This article has been written by Ananya Mohapatra.
Table of Contents
Introduction
The intellectual property rights were developed to recognize the rights of the owners of original works, inventions etc. The main intention behind this was to protect the inventions from being commercially exploited by others without authorization from their owners.
IPR gives the authors or owners credits for their work and also, the monopoly over their invention. Apart from this, they encourage innovation and contribute to the economic and technological development of a country. Patent law is one such IPR that protects new products, new processes, and new methods.
This encourages researchers, research institutes and business to engage in research and developmental work to come up with new inventions. The patent law system of countries provides a set of rules for an invention to qualify as a patent. In India, the Patent’s Act, 1970, provides that for an invention to be eligible for a patent the following conditions needs to be fulfilled:
1) Novelty – This is an important criterion for patentability. The product has to be new or must include any new element to it.
2) Non-obviousness – The invention has to include an inventive step and the invention be such that it could not have been anticipated by anyone.
3) Subject matter – The invention should relate to the patentable subject matter.
4) Industrial use – The invention should have an industrial application.
So, if the above conditions are fulfilled, only then an invention will be granted patent protection. These conditions are quite stringent and appeal mostly to the innovators of the formal sector. The informal sector engages in incremental innovation, it becomes difficult for them to avail patents under these rules as their inventions would not qualify certain criteria mentioned above.
To address this problem the concept of a second-tier patent system came into the picture. Many countries have implemented a second-tier patent system to help their domestic innovators. Utility model patents also known as innovators patent is a type of second-tier patent system implemented by most of the countries. The model has been in use for a long time and has helped countries in their development. In India, at present, there is no second-tier patent system which makes it difficult for domestic innovators to file for patents. This has resulted in the low filing of patents in India.
This paper discusses the concept of utility model patents extensively. It begins by explaining the utility model and how different it is from patents. Then it briefly discusses the advantages of this model and the international framework around it.
The paper then proceeds to discuss the use of utility model patents in different countries and the effectiveness in the technological and economic development in these countries. The paper then briefly discusses the risk associated with this model.
The paper later talks about the problems faced by the informal sector under the current patent system and examines the implementation of the utility model patents in the Indian context. Finally, the paper concludes by suggesting certain changes that can be made in this model and implemented in the Indian context.
What is a utility model patent?
It is a second-tier patent system. The World Intellectual Property Organization defines utility model patents as “An exclusive right granted for an invention, which allows the right holder to prevent others from commercially using their patented invention without authorization for a limited period”. These patents are also known as ‘petty patents ‘or ‘innovative patents ‘or ‘small patents’ or ‘minor patents’(see here).
Though they are known by different names in different countries, they work in a similar pattern. These patents are granted for a short term, the invention does not have to be non-obvious and must not necessarily involve an inventive step. This system of a patent requires only a formal examination and not a substantive examination for the grant of patent. Moreover, the application procedure is simpler as compared to patents.
Why was it developed?
Many small and medium scale businesses engage in incremental innovation, which means most of their inventions are an adaptation or addition to the existing technologies. They necessarily do not involve an inventive step or that their invention is non-obvious. It creates a problem for them as their innovation does not fall under the conditions laid down in the patents act. Due to this reason, it becomes difficult for them to apply and get a patent for their invention.
Moreover, the cost factor for the filing of the patents deters them. Therefore, to provide a cheaper, faster, and simple procedure, the utility model patent developed. This patent system intends to provide an easy mechanism for the filing of patents.
The international framework around it
The TRIPS agreement does not explicitly lay down any rules concerning the Utility Model Patents but it requires countries to implement laws and new systems for the betterment of Intellectual Property Rights. Article 1(2) of the Paris Convention talks about Utility Models in the context of industrial property along with patents. Therefore, the Utility Model Patents needs to adhere to the standard principles of the Paris Convention, like the priority rights etc. At present, about 75 countries have implemented this utility model as a second-tier patent system. They often use it as a strategic tool and as a complement to their patent system.
Countries that have implemented this system
Countries like Japan, Germany, Australia, China, and South Korea have implemented this system for a long. The use of this system has helped these countries in their economic and technological development. Currently, China accounts for 95% of the world’s total application for utility model patents. Similarly, Germany is one of the first nations to have specific laws for utility model patents.
It was reported that an equal number of patents and utility patents are filed simultaneously in the country. Germany has seen immense growth and popularity in the usage of this utility patent system [see here]. Even in Japan, there was huge popularity of the utility model patent system.
Japan was one of the first countries in the world to implement this system. It started using this system after World War II and ever since has made immense development in the technological sector. Due to less stringent laws for the application of patent protection, the local inventions in Japan increased. This is the reason for Japan being one of the most technological superpower countries in the world. Australia is also one of the countries that use this utility model.
In Australia, it is known as innovative model patents. The Australian laws protect both patents and innovative patents. This system is used as a complement to the patent system and is popular in the country. This utility model is majorly being used by small scale enterprises to get easier and faster access to patent protection for their invention. As per reports, there has been a constant increase in innovation patents which has to boost domestic inventions in the country. China has effectively used this system.
It has encouraged many local inventions through this system. China using the system has fostered growth in the country in terms of both technology and economics. In China majorly small businesses and individual innovators use this utility model system for obtaining a patent for them in innovation. This system is widely used in China and as per the reports, it is one of the highest applicants of utility model patents in the world. There are some features common in all of these countries:
1) The utility model patent is granted for a short duration varying from 6 years to 15 years;
2) the patent is granted within or less than 6 months;
3) there is no substantive examination required or any inventive step is necessary for securing a utility model patent.
Even though there have been many positive effects of this particular system, over the years, many problems have come up.
For example, in Japan due to no substantive examination and less stringent laws, the issue of less legal security came up. This impacted the domestic market and the popularity of the utility model patents decreased. Similarly, in Germany due to simpler laws, there were issues with proper legal verification of inventions [see here]. In China, as per reports, in 2018 out of the total patent related litigations filed, about 30% of the litigations were related to utility model patents [see here].
Risks associated with this model
The utility model patents contain several problems. These problems have led to a decrease in the popularity of this model in some of the countries as mentioned above. The main issues with this are:
Less stringent laws: Utility model patents contain less stringent laws as compared to the laws under the patent system. Due to such simpler laws, this system can increase the abuse of patents more than protection.
There is no requirement for a substantive examination. Since there is no substantive examination of the innovation, it might potentially create a greater number of litigations in this field. A good example to look at is the case of China as mentioned above, where due to simpler criteria a number of litigations around this model came up and due to this reason, now china has a two-step examination procedure.
There is the possibility that this system may discourage researchers, big business to invest in creating great inventions that could be protected under patents. This can be an easy alternative for them to get a greater number of patents without investing a lot of effort.
Currently, most of the countries allow utility model patents only on a certain specific area of invention and not all. This narrows the ambit of the patents under this system.
Under this model, patent protection is granted for a short period. So, any product that has a longer commercial life cannot be protected under this system. It is specific to only products having a short commercial life.
As the inventive step is not a criterion under this system, therefore this model is restricted only to products and does not extend to inventive processes or methods.
Therefore, a proper system dealing with these problems and providing better enforcement for the utility model patent would go a long way. It would ensure that this system is not exploited rather it fulfils the aim with which it was developed.
Indian perspective
In India, as of now, there is no second-tier patent system in the country. India is a country where medium and small business contributes immensely to the gross domestic product of the country. The informal sector has shown improvements and productivity over the years and is an important part of the economy of the country.
The informal sector also indulges in a lot of innovation-based activities, but they do not necessarily carry any R&D for it and mostly they work under constraints. These inventions are mostly incremental inventions, which means that the innovation is an adaptation or addition to the already existing technologies.
Their inventions do not involve any inventive step. Due to these reasons, it becomes difficult for them to get patent protection for their inventions and their inventions fail to compete with the inventions of big business. This makes their invention invisible to the world. India has over the years, implemented modern patent laws in the country, but this seems to only help the formal sector and not the informal sector of the country. Because the informal sector still struggles to efficiently reap the benefits of the patent system for their innovation.
Therefore, it is important to implement a second-tier patent system as it is also important to understand the features of innovations in the informal sector. In “The Informal Economy, Innovation and Intellectual Property-Concepts, Metrics and Policy Considerations” the author briefly explain by stating that “The informal sector comprises firms and entrepreneurs who have simple technologies and low capital. There are more imitation and adaptations of technologies in the informal sector than original inventions.
The innovations in the informal sector are based on traditional knowledge and studies reveal that communities are agents of innovations rather than the individual innovator” [see here]. The Government of India to encourage and foster grassroots implemented the National Innovation Foundation in the year 2000. The intention behind this was to set up a body to support grassroots innovation and development, especially for individual innovators and the local community to prosper in the field of innovation.
This foundation also provides incentives for local innovations. Innovation is encouraged but this foundation does not provide much for the protection of these inventions. Therefore, there is a need for a second-tier system that could help the local communities to have easy access to the patent.
Whether this model system will work in India
Developing countries like China, Korea and Brazil have already enforced this system. This system has helped the utility model right holders particularly Small and Medium-Sized Enterprises in commercializing their innovations at an early stage of technology development as the system is quick, inexpensive, and effective [see here].
Due to the implementation of the system these developing countries are fast developing economies of the world. These countries have time and again revised the rules around the Utility model patent to make the system more accessible and within the government’s scrutiny to make the system more efficient. Some common features followed in all these countries are- specific subject matter for utility model, “non-patentable Inventions” and “Utility Models”, “Grace period”, “Publication of the applications”, “Rights of the right holder” etc.
In India, the patent application filed is much less as compared to other countries. In 2019, India filed only 2,053 which is 1% of the total patent filing in the world. As per the WIPO, out of the total patents filed only 19,545 applications were by Indian residents. This indicates a low filing of patents in India. “Such a low filing rate of applications by domestic applicants also does reflect the true research and development activities” in India. However, India invests a lot in the research and development in the countries. Many institutions across India engage in extensive research work.
There is no less research work in India, but it may be because of the patent system that a smaller number of patents are filed. Domestic innovators who are engaged in incremental innovation face more problems, as their invention does not fulfil the specific criteria laid down under the Patent’s Act, 1970.
Due to this reason, their invention does not qualify to get patent protection. Secondly, the patent system takes a long time and is costly. Therefore, domestic innovators are reluctant to apply for patent protection for their invention. To solve this there is a need for a second-tier patent system that provides a more efficient system, faster and cheaper system. A utility model system is a tool that can be used as a complement to the already existing patent system in India. This system has effectively worked in other developing countries, thus it also is tried and analysed in India to know if the system suits the domestic innovators.
Conclusion
The object of Intellectual Property Rights is to protect the inventors of innovation and encourage innovation. The concept of patents was developed to provide the inventor’s monopoly over their invention and prevent others from commercially using their patents without their authorization. This is the right of the patent owner over their invention. That is why every kind of invention should be protected.
Many times, small inventions or incremental inventions fail to get recognition and protection from patents because they do not always involve an inventive step and that they have a short commercial life. But it is important to protect such inventions as these inventions have practical utility. Therefore, many countries in the world have adopted a second-tier system known as utility model patents to help small and individual innovators to get easy access to patent protection. This system is simpler, faster, and cheaper as compared to the patent system.
Therefore, this system has effectively worked for many countries as it helped domestic innovators to secure patent protection for their invention. This system also has its disadvantages but if it is used with proper rules, then it can immensely help in the technological and economic development of a country. India should now consider implementing a second-tier patent system as it will help the local business to prosper.
India should not straight away implement the utility model patents but should critically examine the benefits that this model would provide to its domestic innovators. This system can be used as a complement to the patent system, and it can potentially foster further development in the technology sector. It can also possibly encourage domestic innovators to file more than patents, hence helping India flourish in the field of Intellectual Property.
References
- Patent Act, 1970.
- Utility Models, The World Intellectual Property Organization.
- Gautam Sharma, Exploring the possibilities of the Utility Models Patent Regime for Grassroots Innovations in India, Journal for Intellectual Property Rights, Vol.23, August 2018. http://nopr.niscair.res.in/bitstream/123456789/45331/1/JIPR%2023%282-3%29%20119-130.pdf
- Dr. K.S Kardam, Utility Model – A tool for economic and technological development: A case study of Japan, Ipindia, https://ipindia.gov.in/writereaddata/images/pdf/FinalReport_April2007.pdf.
- Daniel Gajweski, Utility Model Examination in China is quietly changing, IPWATCHDOG, July 28th, 2019, https://www.ipwatchdog.com/2019/07/28/utility-model-examination-china-quietly-changing/id=111451/.
- Statistical Country Profile, World Intellectual Property Organization.
LawSikho has created a telegram group for exchanging legal knowledge, referrals, and various opportunities. You can click on this link and join:
