Patent experts have made a representation to the central government to amend Form 27 under Section 146(2) of Patents Act, 1970 to bring in uniformity in the method of calculation of value of a drug, whether it is imported or manufactured in the country.

As per provisions of Patents Act, 1970, Form 27 is required to be filed by patentees, within three months of calendar year to declare working of the patented invention granted in India. Form 27 requires to declare if the patent is worked in India - whether manufactured in India or imported in India and if imported, the country of origin, the quantity and the value of goods relating to the patented invention. While for goods manufactured in India, normally the sales annual figures are declared, as regards imports, the declared value is often vague and non-uniform. Value declaration can be free on board (FOB) or cost insurance and freight (CIF) value or Landed value or very often, similar to manufactured goods, the value of imports declared are also as gross domestic sales value or based on MRP. For both manufactured in India as well as for imported into India, it is advisable that the figures declared in value terms are better expressed in terms of gross sale value in Indian rupees, said patent expert Dr. Gopakumar G. Nair.

Declaration of product value in Form 27 is a contentious issue. The current Form 27 does not mention any specific valuation guidelines. Taking advantage of it, patentees employ different methods to calculate product value. Some patentees declare value of product taking into account taxes and import duties, while some declare the value of product minus all the taxes and sales margins of intermediaries.

It is observed that patentees declare certain value and quantity of the product in Form 27, but they declare different value and quantity of the product while filing infringement suit in the court.

Taking serious note of it, Dr. Nair has made a representation to the government to introduce uniformity in the method of calculation of value of a product, to rule out discrepancy.

He said “A patentee has to file Form 27 informing the patent office whether the patent has worked in India or not. In case of patent worked in India and the drug is imported in the country, details of imported drug need to be given country wise and quantity wise along with value of the product. A discrepancy has been noticed in most of the patentees' country wise import declaration. They do not specify how the value of product has been arrived at, whether the value of product arrived at landed cost is gross or exclusive of handling charges such as FOB or CIF. Some patentees declare over invoicing of value of imported product, while some declare product MRP containing taxes.”

It is required that each patentee should follow the same method of calculating product cost whether it is imported or manufactured in the country. To ensure consistency, Form 27 needs to be amended to pave the way for uniform calculation, he opined.

If the objective of Section 146 is to provide adequate data to the patent office on whether the drug is being made available to the people at a reasonable price, it follows that the Form 27 should reflect the end price of the drug that the patient is charged, he added.

If a patentee fails to provide details on working of patent in Form 27, the patent is susceptible to a compulsory licence, wherein a third party can produce and sell the product to make it more accessible and affordable to the general public.

Such a compulsory license was issued to Natco to produce Bayer’s patented anticancer drug Nexavar (Sorefanib Tosylate) on the ground that it was exorbitantly priced at Rs. 2.8 lakhs a month and hardly available to just 2 per cent of the patient population.

Professor (Dr) Prabuddha Ganguli, CEO, Vision-IPR and visiting Professor, Rajiv Gandhi School of Intellectual Property Law said “Form 27 is totally outdated and the concept of "One Patent - One Product" has lost its relevance in the present context in business practices and business strategies in India and the globalised world. We need to totally change the Form 27 in terms of the information that is asked for from the patentees. It should be appreciated that in today's  world a product is often protected by a portfolio of patents. Hence the Form 27 should reflect such a business reality. Further, it is no more mandatory to have the product manufactured in India even for the purposes of Section 84 of the Act. Hence details of whether the product is manufactured in India or the process is followed in India is also irrelevant. Therefore it should be sufficient to ask for details of working in terms of whether the product and/ or process is being used to market the product in India. It should not be expected to indicate the amount in quantity and/ or value of the marketed (i.e. worked) product based on the portfolio of patents.”

Prof (Dr.) Shamnad Basheer in his presentation to patent office said “Patented product should be available to people at reasonable price to ensure working of patent but Form 27 fails to do so. Paragraph  3(i)(b) of Form 27 which requires patentees to state the quantum and value of the patented product manufactured in India or imported from other countries, fails to capture the actual sale of  the patented invention in India.”

Form 27 should be amended to make sure that patentees should submit details such as estimated demand of the patented invention or product; extent to which the demand has been met (i.e. availability); and details of any special schemes or steps undertaken by the patentee to satisfy the demand. Rectification of E-Filing version of Form 27 should be done to enable patentees and licencees to submit full and complete working information, he said.

Due to lack of emphatic specificity in paragraph 3(ii) of the Form which requires patentees to disclose licenses and sub-licenses granted during the year, they do not disclose it. The amendment to Form 27 be done to remove it, he concluded.

The Delhi High Court has directed the Centre to come up with a timeline on modification to Form 27 regarding patent working information.

The Court had also directed the government to file an affidavit mentioning steps to strengthen regulations pertaining to prosecution of patentees avoiding the statutory patent working mandate. The directions came in a writ petition filed by Prof (Dr.) Basheer.

Following this, patent office had invited comments from stakeholders on patent working disclosure and Form 27.