EXTRATERRITORIALITY IN INDIAN PATENT LAW WITH SPECIFIC REFERENCE TO SOFTWARE

INDUSTRY

Introduction

Intellectual property rights,1 like all other rights granted by a state, are only limited to the
territoriality of the state. The rationale behind this is that the sovereign state only has a right to
govern its own territory and hence, no act of the state can constitute an interference on the
territory of another state.

The territoriality of the Patent, in particular, pose serious threats in our fast-growing global
economy. The impact is witnessed in terms of inadequate protection, double infringement and
compromised integrity of the patent rights. This is especially alarming with regard to the
software industry and communications and networking fields.

Problems of territoriality in software industry

This paper deals with position of territoriality in India, the jurisprudence and rationale behind
it and the difference in major aspects of patent governance. The problems ensuing from
territoriality are discussed with specific reference to the software industry. To make the
discourse exhaustive and all-encompassing, the treatment of granting patent across US, UK
and India are discussed along with cases raising the problem of territoriality and the problems
ensuing therefrom. While analyzing the current efforts at harmonizing the system, the paper
then throws light on all aspects of the debate regarding the universalization of substantive
patent laws.

The position in India and the jurisprudence/ rationale behind it

The patent rights in India can be granted by getting an invention registered under the Patent
Act, 1970. Section 1 of the act provides that the act shall extend to the whole of India.

An invention to get Patent rights must quality the criteria of Novelty, Inventive step, Industrial
application. Additionally, it should not fall into the category of non-patentable inventions under
Section 3 and Section 4 of the Patents Act, 1970.

1
Hereinafter IPRs.
Exclusive rights are given to the Patentee making, importing, using, offering for sale or selling
the patented process.2 This right is limited to the jurisdiction of India. 3 Surprisingly, Residents
are not eligible to apply for patents outside India without prior permission. 4

Regarding the grant of rights, section 84 of the Patents Act states that the fact that a patented
invention is not used in the territory of India is a ground to claim compulsory licensing.

India’s effort in the direction of harmonization

In order to claim the right to priority, as per the Paris Convention route, an application has to
be filed in the foreign country within 12 months from filing in the country where it was filed
in the first place. The same rule applies when the applicant wishes to file in other countries as
well, i.e., he has to file in all other countries within 12 months from the date of filing in the
first country. 5 The procedure has been given leverage as well.6

To remove the problem arising from the procedural differences in the application process and
reduce the duplication of efforts for both applicants and national patent offices, the Patent
Cooperation Treaty, 1970 was formed.7 An application under PCT is deemed to be an
application made in India.8

India became a party to TRIPS agreement in 1994 w.e.f. 2005. While the TRIPS purported to
harmonize the treaty, there were many drawbacks as well, which are discussed at length.
Further, in 1998 India was made a party to Paris Convention for Protection of Industrial
Property. India joined Budapest Treaty on the International Recognition of Microorganisms for
the purposes of Patent Procedure on September 17, 2001 and is also actively participating in
the discussions related to SPLT.

Judicial decisions Commented [lp1]: More research is reqired

In WWE v. Reshma Collection9, it was held that a Plaintiff can avail territorial jurisdiction by
carrying on business through websites despite no physical presence.

2
Section 48 of the Patent Act, 1970.
3
Section 49 of the Indian Patent Act, 1970.
4
Section 39 of the Patent Act, 1970.
5
Section 135 of the Indian Patent Act, 1970.
6
Section 138 of the Patent Act, 1970.
7
“Introduction to the PCT System”, available at http://www.wipo.int/pct/en/seminar/basic_1/intro.pdf last visited
on03-03-2008.
8
Section 7A of the Patent act, 1970.
9
Courts do grant extra-territorial injunctions on occasion which can be classified as those that
impact a foreign defendant and those that affect actions in foreign state, whether or not they
pertain to a foreign defendant. In cases such as Tata Sons v. Ghassan Yacoub & Ors.10 and
M/s Kaleidoscope (India) Pvt. Ltd v. Phoolan Devi11 the Indian courts have granted injunction
to foreign defendants.

The Supreme Court in Oil and Natural Gas Commission v. Western Co. of North America,
restrained a party from proceeding further with an action in an American court, in view of an
arbitration agreement. The Supreme Court, in an earlier case of Tractorexport Moscow v.
Tarapore and Co.12, restrained a party from proceeding further in an action initiated in
Moscow. It was held in the case of Neiveli Ceramics & Refractories Ltd. v. Hindustan
Sanitary & Industries Ltd.13 that;

If the infringing goods of the defendants are distributed by their agents carrying on
business within the territorial jurisdiction of a court, that court has jurisdiction to
entertain a suit for infringement.

The difference in major provisions in various jurisdictions

While the procedural laws of patent have been significantly universalized, there are various
differences in substantial provisions across nations. It is important to highlight the difference
in the major provisions which create the disparity in the legal standards of patenting.

Highlighting a few major aspects, regarding priority, the US contrary to the rest of the world
follows the file to file system instead of the first to invent system,14 and also refuses to
recognize a grace period. 15 There is also a difference in the definition of prior art among
jurisdictions. While majority of the countries refer prior art as the knowledge available to public
preceding invention, Japan says it is the knowledge preceding the moment of filing patent. 16
US, China, India and some other countries follow a blended or relative standard, which means written
disclosure anywhere but oral or other form of disclosure within its territory only will be considered as

10
(2004) 29 PTC 322(De
11
AIR 1995 Del 316
12
AIR 1971 SC 1
13
[PTC (Supply)(2) 341(Mad)]
14
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=841404.
15
Carlos M. Correa University of Buenos Aires, Bellagio Dialogue on “Intellectual Property and Sustainable
Development: Revising the agenda in a new context” , 24 – 28 September 2005, Bellagio , Italy available at
http://www.wipo.int/export/sites/www/meetings/en/2006/scp_of_ge_06/presentations/scp_of_ge_0 6_correa.pdf
16
Section 29 of the Japan Patent Law
prior art. Another difference is that unlike India,17 the US doesn’t recognize Traditional/Indigenous
knowledge as prior act.

TRIPS has made an effort to harmonize the Patent laws but while it provides certain guidelines like the
test of Novelty, Inventive step, Industrial application etc., all the countries have different standards
and tests for the same. Japan and EPC adopts the universal novelty standard, whereas US, China and
India adopt a blended or relative standard. (write india ka any case defining novelty). As a test for
inventive step, US is the only country which consider secret prior art (conflict application) as prior art
for deciding the unobviousness. The US apply the graham approach EPC adopt the "problem-and-
solution approach". (write india ka latest test for inventive step).

The test for Industrial applicability is also different across jurisdictions. A classic difference can be
highlighted in terms of what the countries find acceptable as industry. For example, in US the word
Industry includes "software industry", the "sex industry" and the "patent industry", in France only the
traditional meaning is accepted and hence, even software was deemed unpatentable.18

The TRIPS gives the states the leverage to exclude certain inventions from patentability.19
Consequently, the inclination of different countries to give exemption and in what degree, in the name
of public order or morality, protection of health, public order or morality etc. varies substantially. Commented [lp2]: Authority and write that US gives less
preference to public morality than EU and India
TRIPS also provides for limited exceptions to the exclusive rights conferred by a patent,20 which India
has applied in terms of providing an exception to experiment, research and education.21 See https://indiankanoon.org/doc/74163100/

US follows the National exhaustion doctrine,22 European union follows the regional exhaustion and
Japan follows the International exhaustion Doctrine23. India.24

Problems ensuing from territoriality (difference in substantial and procedural laws,

divided infringement has no law in India, Case studies of problems, at least 3)

Forceful extra territorial imposition of norms

A big problem arising from territoriality is the forceful imposition of laws by a country in
situations where there is a conflict of laws and there is no universal norm at disposal. An
illustration can be the situation In 2010, India and Brazil accused the EU and the Netherlands of

17
Section 25 (1) (k) and section 64(1)(q) of the Indian Patent Act
18
Schlumberger case
19
Article 27 (2) and Article 27 (3) of TRIPS.
20
Article 30 of TRIPS.
21
Section 47 (3) of the Patent Act, 1970.
22
Jazz Photo Corp v International Trade Commission
23
BBS case
24
Section 107A(b)
violating international obligations25 In this context, the controversy was over the freedom of a Paris
contracting state and TRIPS Member to regulate conduct within its territory that affects the possibility
of other contracting states and Members to determine the availability of inventions within their
territories. In the view of the protesting states the seizure of the pharmaceuticals, even though it was
physically carried out on the prescribing state’s territory, violated the principle of territoriality of
patent law because the effects of the conduct were felt in their territories.26

Unilateral acts like this may be wrong:

The US issued a special 301 report under their Trade Act of 1974 as a unilateral measure meant
for creating pressure on the countries to extend IP rights protection beyond the ambit of the
TRIPS agreement. This report is often cited as an extra territorial application of the native laws
of a country, which is in contravention with the set norms of the WTO.27 Commented [lp3]: Not very important summarise in a
line but keep citation :p
Problems in current universalization

One of the major problems of PCT is the length of time it allows between filing a priority application
and commencing national phase processing leading to a long period of uncertainty for third parties.28

Difference in Standard of protection and enforceability see for authorites29

The applications pertaining to one international application are subjected to different substantive test
with regard to patentability in different states. This leads to various problems. Firstly, there is Commented [lp4]: Research required

uncertainty regarding the eligibility to obtain protection worldwide and hence, releasing the invention
in one place, makes it susceptible to double infringement.. Secondly, countries with lower standards Commented [lp5]: RESEARCH REQUIRED!!

are affected economically as well as it impacts their ease of doing business. This can be illustrated by
the analysis of the BRICS countries’ patenting laws. In Brazil, Russia, India, and China, despite weak IP
protection, developed nations cannot afford to ignore the market opportunities here.30 In all four
States, intellectual property infringement is widespread and problematic.31 Many of these States have
rushed to meet TRIPS deadlines with the threat of sanctions otherwise.32 This has created an incentive
to pass legislation to meet timelines, but failure to adequately implement or protect those rights

25
Abbott 2009; Grosse RuseKhan& Jaeger 2009
26
WTO WT/DS408/1, G/L/921, IP/D/28, European Union and a Member State - Seizure of Generic Drugs in
Transit - Request for Consultations by India, 19 May 2010; WTO, WT/DS408/3, European Union and a Member
State - Seizure of Generic Drugs in Transit - Request to Join Consultations - Communication from Brazil, 2 June
2010.
27
https://dipp.gov.in/sites/default/files/ru1935.pdf
28
29
http://www.tiplj.org/wp-content/uploads/Volumes/v18/v18p55.pdf page 7
30
31
32
granted.33 For example, in India, IP enforcement is problematic because the courts are so backed up
that the average time to get a case heard is around twelve years.34 As an example of how fast
technology can change in twelve years, keep in mind that the first digital MP3 player was released in
1998 and the first iPod came out in 2001.35 Commented [lp6]: Just google this paragraph

Trade related problems Commented [lp7]: Problems in trade related requires

research too
TRIPS provides some general rules to ensure that procedural difficulties in acquiring or maintaining
IPRs do not nullify the substantive benefits that should flow from the Agreement. The TRIPS
Agreement requires Member countries to make patents available for any inventions, whether
products or processes, in all fields of technology without discrimination, subject to the normal tests
of novelty, inventiveness and industrial applicability.

It is also required that patents be available and patent rights enjoyable without discrimination as to
the place of invention and whether products are imported or locally produced (Article 27.1).36
However TRIPS does not set the standard or define novelty, inventiveness or industrial applicability. So
the definition of above three basic criteria of patentability vary from country to country. There are
flexibilities provided to the member countries to exclude inventions contrary to public order or
morality; which explicitly includes inventions dangerous to human, animal or plant life or health or
seriously prejudicial to the environment.

Software Industry: Problems

Advances in networking and communications technologies make practicing patented

inventions across national borders cost-efficient. While U.S. patent law is moving toward
greater extraterritoriality, existing law does not hold a potential infringer liable for practicing
a patented process in multiple jurisdictions. To solve the problem of divided infringement,
this Note proposes adopting a substantial effects test, constrained by comity concerns, to
expand the transnational scope of U.S. patent law.

Generally, in order to infringe a U.S. patent, the entire patented invention must be practiced
within the United States. However, as technology evolves it is becoming harder to contain
inventions within national borders. Specifically, the advancement of networking and
communications technologies allows for the rapid, cost-efficient dissemination of information

33
34
35
36
across countries’ borders. As a result, the number of inventions that are being practiced in
multiple jurisdictions, or the practicing of divided infringement, is on the rise. Potential
infringers that commit divided infringement are practicing patented inventions, escaping
liability in all jurisdictions, but still reaping the rewards of the American market.
Consequently, potential infringers who commit divided infringement are undercutting the
incentive to innovate, the primary purpose of the patent system. To solve the problem of
divided infringement, this Note proposes expanding the extraterritorial scope of U.S. patent
law by adopting a substantial effects test, limited by comity concerns. Commented [lp8]: The paper is at
https://www.nyulawreview.org/wp-
content/uploads/2018/08/NYULawReview-82-1-
Cases Wasserman.pdf
I didn’t ccp the relavant portion because it is too much.
The following cases are illustrative of the problems that arise due to the territorial variations Once you summarise ill add a few authorities from the artile
Pages 22-27
in laws granting software patent. It has a lot of material for software industry

Case 1: NTP Inc. v Research In Motion Ltd

Research in Motion (RIM) was sued in November 2001 by NTPC Inc for infringement of five
US patents that covered the components necessary for integrating an email service and wireless
network. NTPC owned Blackberry which had a relay component that was equivalent to one of
the claim limitations in NTP patents, was located in Canada. The RIM were held to infringe all
patents except relay component (located in Canada). All other elements of NTP’s claim was
located in USA.

RIM appealed to the Federal Circuit, challenging the District Court's claim interpretation, as
well as disputing the applicability of § 271(a) to its extraterritorial operations, based on the
point that the relay component of the BlackBerry system was located in Canada.

The Federal circuit concluded that the beneficial use of the Blackberry devices within US
established territoriality under Section 271 (a).

Case 2: Menashe Business Mercantile Ltd. & Anor v William Hill Organization Ltd.

In October 2001, William Hill was sued by Menashe in UK. The patent granted to Menashe is
"Interactive, computerized gaming system with remote control".

William hill enabled users in UK to install software program on their computers. However, the
servers were located in Antigua. Menashe sued William hill for a contributory
infringement.William accepted that the CD containing the software program was an essential
element of the invention, but disputed that the patent was not put into effect in UK, since the
server was located in Antigua. The decision was in favor of Menashe and it was held that:
Commented [lp9]: https://www.duo.uio.no/bitstream/ha
ndle/10852/60810/MAZALIN_Master-Thesis--1-
.pdf?sequence=1&isAllowed=y see from page 38 of the file
the law pre and post alice in detail just to mention all cases

"it would be wrong to apply the old ideas of location to inventions of the type under
Commented [lp10]: Footnotes
consideration in this case." Thus the supply of the CD in the United Kingdom to the 1. Guidelines for Examination of Computer Related
Inventions (CRIs). (2017). Office of the Controller
United Kingdom punter will be intended to put the invention into effect in the United General of Patents, Designs and Trade marks.
2. Guidelines for Examination of Computer Related
Kingdom". Inventions (CRIs). (2017). Office of the Controller
General of Patents, Designs and Trade marks.
3. Biswanath Prasad RadheyShyam vs Hindustan
Metal Industries Ltd (AIR 1982 SC 1444)
Conclusion from the above cases: 4. Salmond L.J. in Rado v. John Tye& Son Ltd., 4
(1967) RPC 297
5. Biswanath Prasad RadheyShyam vs Hindustan
From both the cases, we can conclude that, patent rights may be enforced even though one of Metal Industries Ltd (AIR 1982 SC 1444)
6. 7 F. Hoffmann-La Roche Ltd vs Cipla Ltd., Mumbai
the elements in the claimed system or method is located outside the territory of the patent, Central, ... on 7 September, 2012
7. Biswanath Prasad RadheyShyam vs Hindustan
provided that the beneficial use of the system occurs within the territory of the patent granted. Metal Industries Ltd (AIR 1982 SC 1444)
8. IPAB in Yahoo Inc. (Formerly Overture Service Inc.)
v. Assistant Controller of Patents and Designs &
In this new age of complex patent enforcement scenarios, to strengthen the patent rights of an Rediff.com India Limited (OA/22/2010/PT/CH dated 8th
December, 2011)
invention relating to cloud computing, a careful strategy should be adopted for drafting and 9. Guidelines for Examination of Computer Related
Inventions (CRIs). (2017). Office of the Controller
filling patent applications. General of Patents, Designs and Trade marks.
10. Guidelines for Examination of Computer Related
Inventions (CRIs). (2017). Office of the Controller
Different treatment across jurisdictions (pre- Alice case, post- Alice case) General of Patents, Designs and Trade marks.
11. Guidelines for Examination of Computer Related
Inventions (CRIs). (2017). Office of the Controller
Indian case laws: General of Patents, Designs and Trade marks.
12. IPAB, OA/26/2009/PT/DEL, 5th July, 2013
13. IPAB, OA/22/2010/PT/CH, 8th December 2011
There have been several cases in India regarding the software patent cases, and the issues 14. IPAB, OA/22/2009/PT/DEL, 28th December, 2012
relating to the patents have been discussed in the same. Some of the most important case 15. Appellate Board DELHI BENCH 12 June 2013
laws are as under: ORA/08/2009/PT/CH
16. M.P. Nos. 8/2010 and 59/2010 in ORA NO.
20/2009/PT/CH
Electronic Navigation Research Institute Vs. Controller General of Patents12: 17. Diamond v. Diehr, 450 U.S. 175
18. Cuno Engineering Corp. v. Automatic Devices
This case was in relation with the patent application number 3624/DELNP/2005 for the Corp., 314 U.S. 84 (1941) 1
19. Gottschalk v. Benson, 409 U.S. 63
invention titled "A CHAOS THEORETICAL EXPONENT VALUE CALCULATION SYSTEM" in 20. Parker v. Flook, 437 U.S. 584
which the application was denied by the patent office on the ground that the proposed system 21. Diamond v. Diehr, 450 U.S. 175
fell under the category of mathematical formulae even if it resulted in technical effects. The 22. KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398
invention claimed a mathematical method to determine and evaluate the time signals. 23. Alice Corp. v. CLS Bank International, 573 U.S. __,
134 S. Ct. 2347 (2014)
24. Appeal from the United States District Court for the
Yahoo v Controller of Patents &Rediffcom India Limited13: Eastern District of Texas in No. 6:13-cv-00447-JRG,
Judge J. Rodney Gilstrap.
In this case, section 3(k) was discussed in great detail, and the patent application was rejected 25. http://www.inkidee.com/
26. DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d
owing to a business model being embodied via technology. It was implied that the business 1245 (Fed. Cir. 2014)
model disguised as technological innovations would not meet the criteria for the patents being 27. Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, No.
granted in India. 2010-1544
28. DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d
1245 (Fed. Cir. 2014)
In the case of Yahoo, the patent claims included features of a software tool targeting search 29. Journal of Intellectual Property rights, Vol 20, July
terms relevant to Yahoo's business. Accordingly, the IPAB concluded that the technical 2015, pp 210-222
advance proposed by Yahoo was simply a method of doing business, even if it was a
technically smarter way of doing business and, therefore, cannot be patented in accordance
with provisions of Section 3(k) of the patents act.

Accenture global service GMBH vs. the assistant controller of Patents & Designs14:

This case relates to Indian patent application number 1398/DELNP/2003, which is now a
granted patent as patent number 256171.This patent application was initially refused for patent
registration by patent office under the provisions of Section 3(k) of the Indian patents act.

However, the patent applicant appealed before the IPAB, and as per the Controller's decision,
it was held that the instant invention as claimed is not software per se but, a system is claimed
which is having the improvement in web services and software. Accordingly, it was held that
the invention since not falling into the category of section 3(K), viz software per se,
corresponding objection was waived and the patent was granted.

Enercon India Limited v. AloysWobben, Germany15:

In this particular case, an invention was presented which had the automated steps for
controlling the wind turbine which depended on the external conditions by the use of computer
system. The board decided that it was not merely a computer software per se or a set of rules
or procedure like algorithms and thus its patentability cannot be objected to. 16 The patent
application was granted.

Case Laws in USA:

First software patent was granted to Martin Goetz and British Petroleum Company in the US
and the world. Diamond v. Diehr17 defined the case laws, and IT patents took a nebulous form
where it was held the execution of the physical process by running a computer program did
not preclude the patentability.

Cuno Engineering v. Automatic Devices18:

Flash of a genius test- A patent eligible device or process:

 The new device, however useful must reveal the creativity and not just the calling.

 The new invention cannot be the mere 'tinkering'.

 It led to the birth of Inventive step/ Nonobviousness.

Gottschalk v. Benson 19:

This case determined that a mere algorithm to convert binary-coded decimal (BCD) into a pure
binary number without any practical/ industrial application cannot be patented. The patent for
this algorithm was not granted.

Machine or Transformation test: a patent can be granted if-

 It is tied to some apparatus or machine.

 Transform an article into a different thing or state.

Parker v. Flook 20:

Updating a numerical value (counter/ alarm limit) which is used in the chemical process of
hydrocarbon conversion. A mathematical formula which was previously unknown needed to
be used and solved. But updating counter value did not have the application to this process
as such, and the mathematical formula could not be wholly preempted. The effective change
was in a state of non- physical thing. Therefore, the patent was denied.

Diamond v. Diehr 21:

In this particular application, a method of operating a rubber molding press with the help of
digital computer and software using an unknown mathematical equation, i.e., ln v=cz +x. The
patent was not granted for the equation, but it was granted for the process as it affected the
change in physical state of things.

KSR v. Teleflex 22:

TSM test: To be patent eligible, three criteria need to be considered.

1. Teaching

2. Suggestion

3. Motivation

If in the known knowledge/ existing documents/ prior art the answer to the above three
questions is a no, then the process/ invention is eligible to get patented.

Alice Corp. V. CLS bank 23:

It was a hedging software which could be used in financial trading systems and could reduce
counterparty and settlement risk. It involved the use of third party or an escrow. The judges
decided even though it would take an infinitesimal amount of time, this process could be
carried out manually in the pre-internet era. Hence, the element of novelty was missing in the
invention, and therefore it could not be patented.

Smartflash v. Apple 24:

The idea behind the alleged invention was such that data would be taken from the supplier to
a carrier after determining the cost/ payment to provide access to the relevant content. This
process was novel and could not have existed in the pre-internet era. As such, the patent was
granted.

Supreme court of USA, hence determined a two-part test for determining if the patent could
be granted:

A. determine whether the claims at issue are directed to one of those patent-ineligible
concepts (judicial exceptions), and

B. search for the 'inventive concept'- i.e., "an element or combination of elements that is
"sufficient to ensure that the patent in practice amounts to significantly more than a
patent upon the [ineligible concept] itself.25

In the above case following JUDICIAL EXCEPTIONS were carved out:

  laws of nature/natural principles,

 natural phenomena; and / or

 natural products.

DDR Holdings, LLC v. HOTELS.com 26:

The patent was filed to execute and assist financial-trading systems resulting in the reduction
of settlement and counterparty risks.

 They do not cite or ask for patenting any mathematical algorithm or idea. Neither do
they recite any business practice or longstanding commercial practice.

 The issue was of a novel process which would be used to interact with internet to get
the desired result.

The implementation of the idea was beyond the "routine", "conventional" and "generic" and
hence the patent was granted.

Ultramercial, Inc v. Hulu, LLC 27:

The patent was regarding the interactive advertisements which made the access to the
premium content to be available. So, basically, the patents were using these advertisements
as a form of currency. The effect for the same was intangible, and hence patent was not
granted.

DDR Holdings, LLC v. HOTELS.com 28:

The uniform way to represent the website/ pages in a user-friendly format. For example, every
website used to have the format of its own, but after the makemytrip.com paved its way in the
market, everything became uniform and generalized. The new page was hybrid that merged
the relevant content in a user-friendly manner.

The effects were tangible in nature as the content was build and made into a new format, and
therefore the patent was granted.

In particular, India maintains a per se rule against the patentability of computer programs.37
Software in cross border trade problems (very brief) Commented [lp11]: Ill see if I can find anything..please
remind when u see this comment
Potential solutions

Ways to remove territoriality and harmonize or bring uniformity

many of the differences can well be overcome through cooperation and effort.”38

37
In particular, India maintains a per se rule against the patentability of computer programs.
38
Takeshi ISAYAMA,Commissioner of JPO. Toward Desirable IP Systems ? Taking the Patent System as an
Example. Chairman's Note for the Informal Meeting of the Heads of Patent Offices in Developed Nations, May
19-20, 1999. Available at http://www.eps.nagoya-u.ac.jp/examin/991d/991dej.html
In response to international calls for harmonization of national and regional patent laws, negotiations
had started, as early as 1985, on a draft Treaty Supplementing the Paris Convention which was
discussed at the first part of a Diplomatic Conference in 1991, but never concluded.39

While developing countries were reluctant to accept treaty rules that would erode their capacity to
design national patent regimes, the United States also decisively contributed to the collapse of
negotiations. United States was under pressure to give up its ‘first to file’ system. It considered,
however, that the negotiating package offered little in exchange for the abandonment of such system.
In its view, a ‘balanced package’ would have to include, inter alia, a grace period, generally opposed
in Europe.40

The failure of the 1980’s WIPO’s substantive harmonization attempt, however, turned out soon into
a resonant success for the proponents of higher and more uniform standards of patent law.41

For the sake of completeness, it should be added that important steps in respect of such
harmonization have been achieved in the framework of certain regional systems, such as the European
Patent Organization (EPO), the Eurasian Patent Organization (EAPO), the African Regional Industrial
Property Organization (ARIPO) and the Organization africaine de la propriétéintellectuelle (OAPI), as
well as through the harmonization of national laws within certain regional systems, as for instance the
Andean Pact.42

WIPO revived the patent harmonization process, albeit limited to procedures and formalities for
patent applications. On June 2, 2000, the Patent Law Treaty (PLT) was signed by 43 countries, with the
support of the United States and the European Patent Office.43

39
Document prepared by the International Bureau, “SUGGESTIONS FOR THE FURTHER DEVELOPMENT
OF INTERNATIONAL PATENT LAW”, STANDING COMMITTEE ON THE LAW OF
PATENTS,FourthSession,Geneva, November 6 to 10, 2000 available at
http://www.wipo.int/edocs/mdocs/scp/en/scp_4/scp_4_2.pdf.
40
Carlos M. Correa, University of Buenos Aires, AN AGENDA FOR PATENT REFORM AND
HARMONIZATION FOR DEVELOPING COUNTRIES, available
athttp://www.wipo.int/meetings/en/2006/scp_of_ge_06/presentations/scp_of_ge_06_correa.pdf.
41
Document prepared by the International Bureau, “SUGGESTIONS FOR THE FURTHER DEVELOPMENT
OF INTERNATIONAL PATENT LAW”, STANDING COMMITTEE ON THE LAW OF PATENTS,Fourth
Session, Geneva, November 6 to 10, 2000 available at
http://www.wipo.int/edocs/mdocs/scp/en/scp_4/scp_4_2.pdf.
42
Document prepared by the International Bureau, “SUGGESTIONS FOR THE FURTHER DEVELOPMENT
OF INTERNATIONAL PATENT LAW”, STANDING COMMITTEE ON THE LAW OF PATENTS,Fourth
Session, Geneva, November 6 to 10, 2000 available at
http://www.wipo.int/edocs/mdocs/scp/en/scp_4/scp_4_2.pdf.
43
Carlos M. Correa, University of Buenos Aires, AN AGENDA FOR PATENT REFORM AND
HARMONIZATION FOR DEVELOPING COUNTRIES, available at
http://www.wipo.int/meetings/en/2006/scp_of_ge_06/presentations/scp_of_ge_06_correa.pdf.
In the year 1998 the Standing Committee on the Law of Patents (SCP) was created.After the adoption
by a Diplomatic Conference on June 1, 2000, of the Patent Law Treaty (PLT), which harmonizes and
streamlines formal procedures in respect of national and regional patent applications and patents, the
need for patent law harmonization going beyond formalities led WIPO's Standing Committee on the
Law of Patents (SCP) to decide to initiate work on harmonization of substantive patent law.44 A
contracting Party under PCT is free to provide for requirements that are more generous from the
viewpoint of applicants and owners, but are mandatory as to the maximum that an Office can require
from applicants or owners.45 Patent law treaty explicitly excludes the substantive provisions.46

Substantial patent law treaty (criticism, comments of main countries and India’s
position, whether soft law will be better)

In November 2000, the SCP, at its fourth session, agreed that first draft provisions for a future legal
instrument should focus initially on a number of issues of direct relevance to the grant of patents, in
particular, the definition of prior art, novelty, inventive step/non-obviousness, industrial
applicability/utility, the drafting and interpretation of claims and the requirement of sufficient
disclosure of the invention. The SCP further agreed that other issues related to substantive patent law
harmonization, such as first-to-file versus first-to-invent systems, 18-month publication of
applications and a post-grant opposition system, would be considered at a later stage..

The WIPO General Assembly, later, adopted a statement which read as follows: "(i) The General
assembly considered the proposal submitted by the Delegations of Japan and the United States of
America. No consensus has been reached thereon. "(ii) It was decided that the date of the next
Standing Committee on the Law of Patents (SCP) should be determined by the Director General
following informal consultations that he may undertake." At the end of the meeting, the participants,
excepting the delegate from Brazil, adopted a statement recommending the Director General to
address the following six issues in an accelerated manner within WIPO: prior art, grace period, novelty,
inventive step, sufficiency of disclosure and genetic resources.

Other efforts..just mention in 1-2 lines the name of treaties in page 69 end to 72 of the report.

Presumption against territoriality

Rationale of AT&T v. Microsoft47 illustrate the challenges that technological advancements pose on
the territoriality of U.S. patent law. Supreme Court precedent, however, dictates that the presumption

44
http://www.wipo.int/patent-law/en/harmonization.htm.
45
http://www.wipo.int/treaties/en/ip/plt/summary_plt.html
46
Article 2(2) of the PLT
47
against extraterritorial application of U.S. law should govern this issue. The presumption restrains U.S.
law in accordance with the principles of comity and national treatment so as to avoid conflicts
between the laws of theUnited States and those of other sovereign nations. In AT&T v. Microsoft48,
the Federal Circuit failed to heed the Supreme Court’s application of this presumption in Deepsouth
Packing and instead chose to interpret § 271(f) in a technology-dependent manner that encompassed
copies of software code made abroad from U.S.-supplied master copies. This interpretation broadens
the scope of § 271(f) extraterritorially such that protection of software inventions from patent
infringement can now be obtained under U.S. law irrespective of the jurisdiction in which the
infringement occurs.49

WTO dispute settlement

India is a WTO member and therefore bound by the TRIPS agreement,50 calling into question the
agreement’s effectiveness. Fortunately, TRIPS incorporates dispute resolution mechanisms through
which the United States can work to improve global copyright enforcement, offering measured steps
toward better copyright protection for software in cross-border trade51 adopted a systematic process,
known as “Special 301,” for improving foreign nations’ compliance with TRIPS. Under Special 301, the
United States Trade Representative (“USTR”) “must identify those countries that deny adequate and
effective protection for [intellectual property rights] . . . .” Violations trigger the USTR to request
consultations with the offending nation under the WTO Dispute Settlement Understanding. In 2007,
for example, the USTR requested consultations with China over lax Chinese enforcement of copyright
anti-piracy laws. When consultations failed to reach a resolution, the USTR escalated the issue by
requesting that a WTO panel investigate the United States complaint.52 Further escalation could result
in the WTO assessing damages (known as compensation) Commented [lp12]: Have to see
http://www.bu.edu/law/journals-
archive/bulr/documents/ernstmeyer.pdf after everything is
Comity and its concerns (non-uniformity, condition of reciprocity, substantial effects done
test not sure if in this category or not)

In earlier cases, the Supreme Court has been hesitant to extend the reach of U.S. patent law
outside the country, invoking a presumption against extraterritoriality. 53The decision to hear a

48
49
https://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=1170&context=dltr
50
World Trade Organization
51
e J.H. Reichman, Universal Minimum Standards of Intellectual Property Protection Under the TRIPS
Component of the WTO Agreement, 29 INT’L LAW. 345, 360-61 (1995)
52
OFFICE OF THE U.S. TRADE REPRESENTATIVE, 2008 SPECIAL 301 REPORT 18 (2008), available at
http://www.ustr.gov/assets/Document_Library/Reports_Publications/
2008/2008_Special_301_Report/asset_upload_file553_14869.pdf.
53
Microsoft Corp. v. AT&T Corp.,
case that reviews whether a patent owner can recover profits lost outside of the U.S. due to
infringement under 271(f) could have significant consequences on damages awards.
U.S. Supreme Court agreed to hear an appeal addressing whether a patent owner proving
infringement under 35 U.S.C. § 271(f) is entitled to damages suffered outside the United
States, or whether a presumption against any extraterritorial reach of U.S. law excludes
recovery for foreign injuries.

The case presents an important issue that could expand the availability of damages in cases
involving the export of components used to assemble infringing products outside the United
States. WesternGeco LLC v. ION Geophysical Corp.,54and possibly to more broadly cover
any instance where a company lost profits around the world due to patent infringement under
U.S. law.

SEE WHAT ISRELEVANT

In the absence of cross-border laws, the doctrine of comity is used.55Comity, in common law and civil
law countries,56 mandates the serious consideration,57 of a foreign court’s order. The theory of Conflict
of Laws prefers the jurisdiction of the State having most intimate contact with the issues on functional
lines to avoid forum shopping. 58 Thus, the "most intimate contact" or "closest concern"
doctrine,59should be applied even in respect of interlocutory orders.60It is the discretionary power of Commented [lp13]: That India should be the place of
the court or tribunal in which recognition is being sought,61 and comity only demands consideration,62 Main proceedings
of an order,63 not blindly follow an order made by a foreign court.64 Weight and persuasive effect of
a foreign order depends on the facts and circumstances.65Foreign judge is the person best qualified to
decide if the proceedings in his Court should be allowed to continue,66 or stay proceedings.67 Comity
demands a policy of non-intervention,68 as the court can’t decide whether a foreign courtCourtforum
non conveniens.69

Need for a unified scheme/ harmonization (advantages)

The patent systems in different countries are not the same, which often create problems for
them. They often shy away from the countries where protection is weak or nil for their

54
55
¶7 interpretation
56
Joel R. Paul, Comity in International Law, 32 HARV. INT’L L.J. 1, 4 (1991).
57
McKee v. McKee, 1951 AC 352
58
Surinder Kaur Sandhu v. Harbax Singh Sandhu, (1984) 3 SCC 698.
59
Chandan Mishra v. Union of India &Ors., W.P. (CRL) No. 1088 of 2015.
60
Alcon Electronics Private Limited v. Celem SA, 2017 2 SCC 253.
61
Securities and Exchange Commission v. Stanford International Bank, Ltd., Civil Action No. 3:09 -cv-0298.
62
McKee v. McKee, 1951 AC 352.
63
Surya Vadanan vs. State of Tamil Nadu, (2015) 5 SCC 450.
64
Dhanwanti Joshi v. Madhav Unde, (1998) 1 SCC 112.
65
Elizabeth Dinshaw v. Arvand M. Dinshaw, (1987) 1 SCC 42.
66
Mitchell -vs- Carter, (1997) BCC 907
67
Barclays Bank plc -vs- Homan, (1992) BCC 757.
68
Essel Sports Pvt. Ltd. v. Board of Control for Cricket in India, ILR (2011) V Delhi 585.
69
Horlicks Limited vs. Henz India Private Limited, 164 (2009) DLT 539 (DB).
invention. “There are good reasons behind each country having their own different systems.
But today , however, when the major part of economic activity has become globalized, different
local rules would become a constraint on economic development. A close look at the details of
each nation's rules will doubtless reveal differences, but at the same time, many similarities can
be found as well. And many of the differences can well be overcome through cooperation and
effort.”70

1. Simplification of the process of obtaining the patent; Due to dissimilarities in the

patentability requirements the applicant follows different processes according to the
patentability requirements of the countries. There may be case where the ground of refusal
from different countries for the same invention may be different. Then the applicant has to
respond to each country differently. This may results in refusal of patent on different ground.
There may be case when the patent is granted in some countries where not in some other
countries. This make the process of getting patent in multiple countries complex. With the
harmonization of substantive patent law the ground of refusal from one country will be
presumed as the ground of refusal from other countries and will simplify the process of
obtaining patent.71

2. Reduction of work load of the patent office;- Nearly 242000 applications are duplicated
among the trilateral offices(2006 year).These duplicated applications are also subjected to all
the steps of granting patent which include search and examination too. This duplication of
application cannot be avoided. But the duplication of work can be avoided provided the laws
of the countries are harmonized. This will result in substantial work load reduction in the
developed as well as developing countries. If substantive harmonization achieved in
determination of range of prior art, claim system and claim interpretation at least the search
and examination result of one office can be better used by other office.72

3.Broadening of patentable subject matter: Due to the harmonization of patent system there
is every chance that the subject matter of patentability will be broadened. At least patent
protection will be available to inventions related to new generation technologies such as
information technology, biotechnology and nanotechnology. The TRIPS article 27.1 has

70
Takeshi ISAYAMA,Commissioner of JPO. Toward Desirable IP Systems ? Taking the Patent System as an
Example. Chairman's Note for the Informal Meeting of the Heads of Patent Offices in Developed Nations, May
19-20, 1999. Available at http://www.eps.nagoya-u.ac.jp/examin/991d/991dej.html and last visited on 24dec2007.
71
See: Shinjiro Ono, deputy commissioner of JPO: “Substantive Patent Harmonization and Japan’s Stance”,
Website: www.law.washington.edu/CASRIP/Symposium/, 2007-5-23.
72
See: Shinjiro Ono, deputy commissioner of JPO: “Substantive Patent Harmonization and Japan’s Stance”,
Website: www.law.washington.edu/CASRIP/Symposium/, 2007-5-23.
limited the “invention” to all fields of technology, however with the harmonization the
“invention” belonging to any field may be patented.

4. Increase the predictability of the patent: With the harmonization in place if an invention
is granted a patent in one country, the probability of getting the patent in other country for the
same invention will be high. This will increase the legal certainty and value of the patent.

5.Reduction in cost of Patenting: Due to simplification of the procedure and unification of

the forms and formats the cost of patenting an invention will be reduced. By mutual
exploitation of search and examination results of other office, the patent office can also cut
expenditures

6. Cuts down on “forum shopping”73: In multi country litigation process the chance of forum
shopping will be less as the provisions of law and implementing guidelines will be harmonized.

7. Expansion of policy space for the developed countries:74 Through harmonization there is
a greater chance that the developed countries’ domestic policy will be imposed on other
countries and their economic benefits will be safe guarded.

Disadvantages of harmonization

The main problems in the patent systems of different countries are the dissimilarities in formal,
substantive and procedural provisions. These dissimilarities cause a lot of trouble in patent
processing. With the harmonization of patent system these dissimilarities will not be there.

The harmonization of substantive patent laws, however, can have the following disadvantages.

Disadvantages due to strong IPR Harmonization often regarded as adoption of higher IPR standard.
It is often thought that strong IPR brings FDI, technology transfer and promote research and
development “ while critics counter that it will lead an unjust transfer of wealth from the poorest
countries to the wealthiest ones. The World Bank estimates that Trips represent an annual $20 billion
plus transfer of wealth from the technology importing countries to the technology exporting
countries.75 Evidence from Turkey found that the banning of pharmaceutical patents appeared to have

73
Michael D. Kaminski is a partner at Foley & Lardner, an adjunct professor at American University and George
Mason University, and 1999 chair of the ACS Division of Chemistry and The Law. Comments and questions for
the author can be addressed to the Editorial Office by email at mdd@acs.org, by fax at 202-776-8166 or by post
at 1155 16th Street, NW; Washington, DC 20036.source:
http://pubs.acs.org/subscribe/journals/mdd/v04/i01/html/patents.html
74
Source:- FENG XIAOBING.THE HARMONIZATION OF THE PATENT SYSTEM. A Global patent System
IS Possible or Impossible?,available at http://www.apic.jiii.or.jp/en/modules/tinyd5/index.php?id=24
75
no significant effects on levels of FDI, technology transfers, or domestic innovation. “In East Asia
(Japan, South Korea and Taiwan), a combination of relatively weak IPR protection and the availability
of second-tier IPRs like utility models and design patents encouraged technological learning. The weak
IPRs helped by allowing for local absorption of foreign innovations. The second-tier systems
encouraged minor adaptations and inventions by local firms. Later on, the IPR systems became
stronger partly because local technological capacity was sufficiently advanced to generate a significant
amount of innovation, and also as a result of international pressure.”156

Export of mistakes from one system to other: In an harmonized patent system if a mistake occur in
one system then there is rare chance that the mistake will be detected and corrected in another
system. For example if the search examiner skipped one particular prior art, there is very rare chance
the examiner in other office will find that prior art.

Absence of best practice Due to harmonization as the provisions of the laws of all the countries will
be the same, there is no question of finding any best provision to tackle a particular situation.

Due to harmonization there will be no diversities in the law so a single cause will affect all the countries
equally. However all the above disadvantages can be sidelined, eliminated or bear with if the
advantages accrued due to harmonization is quite more. To make the harmonization effort truly
meaningful, countries concerned should select best practices from among various patent systems
without adhering to the systems of their own.76

Why Extraterritoriality Fails

1. Creates Increased Tensions Between States

2. Extraterritoriality Discourages the Development of National Patent Systems

3. Application of Extraterritoriality is Unpredictable77

Conclusion (whether it is good to bring uniformity and is it possible)

The occurrence of domestic IP rights infringing behavior outside of the respective

national boundaries has become the rule and increasingly contrasts with the territorial view
of domestic IP laws. Not only the increased number of cases involving foreign conduct but
also the frequent intangibility of foreign based infringing elements has made it more and

76
Minxin Pei, Carnegie Endowment for International Peace; Intellectual Property Rights: A Survey of the Major
Issues, A Report for the Asia Business Council September 2005 available at
http://www.asiabusinesscouncil.org/docs/IntellectualPropertyRights.pdf last visited on 01-03-2008
77
http://www.tiplj.org/wp-content/uploads/Volumes/v18/v18p55.pdf
more difficult to make domestic IPRs reach activities outside their territorial boundaries
without definitely abandoning the territorial confinements of national infringement laws.
Under such circumstances, it is no longer possible to correct the shortcomings of the
territoriality principle by applying national IP laws on a case-by-case basis to conduct
occurring in foreign countries. Rather, a systematic analysis of the possible responses to the
conflict between transnational commerce and territorial IP rights is critical in order to adapt the
world’s IP systems to the demands of a global high-technology market place.
As opposed to other forms of IP such as trademarks and copyright, legislators and scholars have
so far mostly shied away from looking into extraterritoriality in patent law. The myth of the
strict territoriality of patent law still leads many to ignore that patented software and business
methods are as easily discernable on the Internet as copyright protected works and trademark-
labeled merchandise and that protected elements of transborder telecommunication and
computer systems themselves can be subject to patent infringement. Not least two recent cases
from the U.S. – in re NTP, Inc. v. Research in Motion, Ltd.78 and in re Microsoft Corp. v.
AT&T Corp79. – bear testimony of the issue’s topicality and importance.
Standard essential patents80
Problems of portfolio licensing
78
79
80
https://blog.ipleaders.in/standard-essential-patents-frand-litigation/
Commented [lp14]: are filed / granted in the US, or
Europe, not all of them are filed in India. In fact, for
some companies, the ratio is as low as 10% of the
ones filed in the US/Europe. The issue that emerges is
that the portfolio licensing rate does not change in the
same proportion. What I am saying here is that if the
portfolio size is say 50 % in India as compared to US,
then why is it that the portfolio rate does not change
from 4 % to 2%. This is a clear example of extra-
territorial reach. Even if the patent is not filed in India,
the licensor demands royalty for entire portfolio on the
simple reason that “all SEPs are implemented in the
device conforming to the standard” whether or not the
SEPs are actually essential or not.
This is only part of the problem as the next question is
that all patents (even in the same family) are not of the
same scope. In the diagram below, Country A issues a
patent which is standard essential, and it is
designated as Essential A. Similarly, Country B issues
a patent from the same family as that of Essential A,
and it is standard essential, and the patent is
designated as Essential B.
The scope of both is different because of the variation
in the patent laws of countries A and B. For example,
some unique aspects are found in Indian patent law
(section 3(d), 3(k), (3(m), etc.) that are not found in US
patent law, and vice versa.
When the scope of both patents from the same family
is different, how is it that they are able to command the
same premium when it comes to licensing, i.e. are
treated the same when it comes to the portfolio
value. It could also happen that the Country A patent is
standard essential but the Country B one is not. It is
these concerns that wash out the so called efficiencies
in portfolio licensing. These efficiencies
include allowing firms operating within a patent thicket
to use each other’s patented technology without the
risk of litigation, including the risk of facing an injunction
that shuts down production. Elimination of risk, or
“patent peace,” in this situation cannot give firms the
design freedom
This situation in the telecommunications industry also
does not encourage long-term investments in both
manufacturing capacity and R&D because the parties
to the portfolio cross license fear “unforeseen, and
unforeseeable, infringement actions.” These also do
not reduce transaction costs to licensees as the
licensee has got no technical prowess but only that of
marketing – the licensee cannot start to value or
determine whether a patent is standard essential or
not. For more details on these efficiencies,
see this article from the DOJ.
In my personal opinion, the cases where Ericsson has
filed lawsuits at the Delhi High Court against Micromax,
Intex, Gionee, Xiaomi, Lava, etc. all have at least some...