shyam v/s Hindustan Metal Industries [AIR 1982 SC 1444].
(5) Gandhimathi Appliances Limited, Kelambakkam, Kancheepuram District, Tamil Nadu v/s L.G. Varadaraju and others [2001 (1) CTR 459 (Madras) (DB)]. 13

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