Chapter 17 : The Patent Act,1970

Chapter XVII: Use of Inventions For Purposes of Government and Acquisition of Inventions by Central Government

This chapter gives the Indian government special powers to use any patented invention for its own needs and, in some cases, to take ownership of it entirely.

Section 99: Meaning of use of invention for purposes of Government.

This section defines what it means for the “government” to “use” an invention.

• (1) …an invention is said to be used for the purposes of Government if it is made, used, exercised or vended for the purposes of the Central Government, a State Government or a Government undertaking.
  • Plain English: The phrase “used by the government” is very broad. It means any activity (making, using, selling) done for the benefit of:
    • The Central Government (e.g., the Ministry of Defence, Ministry of Railways).
    • A State Government (e.g., the Government of Maharashtra, the Karnataka Health Department).
    • A Government undertaking (e.g., public sector companies like Hindustan Aeronautics Limited (HAL), BHEL, or the Indian Oil Corporation).
  • Real-world Example:
    • If the Indian Army (Central Govt) uses a patented night-vision goggle, that is “use for purposes of Government.”
    • If the National Highway Authority of India (a Govt undertaking) uses a patented road-laying machine, that is also “use for purposes of Government.”
    • If the Kerala state health department (State Govt) uses a patented diagnostic test, that is also “use for purposes of Government.”
• (2) [Omitted by the Patents (Amendment) Act, 2002]
  • Plain English: This sub-section was removed and is no longer part of the law.
• (3) Nothing contained in this Chapter shall apply in respect of any such importation, making or using… as may be made by virtue of… section 47.
  • Plain English: This is a clarification. It says the rules in this chapter (which generally involve paying the patent owner) are separate from the free exceptions already given in Section 47.
  • Section 47 gives everyone (including the government) a free right to use a patent for research, experiments, or teaching. It also gives the government a free right to import patented medicine for its own public hospitals. This section (99) confirms that those free rights remain untouched. The rules in this chapter (99-103) apply to other uses, like large-scale manufacturing or use for non-medical purposes.
  • Real-world Example: If a government hospital imports 1,000 patented stents for its own patients, that is a free use under Section 47. But if the government decides to manufacture 5 million of those patented stents itself (or through a contractor) to supply the entire country’s health system, it would do so using the powers in this chapter, and it would likely have to pay compensation to the patent owner.

Section 100: Power of Central Government to use inventions for purposes of Government.

This is the main section that grants the Central Government the power to use any patented invention, whether the patent owner likes it or not.

• (1) Notwithstanding anything contained in this Act, at any time after an application for a patent has been filed… or a patent has been granted, the Central Government and any person authorised in writing by it, may use the invention for the purposes of Government…
  • Plain English: The Central Government can use any invention for its own purposes. It doesn’t even have to wait for the patent to be granted; it can start using it as soon as the application is filed.
  • Furthermore, the government can “authorize” any other person (like a private company) in writing to use the invention on the government’s behalf.
  • Real-world Example: The Ministry of Defence needs a new patented drone technology. It can either:
    1. Start building the drone itself (at a DRDO lab).
    2. Give a written contract to a private company like Larsen & Toubro (L&T), authorizing L&T to build the patented drone for the Army.
  • In both cases, the patent owner cannot sue for infringement.
• (2) Where an invention has… before the priority date… been duly recorded… or tested… by or on behalf of the Government… otherwise than in consequence of the communication of the invention… by the patentee… any use of the invention… may be made free of any royalty or other remuneration to the patentee.
  • Plain English: This is the government’s “prior use” right. If the government (e.g., a government lab) had already documented, tested, or tried the exact same invention before the patent’s priority date, it gets to use that invention for free, forever.
  • The Exception: This “free use” right is voided if the only reason the government knew about the invention was because the inventor told them about it (e.g., in a private demonstration).
  • Real-world Example: A DRDO lab has been secretly documenting and testing a new type of armor plating since 2020. In 2022, a private company independently invents the same armor and files a patent. The DRDO can continue to make and use that armor for free because it had “prior use.”
  • Exception Example: An inventor shows his new armor to the DRDO in 2020 under a non-disclosure agreement. The DRDO secretly records it. The inventor then files his patent in 2022. In this case, the government must pay, because their “prior use” was a direct “consequence of the communication” from the patentee.
• (3) If… the invention has not been so recorded or tried or tested… any use of the invention made by the Central Government… shall be made upon terms as may be agreed upon… or, as may in default of agreement be determined by the High Court…
  • Plain English: This is the standard situation. If the government didn’t invent it first (i.e., sub-section (2) doesn’t apply), then it must pay the patent owner.
  • The government and the patent owner are expected to negotiate “terms” (a royalty or licence fee). If they cannot agree (e.g., the government offers ₹10 crore, but the patentee demands ₹100 crore), the dispute is sent to the High Court to decide on a fair payment.
  • Proviso: The proviso states the payment must be “adequate remuneration” based on the “economic value of the use.”
  • Real-world Example: The Indian Railways wants to use a new patented high-speed signaling system. The government and the patent owner try to negotiate a licence fee but fail. The government starts using the system anyway (which it is allowed to do) and refers the payment dispute to the High Court to determine the “adequate remuneration.”
• (4) The authorisation by the Central Government… may be given… either before or after the patent is granted and either before or after the acts… are done, and may be given to any person whether or not he is authorised… by the… patentee…
  • Plain English: This section gives the government maximum flexibility.
    1. It can give authorization at any time (even after the work has already started).
    2. It can give authorization to anybody (it doesn’t have to be someone the patentee trusts; it can even be the patentee’s biggest competitor).
  • Real-world Example: The government needs a patented vaccine for an urgent public health campaign. The patent is owned by Company A. The government can give a written authorization to Company B (Company A’s main rival) to start manufacturing the vaccine immediately.
• (5) Where an invention has been used… by the Central Government… the Government shall notify the patentee as soon as practicable… and furnish him with such information as to the extent of the use…
  • Plain English: In normal circumstances, the government can’t use an invention in complete secret. It must notify the patent owner “as soon as practicable” that it is using the invention and provide information about how much it is being used (so the patentee can calculate a fair royalty).
  • The Exception: This notification is not required in cases of “national emergency,” “extreme urgency,” or “non-commercial use,” as this might compromise national security or public safety.
  • Real-world Example (Notification): BHEL (a govt. undertaking) uses a patented turbine blade. It must notify the patent owner and report how many turbines it has built using the blade.
  • Real-world Example (Exception): The government’s intelligence agency (RAW) uses a patented encryption technology. It does not have to notify the patent owner, as doing so would be a breach of national security.
• (6) The right to make, use, exercise and vend… for the purposes of Government… shall include the right to sell on non-commercial basis, the goods…
  • Plain English: This clarifies that “use by the government” also includes selling the product, as long as it’s a “non-commercial” sale (i.e., not for profit).
  • Real-world Example: The government uses its power to manufacture a patented life-saving drug. It can then sell that drug to the public through its network of public hospitals for a highly subsidized, at-cost price (e.g., ₹100 per dose). This is “non-commercial” and is allowed.
• (7) Where… there is an exclusive licensee… or where such patent has been assigned to the patentee in consideration of royalties… the notice… shall also be given to such exclusive licensee or assignor… and the reference to the patentee… shall be deemed to include a reference to such assignor or exclusive licensee.
  • Plain English: This ensures that all the financial stakeholders are included. If the patent owner has already given an exclusive licence to another company, that exclusive licensee also has a financial stake.
  • Therefore, the government must notify both the patent owner AND the exclusive licensee.
  • When the payment is decided by the High Court, the money will be split between the patent owner and the exclusive licensee in a fair manner.
  • Real-world Example: A US university (patentee) has an exclusive licence with an Indian company, “IndiaPharma.” The government starts using the invention. The government must notify both the US university and IndiaPharma. The High Court decides the total compensation is ₹20 crore. The court will then look at the licence agreement and split that ₹20 crore between the university and IndiaPharma.

Section 101: Rights of third parties in respect of use of invention for purposes of Government.

This section explains what happens to existing private contracts (like licence agreements) when the government decides to use an invention under its special powers (from Section 100).

• (1) …the provisions of any licence, assignment or agreement granted or made, between the patentee… and any person other then the Central Government shall be of no effect…
  • Plain English: When the government steps in to use a patent, any pre-existing private contracts that the patent owner has with other companies are temporarily “of no effect” (i.e., they are voided or ignored) in so far as they interfere with the government’s use.
  • This applies if the provisions:
    • (i) restrict or regulate the use for the purposes of Government…
      • Real-world Example: A patentee, “GlobalCorp,” gave an Indian company, “IndiaLicence,” an exclusive licence. This licence says, “IndiaLicence is the only entity allowed to make this product in India.” If the Central Government decides to make the product itself (or hire another company to do it), this “exclusivity” clause is ignored. The government’s right to use the patent overrides the private contract.
    • (ii) provide for the making of payments in respect of any use of the invention… for the purposes of Government…
      • Real-world Example: The same licence agreement says, “If this product is ever sold to the government, IndiaLicence must be paid a 10% commission.” When the government itself starts making the product, that commission clause is ignored. The government will pay compensation under Section 100(3), not under the terms of the private contract.
• (2) Where the patent… has been assigned to the patentee in consideration of royalties… any sum payable by virtue of [Section 100(3)] shall be divided between the patentee and the assignor in such proportion as may be agreed upon… or as may in default of agreement be determined by the High Court…
  • Plain English: This deals with a situation where the current “patentee” (owner) isn’t the original inventor. Imagine an inventor assigned (sold) their patent to a company in exchange for a continuous royalty (e.g., “5% of all future sales”).
  • When the government uses this invention and pays compensation, that money must be split between the current owner (the company) and the original inventor (the “assignor”). If they can’t agree on a fair split, the High Court will decide for them.
  • Real-world Example: A university professor invents a new material and assigns the patent to her university in exchange for a 30% royalty on all future revenue. The Ministry of Defence uses the invention and the High Court determines the total compensation is ₹10 crore. The university and the professor must now split that ₹10 crore. If they can’t agree, the High Court will decide how much of that ₹10 crore goes to the professor and how much to the university.
• (3) Where… payments are required to be made by the Central Government… and where… there is an exclusive licensee… such sum shall be shared by the patentee and such licensee in such proportions… as may be agreed upon… or… determined by the High Court…
  • Plain English: This is similar to sub-section (2), but for an exclusive licensee. An exclusive licensee is a company that has paid for the sole right to make and sell the invention. Because the government’s use overrides that exclusivity, the exclusive licensee is also losing money.
  • Therefore, the compensation paid by the government must be split between the patent owner and their exclusive licensee.
  • The High Court, in deciding the split, will specifically look at any money the licensee has already spent on:
    • (a) in developing the said invention; or
    • (b) in making payments to the patentees other than royalties…
  • Real-world Example: A German company (patentee) gives an exclusive licence to an Indian company, “IndiaPharma,” which paid a ₹50 crore upfront fee and spent another ₹100 crore on R&D to adapt the product for India. The government starts using the invention and the High Court sets compensation at ₹20 crore. The High Court will not just give the ₹20 crore to the German company. It will “have regard to” the ₹150 crore IndiaPharma has already spent and will split the ₹20 crore “justly” between both parties.

Section 102: Acquisition of inventions and patents by the Central Government.

This section goes a step further than Section 100. Instead of just using the invention, this gives the Central Government the power to take complete ownership of it (like “eminent domain” for patents).

• (1) The Central Government may, if satisfied that it is necessary that an invention… should be acquired… for a public purpose, publish a notification to that effect in the Official Gazette, and thereupon the invention or patent… shall… stand transferred to and be vested in the Central Government.
  • Plain English: If the government decides it is “necessary for a public purpose,” it can acquire (take) a patent or even just a patent application.
  • The process is simple: it publishes a notification in the Official Gazette (the government’s official public journal). The moment it is published, the patent’s ownership is automatically transferred to the Central Government.
  • Real-world Example: An inventor patents a revolutionary, cheap, and simple water desalination process. The government decides that to ensure national water security (a “public purpose”), this technology shouldn’t be in private hands. It publishes a notification, and the patent now belongs to the Government of India, which can then give it to every state municipality for free.
• (2) Notice of the acquisition shall be given to the applicant, and… to the patentee and other persons, if any, appearing in the register as having an interest in the patent.
  • Plain English: The government can’t just take the patent and not tell the owner. After publishing the notice, it must formally notify the patent applicant/owner and anyone else listed in the patent register as having a financial stake (like an exclusive licensee).
• (3) The Central Government shall pay… such compensation as may be agreed upon… or, as may, in default of agreement, be determined by the High Court… to be just having regard to…
  • Plain English: The government must pay “just compensation” for acquiring the patent. As with government use, this is first negotiated. If they can’t agree, the High Court decides the amount.
  • The High Court will consider:
    • The money the inventor spent (“expenditure incurred”).
    • The remaining life of the patent (“the term thereof”).
    • How much the patent was already used and the profits made (“the period during which and the manner in which it has already been worked”).
    • Any “other relevant factors.”
  • Real-world Example: The government acquires the water desalination patent. The inventor shows they spent ₹5 crore on R&D. The patent is new and has 19 years left. The government and the inventor cannot agree on a price. The case goes to the High Court, which weighs all these factors (the R&D cost, the enormous public benefit, the 19-year term) and determines the “just compensation” is, for example, ₹75 crore.

Section 103: Reference to High Court of disputes as to use for purposes of Government.

This section lays out the detailed rules for any legal dispute involving the government’s use or acquisition of a patent.

• (1) Any dispute as to the exercise by the Central Government… of the powers conferred by section 100, or as to terms for the use… or as to the right of any person to receive any part of a payment… or as to the amount of compensation… under section 102, may be referred to the High Court…
  • Plain English: This lists all the disputes that can be sent to the High Court:
    1. A dispute over whether the government’s use is valid.
    2. A dispute over the amount of compensation for use (S.100).
    3. A dispute between a patentee and their licensee over who gets the compensation (S.101).
    4. A dispute over the amount of compensation for acquisition (S.102).
  • Real-world Example: Any of the previous examples where the parties “cannot agree” on a price would end up in the High Court under this section.
• (2) In any proceedings under this section to which the Central Government is a party, the Central Government may, –
  • (a) …petition by way of counter-claim for revocation of the patent…
  • (b) …put in issue the validity of the patent without petitioning for its revocation.
  • Plain English: This gives the government a powerful legal advantage. When a patent owner takes the government to the High Court to ask for more money, the government can fight back by:
    1. Filing a “counter-claim” to revoke (cancel) the patent entirely on any of the grounds in Section 64 (e.g., “this wasn’t a new invention anyway”).
    2. Using the patent’s invalidity as a defense (e.g., “We shouldn’t have to pay much for this patent because it’s invalid”) without having to file a full revocation claim.
  • Real-world Example: A patentee sues the government in the High Court, demanding ₹100 crore in compensation. In its defense, the government’s lawyers state, “We should pay nothing, because the patent is invalid for ‘obviousness’ under Section 64(f).”
• (3) If in such proceedings… any question arises whether an invention has been recorded… as is mentioned in section 100, and the disclosure of any document… would… be prejudicial to the public interest, the disclosure may be made confidentially to the advocate of the other party or to an independent expert…
  • Plain English: This is the “state secrets” rule. Imagine the government’s defense for not paying is, “We already invented this in our secret DRDO lab” (under S.100(2)). The patentee demands, “Prove it. Show us the lab reports.” If the government says, “Those reports are top secret and showing them would be ‘prejudicial to public interest’,” the High Court can find a compromise. The secret documents won’t be shown in open court, but will be shown confidentially to the patentee’s lawyer (who is sworn to secrecy) or to a neutral, security-cleared expert.
  • Real-world Example: A dispute arises over a patented missile guidance system. The government’s secret lab files are shown only to the patentee’s advocate and an independent expert from IIT, who then advise the court.
• (4) In determining… any dispute… the High Court shall have regard to any benefit or compensation which that person… may have received… directly or indirectly in respect of the use of the invention…
  • Plain English: The High Court must look at the whole picture. If the patent owner has already received other government benefits (like grants, subsidies, or a different lucrative contract) related to this invention, the court can consider that when deciding the compensation.
  • Real-world Example: A company demands ₹50 crore for the government’s use of its patent. The government shows the High Court that it already gave the company a ₹20 crore “Make in India” grant to develop that very same invention. The High Court can “have regard to” that ₹20 crore grant and may decide to award lower additional compensation.
• (5) In any proceedings under this section, the High Court may… order the whole proceedings or any question or issue of fact… to be referred to an official referee, commissioner or an arbitrator…
  • Plain English: If the case gets extremely technical (e.g., “what is the precise economic value of this biotech patent?”), the High Court judge (who is a legal expert, not a scientist) can appoint a neutral technical or financial expert (a “referee” or “arbitrator”) to investigate that specific question and prepare a report to help the court decide.
  • Real-world Example: In a dispute over a complex chemical patent, the High Court appoints a chemistry professor from the Indian Institute of Science (IISc) as an “official referee” to determine the technical novelty and value of the invention.
• (6) Where the invention claimed in a patent was made by a person who… was in the service of the Central Government… or… a Government undertaking and the subject-matter… is certified… to be connected with the work done in the course of the normal duties… then… any dispute… shall be disposed of by the Central Government…
  • Plain English: This is a special rule for government employees. If a person invents something as part of their government job (e.g., an ISRO scientist inventing a new rocket part), they may get a patent for it. However, if a dispute about payment for government use arises, that dispute is not handled by the High Court. It is handled internally by the Central Government itself.
  • The government must still give the employee-inventor a chance to be “heard” before making a final decision on payment.
  • Real-world Example: A scientist at a DRDO lab patents a new radar component. The DRDO uses it. The scientist (patentee) and the DRDO (government) have a dispute over royalties. This dispute is resolved by the Central Government (e.g., the Secretary, Department of Defence), not by the High Court.