8 September 2021
Voluntary surrender of a patent and its revocation in a court are two distinct actions through which a patentee loses its right to enforce a valid patent. The question to allow the surrender of any patent is not as simple as it seems. Even when an application for surrender is made before the patent office, the Controller is duty-bound to publish the offer of the surrender by the patentee and invite opposition from any person interested to oppose such an application. The existence of this procedure under section 63 of the Patent Act does not, however, preclude a patent proprietor from choosing to let his patent lapse through non-payment of the renewal fees. Interestingly, the patent revocation by these two methods is not only distinct but also has a very different effect on the enforcement of the past and future infringement actions. For instance, where a patent is allowed to lapse due to the non-payment of the renewal fees, or if it is surrendered in the national proceedings, its revocation would not have a retrospective effect (ex nunc). In contrast, if a patent is revoked by the court in any counterclaims for revocation, such revocation takes effect ex tunc. In other words, it would be deemed to have never existed ab initio. But in case of the surrender of a patent in certain circumstances, for example, where fees have been paid to the proprietor under a licence agreement then depending on the terms of the agreement it will not be recoverable after the surrender.
Salutary Position in India
In India, the process relating to voluntary the surrender of patents is covered by section 63 of the Patents Act and the procedure to affect such surrender is governed by rule 87 of the Patents Rules. Patentees must notify the Controller of their offer to surrender a patent in writing with payment of the prescribed fee. A proper offer for the patent to be surrendered must contain a declaration that no action is pending before any court for infringement or revocation of the patent. In case such action is pending, patentee shall give the particulars of such action and its status. There is no need for the patentee to give the reason or motivation for the offer of the surrender. On receipt of the offer for surrender, the Controller shall publish the offer and notify every person other than the patentee whose name appears in the register as having an interest in the patent. Any person having an interest in the patent may give within three months after such publication, notice to the Controller of opposition to the surrender. If the Controller is satisfied after hearing the patentee and any opponent, that the patent may properly be surrendered, he may accept the offer and direct the patentee to return the patent, and on receipt of such patent, the Controller shall by order revoke it and publish the revocation of the patent.
The surrender of a patent under section 63 of the Act is not retrospective. A patent would be in force and effect from grant until surrender. That means revocation on the offer of surrender would have an ex-nunc effect. For obtaining a retrospective effect from the date of grant it is required to be revoked separately. That revocation proceeding then being retrospective to grant would have an ex-tunc effect.
Voluntary revocation of a patent
Generally, non-paying the renewal fees would be a preferred option of a patentee to allow the patent to become defunct. By choosing such an option patentee allows the patent to lapse. But this option is not failproof as the patent lapsed due to non-payment can be restored within nineteen months. If the patentee wishes to avoid the patent being challenged by third parties thus leading to invalidation voluntarily revoking the patent through surrender may be an attractive option. If the patentee chooses the surrender option revocation rather than allowing the patent to lapse, he will achieve commercial certainty faster. Mind you, it would take 19 months after the last renewal date of the patent for it to lapse and consequent automatic cession of patent with no chance of its restoration. In India, the effect of surrendering a patent under section 63 is that the patent is deemed to cease to exist as of the date when notice of the Controller’s acceptance of the surrender is published in the Official Journal. Thus, surrender of the patent is a better option if the patentee no longer wishes to maintain a patent and he does not accept that the patent is invalid and ought to be revoked.
Precedents in this area of the law in all jurisdictions are sparse, but it may be noted that where proceedings for revocation are already in progress it is a normal practice to first wait for the revocation action-outcome and then consider the offer for surrender. Speaking on a petition to surrender just one day before the trial of the petition to revoke to commence, in Connaught Laboratories Inc’s Patent [1999] FSR 284 Laddie J revoked a patent and observed in assessing the impact of surrender that “An order for revocation may have a different effect to an acceptance of surrender, for example in relation to the royalty provisions in third-party licenses.” Laddie J further observed that “It is open to me, therefore, to order revocation of the patent if, having regard to what is pleaded and the material which I have seen, that is the appropriate course. Alternatively, I can allow the offer to surrender to be further processed through the Comptroller. The latter course will involve advertisement, the possible involvement of third parties, delay and additional expense.” He went on to say that “I do not think this takes away the comptroller’s powers of decision under section 29 where a revocation action is before the court. It does however suggest that, where the court is aware of an offer to surrender, it will consider in all the circumstances of the case whether it is preferable to go ahead with the revocation action or to leave the offer of surrender to take its course before the comptroller. If revocation were ordered, there would, of course, be no patent left to surrender.” Though the right to apply for surrender rests with the patentee with no specific bar on its timing yet the courts are diligent and allow a stay of surrender application before the controller and go ahead with deciding the revocation matter. This suggests that the pending revocation proceeding proceeds the action on acceptance of surrender application by the Controller. In case a revocation is ordered, the surrender application would become infructuous as there would be no patent left to surrender.
Conclusion
Surrendering a patent is a statutory option available to the patentee to safeguard his financial interest prior to making an offer for the surrender. It means any payment made under that patent prior to the date of the acceptance of the surrender application would not be put at risk. Normally, surrendering the patent would not adversely affect the continuance of the revocation proceedings in the court. The Controller may not proceed with the acceptance of the application till the outcome of the revocation litigation. Alternatively, the court where revocation petition is pending may stay the surrender application pending the outcome of the revocation trial. The statutory provision in Indian patent law is like the patent law of the United Kingdom and precedents on this law in the UK may influence the decision in such matters in India as well. Nonetheless, the procedure of surrender is not used in India so far even though surrendering a patent before the controller would be an attractive proposition to a patentee when licence payments or royalty payments have previously been made rather than risking revocation of an in-use patent. In case the patent is revoked, it would mean that the patent would be deemed to have never existed and thus subjecting all the financial agreements made earlier at risk. However, a piece of expert advice relating to surrender of a patent would be worthwhile to safeguard the interest of a patentee and equally, the expert opinion would be essential to protect the rights of the claimants having an interest in a patent (opponent) as well.
DPS Parmar analyses the two distinct actions through which a patentee loses its right to enforce a valid patent – voluntary surrender and revocation of a patent in a court.
For further information, please contact:
DPS Parmar, Head of the IPAB practice group LexOrbis
mail@lexorbis.com
