Section 68 of Patent Act: Should Assignment be Oral or Written?

Section 68 of Patent Act, 1970, explains how patents can be transferred or shared. It requires all patent agreements to be written clearly to prevent confusion or disputes. India updated the Patents Act in 1999, 2002, and 2005 to follow global rules under the TRIPS Agreement. These updates improved patent processes and expanded what can be patented, but Section 68’s main rules have stayed the same. This section stresses the importance of written agreements for patent dealings. For lawyers, understanding Section 68 of Patent Act connects to contract law and affects how businesses use patent rights.

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What is Section 68 of Patent Act?

Section 68 of Patent Act is titled as "Assignments, etc., not to be valid unless in writing and duly executed,"  and is a part of Chapter XII of the Patents Act, 1970. This chapter covers the register of patents and related issues. 

• Section 68 says that "an assignment of a patent or a share in a patent, a mortgage, license, or the creation of any other interest in a patent is not valid unless it is in writing. The agreement between the parties must be written in a document that includes all terms and conditions about their rights and duties, and it must be properly signed."

• Section 68 ensures that patent dealings are clear and enforceable. Unlike some contract laws that allow verbal agreements, this section requires written documents to avoid misunderstandings. This is important because patents are valuable in industries like medicine, technology and manufacturing. Clear agreements reduce the chance of costly court battles.

• Before the 1970 Act, older laws were less strict about patent transfers. Section 68 introduced stronger rules to support India’s goal of building a fair patent system. For lawyers, this section aligns with rules in other countries, like the U.S. Patent Act, which also requires written agreements but India’s rule is stricter about including all terms.

Know about the Rights and Limitations of Patent Law.

Requirements under Section 68 of Patent Act

To follow Section 68 of , patent agreements must meet three main requirements. If these requirements are not met, the agreement is invalid, which could lead to problems like third-party claims or loss of patent rights. Courts focus on whether the agreement is valid between the parties, not just its use as evidence in other disputes:

1. Written Document: The agreement must be written, either on paper or electronically. Verbal agreements are not valid. This applies to assignments (full ownership transfer), licenses (permission to use the patent), mortgages (using the patent as loan security), and other interests like sub-licenses or pledges.

2. Complete Terms: The document must include all terms and conditions, such as how long the agreement lasts, where it applies, royalty payments, how to end the agreement, and how to settle disputes. If the document is incomplete or vague, the agreement may not be valid.

3. Proper Signing: The document must be signed by authorized people, sometimes with witnesses or notarization, depending on whether individuals, companies, or foreign entities are involved. For companies, a board resolution or power of attorney may be needed to prove the signer’s authority. Agreements may also need stamps under the Indian Stamp Act to be enforceable.

Types of Patent Dealings under Section 68 of Patent Act

Section 68 covers different types of patent dealings, all requiring written agreements, but they differ in purpose:

• Assignment: This transfers patent ownership, either fully or partially. The new owner (assignee) gains all rights, like the original patent holder.

• License: This gives permission to use the patent without transferring ownership. Licenses can be exclusive (only one user), non-exclusive (multiple users), or limited.

• Mortgage: This uses the patent as security for a loan. The patent returns to the owner after the loan is repaid, but the lender can take it if the loan is not paid.

• Other Interests: This includes things like sub-licenses or pledges, where specific rights and duties must be clearly written.

Read about the role of Patent in Intellectual Property Rights.

The Role of Registration under Section 69 of Patents Act

Section 68 focuses on writing and signing agreements, while Section 69 of Patent Law in India covers registering these documents with the Controller of Patents. Registration is not needed for an agreement to be valid under Section 68 but it’s important for proving ownership. Section 69(5) says unregistered documents cannot be used as proof of ownership unless the Controller or a court allows it.

Registering an agreement gives public notice, protects against later claims, and makes the agreement effective from the signing date once registered. Unregistered agreements may work between the parties but may not hold up against third parties or in court cases about patent infringement.

The following table outlines a streamlined process of registration of assignment agreement under Section 69 of Patents Act, 1970.

Consequences of Not Following Section 68 of Patent Act

Failing to follow Section 68 of Patent Act can cause serious problems. An invalid agreement means the person receiving the patent rights has no legal claim, which could lead to lost money or inability to enforce the patent. Unclear or incomplete terms can also lead to expensive court disputes. For foreign companies, the Foreign Exchange Management Act may apply. Lawyers should check the patent’s status carefully before drafting agreements to avoid these issues.

Summary

Section 68 of Patent Act is crucial for keeping patent transactions clear and fair. It requires written, complete and properly signed documents to protect everyone involved and ensure orderly use of inventions. While registration under Section 69 adds extra protection, Section 68’s ensures patent rights are not weakened by informal deals. As India’s innovation grows, following this section is essential for legal clarity. Lawyers must guide clients carefully to maximize the value of patent assets.

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Section 68 of Patent Act: FAQs

Q1. What is Section 69 of the Patent Act? 

Section 69 allows someone who has applied for a patent in a convention country to claim priority for a similar application in India within 12 months.

Q2. What is Section 67 of the Indian Patent Act? 

Section 67 requires the patent register to be maintained, recording details like patent grants, ownership changes, and renewals.

Q3. What is proof of right in patent application? 

Proof of right is a document showing the applicant’s legal entitlement to apply for a patent, like an assignment or agreement from the inventor.

Q4. What is Section 68 of the Patent Act 1970? 

Section 68 states that a patent assignment or license must be in writing and registered to be valid.

Q5. What is Section 68 of the Indian Registration Act? 

Section 68 empowers the Inspector-General to oversee and issue directions to registrars and sub-registrars for proper registration of documents.