The 2023-24 IP India Annual Report was released on March 31, almost exactly a year after the financial year 2023-24 ended. While the Annual Reports bring forth critical statistics surrounding the filing, examination, and disposal of IP applications, they are rarely comprehensive in their qualitative evaluation of the data. At SpicyIP, we take our job of “de-coding Indian IP law” seriously and look beyond the numbers rather enthusiastically!
Compiled in an inaccessible format where a reader cannot even search the 157-page document, the Annual Report brings out some interesting facts. Some of the ones that caught my eye relate to the patent ecosystem: firstly, patent applications have risen to 92,168 (11.29% increase), and granted patents to 1,03,057 (201% increase!); secondly, foreign filings form 44% of these total applications; thirdly, there is a significant drop in patent examinations from nearly 50,000 to 18,438; and finally, pre-grant oppositions have reduced from 420 to 366 in the current assessment. Additionally, the Report has focused on “procedural improvements” including the Patent Amendment Rules, 2024 (“the Rules”), and decriminalization and rationalization of certain IP-related offences in the Jan Vishwas (Amendment of Provisions) Act, 2023 (“Jan Vishwas Act”), among other measures.
In this post, I undertake an examination of these statistics to determine whether/not claims about the “remarkable growth” in the patent ecosystem hold strength. In doing so, I focus on the importance of the patent examination and pre-grant opposition stages, while highlighting an administrative tilt towards the patentees over the general public.
Mirror, Mirror on the Wall, are Numbers the Most Important of All?
1. A Rise in Patent Applications: What does it Indicate?
The IPO hails the increment in the number of applications as a “growing recognition of creativity and innovation”. Various voices in the government including PM Modi have highlighted this as a reflection of the “rising innovative zeal of youth” in India. This analysis is only partially accurate. Firstly, it presupposes the infallibility of the patent examination (Chapter IV of the Act) process. In Bharati Rathore v Union of India (2021), the Delhi HC referenced the report of the Justice Allah Raham Committee to highlight the gravity of maintaining “high standards” and “sustained quality” in both, recruitment of patent examiners and the process itself. The Court pressed upon the rise in international applications necessitating greater industrial and technological expertise of patent examiners. In fact, several orders of the IPAB have emphasized how patent examination must be driven to ensure that technical scrutiny renders the patent specification a “worthwhile document” before grant. However, despite the imperative to encourage innovation while maintaining integrity, concerns surrounding the misplaced race to grant more patents, the recruitment of patent examiners, and the quality of the current examination system remain unaddressed.
Secondly, the difference between the granted patent applications (1,03,057) and the number of examined patent applications (18,438) is the highest in the past five years. To examine this further, let’s look at the steps entailed in the patent examination process in India. After a timely request for examination is submitted (as Form 18) under section 11B of the Act, the same is referred by the Controller to a patent examiner in line with section 12. A “First Examination Report” (FER) is prepared by the examiner assessing the patentability criteria under the Act, which is then reviewed by the Controller in terms of section 14. The process of pre-grant oppositions (“PGOs”) under section 25 follows the publication of a patent application, after examination of the applicant’s complete specification.
Therefore, the grant of over one lakh patents in 2023-24 signals an expeditious approval of applications examined over the years, by Controllers at the IPO. As reported on the blog earlier, the number of Controllers in the Office increased from 241 to 557 from March 2023 to May 2023, with a working strength of 241. This working strength further rose to 614 controllers (Appendix A) by March 2024. This directly explains the increase in disposed applications indicated by the Report. On the other hand, the working strength of examiners has been a concern over the years. As a result, the steep fall in the number of examinations (from 49,961 to 18,438) does not come as a surprise in the backdrop of a reduction in the number of examiners from 593 (March 2023) to 219 as indicated in the Report (Appendix-A).
After a controversy-ridden recruitment drive, the National Testing Agency did provisionally recommend 550 applicants for notification as patent examiners. However, instead of relieving any burden on an overstaffed IPO, the process was soon challenged before the Delhi HC for irregularities, which consequently directed the petitioners to approach the Central Administrative Tribunal (“CAT”) with their grievances. The CAT admitted the case file in January this year, as a result of which the joining process of the patent examiners is on hold. As we await further developments, the recruitment saga in the IPO is far from over!
Picard and van Pottelsberghe have emphasized that the quality of patent examination is the highest when systems focus on incentivizing innovation, as opposed to systems which solely maximize the number of granted patents. In his assessment of the USPTO’s patent examination system, Roger Ford noted the following: One, patent examiners act as a “substantive screen” in ensuring that worthy inventions benefit both, patent holders and the public. Two, despite this imperative role, the quality of patents is adversely impacted owing to absence of consistency in provision of reasoned orders – while patent applications are often granted without explanation, rejections necessitate a greater burden of explanation on the examiner. Finally, the tying of bonuses and promotions to the number of applications examined by an understaffed department of examiners magnifies overall ineffectiveness.
In this backdrop, we need to pose similar questions on increasing grant numbers – How many of such grants were backed by reasoned orders? How much time does a patent examiner spend on average on an application in a particular sector (this might differ between Pharmaceuticals and Textiles, Computer Science and Communication)? Why has there been a fall in the number of Examiners, if the number of applications is at an all-time high? With this food for thought, let’s move ahead.
2. What are the “Procedural Improvements” highlighted by the Report?
Firstly, the Report indicates “streamlining of procedures for pre-grant oppositions” as a valuable procedural improvement that has enhanced efficiency, and reduced patent application timelines. Section 25 of the Act enables any person to present a pre-grant opposition to the Controller on a list of specified grounds, and further request an opportunity to be heard. Recently, in Novartis AG v Natco Pharma (2024), PGOs were acknowledged as enabling the Controller to gain insights from a “broad spectrum of sources” in taking an informed decision. In this light, Rule 55 of the 2024 Rules dissuades PGOs through added procedural burdens. The Controller is now empowered to notify the opponent in case no prima facie case is made out, with an opportunity of hearing provided when the opponent requests the same within one month. As a consequence, the number of PGOs has reduced from 800 (50,823 applications) in 2019-20 to 366 (1,08,142) in 2023-24. Is “streamlining” of the patent ecosystem only meant to serve patent owners?
Secondly, among other changes, “rationalization” of penalties through the Jan Vishwas Act, 2023 has also meant a dilution of the requirement to file Form 27, demonstrating the working of patents. This is especially significant for industries like pharmaceuticals. As discussed by Aparajita here, this change impacts the ability of smaller businesses to invoke section 84(c) of the Act to seek compulsory licensing of patents that have not been commercially worked in India. This has been aggravated by the Rules of 2024, which modify Form 27 to eliminate the requirement to demonstrate the “extent” to which patented inventions have been worked. Hence, with patentees merely having to indicate whether their patents “worked”/were “not worked”, a rise in the number of “working patents” may be expected in next year’s Report, avoiding any discussion on their actual commercial value.
Moving ahead, I summarize other data surrounding the subject-matter of patent applications, and institutions filing them.
3. Sectors & Applicants: Who is filing the Patents, and in which Fields?
The maximum applications (Appendix E) were filed in Computer Science & Electronics (25,826), followed by Mechanical Engineering (14,811), Chemical (13,093), Communication (7,864), Bio-Medical (7,376), Electrical (6,596), Physics (4,305), and Polymer Science and Technology (1990). Similar to 2022-23, no applications were filed in Pharmaceuticals. Further, 10,307 applications were filed in other fields including Biotechnology, Biochemistry, Metallurgy, and so on (Appendix E1).
Among academic institutes and universities, maximum number of applications were filed by Lovely Professional University (1,418), Jain (Deemed-to-be-University – 1,325), Chandigarh University Technology Business Incubator (1,126), and so on. We may focus on two aspects here: one, the assessment of filed/granted patent applications is undertaken in the NIRF Rankings, and may be a potential factor pushing academic institutes to focus on these numbers. In contrast to the top performers in this list, the twenty-three Indian Institutes of Technology (IITs), often considered premier institutions for technical education and research in India have collectively filed 1,106 patents! The Indian Research Watch has aptly termed these rankings as constituting a “mindless race” wherein “frivolous” applications would do the job. Whether or not a greater number of patent applications necessarily indicate an innovation-driven academic atmosphere is a question that can be probed further. Two, similar to the concerns discussed above about linking incentives with greater disposals in case of patent applications, academic integrity has been challenged when funding and investments are linked to better rankings, even if quality is amiss. Hence, Chandigarh University and Lovely Professional University being flagged for questionable authorship and affiliation practices, and thereby manipulated rankings, only proves our point.
With reference to the number of patents in force, Indian Patentees stand at 47,335 in comparison to 1,75, 910 Foreign Patentees (Appendix D). As emphasized in the Ayyangar Committee Report (1959), there lies an apprehension of some Foreign Patentees capturing markets in India, while adversely impacting domestic innovation. Among Foreign Resident Applicants, Qualcomm Inc. took the lead (3,017), followed by Samsung Electronics (1,555), and Huawei Technologies (681).
A Brief Comparison with the WIPO IP Indicators 2024
Before concluding our discussion on the Annual Report, it is helpful to compare a few statistics (mentioned above) with India-specific data in the WIPO Indicators. Interestingly, despite a delay of one year in publishing the Annual Report for 2023-24, the IPO has shared updated data with the WIPO for the 2024 Indicators. While data in the IPO Report relates to the Financial Year ending in March 2024, data in the WIPO Indicators is derived from the Statistics Database, dated to August 2024. As a consequence, few differences are identifiable.
Firstly, while India granted 45,563 additional patents in 2023 as per the WIPO Indicators, this number stands at 68,923 in the Annual Report. The data translates to a growth of 149.4% indicated by the WIPO in contrast to 201% by the IPO. Secondly, while the IPO Report mentions that Indian applicants in 2023-24 stood at 51,574 (55.96% of total applications), the WIPO data reflects how more than half (55.2%) of the 90,298 applications in 2023 (49,860 precisely) were filed by residents. Thirdly, the WIPO flagged how the IPO granted patents to approximately 80% of the applications processed in 2023. It is difficult to draw a similar conclusion based on the Annual Report since it merely provides data of applications filed and granted in 2023-24 – the latter may relate to applications from previous years that were cleared subsequently.
Hence, as noted by Praharsh here, the Indicators reflect similar challenges regarding quality of patent examinations, overburdening of the IPO, an unrealistic aspiration to achieve greater numbers.
Concluding Remarks
Moving forward, we must shift our focus beyond shining IP numbers to discussions on the processes followed in arriving at them in the first place. In doing so, assessing the governance of the Indian Patent Office, the quality of undertaken examinations, the extent of public involvement and associated incentives, become important factors.
The author is grateful to Praharsh and Swaraj for their helpful comments and engagement.