NOTES ON INTELLECTUAL PROPERTY CODE (RA NO.

8293)

PART I - (Sections 1 – 19)

The Intellectual Property Office

SECTION 1. Title. - This Act shall be known as the “Intellectual Property Code of
the Philippines.”

What are the state policies with respect to Intellectual Property Code?

SECTION 2. Declaration of State Policy. - The State recognizes that an effective

intellectual and industrial property system is vital to the development of domestic
and creative activity, facilitates transfer of technology, attracts foreign
investments, and ensures market access for our products.

It shall protect and secure the exclusive rights of scientists, inventors, artists and
other gifted citizens to their intellectual property and creations, particularly when
beneficial to the people, for such periods as provided in this Act. (This protection of
intellectual property is likewise mandated in the Constitution, Section 13, Article
XIV).

The use of intellectual property bears a social function. To this end, the State shall
promote the diffusion of knowledge and information for the promotion of national
development and progress and the common good.

It is also the policy of the State to streamline administrative procedures of registering

patents, trademarks and copyright, to liberalize the registration on the transfer of
technology, and to enhance the enforcement of intellectual property rights in the
Philippines. (n)

What are the international related laws to IPC?

1. Reciprocity

SECTION 3. International Conventions and Reciprocity. - Any person who is a national

or who is domiciled or has a real and effective industrial establishment in a country which
is a party to any convention, treaty or agreement relating to intellectual property rights or
the repression of unfair competition, to which the Philippines is also a party, or
extends reciprocal rights to nationals of the Philippines by law, shall be entitled to
benefits to the extent necessary to give effect to any provision of such convention, treaty
or reciprocal law, in addition to the rights to which any owner of an intellectual property
right is otherwise entitled by this Act. (n)

2. Treaties are parts of our laws, hence various provisions of treaties are incorporated
in the IPC. For instance, the enactment of the IPC is partly the result of the
mandate of the Agreement Establishing the World Trade Organization and the
WTO’s Agreement on Trade Related Aspects of Intellectual Property Rights
or TRIPS (Mirpuri vs. CA, 318 SCRA 516).

3. National Treatment – Each member of the WTO’s Agreement on TRIPS shall

accord to nationals of the other members no less favorable than that it accords its
own nationals with regard to the protection of intellectual property (Art. 3, TRIPS).

4. Most- Favored- Nation Treatment – With regard to the protection of intellectual

property, any advantage, favor, privilege or immunity granted by a Member to the
nationals of any other country shall be accorded immediately and unconditionally
to the nationals of all other members of WTO’s TRIPS (Art. 4, TRIPS).

What are the intellectual property rights?

SECTION 4. Definitions. - 4.1. The term “intellectual property rights” consists of:

a) Copyright and Related Rights;

b) Trademarks and Service Marks;

c) Geographic Indications;

d) Industrial Designs;

e) Patents;

f) Layout-Designs (Topographies) of Integrated Circuits; and

g) Protection of Undisclosed Information (n, TRIPS).

What is the Intellectual Property Office (IPO)?

The Intellectual Property Office (IPO) is the body that administers the policies sought
to be implemented under the IPC
SECTION 5. Functions of the Intellectual Property Office (IPO). – Section 5.1. To
administer and implement the State policies declared in this Act, there is hereby created
the Intellectual Property Office (IPO) which shall have the following functions:

a) Examine applications for grant of letters patent for inventions and register utility models
and industrial designs;

b) Examine applications for the registration of marks, geographic indication, integrated

circuits;

c) Register technology transfer arrangements and settle disputes involving technology

transfer payments covered by the provisions of Part II, Chapter IX on Voluntary Licensing
and develop and implement strategies to promote and facilitate technology transfer;

d) Promote the use of patent information as a tool for technology development;

e) Publish regularly in its own publication the patents, marks, utility models and industrial
designs, issued and approved, and the technology transfer arrangements registered;

f) Administratively adjudicate contested proceedings affecting intellectual property rights;

and

g) Coordinate with other government agencies and the private sector efforts to formulate
and implement plans and policies to strengthen the protection of intellectual property
rights in the country.

Note: While registration of other intellectual properties are with IPO, copyrighted works
are still deposited with the National Library and the Supreme Court.
 PART II ( Sections 20 – 120, RA 8293)

The Law on Patents

What is a patent?
PATENT is a statutory monopoly which protects against unlicensed use of the patented
device or process even by the one who discovered it through independent
research.

What are the purposes of Patent Law?

1. The patent law seeks to foster and reward invention.

2. It promotes disclosures of inventions to stimulate further innovation and to permit

the public to practice the invention once the patent expires.

3. The stringent requirements for patent protection seek to ensure that ideas in the
public domain remain there for the free use of the public. (Pearl & Dean vs.
Shoemart, G.R. 148222, August 15, 2003).

The ultimate goal of a patent system is to bring new designs and technologies into
the public domain through disclosure. Ideas, once disclosed to the public without the
protection of a valid patent, are subject to appropriation without significant restraint.

DEFINITION OF TERMS:
1. Novel – that which does not form part of a prior art (Sec. 23, ICP).
2. Prior art

SECTION 24. Prior Art. - Prior art shall consist of:

24.1. Everything which has been made available to the public anywhere in the world,
before the filing date or the priority date of the application claiming the invention; and

24.2. The whole contents of an application for a patent, utility model, or industrial design
registration, published in accordance with this Act, filed or effective in the Philippines, with
a filing or priority date that is earlier than the filing or priority date of the application:
Provided, That the application which has validly claimed the filing date of an earlier
application under Section 31 of this Act, shall be prior art with effect as of the filing date
of such earlier application: Provided, further, That the applicant or the inventor identified
in both applications are not one and the same. (Sec. 9, R.A. No. 165a).

3. Inventive Step

SECTION 26. Inventive Step. - 26.1. An invention involves an inventive step if, having
regard to prior art, it is not obvious to a person skilled in the art at the time of the filing
date or priority date of the application claiming the invention. (n)

26.2. In the case of drugs and medicines, there is no inventive step if the invention
results from:

i. the mere discovery of a new form or new property of a known substance which does
not result in the enhancement of the known efficacy of that substance, or

ii. the mere discovery of any new property or new use for a known substance, or

iii. the mere use of a known process unless such known process results in a new product
that employs at least one new reactant.

4. Industrial applicability.

SECTION 27. Industrial Applicability. - An invention that can be produced and used in
any industry shall be industrially applicable.

5. Person skilled in the art. – presumed to be an ordinary practitioner aware of what

was common general knowledge in the art at the relevant date. He is presumed to
have knowledge of all references that are sufficiently related to one another and to the
pertinent art and to have knowledge of all arts reasonably pertinent to the particular
problems with which the inventor is involved. He is presumed also to have had at his
disposal the normal means and capacity to routine work and experimentation.

What are patentable inventions?

PATENTABLE INVENTIONS refer to any technical solution of a problem in any field of

human activity which is new, involves an inventive step and is industrially applicable.

REQUISITES:
1. A technical solution of a problem in any field of human activity
2. Inventive step – an invention involves inventive step if, having regard to prior art,
it is not obvious to a person skilled in the art at the time of the filing date or
priority date of the application claiming the invention.
 3. Novelty - it must be a novel invention. An invention shall be considered new if it
does not form part of a prior art.
4. It must be industrially applicable – an invention that can be produced and used in
any industry.
5. Patentable subject matter – the invention does not fall within the prohibition of a
non-patentable invention.

What are the classes of patentable inventions?

1. Useful machines
2. A product
3. A process
4. An improvement of nos. 1, 2 or 3
5. Microorganism
6. Non-biological and microbiological process
(Rule 201, Rules and Regulations on Inventions)

What are non-patentable Inventions?

SECTION 22. Non-Patentable Inventions. - The following shall be excluded from patent
protection:

22.1. Discoveries, scientific theories and mathematical methods, and in the case of
drugs and medicines, the mere discovery of a new form or new property of a known
substance which does not result in the enhancement of the known efficacy of that
substance, or the mere discovery of any new property or new use for a known substance,
or the mere use of a known process unless such known process results in a new product
that employs at least one new reactant.

For the purpose of this clause, salts, esters, ethers, polymorphs, metabolites, pure form,
particle size, isomers, mixtures of isomers, complexes, combinations, and other
derivatives of a known substance shall be considered to be the same substance, unless
they differ significantly in properties with regard to efficacy;

22.2. Schemes, rules and methods of performing mental acts, playing games or
doing business, and programs for computers;

22.3. Methods for treatment of the human or animal body by surgery or therapy and
diagnostic methods practiced on the human or animal body. This provision shall not
apply to products and composition for use in any of these methods;
22.4. Plant varieties or animal breeds or essentially biological process for the
production of plants or animals. This provision shall not apply to micro-organisms
and non-biological and microbiological processes.

Provisions under this subsection shall not preclude Congress to consider the enactment
of a law providing sui generis protection of plant varieties and animal breeds and a system
of community intellectual rights protection:

22.5. Aesthetic creations; and

22.6. Anything which is contrary to public order or morality. (Sec. 8, R.A. No. 165a)

What is the term of a Patent?

The term of a patent is twenty (20) years counted from the filing date of application
(Sec 54, IPL).
Upon the expiration of that period, the knowledge of the invention inures to the people,
who are thus enabled to practice it and profit from its use.

What are the requirements for a patent application?

SECTION 32. The Application. - 32.1. The patent application shall be in Filipino or
English and shall contain the following:

(a) A request for the grant of a patent;

The request shall contain a petition for the grant of the patent, the name and other
data of the applicant, the inventor and the agent and the title of the invention.
(b) A description of the invention;
The application shall disclose the invention in a manner sufficiently clear and
complete for it to be carried out by a person skilled in the art.

(c) Drawings necessary for the understanding of the invention;

(d) One or more claims - The application shall contain one (1) or more claims which
shall define the matter for which protection is sought. Each claim shall be clear and
concise, and shall be supported by the description.

(e) An abstract - The abstract shall consist of a concise summary of the disclosure of the
invention as contained in the description, claims and drawings in preferably not more
than one hundred fifty (150) words.
32.2. No patent may be granted unless the application identifies the inventor. If the
applicant is not the inventor, the Office may require him to submit said authority. (Sec. 13,
R.A. No. 165a)

SECTION 33. Appointment of Agent or Representative. - An applicant who is not a

resident of the Philippines must appoint and maintain a resident agent or
representative in the Philippines upon whom notice or process for judicial or
administrative procedure relating to the application for patent or the patent may be served.
(Sec. 11, R.A. No. 165a)

Who are entitled to the rights to a patent?

SECTION 28. Right to a Patent. - The right to a patent belongs to the inventor, his heirs,
or assigns. When two (2) or more persons have jointly made an invention, the right to a
patent shall belong to them jointly. (Sec. 10, R.A. No. 165a)

SECTION 29. First to File Rule. - If two (2) or more persons have made the invention
separately and independently of each other, the right to the patent shall belong to the
person who filed an application for such invention, or where two or more applications
are filed for the same invention, to the applicant who has the earliest filing date or, the
earliest priority date. (3rd sentence, Sec. 10, R.A. No. 165a)

SECTION 30. Inventions Created Pursuant to a Commission. - 30.1. The person who
commissions the work shall own the patent, unless otherwise provided in the contract.

30.2. In case the employee made the invention in the course of his employment contract,
the patent shall belong to:

(a) The employee, if the inventive activity is not a part of his regular duties even if the
employee uses the time, facilities and materials of the employer.

(b) The employer, if the invention is the result of the performance of his regularly-
assigned duties, unless there is an agreement, express or implied, to the contrary. (n)

SECTION 31. Right of Priority. - An application for patent filed by any person who has
previously applied for the same invention in another country which by treaty, convention,
or law affords similar privileges to Filipino citizens, shall be considered as filed as of the
date of filing the foreign application: Provided, That: (a) the local application expressly
claims priority; (b) it is filed within twelve (12) months from the date the earliest foreign
application was filed; and (c) a certified copy of the foreign application together with an
English translation is filed within six (6) months from the date of filing in the Philippines.
(Sec. 15, R.A. No. 165a)
What are the rights conferred by patents?

SECTION 71. Rights Conferred by Patent. –

71.1. A patent shall confer on its owner the following exclusive rights:

(a) Where the subject matter of a patent is a product, to restrain, prohibit and prevent
any unauthorized person or entity from making, using, offering for sale, selling or
importing that product;

(b) Where the subject matter of a patent is a process, to restrain, prevent or prohibit any
unauthorized person or entity from using the process, and from manufacturing, dealing
in, using, selling or offering for sale, or importing any product obtained directly or indirectly
from such process.

71.2. Patent owners shall also have the right to assign, or transfer by succession the
patent, and to conclude licensing contracts for the same. (Sec. 37, R.A. No. 165a)

What are the limitations of patent rights?

SECTION 72. Limitations of Patent Rights. - The owner of a patent has no right to
prevent third parties from performing, without his authorization, the acts referred to
in Section 71 hereof in the following circumstances:

72.1. Using a patented product which has been put on the market in the Philippines by
the owner of the product, or with his express consent, insofar as such use is performed
after that product has been so put on the said market: Provided, That, with regard to drugs
and medicines, the limitation on patent rights shall apply after a drug or medicine has
been introduced in the Philippines or anywhere else in the world by the patent
owner, or by any party authorized to use the invention:

Provided, further, That the right to import the drugs and medicines contemplated in this
section shall be available to any government agency or any private third party –
PARALLEL IMPORTATION.

72.2. Where the act is done privately and on a non-commercial scale or for a non-
commercial purpose: Provided, That it does not significantly prejudice the economic
interests of the owner of the patent;
72.3. Where the act consists of making or using exclusively for experimental use of the
invention for scientific purposes or educational purposes and such other activities directly
related to such scientific or educational experimental use;

72.4. In the case of drugs and medicines, where the act includes testing, using, making
or selling the invention including any data related thereto, solely for purposes reasonably
related to the development and submission of information and issuance of approvals by
government regulatory agencies required under any law of the Philippines or of another
country that regulates the manufacture, construction, use or sale of any product:
Provided, That, in order to protect the data submitted by the original patent holder from
unfair commercial use provided in Article 39.3 of the Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPS Agreement), the Intellectual Property
Office, in consultation with the appropriate government agencies, shall issue the
appropriate rules and regulations necessary therein not later than one hundred twenty
(120) days after the enactment of this law;

72.5. Where the act consists of the preparation for individual cases, in a pharmacy or
by a medical professional, of a medicine in accordance with a medical prescription or
acts concerning the medicine so prepared; and

72.6. Where the invention is used in any ship, vessel, aircraft, or land vehicle of any other
country entering the territory of the Philippines temporarily or accidentally: Provided,
That such invention is used exclusively for the needs of the ship, vessel, aircraft,
or land vehicle and not used for the manufacturing of anything to be sold within
the Philippines. (Secs. 38 and 39, R.A. No. 165a)

SECTION 74. Use of Invention by Government. –

74.1. A Government agency or third person authorized by the Government may exploit
the invention even without agreement of the patent owner where:

(a) The public interest, in particular, national security, nutrition, health or the development
of other sectors, as determined by the appropriate agency of the government, so requires;
or

(b) A judicial or administrative body has determined that the manner of exploitation, by
the owner of the patent or his licensee is anti-competitive; or

(c) In the case of drugs and medicines, there is a national emergency or other
circumstance of extreme urgency requiring the use of the invention; or

(d) In the case of drugs and medicines, there is public non-commercial use of the patent
by the patentee, without satisfactory reason; or
(e) In the case of drugs and medicines, the demand for the patented article in the
Philippines is not being met to an adequate extent and on reasonable terms, as
determined by the Secretary of the Department of Health.

74.2. Unless otherwise provided herein, the use by the Government, or third person
authorized by the Government shall be subject, where applicable, to the following
provisions:

(a) In situations of national emergency or other circumstances of extreme urgency as

provided under Section 74.1(c), the right holder shall be notified as soon as reasonably
practicable;

(b) In the case of public non-commercial use of the patent by the patentee, without
satisfactory reason, as provided under Section 74.1 (d), the right holder shall be informed
promptly: Provided, That, the Government or third person authorized by the Government,
without making a patent search, knows or has demonstrable ground to know that a valid
patent is or will be used by or for the Government;

(c) If the demand for the patented article in the Philippines is not being met to an adequate
extent and on reasonable terms as provided under Section 74.1 (e), the right holder shall
be informed promptly;

(d) The scope and duration of such use shall be limited to the purpose for which it was
authorized;

(e) Such use shall be non-exclusive;

(f) The right holder shall be paid adequate remuneration in the circumstances of each
case, taking into account the economic value of the authorization; and

(g) The existence of a national emergency or other circumstances of extreme urgency,

referred to under Section 74.1 (c), shall be subject to the determination of the President
of the Philippines for the purpose of determining the need for such use or other
exploitation, which shall be immediately executory.

74.3. All cases arising from the implementation of this provision shall be cognizable by
courts with appropriate jurisdiction provided by law.

No court, except the Supreme Court of the Philippines, shall issue any temporary
restraining order or preliminary injunction or such other provisional remedies that will
prevent its immediate execution.
What are the grounds for cancellation of patents?

SECTION 61. Cancellation of Patents. - 61.1. Any interested person may, upon payment
of the required fee, petition to cancel the patent or any claim thereof, or parts of the claim,
on any of the following grounds:

(a) That what is claimed as the invention is not new or patentable;

(b) That the patent does not disclose the invention in a manner sufficiently clear and
complete for it to be carried out by any person skilled in the art; or

(c) That the patent is contrary to public order or morality.

61.2. Where the grounds for cancellation relate to some of the claims or parts of the claim,
cancellation may be effected to such extent only. (Secs. 28 and 29, R.A. No. 165a)

SECTION 66. Effect of Cancellation of Patent or Claim. - The rights conferred by the
patent or any specified claim or claims cancelled shall be terminated. Notice of the
cancellation shall be published in the IPO Gazette. Unless restrained by the Director
General, the decision or order to cancel by Director of Legal Affairs shall be immediately
executory even pending appeal. (Sec. 32, R.A. No. 165a)

What is prejudicial disclosure?

Whatever right one has to the invention covered by the patent arises alone from the
application date. Thus, if the inventor voluntarily discloses it, such as by offering it for
sale, the world is free to copy it with impunity. Ideas, once disclosed to the public without
the protection of a valid patent, are subject to appropriation without significant
restraint. (Pearl & Dean v. Shoemart, Inc.)

What is non-prejudicial disclosure?

SECTION 25. Non-Prejudicial Disclosure. - 25.1. The disclosure of information contained

in the application during the twelve (12) months preceding the filing date or the priority
date of the application shall not prejudice the applicant on the ground of lack of
novelty if such disclosure was made by:

(a) The inventor;

(b) A patent office and the information was contained (a) in another application filed by
the inventor and should not have been disclosed by the office, or (b) in an application filed
without the knowledge or consent of the inventor by a third party which obtained the
information directly or indirectly from the inventor; or

(c) A third party which obtained the information directly or indirectly from the inventor.

25.2. For the purposes of Subsection 25.1, “inventor” also means any person who, at the
filing date of application, had the right to the patent. (n)

What is the concept of divisional applications?

The concept of divisional applications comes into play when two or more inventions are
claimed in a single application but are of such a nature that a single patent may not be
issued for them.

The applicant is thus required “to divide”, that is, to limit the claims to whichever invention
he may elect, whereas those inventions not elected may be made the subject of separate
applications which are called “divisional applications” (Smith Kline Beckman Corp. v. The
Honorable CA, G.R. No. 126627, Aug. 14. 2003.

What is infringement of a patent?

SECTION 76. Civil Action for Infringement. - 76.1. The making, using, offering for sale,
selling, or importing a patented product or a product obtained directly or indirectly from a
patented process, or the use of a patented process without the authorization of the
patentee constitutes patent infringement.

How do you determine the presence of infringement?

1. Determine if there is literal infringement. If there is literal infringement, the

defendant is liable.
2. If there is no literal infringement, then the doctrine of equivalents
should be applied.

What is literal infringement?

There is infringement of patent under this test if one makes, uses or sells an item that
contains all the elements of the patent claim.

This test is satisfied in either of the following:

a. Exactness rule – the item that is being sold, made or used conforms exactly to
the patent claim of another.

b. Addition rule – when one makes, uses or sells an item that has all the elements
of the patent claim of another plus other elements.

What is the doctrine of equivalents?

The doctrine of equivalents provides that an infringement also takes place when a
device appropriates a prior invention by incorporating its innovative concept and,
although with some modification and change, performs substantially the same function
in substantially the same way to achieve substantially the same result. In other words,
the principle or mode of operation must be the same or substantially the same.
The doctrine of equivalents thus requires satisfaction of the function-means-and-
result test, the patentee having the burden to show that all three components of such
equivalency test are met (Smith Kline Beckman Corp. v. The Honorable CA, G.R. No.
126627, Aug.14, 2003).
The reason for the doctrine of equivalents is that to permit the imitation of a patented
invention which does not copy any literal detail would be to convert the protection of the
patent grant into a hollow and useless thing. (Godines vs. CA, G.R. N0. L – 97343,
Sept. 13,1993).

What is a contributory infringer?

Section 76.6. Anyone who actively induces the infringement of a patent or provides the
infringer with a component of a patented product or of a product produced because of a
patented process knowing it to be especially adopted for infringing the patented invention
and not suitable for substantial non-infringing use shall be liable as a contributory infringer
and shall be jointly and severally liable with the infringer. (Sec. 42, R.A. No. 165a)

NOTE:

A person or entity who has not been granted letters of patent over an invention and has
not acquired any right or title thereto either as assignee or as licensee, has no cause of
action for infringement because the right to maintain an infringement suit depends on the
existence of the patent. (Cresser Precision Systems vs. CA, G.R. No. 118708, Feb. 2,
1998).

What are the remedies for patent infringement?

1. Action for damages plus attorney’s fees and other expenses of litigation and to
secure an injunction.

Sec. 76.2. Any patentee, or anyone possessing any right, title or interest in and to
the patented invention, whose rights have been infringed, may bring a civil action
before a court of competent jurisdiction, to recover from the infringer such
damages sustained thereby, plus attorney’s fees and other expenses of litigation,
and to secure an injunction for the protection of his rights.

2. Disposal or destruction.

Sec. 76.5. The court may, in its discretion, order that the infringing goods, materials
and implements predominantly used in the infringement be disposed of outside the
channels of commerce or destroyed, without compensation.

3. Criminal action for repetition of infringement.

SECTION 84. Criminal Action for Repetition of Infringement. - If infringement is

repeated by the infringer or by anyone in connivance with him after finality of the
judgment of the court against the infringer, the offenders shall, without prejudice to
the institution of a civil action for damages, be criminally liable therefor and, upon
conviction, shall suffer imprisonment for the period of not less than six (6) months
but not more than three (3) years and/or a fine of not less than One hundred
thousand pesos (P100,000) but not more than Three hundred thousand pesos
(P300,000), at the discretion of the court. The criminal action herein provided shall
prescribe in three (3) years from date of the commission of the crime. (Sec.
48, R.A. No. 165a)

What is Compulsory Licensing?

Compulsory license is a license issued by the Director General of the Intellectual

Property Office to exploit a patented invention without permission of the patent holder,
either by manufacture or through parallel importation.

What are the grounds for issuance of a compulsory license?

SECTION 93. Grounds for Compulsory Licensing. - The Director General of the
Intellectual Property Office may grant a license to exploit a patented invention, even
without the agreement of the patent owner, in favor of any person who has shown his
capability to exploit the invention, under any of the following circumstances:

93.1. National emergency or other circumstances of extreme urgency;

93.2. Where the public interest, in particular, national security, nutrition, health or the
development of other vital sectors of the national economy as determined by the
appropriate agency of the Government, so requires; or

93.3. Where a judicial or administrative body has determined that the manner of
exploitation by the owner of the patent or his licensee is anti-competitive; or

93.4. In case of public non-commercial use of the patent by the patentee, without
satisfactory reason;

93.5. If the patented invention is not being worked in the Philippines on a commercial
scale, although capable of being worked, without satisfactory reason: Provided, That the
importation of the patented article shall constitute working or using the patent. (Secs. 34,
34-A, 34-B, R.A. No. 165a) and

93.6. Where the demand for patented drugs and medicines is not being met to an
adequate extent and on reasonable terms, as determined by the Secretary of the
Department of Health.

In whose favor is the license issued?

Compulsory license should be granted to any person who has shown his capacity to
exploit the invention.

What is the time when application for compulsory license cannot be applied?

The time is before the expiration of a period of four (4) years from the date of filing the
application or three (3) years from the date of the patent whichever period expires last.

What are the requirements to obtain a license on reasonable commercial terms?

SECTION 95. Requirement to Obtain a License on Reasonable Commercial
Terms. - 95.1. The license will only be granted after the petitioner has made efforts to
obtain authorization from the patent owner on reasonable commercial terms and
conditions but such efforts have not been successful within a reasonable period of time.

EXCEPTIONS:

95.2. The requirement under Subsection 95.1 shall not apply in any of the following cases:

(a) Where the petition for compulsory license seeks to remedy a practice determined after
judicial or administrative process to be anti-competitive;

(b) In situations of national emergency or other circumstances of extreme urgency;

(c) In cases of public non-commercial use; and

(d) In cases where the demand for the patented drugs and medicines in the Philippines
is not being met to an adequate extent and on reasonable terms, as determined by the
Secretary of the Department of Health.

95.3. In situations of national emergency or other circumstances of extreme urgency, the

right holder shall be notified as soon as reasonably practicable.

95.4. In the case of public non-commercial use, where the government or contractor,
without making a patent search, knows or has demonstrable grounds to know that a valid
patent is or will be used by or for the government, the right holder shall be informed
promptly. (n)

95.5. Where the demand for the patented drugs and medicines in the Philippines is not
being met to an adequate extent and on reasonable terms, as determined by the
Secretary of the Department of Health, the right holder shall be informed promptly.

What is Technology Transfer Agreements and Voluntary License?

Section 4.2. The term “technology transfer arrangements” refers to contracts or

agreements involving the transfer of systematic knowledge for the manufacture of a
product, the application of a process, or rendering of a service including management
contracts; and the transfer, assignment or licensing of all forms of intellectual property
rights, including licensing of computer software except computer software developed for
mass market.

It is in the nature of a Voluntary License Contract.

Who has jurisdiction over technology transfer agreements?

The IPO thru the Director of the Documentation, Information and Technology
Transfer Bureau.

SECTION 86. Jurisdiction to Settle Disputes on Royalties. - The Director of the

Documentation, Information and Technology Transfer Bureau shall exercise quasi-
judicial jurisdiction in the settlement of disputes between parties to a technology transfer
arrangement arising from technology transfer payments, including the fixing of
appropriate amount or rate of royalty.

What are the Prohibited Provisions in Technology Transfer Agreements or

Voluntary license?

Those that are adverse to competition and trade as enumerated in Sections 87.1 to
87.14 0f IPC.

SECTION 87. Prohibited Clauses. - Except in cases under Section 91, the following
provisions shall be deemed prima facie to have an adverse effect on competition and
trade:

87.1. Those which impose upon the licensee the obligation to acquire from a specific
source capital goods, intermediate products, raw materials, and other technologies, or of
permanently employing personnel indicated by the licensor;

87.2. Those pursuant to which the licensor reserves the right to fix the sale or resale
prices of the products manufactured on the basis of the license;

87.3. Those that contain restrictions regarding the volume and structure of production;

87.4. Those that prohibit the use of competitive technologies in a non-exclusive

technology transfer agreement;

87.5. Those that establish a full or partial purchase option in favor of the licensor;

87.6. Those that obligate the licensee to transfer for free to the licensor the inventions or
improvements that may be obtained through the use of the licensed technology;

87.7. Those that require payment of royalties to the owners of patents for patents which
are not used;
87.8. Those that prohibit the licensee to export the licensed product unless justified for
the protection of the legitimate interest of the licensor such as exports to countries where
exclusive licenses to manufacture and/or distribute the licensed product(s) have already
been granted;

87.9. Those which restrict the use of the technology supplied after the expiration of the
technology transfer arrangement, except in cases of early termination of the technology
transfer arrangement due to reason(s) attributable to the licensee;

87.10. Those which require payments for patents and other industrial property rights after
their expiration, termination arrangement;

87.11. Those which require that the technology recipient shall not contest the validity of
any of the patents of the technology supplier;

87.12. Those which restrict the research and development activities of the licensee
designed to absorb and adapt the transferred technology to local conditions or to initiate
research and development programs in connection with new products, processes or
equipment;

87.13. Those which prevent the licensee from adapting the imported technology to local
conditions, or introducing innovation to it, as long as it does not impair the quality
standards prescribed by the licensor;

87.14. Those which exempt the licensor for liability for non-fulfilment of his responsibilities
under the technology transfer arrangement and/or liability arising from third party suits
brought about by the use of the licensed product or the licensed technology.

What are the Mandatory Provisions?

SECTION 88. Mandatory Provisions. - The following provisions shall be included in

voluntary license contracts:

88.1. That the laws of the Philippines shall govern the interpretation of the same and in
the event of litigation, the venue shall be the proper court in the place where the licensee
has its principal office;

88.2. Continued access to improvements in techniques and processes related to the

technology shall be made available during the period of the technology transfer
arrangement;

88.3. In the event the technology transfer arrangement shall provide for arbitration, the
Procedure of Arbitration of the Arbitration Law of the Philippines or the Arbitration Rules
of the United Nations Commission on International Trade Law (UNCITRAL) or the Rules
of Conciliation and Arbitration of the International Chamber of Commerce (ICC) shall
apply and the venue of arbitration shall be the Philippines or any neutral country; and

88.4. The Philippine taxes on all payments relating to the technology transfer
arrangement shall be borne by the licensor. (n)

NOTE: A Technology Transfer Agreement or any Voluntary License that contains a

prohibited provision or does not contain any of the mandatory provisions shall be
unenforceable.

SECTION 92. Non-Registration with the Documentation, Information and Technology

Transfer Bureau. - Technology transfer arrangements that conform with the provisions of
Sections 86 and 87 need not be registered with the Documentation, Information and
Technology Transfer Bureau. Non-conformance with any of the provisions of Sections 87
and 88, however, shall automatically render the technology transfer arrangement
unenforceable, unless said technology transfer arrangement is approved and registered
with the Documentation, Information and Technology Transfer Bureau under the
provisions of Section 91 on exceptional cases. (n)

What are Trade Secrets?

A trade secret is a plan or process, tool, mechanism, or compound known only to its
owner and those of his employees to whom it is necessary to confide it. It includes a
secret formula or process not patented, but known only to certain individuals using it in
compounding some article of trade having a commercial value (Air Philippines Corp. vs.
Pennswell, Inc., G.R.No. 172835, Dec 13, 2007).

1. A trade secret may consist of any formula, pattern, device, or compilation of

information that:
a. Is used in one’s business
b. Gives the employer an opportunity to obtain an advantage over competitors
who do not possess the information.
It can be a ( i ) chemical composition, ( ii) formulation, (iii) ingredients, (iv)price
list, (v) catalogue, (vi) specialized customer list.

2. A trade secret is protected even if it is not patentable. It is covered by the

propriety rights of the owner of the trade secret and the said owner cannot be
compelled to disclose its trade secret. Courts cannot generally issue an
injunction to compel such disclosure.
3. The ingredients of consumer products are not trade secrets. They should be
indicated in the label under Section 77 of the Consumer Act. Consumer products
are primarily for personal, family, household or agricultural purposes.

4. Trade secrets protection is not covered by the constitutional right to

information. It is protected under: (i) Section 66.2 0f the Securities Regulations
Code, (ii) Articles 291 and 292 of the Revised Penal Code, (iii) Section 278 of the
National Internal Revenue Code and (iv) Section 12 of RA 6969, the Toxic
Substances and Hazardous and Nuclear Waste Control Act of 1990.