‘The Residence’ Conundrum: Overview

In 2002, the foreign filing license requirement was introduced in the Indian Patents Act of 1970. This requirement provided that any inventor who is a resident of India should file or cause to be filed a patent application for his/her own invention first in India; and only after a period of six weeks after the date of filing of the patent application, a filing could be done in a country outside India. Alternatively the inventor was required to obtain the Controller’s permission for filing the patent application outside India. The scope and applicability of section 39 did not create much of a stir among inventors in India, but there has been a lingering confusion over the definition and coverage of the term “residence” provided in section 39. Since the written permission takes time resulting in a loss of priority, filing an application first in India is the preferred way of complying with these provisions.

In the following sections of this article, we will interpret the term “residency,” in an attempt to clarify the ambiguity caused by this term in the context of the place where the first patent application needs to be filed.

Relevance of the term “resident of India” in relation to section 39

Section 39 centers around the term “residence.” This term forms the basis for the interpretation of this section. The term “resident” in the section is actually inserted to exclude any restrictions that can be imposed on the applicability of the provision, and to widen its ambit. The term “resident” in law is construed to be broader than the term “citizen.”

As per the Indian Patent Law, the place of creation of invention is irrelevant for the purposes of Section 39. What is important is the place of residence of the inventor. Therefore, if the invention is being created in India by persons who are not resident in India, section 39 will not apply.

Ambiguity in the definition of “Resident”

The term “resident” is not defined anywhere in the Patents Act of 1970. The lack of a definition for the term “resident” in the Act necessitates that this interpretation be made from the definition of “resident” given in the Income Tax Act. According to the Indian Income Tax Act, an individual is termed as a ‘Resident of India’ if he stays for the prescribed period during a fiscal year i.e. 1st April to 31st March, either for:

  1. 182 days or more; or
  2. Has been in India in the aggregate for 365 days or more in the previous 4 years.

Any person who does not satisfy these norms is termed as a ‘Non-Resident.’ Further a resident individual is considered to be ‘ordinarily resident’ in any fiscal year if he has been resident in India for 9 years out of the previous 10 years and, in addition, has been in India for a total of 730 days or more in the previous 7 years. Residents who do not satisfy these conditions are called individuals ‘not ordinarily resident.’

It is also essential to understand section 6(4) of the Income Tax Act of India which states that every other person is said to be resident in India in any previous year in every case, except in a year where the control and management of his affairs is situated wholly outside India. Thus, an individual ceases to fall under the category of residence only if in any previous year the control and management of his/her financial affairs are situated wholly outside India. In a case of an Indian national, who may be employed abroad for example, his physical presence abroad even if it is prolonged may not be treated as “residence.” If a patent application is filed by his employer outside India, it will be treated as an application caused to be filed by an Indian resident and will therefore violate the provisions of section 39 of the Patents Act. This may even be the case if the Indian national is a student or has been granted temporary residence or a green card or employment permission.

Consequences of violating section 39

Violating the clauses of section 39 results in criminal liability under section 118 of the Indian Patent Act of 1970, in which the term of imprisonment may extend to 2 years or a monetary fine imposed on the inventor, in addition to abandonment of the patent application or revocation of the patent even if it is already granted. Hence it very important to abide by the mandatory requirements stated in the section 39 of the Indian Patent Act of 1970, to fortify oneself from the ramification of Section 118 of the said Act.

Recommendation

In the case of doubt over the residency status of an inventor, it is always safer to first file a patent application in India or to obtain written permission from the Controller of Patents for the grant of foreign filing license and thereby, safeguard the inventor from criminal consequences of section 118 of The Indian Patents Act of 1970.