Utility Models: Need in India

By Siddhant Sharma, Amity Law School

Editor’s Note: The author, essentially, seeks to analyse the necessity of utility models in India.

Introduction

Being similar to a patent a utility model is often regarded as a petty patent or an innovative patent. It allows the rightful holder to protect the invention from unauthorised use for a limited period of time. The definition of the utility models differs from country to country.[1]

Since there are inventions that lack the degree of inventiveness that is required for patent, these utility models are granted as short term registered rights for protecting such innovations. Utility models are often referred to as “small patents” or “petty patents”. In total 75 countries provide this kind of “second-tier protection” most of them being Non-English countries.[2]

It can also be implied that in cases where the patent application is weak it can be made stronger by the process of substantive examination, but for the utility models it is a totally different scenario. For the utility models to come into effect it should meet the yardstick of the formal requirements set by the patent authorities since there is no examination of the submitted application. However the quality of the utility models rests in the hands of the applicant to a certain extent. The applicant can indulge in hefty research and evaluation of the invention prior to filing the application which in case will make the utility model stronger. The Indian patent authorities do not recognise the registration of utility models. However, priority can be claimed for such application filed in India from Utility Model Patent application filed in convention country.[3]

Historical Background

The origin of utility models can be associated with the starting of the German law of June 1891. The German law demanded that the invention will be granted to a patent not only because it is new but also because it is a technological advancement and a step forward in the future. The minor inventions which did not represent a step forward but were of practical use were left unprotected. This raised the need for a new law which provided protection to simple devices and the utility model came into being. Within fifteen years, Japan, whose IPR Laws were German inspired felt it suitable to introduce utility based protection.[4] The need for inventiveness led to the possibility that if one failed to convince the examiner that a sufficient degree of inventiveness had been demonstrated to permit patent protection, the application might be converted into one for a utility model as in the case of France.[5]

Patents and Utility Models

Patents are regarded as the tools of economic advancement that should contribute to the enrichment of the economy by making new and useful goods available through inventive activity and the economic activity based on the production, and further development of such goods and services and information. The term Utility model is referred to as a second-tier patent system by the jurists who offer a cheap and less stringent protection regime for technical inventions which are less on inventiveness and are a result of the innovation to the existing resources. The United States, United Kingdom, Canada and India in contradiction to major industrial nations like Japan, South Korea and Germany have not adopted utility models. [6]

Utility models and Patents differentiate on the following basis:

  • Utility models are less stringent than from patents and are issued for a shorter period of time than that of patents (usually between 6 and 15 years).
  • The registration process of utility models is comparatively cheaper and faster than that of patents and often requires six months on an average.
  • Their maintenance cost is also cheaper as compared to that of the patents.[7]

Small, Medium and Micro Enterprises in India

In India small scale industry plays a very vital role in the economic growth of the country. This sector is a less capital-intensive producer of consumer goods and provider of employment thereby addressing not only the problem of unemployment but also playing very important role in poverty removal process and therefore acquired a prominent place in the socio-economic development of the country. It also provides employment to about 27.14 million persons, which is second only to Agriculture. Small Scale sector is contributing nearly about 35% of total export of the country. Besides this, it is also responsible for indirect export of about 15% through merchant exporters, trading houses and export houses 27. Therefore, SSI Sector has also been playing a major role in India’s present export performance which is about 45%-50% of the total Exports[8].

In India only 20 to 25 % of patent applications are filed by the domestic applicants and remaining applications by foreign applicants. This is mainly due to less expenditure on R&D activities, Apart from this; patentability criteria for patenting any invention are very strict such as worldwide novelty, and greater degree of inventiveness. Further patenting system also takes a longer time for granting patent rights. Therefore this sector seems to be highly hesitant to protect their IP rights as current or existing Industrial Property protection system is not sufficient enough to protect the small or petty innovative work done either by them or individual innovators.

It is often claimed that utility model systems are particularly advantageous for SMEs. A cheap and rapid second-tier patent regime would improve the legal environment for SMEs. Another reason why utility models may be good for SMEs is that the cost factor may inhibit them from using the patent system as much as they would desire leaving them vulnerable to the widespread industrial plagiarism.[9]

Does India need a Utility Model Law

Indian Micro, Small and Medium Enterprises (MSME) employ an estimated 59.7 million persons accounting for about 45% of the manufacturing output and around 40% of the total export of the country. MSME sector though economically constrained has a rich pool of grassroots innovation that needs to be protected under legal framework. Further getting patent is not only time-consuming but also very expensive as maintaining a patent in India costs anywhere from Rs 48, 000 to up to Rs. 1,92,000. Due to the influence of this heavy pricing the small innovators do not participate in the development of the country.

For any SME to take advantage of the IP rights they should be made cheap and feasible[10]. Although India has put in place a very modern Patent and Design laws recently but the small scale industry sector and small innovators are still unable to take full advantage of these legislations due to their stringent and global nature which often take a lot of time and very expensive. On the other hand the Utility Model System is relatively cheaper, saves time and needs no substantive examination. They can be registered by formal examination and their term of protection may vary between 10 to 15 years[11]. Therefore, nations like Japan stand high in the race of technological advancement due to the presence of utility models in their economy. India should also adopt this petty patent system so as to protect its developing SMME industry and make them a major player in the international market.

Conclusion

Despite the many advantages, a threat of frivolous filing of Utility models looms large which would in turn make the system a mockery. The purpose of any Intellectual Property legislation is to grant monopoly rights which are enforceable. Therefore, for a country like India which has already been criticized for its IPR regime (the Novartis case and India already being on the US priority list for digital content piracy) it would be advantageous to have an examination system with proper examination guidelines in place for grant and enforcement of Utility models along with remedies and sanctions available in cases of infringement.

Edited by Saksham Dwivedi

Footnotes

[1] Protecting innovations by utility models, World Intellectual Property Organisation (WIPO), available at  http://www.wipo.int/sme/en/ip_business/utility_models/utility_models.htm, last seen on 1/10/2014

[2] Dr. Hans-Peter Brack, Utility models and their comparison with Patents and implications for the US intellectual property law system, Boston College Intellectual Property & Technology Forum 1, 2 (2009) available at http://bciptf.org/wp-content/uploads/2011/07/13-iptf-Brack.pdf, last seen on 1/10/2014

[3] Utility Model Patent, PMG Associates, available at  http://www.pmgip.com/utilitymodelpatent.html, last seen on 1/10/2014

[4] John Richards, Utility model protection throughout the world, Ladas & Parry LLP, available at http://www.ipo.org/wp-content/uploads/2013/03/Utility_Model_protection.pdf, last seen on 1/10/2014

[5] Ibid

[6] Uma Suthersanen, Utility Models and Innovation in Developing Countries, UNCTAD-ICTSD Project on IPRs and Sustainable Development, Executive summary (2006), available at http://unctad.org/en/docs/iteipc20066_en.pdf, last seen on 2/10/2014

[7] Supra 3

[8] Dr.K.S.Kardam, Utility Model – A tool for Economic and Technological Development: a case study of Japan, World Intellectual Property Office (WIPO) in Collaboration with the Japan Patent Office (2007), available at http://www.ipindia.nic.in/research_studies/FinalReport_April2007.pdf, last seen on 2/10/2014

[9] Supra 6

[10] Issues for consideration on Utility Models, SS. Rana and Associations, available at  http://www.ssrana.in/Admin%5CUploadDocument%5CArticle%5CDIPP%20Suggestions%20on%20Utility%20Model-final.pdf, last seen on  2/10/2014

[11] Supra 8

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