UTILITY MODEL: THE NEXT BIG

THING FOR DEVELOPMENT?

SUBMITTED BY - SUBMITTED TO –
Ram Kumar Yadav Mr. M.R.S. Murthy
Semester- VII(B) FACULTY OF IPR-II
Rollno-951

NATIONAL UNIVERSITY OF STUDY AND RESEARCH IN LAW,

RANCHI
 INTRODUCTION

In the last few years, the Central Government has taken up the initiative to grow the sector of
micro, small and medium enterprises. Various new policies and support systems have been
rolled out by the government for the same. Considering the current developments, it is
important to address whether it is imperative to inculcate the concept of ‘Utility Model’ in
India or not. Thereby, this article will look into the nuances of ‘utility model’ and conclude if
it is another imperative tool for economic and technological development of the country.
Especially in developing countries like India, where through various programs such as ‘Make
in India’ boost was given to the entrepreneurship, thus leading to the overall growth of small
as well as medium sized enterprises. With the increase in growth of small and medium
enterprises, it is also important to realise the importance and protection of Intellectual
Property. Often, these SMEs come up with small innovations which act as a boost to the
economy. Thus, to maintain the economy and healthy trade balance, it is important to provide
such SMEs with recognition for their innovations so as to encourage them.
This is where ‘Utility Model’ comes into role. As they have less meticulous process and
simple procedures, they respond to the needs of the local innovators in the best way possible.
Often utility models are referred to as ‘petty patents’ as they are in a way miniature version of
Patent. Just like patents, utility model is also a territorial right. Based on the similar lines, it
also protects new technical inventions. This is done by granting a limited exclusive right to
the innovator as to protect the commercial exploitation of the product. The right is granted for
a short period of time and therefore, often the utility model protection is opted by the local
innovators for the small improvements and adaptations of the already existing product
because they are presumed to have a short commercial span. The limited period span may
range from six to ten years from the filing date of the application for utility model protection.
The term protection herein amounts to protection from commercial manufacturing, usage,
distribution, importing or selling of the product by another without the consent of the utility
model’s owner.
But as utility model is a miniature version, it has few primitive differences too. At the very
onset, utility model is for a shorter time span. The registration process is simple, fast and
cheaper. Moreover, the requirements are less stringent as compared to patents. At times,
innovators seek utility model protection for product which might not pass the criteria for
patentability. But one should note that that the requirement of ‘novelty’ is mandatory and
cannot be waived off. Considering this dynamic outlook of ‘Utility model’ many countries
provide utility model protection. It boosts the small and medium enterprises set up in the
country and thus helps in boosting trade and economy.
As of now, India does not have utility model protection. Therefore, this article will analyse as
to whether there is a need of utility model system in India. The article will also focus on the
changes the utility model system can bring in the Indian economy and trade sector. This will
be decided with the help of analysing the utility model system present in various developed
countries such as Japan and Germany and few developing countries like Malaysia and China.
Additionally, it is also crucial to determine the parameters India follow as to determine the
legitimacy of Intellectual Property and whether those parameters could be carried forward in
case utility model system is introduced. It is often said that the Intellectual Property
registration in India does not walk hand in hand with the innovative minds this country
harbour. Therefore, the article will also look into the lack of legal framework responsible for
less Intellectual Property filing in India and how this could hamper the growth of utility
model system. It will be vital to understand how strengthening the legal frameworks might

2
initiate smooth growth of Intellectual property and trade; or else this new system of utility
model will be nipped in the bud.

INTERNATIONAL DEVELOPMENT IN UTILITY MODELS

PARIS CONVENTION
The importance of protection of intellectual property, particularly the industrial property was
first recognized in the Paris Convention for the protection of Industrial Property, which was
established more than 120 years ago in 1883 and revised many times since then but lastly
amended on September 28, 1979, provides for the protection of utility models. This is one of
the first important international treaties for the promotion and protection of industrial
property by the nationals of contracting member countries in other member countries. At
present, there are about more than 170 members to this convention. India joined the Paris
Convention on December 8, 1998 and became bound to the provisions of this convention.
This has in its scope and objects, apart from patents, industrial designs and trademarks, utility
models, service marks, trade names, indications of source or appellations of origin and the
repression of unfair competition.1 Although, the convention is silent as to its definition and
scope of the utility model but provides for National treatment and a right of priority for the
purpose of filing of application in other member countries within certain period of time.2
This period could be between six months to twelve months depending upon the kind of
industrial property. For instance, a period of twelve months for patents and utility models and
six months for industrial designs and trademarks from the date of filing of the first
application. Furthermore, it is permissible to file a utility model application in country by
virtue of a right of priority based on the filing of a patent application and vice versa.3
Under the provisions of the Convention, the applicant can also divide his patent application
into patent application or utility model either suo-motto or on the receipt of the examination
report that application discloses more than one invention. The provisions of importation and
compulsory licences, failure to work or insufficient working in respect of patents are also
applicable, mutatis mutandis, to utility models.4
PATENT COOPERATION TREATY
Similarly, there is another international system, which mainly provides a simplified
procedure for filing of an application for the grant of patent to the invention in each of its
contracting member countries by filing an international application. This system is known as
Patent Cooperation Treaty and popularly known as 'PCT'. This treaty was concluded in 1970
and entered into force on January 21, 1978 but modified several times. There are about more
than 135 members to this treaty. India became member to this treaty with effect from
December, 8, 1998. Although this treaty mainly provides for unified procedure for
international patent application in respect of filing, international search for novelty purpose,
international publication and optionally for international examination before entering the
national phase of individual member country, but encourages and protects utility models
procedurally. The provisions of this treaty enable the inventors or the applicants filing of an
international application for the grant of patent claiming priority based on the utility model

1
Article 1.1 of Paris Convention, 1883.
2
Article 4 of Paris Convention, 1883.
3
Article 4E(2) of Paris Convention, 1883.
4
Article 5 of Paris Convention, 1883.
application.5 The provisions of this treaty also construe the reference of patent, unless
expressly stated otherwise, as patents for inventions, inventors' certificates, utility certificates,
utility models, patents or certificates of addition, inventors' certificate of addition and utility
certificates of addition.6 Accordingly, PCT also permits to file Utility Model application
through National phase utilizing the priority date and flexibilities provided therein as
applicable for patent. Therefore, the utility model is one of the important forms of the
intellectual property, which is not only recognized world over but also in the international
treaties and conventions.
TRIPS AGREEMENT
Perhaps the last international agreement in respect of intellectual property is the agreement on
Trade-Related Aspects of Intellectual Property Rights (TRIPS), which came into existence
from January, 1, 1995. This agreement provides for standards concerning the availability,
scope and use of intellectual property in respect of Copyright and Related Rights,
Trademarks, Geographical Indications, Industrial Designs, Patents, Layout Designs
(Topographies) of Integrated Circuits, Protection of Undisclosed Information and Control of
Anti-competitive Practices in Contractual Licences.7
It does not provide for establishment of utility model system by member country but has
reference to the provisions of Paris Convention through the provisions of Article 2,3 and 4 of
this agreement (Part-I). Since TRIPS provides for only minimum standards for the protection
of intellectual property rights, there is nothing which prevents any member country to adopt
utility model system to promote IP protection among the small innovators particularly in the
SMEs.

UTILITY MODEL: NEED IN INDIA?

The Utility Models are considered generally good for developing countries, namely
 It secures protection for innovations, which does not require the strict novelty and
inventive step as required by patent law.
 They increase the role of individual & small scale innovators in economic
development and promote competitive environment.
 They act as a spur to enhanced levels of innovation.
 They are cheaper to acquire than patent and finally they become a source of data on
innovative activity and experience in technological management.
In recent years India IP regime has developed with several initiatives taken by government to
promote Intellectual Property. And one of the heated debates is whether India should opt
Utility Model patent or not? Voices are yes and it is expected soon. Indian patent regime is
stricter than many other countries. Under the Indian Patent Act, 1970, several exceptions are
provided which excludes small and useful inventions. India is growing as a hub for small and
medium size enterprises which focuses on the development of new technology with minor
improvements or modifications of existing products to meet the changing demands of the
market.

5
Article 2(i) of the Patent Cooperation Treaty defines 'application' means an application for the protection of an
invention; references to an application shall be construed as references to applications for patents for inventions,
inventors' certificates, utility certificates, utility models, patents or certificates of addition, inventors' certificate
of addition and utility certificate of addition.
6
Article 2(ii) of Patent Cooperation Treaty, 1970.
7
Part-II, Section1-8 of the TRIPS Agreement, 1995.
In India SMEs plays an important role in economic growth of country and it provides
employment to about 27.14 million people, which is second only to Agriculture 5. However,
this sector is not much aware of patent regime and if so then also they are reluctant, because
the slogan of patent system is "you have to invest in it before you can really benefit from it".
Thus, Patenting is expensive and time consuming. In recent years, industrialization process
has reached its highest pick and it is expected to have more Foreign Direct Investment. Thus
strong IP regime ensure nondisclosure of technology brought by firms and further encourage
investment. On this scenario Utility Model Patent will be boon to India.
After analysing the utility model protection systems in other countries and India being a
developing nation, it becomes extremely important to have a legislation which will protect
innovations and also would motivate the small innovators or SMEs. Micro, Small and
Medium Enterprises (MSME) which contribute nearly 8 percent of the country's GDP, 45
percent of the manufacturing output and 40 percent of the exports. They provide the largest
share of employment after agriculture. They are the nurseries for entrepreneurship and
innovation. They are widely dispersed across the country and produce a diverse range of
products and services to meet the needs of the local markets, the global market and the
national and international value chains.8
The SMEs contribute 45% of the industrial output, 40% of exports, 42 million of
employment, create one million jobs every year and produces more than 8000 quality
products for the Indian and international markets. As a result SMEs are today exposed to
greater opportunities for expansion and diversification across the sectors.9
The Utility Model protection is less expensive and can promote the growth of the SMEs and
motivate them for more innovations. Hence, recognizing innovations is an essential need of
the hour.

UTILITY MODELS IN THE WORLD

The global trend of utility model applications filed in various countries, who have
successfully implemented the system, is given below.

JAPAN

The perplexing decrease of utility model registration figures

The first utility model law in Japan was enacted in 1905 to complement the patent system.
The main aim of the utility model system was to protect less significant inventions and to
foster technologies of small and medium sized enterprises. The utility model system was
thought to be rapid and easier, and thus particularly suitable for SMEs. By the end of the
1980’s, however, there were long delays in the grant of utility model applications partly
because the cost difference between the patent and utility model systems is negligible, and
partly because of an increase in the number of applications for utility models by both small
and large companies. In response, the Japanese government revised the utility model law to
allow accelerated registration without substantive examination, and to shorten the term of
protection to six years from the filing date on the basis that product lifecycles were expected
to shorten.

8
Suchi Rai, Akshay Mehta, India: Need for Utility Model Protection in India available at
http://www.mondaq.com/india/x/325864/Patent/NEED+FOR+UTILITY+MODEL+PROTECTION+IN+INDIA.
9
Priyanka Rastogi, India:Utility Model Patent:Road Ahead! Available at
http://www.mondaq.com/india/x/348624/Patent/Utility+Model+Patent+Road+Ahead.
While the accelerated registration was popular with industry, the legal uncertainty caused by
the “no examination” rule made the system less satisfactory for business – the technology
transfers of unexamined rights not being popular in Japan. It also turned out that many firms
were unhappy with the reduced term of protection as there is little chance of succeeding in an
action for injunctive relief with a protection period of six years. No doubt, these are key
reasons for the failure of the revised system to reverse the fall in applications. 10 Another
underlying reason for the drop in popularity of the utility model system can be that the
Japanese industry has become more innovative and has increasingly been opting for the
patent route to legal protection of its inventions. A more cynical view would be that both
Japan and the United States have experienced increased patenting due to the expanded scope
of patentable subject matter, and due to the relaxed stance of patent examiners.
The trend of utility model applications filed as compared to Patent and Designs applications
from 2007 to 2017 in Japan is given below. It is seen that the trend of utility model
applications was almost constant till 2014 and thereafter it started declining. However, the
number of utility model applications filed by Nationals is much more (about 80%) than the
Foreign Nationals.

Statistical data for 2008-201711 -

YEAR PATENTS INDUSTRIAL DESIGNS UTILITY MODELS
2008 509,990 107,108 9,936
2009 463,601 86,406 9,917
2010 468,417 102,977 9,385
2011 475,051 127,795 9,634
2012 490,271 120,761 10,902
2013 473,141 112,225 10,919
2014 465,971 12,295 10,404
2015 457,952 105,746 9,947
2016 456,467 119,141 8,910
2017 460,660 138,389 8,409

10
Christopher Heath, Japan, in Intellectual Property Law in Asia (ed. C. Heath), Kluwer Law International
London: The Hague, 2003.
11
Statistical Country Profiles, WIPO at https://www.wipo.int/ipstats/en/statistics/country_profile/.
 6,00,000

5,00,000

4,00,000

Patents
3,00,000 Induatrial Design Utility Models

2,00,000

1,00,000

0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

GERMANY

Economic and Innovation Climate in Germany

Germany had no coherent or unified industrial property policy until the creation of the
German free trade area in the late nineteenth century. The first patent law in the German
Reich was introduced relatively late in 1877 against a background of anti-monopoly and anti-
patent movements. Part of the reason for this push for industrial property protection was the
change in the economic landscape of Germany. German territories, especially Prussian ones,
were agrarian at the beginning of the nineteenth century. Between 1850 and 1870, however,
Germany was industrializing rapidly and industrial leaders such as the Siemens firm
organized pro-patent lobbies.
Today, in terms of the number of patents, Germany belongs to the leading international
group. German patent output increased in recent years after an initial post-reunification
downturn. In addition to higher innovation output, this general growth in patent activity may
be at least partly due to companies’ increasing strategic focus on legal protection for
intellectual property on globalised markets.

Current substantive law

The German Utility Model Law, last amended on 21 January 2005, protects any inventions of
technical character that are new, based on inventive step and are capable of industrial
application.12 In addition to the usual excluded subject matter under patent law (such as
discoveries, scientific theories, aesthetic creations, etc)13, the utility model law additionally
excludes inventions relating to processes and biotechnological inventions.
Furthermore, as opposed to German patent law, utility model law requires lesser thresholds of
protection. The subject matter of a utility model is considered new if it does not form part of
the state of the art. The state of the art comprises any knowledge made available to the public

12
Article 1(1), German Utility Model Act of August 28, 1986, as amended in 21 January 2005, (Federal Law
Gazette
13
I, p. 146).
The provisions on excluded subject matter under the German utility model and patent laws are based on Articles
52(2), (4) and 53, European Patent Convention.
by means of a written description or by use within the territory of Germany before the date
relevant for the priority of the application i.e. local novelty. Non-obviousness under utility
model law is easier to meet than under patent law as the utility model law refers to “inventive
step”, while the patent act requires “inventive activity”, which is a higher level of
inventiveness.14 The process of obtaining a utility model registration is made even simpler by
the fact that there is no pre-grant examination. The maximum duration of protection is ten
years.15
A substantive number of applications for utility model applications were filed in Germany
from 2007 to 2016. The utility model applications as compared to patents and industrial
design filed in Germany is given below. It is observed that the domestic applicants filed
substantive number of applications.

Statistical data for 2008-201716 -

YEAR PATENTS INDUSTRIAL DESIGNS UTILITY MODELS
2008 1,71,835 5,86,673 17,459
2009 1,62,332 5,30,833 17,798
2010 1,73,619 5,56,584 17,488
2011 1,75,606 5,64,082 16,675
2012 1,83,048 6,18,289 16,316
2013 1,84,493 6,21,807 16,475
2014 1,79,506 6,48,210 15,919
2015 1,75,423 5,73,271 15,282
2016 1,77,073 6,36,395 15,035
2017 1,76,235 6,76,139 14,435

7,00,000

6,00,000

5,00,000

4,00,000
Patents
3,00,000 Induatrial Design Utility Models

2,00,000

1,00,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

14
German Utility Model Act, Art. 1(2), and 3(1).
15
Article 1 of the German Utility Model Act of August 28, 1986, as amended in 1994.
16
Statistical Country Profiles, WIPO at https://www.wipo.int/ipstats/en/statistics/country_profile.
 CHINA
Economic and Innovation Climate in China
China has experienced a paradigm shift and has now become a common outsourcing
manufacturing centre for the United States, Japan and Europe. Tremendous growth has been
witnessed in recent years after establishing its open door policy towards foreign trade and
investments, and improving its economic and legal structures. Advancements in the area of
information and telecommunications have made China a competitive nation in the post WTO
accession era based on its abundance of cheap labour and natural resources.
Despite the remarkable economic growth and development, innovation seems to be rather
limited as most of the private sector do not possess the necessary financial and human
resources to conduct their own research & development activities. 17 The strengths that are
visible within the Chinese economy are its industrial restructuring and strengthening of
economic competitiveness. Weaknesses included a critical need for improvement in relevant
laws and regulations and weakness in some industries with respect to international
competitiveness. One World Bank report stated, amongst its many recommendations, that
China should institute an economic regime that offers incentives for the efficient use of
existing knowledge and creation of knowledge and entrepreneurship.18
Policy implications
No economic or statistical analysis of utility models in China would be complete without
mentioning that many utility models are being granted to local “inventors” for inventions
imported from overseas.
There are two alternative but possible explanations for the statistics. One explanation can be
that the surge in utility model applications can reflect the growth in the innovative sectors in
China, and a growing awareness of intellectual property protection and rights. Apparently
such second-tier innovation has been put to good use by smaller local enterprises, implying a
lower level of high-value innovation by domestic inventors.
An alternative explanation is that these statistics reflect the fact that counterfeiters are now
employing the utility model and design patent systems to claim protection for their modified
versions of goods and products which are protected only under foreign patents. Allegedly,
this is giving rise to perverse behaviour by some utility model owners who are threatening to
take legal action against the true inventors who are often foreign companies seeking to
expand their commercial activities in China. If true, a strong case can be made to argue that
universal novelty should be applied strictly not only by the granting office but also by the
courts.19
Finally, as one commentator indicated, although the utility model system is viewed as being
valuable in China, problems exist within this system. In his view, the fact that the Chinese
system offers utility model protection without substantive examination means that it is
difficult to guarantee the quality or level of inventiveness involved in a utility model.
Consequently disputes have occurred. Thus, the author suggests that this can be resolved by
insisting that all applications for utility models provide a corresponding search report. 20
Nevertheless, this will increase the costs of the system.

17
Cong Cao, “Corporate R&D and innovation in China”, East Asia Institute, National University of Singapore.
18
Dahlman, C., Aubert, J-E., (2000), China’s Development Strategy, The Knowledge and Innovation Perspective, World
Bank Institute.
19
Spurgeon, B.( 2004), “The New Chinese Counterfeit Game”, International Herald Tribune, November.
20
G. Shoukang, The Development And Perspective Of Intellectual Property In The People's Republic of China, [1997]
Intellectual Property Quarterly.
Moreover, as the number of patent applications and patents granted increase quickly, the
requests for re-examination and invalidation also increase. A Re-examination Board was set
up in China to deal with appeals filed by applicants who were not satisfied with the decision
of the lower examining board. The Board also deals with patent invalidation requests and the
rate of invalidation requests has been high, making up more than 40% of the total. One
ChinesePatent Office examiner opined that the reason for the high invalidation rate is because
most invalidation proceedings relate to utility models i.e. 95% of the invalidation requests
were filed against patent rights for utility model, and more than 60% of the cases ended in the
invalidation of the utility model right.21 Yet another Chinese attorney laments that the utility
model system is being abused since no examination as to substance is made, either at grant
stage or even at infringement stage (it remains an option for the court or administrative
authority to ask the patentee to furnish a search report).22
The trend of utility model applications filed in China indicates the tremendous growth in this
sector. It is observed that more than 1.5 lac utility model applications are being filed per year.
The China is one those countries where utility model system is most successful and being
increasingly utilized mostly by domestic applicants. However, it is surprising that in the year
2009 more than 3 lacs utility model applications were filed, which are equal to patent
applications as well as designs applications.

Statistical data for 2008-201723 -

YEAR PATENTS INDUSTRIAL DESIGNS UTILITY MODELS
2008 2,04,268 328075 2,26,120
2009 2,41,434 369593 3,11,395
2010 3,08,326 448121 4,10,588
2011 4,36,170 563532 5,86,316
2012 5,61,408 717863 7,41,409
2013 7,34,096 761027 8,93,749
2014 8,37,817 673538 8,69,956
2015 10,10,615 729551 11,29,160
2016 12,57,409 791338 14,77,686
2017 13,06,019 857753 16,89,443

21
Yin Xin-Tian, “A Patent Invalidation Case in China?”, [1991] 21 IIC 513, at 514.
22
Mark Ye, “Patents for Utility Model and Design Be Renamed Patent Registration”, [2004] 4 China Patents &
Trademarks 34.
23
Statistical Country Profiles, WIPO at https://www.wipo.int/ipstats/en/statistics/country_profile.
 18,00,000

16,00,000

14,00,000

12,00,000
Patents
10,00,000 Induatrial Design Utility Models

8,00,000
6,00,000

4,00,000

2,00,000

0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

THE UNITED STATES: A COUNTRY WITH NO UTILITY MODEL SYSTEM

The United States is, perhaps, the world’s biggest intellectual property producer.
Nevertheless, the United States has never had second tier patent protection, though there are
some calls for such a system to exist.24 How far, then, does the United States intellectual
property law protect minor innovations? There is limited scope for protecting innovation
under the United States design patent and trade dress laws; however, highly functional
innovations usually claim protection under patent law.
One can, of course, speculate on the reasons why the United States has felt no need for a
second tier regime. Perhaps as a net exporter of intellectual property goods, the United States
has no need to worry about reducing the level of imports - the fact that it is a major exporter
of intellectual property goods, including patented goods, shows that the current system of
patent law and design patent law works for this particular economic and social environment.
Another possibility is that most of the innovations and inventions do not emanate from SMEs
but rather from large transnational corporations, and the level of competition amongst these
firms is high enough to maintain the incentive and momentum to create - no further
legislative activity is required to furnish additional inducement.
Finally, one can also state that the main concern of the United States legislators is not so
much its domestic market, but protecting its intellectual property goods outside its
jurisdiction, and its national policy has focused on maintaining a high intellectual property
regime outside its borders. But however tempting these conclusions are, they do not hold up
against recent studies which show, first, that small to medium sized corporations dominate
the patenting scene, and second, that the rate of grant of patents is high compared to the low
rate of invalidation.25 Part of the reason stems from the 1982 patent law reforms which
opened the path to higher patenting levels in the United States.26 Moreover, developing
24
Mark D. Janis, Second Tier Patent Protection, 40 Harvard International Law Journal 151 (1999) at 155.
25
Samuel Kortum and Joshua Lerner, “Stronger Protection or Technological Revolution: What Is Behind The Recent
Surge In Patenting”, National Bureau of Economic Research, Working Paper 6204, September 1997.
26
Adam B. Jaffe & Josh Lerner, Innovation and its Discontents: How our Broken Patent System is Endangering
Innovation and Progress, and What to do About it, Princeton University Press, 2004.
countries must note that part of the innovative environment and climate is engendered by the
United States Government which has, since the 1980s, actively pursued a patent policy which
has promoted the interests of patent owners.27
Features of current United States patent law
The United States patent law is unique in the sense that it is the only country retaining a first-
to-invent, as opposed to first-to-file system. There are no explicitly defined subject matter
exceptions such as lists of what is not patentable as in European patent law. The criteria for
patentability are novelty, utility and non obviousness. In practice the latter two are not very
different from industrial applicability and inventive step as in numerous other jurisdictions.
One interesting feature is that, unlike in Europe inventors or their successors in title who
disclose their invention are allowed a grace period of up to 12 months during which they can
still file a patent despite this prior disclosure.
The United States has reviewed and is still reviewing the possibility of introducing second
tier patent systems to address several problems and issues in their current patent system.
Advantages of a lower-tier patent protection being envisaged include the following:
 To raise fees and reduce applications for top-tier patents. This would provide
efficiency with the patent office having to examine fewer standard patent cases;
 to eliminate the coverage gap between designs and utility models;
 to quickly and cheaply protect inventions of incremental nature and having short
commercial life in a fast moving technology market as is the United States;
 To discourage defensive patenting by firms as standard patents become much
more expensive.

PARAMETERS OF INDIAN IP: ENCOMPASSING UTILITY MODEL?

Presently, in India, the inventions are protected through patents under the patent law.
Similarly the inventions relating to industrial designs are protected under the design law. The
inventions for before being granted patents are subjected to substantive examination as to
their patentability aspects such as novelty, inventive step and industrial application. Apart
from this, they are also considered as to whether such inventions attract any of the provisions
relating to non-patentability as stipulated in the law. Further, for any invention which is being
considered for patent, the inventive activity generally relates either to improvements with
regard to functionality or techniques to produce the improved products or sometimes the
products and processes are entirely new but these improvements relating to functionality or
techniques or newness itself must be non- obvious to the person skilled in the art.
Therefore the inventive ingenuity or the degree of inventiveness plays a very important role,
in addition to its newness, in acquiring the patent rights for these kinds of inventive activities.
The industrial designs, on the other hand, are being considered for their registration for the
inventive activity with regard to their shape, configuration, and patterns relating to
ornamental or physical aesthetic appearance only.
However, it does not protect any inventive activity relating to any mode or principle of
construction or anything which is a mere mechanical device involving wafer thin inventive
ingenuity but having a useful practical advantage. This is probably area where the utility
model inventions fit in as such inventions are not protectable under patent for being lack of
inventiveness.

27
David C. Mowery & Nathan Rosenberg, The U.S. National Innovation System, in National Innovation Systems: A
Comparative Analysis (ed. Richard R. Nelson) (OUP:1993).
 IMPORTANT PROVISIONS OF THE PATENT LAW

Patentability of the inventions The Patents Act, 1970 provides that the patents may be
granted for any invention whereas such invention is either a new product or the process
involving an inventive step and capable of industrial application.28
Although the Act defines the terms such as inventive steps and capable of industrial
application, no definition is provided for novelty or newness. However the Patents Acts, 1970
puts onus on the examiner to make investigation by conducting search for anticipation by
previous publications and prior claiming of the invention.29 Therefore according to the
provisions contained therein an invention may be considered to be new (novel) if the same
has not been published in any specification filed in India on or after the 1st day of January
1912 or any document in India or elsewhere in the world or the same has not been claimed in
other application in India or publicly known or publicly used in the country, before filing of
the patent application or priority date as the case may be.
However the anticipation of the invention by prior publication , by public display , by public
working and use or prior communication is subject to the conditions contained in the
provisions of sections 29 to 34 of the Act.30
The Act also defines the term “inventive step” as a feature of the invention that involves
technical advance as compared to the existing knowledge or having economic significance or
both and that makes the invention not obvious to a person skilled in the art.31 This definition
of inventive step is a revised one which was has been amended in 2005 to include economic
significance and technical advancement as compared with existing knowledge. As far
industrial application is concerned, the definition is similar to that given in the European
Patent Convention, according to which the invention is capable of industrial application if it
can be made or used in an industry.32

IMPORTANT PROVISIONS OF THE DESIGN LAW

Currently, in India the Design Act 2000 is in force.33 This law has replaced the Indian Design
Act 1911.The important provisions relating to registerability and non registerability of an
industrial design are mentioned below.

Registrability of the Design According to section 5 of the Act, The Controller may, register
the design on the application of any person claiming to be the proprietor of any new or
original design not previously published in any country and which is not contrary to public
order or morality. A design may be registered in respect of any or all of the articles comprised
in a prescribed class of articles.34 The Act also define the term `design` as only the features of
shape, configuration, pattern, ornament or composition of lines or colours applied to any
article whether in two dimensional or three dimensional or in both forms, by any industrial

28
Section 2(1)(j) of the Patents act 1970.This definition of the term `invention` was redefined by the Patents
（Amendments）Act, 2002 which became operational with effect from May 20,2003.
29
Section 13, Patents act 1970.
30
Anticipation of the invention by prior publication, by public display, by public working and use or prior
communication is not considered provided the application for patent has been filed not later than12 months from
the date of such publication or display and such working was for the purpose of reasonable trial only and the
invention was used after filing of the provisional specification.
31
Section 2(1)(ja), Patent Act 1970.
32
Section 2(1)(ac), Patent Act 1970.
33
The Design Act 2000 is in force since May 11, 2001with the Design Rules 2001.
34
Section 6(1), The Design Act 2000.
process or means, whether manual, mechanical or chemical, separate or combined, which in
the finished article appeal to and are judged solely by the eye; but does not include any mode
or principle of construction or anything which is in substance a mere mechanical device.35
The design also does not include any trade mark as defined in clause (v) of sub-section(1) of
section 2 of the Trade and Merchandise Marks Act, 1958 or property mark as defined in
section 479 of the Indian Penal Code or any artistic work as defined in clause (c) of section 2
of the Copyright Act, 1957 since the design is registerable only in respect of an article, the
term “article” has been defined to include any article of manufacture and any substance,
artificial, or partly artificial and partly natural and includes any part of an article capable of
being made and sold separately.36
The Act also defines as to what constitute original design. According to the provisions of
section 2(g) “original”, in relation to a design, means originating from the author of such
design and includes the cases which though old in themselves yet are new in their application.
In order be new the design must not have been disclosed to the public anywhere in India or in
any other country by publication in tangible form or by use or in any other way prior to the
filing date, or where applicable, the priority date of the application for registration.
However the disclosure of a design by the proprietor to any other person, in such
circumstances as would make it contrary to good faith for that other person to use or publish
the design, and the disclosure of a design in breach of good faith by any person, other than
the proprietor of the design, and the acceptance of a first and confidential order for articles
bearing a new or original textile design intended for registration, shall not be deemed to be a
publication of the design. Further if the design is exhibited in an industrial exhibition by the
Government, Any publication of design due to such exhibition shall not invalidate the design
for its registration provided the application is made within six months from the date of the
first exhibition of such design.
37
EMPIRICAL ANALYSIS OF IP APPLICATIONS

Patent applications: The following table indicates the number of applications for patent filed
by the domestic applicants as well as by the foreign applicants from 2008 to 2017 in Indian
Patent Office. It can be seen that number of applications filed by the domestic applicants is,
although, increasing every year, but in terms of percentage to foreign applications, it does not
indicate healthy trend.
Year/Applicants Domestic Non- Abroad Foreign Grand
(Residents) Residents (NR + Total
Abroad)
2008 6,425 30,387 5,121 35,508 41,933
2009 7,262 27,025 4,677 31,702 38,964
2010 8,853 30,909 6,016 36,925 45,778
2011 8,841 33,450 7,055 40,505 49,346
2012 9,553 34,402 8,649 43,051 52,604
2013 10,669 32,362 10,239 42,601 53,270
2014 12,040 30,814 10,405 41,219 53,259
2015 12,579 33,079 11,411 44,490 57,069
2016 13,199 31,858 12,638 44,496 57,695

35
Section 2(d), The Design Act 2000.
36
Section 2(a), The Design Act 2000.
37
Data available at Statistical Country Profiles, WIPO at
https://www.wipo.int/ipstats/en/statistics/country_profile/.
2017 14,961 31,621 13,024 44,645 59,606

Patent Applications
100%
90%
80%
70%
60%
50% Foreign
40% Domestic
30%
20%
10%
0%
2008 2009 2010
2011 2012 2013 2014 2015
2016 2017

The trend of applications filed by the domestic applicants as against the applications filed by
the foreigners is indicated in the graphical figure above. It shows that the domestic applicants
file around 20-23% as compared to foreign applicants. However the percentage of filing by
the domestic applicants has gone down below 20% in the fiscal year 2011-12 despite the
increase in their number. This trend however does not depict a healthy situation for
intellectual property creation and protection culture particularly in case of patent.

Design Applications: The following table indicates the number of applications for designs
filed by the domestic applicants as well as by the foreign applicants from 2008 to 2017 in
Indian Patent Office. It can be seen that number of applications filed by the domestic
applicants is not only increasing every year, but also increasing in terms of percentage to
foreign applications. Increasing trend in the design applications also indicate that Indian
innovators appear to be more interested in the IP protection relating to aesthetic creations of
the products rather than the functional improvements. As the registration for design is faster
than the patent, the innovators therefore appear to be more inclined towards design
registration.
Year/Applicants Domestic Non- Abroad Foreign Grand
(Residents) Residents (NR + Total
Abroad)
2008 4,308 2,249 1,170 3,419 7,727
2009 4,267 1,825 619 2,444 6,711
2010 4,416 2,622 2,322 4,944 9,360
2011 5,156 3,060 3,023 6,083 11,239
2012 5,100 3,445 2,037 5,482 10,582
2013 5,182 3,315 1,823 5,138 10,320
2014 6,168 3,141 1,853 4,994 11,162
2015 6,829 3,461 2,428 5,889 12,718
2016 6,753 3,920 1,129 5,049 11,802
2017 7,534 3,583 2,719 6,302 13,836
 Design Applications recieved
100%
90%
80%
70%
60%
50% Foreign
40% Domestic
30%
20%
10%
0%
2008 2009 2010 2011 2012
2013 2014 2015 2016 2017

Design Applications registered

100%
90%
80%
70%
60%
50% Foreign
40% Domestic
30%
20%
10%
0%
2008 2009 2010 2011 2012
2013 2014 2015 2016
2017

It can be observed from the above graphical figures showing the trend of design applications
filed and registered that in case of design registration, the increase is not only in the number
of applications being filed by the domestic applicants but also in the number of the designs
being registered to them. This trend also indicates that the domestic applicants appear to be
somewhat reluctant towards the patent system as compared to the design registration system.
However keeping in view the capabilities of Indian scientific manpower and their strength,
the numbers of applications filed for patent as well as for design are nowhere to the number
of applications filed by the domestic applicants, for instance, in China, South Korea or even
Taiwan China. This is a matter of great concern for Indian industry as a whole for the purpose
of competition as well as economical and technological development of the country.

IS EXISTING IP REGULATION SUFFICIENT?

As observed from the number of applications filed by Indian domestic applicants for patents
and designs, the situation is not very happy and encouraging. Such a low filing rate of
applications by domestic applicants also does reflect the true research and development
activities in India. There are lot of research and development activities being carried out by
hundreds of the national laboratories, institutes and universities. There are thousands of
technical institutes and colleges apart from industrial sector including SMEs engaged in
research and development activities. This can be observed by the number of research paper
being published every year by the researchers.
Although, there are several reasons for low intellectual property protection activities, one of
them is that the existing law is not sufficiently able to protect their innovation activities. The
domestic innovators particularly those who are engaged in such innovative activities which
result into practical usefulness in the existing products seems to be reluctant to file
application for protecting these kind of activities due to the fact that such innovations have
very thin inventiveness which is not able to meet strong requirement of inventive step under
the Patents Act. Further the provisions contained in section 3 of the Act excluding certain
kinds of inventions from patentability also do not help them either. Moreover these
innovators like to commercialize them quickly as the commercial life of such innovation is
also very short due to tough completion not only within the country but also from abroad.
Further the patenting system takes not only long time as compared to the commercial life of
the innovation but also expensive. Although under the design law the protection is available
within six to twelve months but the law provides protection only to the features of shape,
configuration, pattern or ornament relating to aesthetic appearance of the products. This
however does not protect the features or activities relating to any mode or principle of
construction or anything which is in substance a mere mechanical device. Therefore such
inventions or innovative activities relating to mode or principles of construction of
mechanical devices which are otherwise excluded from the preview of registration under
design law and either excluded under the provisions of section 3 or unable to meet the
inventiveness criteria under of the Patents Act 1970 need to be protected in order to promote
and encourage the intellectual property creation as well as protection culture among the
domestic inventors and small innovators including SMEs which are playing very crucial role
in the economical as well as technological development of the country. In view of the above
analysis it can be stated that existing provisions either under the patent law or under the
design law are not sufficient enough to protect and promote such kind of business oriented
small innovative activities.

SUGGESTIONS AND CONCLUSION

Based on the empirical analysis and the experience of the countries and number of
applications being filed in those countries for the protection of inventions by patents,
industrial designs and utility models, following proposals may be useful for
recommendations. In my opinion I feel that policy considerations necessitate the introduction
of a utility model system in India and thus it is recommended that the following essential
features be considered:
 Subject matter of protection: The utility model law should comprise a detailed list
of excluded subject matter which must mirror the exclusions under the patent law.
Moreover, it is worth considering excluding some types of invention as dictated by
public policy such as chemicals or pharmaceuticals or biological material or
substances or processes.
 A renewal based term of protection: The term should be a minimum term of 3 years
(as the absolute minimum) but not exceeding the patent term of 20 years. However, a
more appropriate maximum term based on existing utility model laws in several
jurisdictions is 10 years.
 A non-examination system: At least for the first period of registration. This is one of
the key ingredients of the utility model system
 A compulsory examination/report for second stage: This procedure could be
introduced if the term of protection is linked to a renewal procedure.
 A compulsory examination / report when invalidation/infringement proceedings:
This burden should be placed on the utility model rights holder to produce (and pay
for) a detailed examination report as to the novelty and inventiveness of his invention
prior to litigation
 Renewal fees: This is one suggested means to weed out the underutilised utility
model
 Tiered fees: This is to enable the system to be friendly to small and medium sized
enterprises or the individual inventor
 Novelty: Most developed countries have introduced universal novelty. Moreover,
enforcement problems develop if a lower level of novelty (such as domestic or regional
novelty) is adopted.
 Government action: Introducing a completely new intellectual property system
requires some effort on the part of all the relevant stakeholders (such as the relevant
government agencies and patent attorneys/agents) to engender “a utility model
culture” such as an awareness education training program, helpdesk services, web and
print literature, innovation fairs, etc. to inform potential users of how the new system
works, and how it differs from existing standard patent and designs systems.
 Cross-licensing/compulsory licensing: A final issue is whether compulsory licensing
provisions should be included on the same basis as patent law. This is especially
important in the case of two conflicting rights whereby a subsequent inventor cannot
obtain or exploit a patent or utility model without infringing a prior patent or utility
model. This is especially important if a no-examination system is adopted.