The case of Agriboard International LLC vs Deputy Controller of Patents and Designs, decided by the Delhi High Court on March 31, 2022, stands as a landmark in Indian patent law, highlighting the critical need for reasoned and transparent decision-making in the adjudication of patent applications. This appeal, filed under Section 117A of the Patents Act, 1970, challenged the Deputy Controller’s order rejecting the appellant’s patent application for an "Efficient Method and Apparatus for Producing Compressed Structural Fiberboard" on the grounds of lacking inventive step. The Delhi High Court’s decision to set aside the cryptic order and remand the matter for fresh consideration underscores the judiciary’s commitment to ensuring that patent offices adhere to principles of natural justice and provide detailed justifications for rejections. This case sets a robust precedent for the analytical rigor required in assessing inventive step, particularly in the context of technical advancements in industrial processes.

Detailed Factual Background:  Agriboard International LLC, a U.S.-based company, filed a patent application in India (No. 202014010848) on March 13, 2020, for an invention titled "Efficient Method and Apparatus for Producing Compressed Structural Fiberboard." This application claimed priority from a U.S. patent application (No. 16/353,624) filed on March 14, 2019. The invention involved a method and apparatus for producing compressed structural fiberboard from agricultural fibrous matter, such as rice straw, using a novel extruder mechanism. The core innovation lay in the use of electric linear actuators to drive a cyclic ram, replacing conventional mechanical systems like drive flywheels and crankshafts, which offered greater control, energy efficiency, reduced maintenance, and enhanced safety.

The Indian Patent Office (IPO) issued a First Examination Report (FER) on July 21, 2020, raising objections on novelty under Section 2(1)(j) and inventive step under Section 2(1)(ja) of the Patents Act, 1970. The FER cited three prior art documents—D1 (US5945132A), D2 (US20090188642A1), and D3 (CN102026785B)—claiming that claims 1-15 were anticipated and obvious. D1, also filed by Agriboard Industries Inc. and granted in 1999, described a similar process for producing fiberboard but used a conventional mechanical extruder with a reciprocating ram driven by a connecting rod, crank, and flywheel.

Agriboard responded to the FER on February 21, 2021, distinguishing the invention from D1 by highlighting the shift from mechanical to electric linear actuators, which provided technical advantages. The response emphasized the invention’s specification, particularly paragraph 45, which detailed the linear actuators’ efficiency and control mechanisms. After a hearing and submission of written arguments on April 30, 2021, the Deputy Controller issued an order on June 16, 2021, rejecting the application under Section 2(1)(ja) for lack of inventive step, primarily relying on D1. The order also noted an unresolved objection regarding notarization of the power of attorney (PA).

Detailed Procedural Background: The procedural timeline began with the filing of the Indian patent application on March 13, 2020, following the U.S. priority application. The IPO’s examination process commenced upon Agriboard’s request, leading to the FER on July 21, 2020. Agriboard’s response on February 21, 2021, addressed the objections, and a hearing was held, followed by written submissions on April 30, 2021. The Deputy Controller’s rejection order on June 16, 2021, prompted Agriboard to file an appeal under Section 117A(2) of the Patents Act, registered as C.A. (COMM. IPD-PAT) 4/2022, before the Delhi High Court.

Agriboard also filed an application (I.A. 161/2022) to condone a 100-day delay in filing the appeal, which was granted based on the Supreme Court’s order in Suo Moto Writ Petition (C) No. 3 of 2020, extending limitation periods due to the COVID-19 pandemic. The appeal was heard by Justice Prathiba M. Singh, with Agriboard represented by Mr. Vineet Rohilla, Mr. Rohit Rangi, and Mr. Debashish Banerjee, and the IPO by Mr. Harish V. Shankar, Central Government Standing Counsel, along with Ms. S. Bushara Kazim and Mr. Srish Kumar Mishra. The court delivered its oral judgment on March 31, 2022, with the corrected order released on April 4, 2022.
Issues Involved in the Case

The court addressed the following key issues in adjudicating the appeal: Whether the Deputy Controller’s order rejecting the patent application for lack of inventive step was sufficiently reasoned and compliant with principles of natural justice. Whether the Controller adequately considered Agriboard’s submissions distinguishing the invention from the prior art, particularly D1.

Whether the shift from a mechanical to an electric linear actuator constituted a mere workshop modification or a patentable inventive step. Whether the impugned order’s reliance on D1, without addressing D2, D3, or the International Search Report (ISR), rendered it deficient. Whether the matter should be remanded for fresh consideration, and if so, what scope should be allowed for considering additional prior art.

Appellant’s (Agriboard’s) Submissions: Agriboard argued that the Deputy Controller’s order was cryptic and lacked reasoning, violating the principle of audi alteram partem. The order merely reproduced the FER’s objections on D1 without addressing Agriboard’s response, which distinguished the invention’s electric linear actuators from D1’s mechanical system. Referring to figure 9 and paragraph 45 of the specification, Agriboard emphasized that the invention’s extruder used linear actuators controlled by motion control software, offering superior efficiency, lower energy use, and reduced maintenance compared to D1’s flywheel-driven ram. The appellant contended that this represented a significant technical advance, not a routine modification.

Agriboard cited the U.S. Patent Office’s allowance of the priority application, which considered D1 and found the electric actuators non-obvious due to a "significant change in the operating principle of the ram." The appellant relied on Assistant Commissioner, Commercial Tax Department v. Shukla and Brothers, (2010) 4 SCC 785, to argue that reasoned orders are essential for fairness. Agriboard urged the court to set aside the order and remand the matter, asserting that the Controller failed to analyze how D1 rendered the invention obvious to a person skilled in the art.

Respondent’s (IPO’s) Submissions: The IPO defended the rejection, arguing that the order’s reasoning, though brief, was sufficient, as it extracted D1’s relevant disclosures. The IPO contended that the shift from D1’s mechanical extruder to electric linear actuators was a "workshop modification," lacking inventive step. The IPO noted that D1 was Agriboard’s own patent, granted in 1999 and set to expire in 2019, suggesting the new application was an attempt to extend the earlier patent’s term. The IPO cited US20100307349A1 to argue that electric linear actuators were widely used in pressing apparatuses over the 20-year period, rendering the invention obvious.

The IPO also highlighted the International Search Report (ISR) from the Patent Cooperation Treaty (PCT) Office, which found the claims lacking inventive step under Article 33(3). The IPO argued that the Controller’s conclusion was justified, and the court should not interfere with the technical assessment of obviousness.

• Detailed Discussion on Judgments Cited by Parties: The parties, primarily Agriboard, relied on judicial precedents to frame their arguments:
  • Assistant Commissioner, Commercial Tax Department v. Shukla and Brothers, (2010) 4 SCC 785 (Supreme Court of India): Cited by Agriboard, this case emphasized that reasoned orders are integral to the principle of audi alteram partem. The Supreme Court held that authorities must provide a fair procedure, apply their mind, and dispose of matters with a speaking order, ensuring transparency. The Delhi High Court applied this principle, finding the Deputy Controller’s order deficient for lacking analysis of Agriboard’s response to D1.
     
  • Manohar v. State of Maharashtra & Ors., AIR 2013 SC 681 (Supreme Court of India): Referenced by the court in its analysis, this Supreme Court decision reiterated that application of mind and reasoned decision-making are core elements of natural justice. The court used this precedent to underscore the Patent Office’s obligation to provide detailed justifications when rejecting patent applications.
     
  • The IPO cited US20100307349A1 (a U.S. patent document, not a judgment) to argue that electric linear actuators were common, but this was not considered in the impugned order, limiting its relevance. The ISR, while mentioned, was also not part of the Controller’s reasoning, and the court declined to opine on it or other uncited prior art (e.g., Sullivan et al., US6143220; Pittman et al., US8052842; DE102006004779 A1) referenced in the U.S. examiner’s analysis.
     
• Detailed Reasoning and Analysis of Judge: The court examined the invention’s specification, particularly figure 1 (depicting the apparatus’s cells) and figure 9 (detailing the extruder’s linear actuators), alongside paragraph 45, which highlighted the technical advantages of electric linear actuators over D1’s mechanical system. The court noted that the actuators’ linear motion, controlled by software, reduced energy, maintenance, and safety risks, distinguishing the invention from D1’s flywheel-driven ram.
   
• The court found the Deputy Controller’s order "completely lacking in reasoning," as it merely reproduced the FER’s objections on D1 without engaging with Agriboard’s response. The order failed to discuss how D1’s disclosures rendered the invention obvious or why Agriboard’s distinctions were inadequate. The court emphasized that Section 2(1)(ja) defines "inventive step" as a feature involving technical advance or economic significance that is not obvious to a person skilled in the art. To reject an application, the Controller must analyze three elements: the prior art’s disclosure, the invention’s disclosure, and the obviousness to a skilled person. The absence of this analysis rendered the order arbitrary.
   
• The court drew support from the U.S. Patent Office’s analysis, which found the electric actuators non-obvious over D1 due to a significant change in the ram’s operating principle. While not binding, this bolstered Agriboard’s claim of inventiveness. The court rejected the IPO’s argument that the shift to electric actuators was a workshop modification, noting that the Controller’s order lacked such reasoning and failed to consider the specification’s technical advancements.
   
• Citing Shukla and Brothers and Manohar, the court underscored that reasoned orders are essential to ensure fairness, particularly in patent rejections affecting applicants’ rights. The court declined to opine on D2, D3, or the ISR, as they were not addressed in the impugned order, but permitted the IPO to consider these upon remand. The court clarified that its observations on D1 were not binding on the Controller, ensuring a fresh and unbiased reconsideration.
   
• Final Decision: The Delhi High Court allowed the appeal (C.A. (COMM. IPD-PAT) 4/2022), setting aside the Deputy Controller’s order dated June 16, 2021, and remanding the matter to the Indian Patent Office for fresh consideration within four months. The IPO was permitted to consider D1, other prior art (D2, D3), and the ISR, ensuring a comprehensive evaluation.
   
• Law Settled in This Case: This case established several pivotal principles in Indian patent law, particularly for inventive step assessments:
  • Requirement of Reasoned Orders: Patent rejections, especially for lack of inventive step, must be supported by a speaking order analyzing the prior art, the invention, and the obviousness to a person skilled in the art, as mandated by Section 2(1)(ja) and natural justice principles.
  • Three-Element Analysis for Inventive Step: Controllers must evaluate the prior art’s disclosure, the invention’s features, and the reasoning for obviousness, unless the lack of inventiveness is patently clear.
  • Engagement with Applicant’s Submissions: The Patent Office must address applicants’ responses to prior art objections to ensure procedural fairness and avoid arbitrary decisions.
  • Scope of Remand: Courts may remand matters for fresh consideration, allowing the IPO to consider additional prior art not addressed in the original order, while ensuring impartiality.
  • Judicial Oversight: Courts will intervene when patent rejections lack reasoning, reinforcing transparency and accountability in intellectual property administration.

Case Title: Agriboard International LLC Vs Deputy Controller of Patents and Designs
Date of Order: March 31, 2022
Case No.: C.A. (COMM. IPD-PAT) 4/2022
Neutral Citation: 2022 SCC OnLine Del 940
Name of Court: High Court of Delhi
Name of Judge: Hon’ble Ms. Justice Prathiba M. Singh

Disclaimer: The information shared here is intended to serve the public interest by offering insights and perspectives. However, readers are advised to exercise their own discretion when interpreting and applying this information. The content herein is subjective and may contain errors in perception, interpretation, and presentation.

Written By: Advocate Ajay Amitabh Suman, IP Adjutor - Patent and Trademark Attorney
Email: ajayamitabhsuman@gmail.com, Ph no: 9990389539