Mercantile and Taxation Laws: Intellectual Property - Patents in the Philippines

The field of intellectual property law in the Philippines is governed by the Intellectual Property Code of the Philippines (Republic Act No. 8293, as amended). The law covers various aspects of intellectual property, including patents, trademarks, copyrights, trade secrets, and other related rights. In the context of patents, the following comprehensive outline presents the key aspects of patent law in the Philippines:

1. Definition and Purpose of Patents

Patent: A patent is an exclusive right granted for an invention, a product, or a process providing a new and inventive solution to a problem.
Purpose: Patents incentivize inventors by granting them temporary monopoly rights, fostering innovation and technological progress in exchange for the public disclosure of the invention.

2. Patentable Inventions

Under Section 21 of RA 8293, a patentable invention must satisfy three criteria:
1. Novelty: The invention must be new and not part of prior art.
2. Inventive Step: The invention must not be obvious to a person skilled in the art.
3. Industrial Applicability: The invention must be capable of being used in any industry.
Non-Patentable Inventions (Section 22):
- Discoveries, scientific theories, and mathematical methods
- Schemes, rules, and methods for performing mental acts or playing games
- Methods for treatment of the human or animal body
- Plants and animals (except for microorganisms and non-biological processes)
- Aesthetic creations
- Inventions contrary to public order, morality, health, or welfare

3. Filing a Patent Application

Requirements for Application (Sections 32–34):
- Who Can Apply: Any inventor or their assignee can file a patent application.
- Where to Apply: Application is submitted to the Intellectual Property Office of the Philippines (IPOPHL).
- Content of Application: The application must contain a request for grant, a description, claims, an abstract, and drawings (if necessary).
- Formal Examination: IPOPHL conducts a formal examination to check compliance with formal requirements.
Examination Process:
- Substantive Examination (Section 48): Ensures the invention meets patentability requirements.
- Publication and Opposition (Sections 44–47): Upon acceptance, the application is published, allowing third-party opposition within 6 months.

4. Grant and Term of Patent

Grant of Patent: Once the examination is complete and requirements met, IPOPHL issues a patent, conferring exclusive rights to the inventor.
Duration: Patents are valid for 20 years from the filing date, subject to the payment of annual fees.
Extension: Patent term extension is generally not allowed, except under special conditions, such as compensating for delays in granting the patent.

5. Rights Conferred by Patents

The patentee has the exclusive right to prevent third parties from:
- Making, using, offering for sale, or importing the patented product.
- Using the patented process and dealing with products obtained directly from the process.
Exhaustion of Rights: Once the product is sold by or with the consent of the patentee, they cannot control further sale or distribution of that product.
Compulsory Licensing (Sections 93–102): In certain cases, such as national emergency or public interest, the government can grant compulsory licenses to third parties to use the patent without the owner’s consent.

6. Patent Infringement and Remedies

Infringement:
- Unauthorized use, production, sale, or importation of a patented invention constitutes infringement.
Remedies for Infringement:
- Civil Remedies: The patentee can file a civil suit for damages and injunctive relief. Actual and moral damages can be awarded, including attorney's fees and costs.
- Criminal Remedies: Under certain conditions, patent infringement can also be subject to criminal penalties.
Burden of Proof: The patentee generally has the burden to prove infringement, but certain defenses are allowed, including:
- Prior use by another party before the patent application.
- Experimental use for scientific research without commercial purposes.

7. Taxation on Patents

Income Tax: Income derived from patents, such as royalties or license fees, is generally subject to income tax. The income tax rate will depend on whether the patentee is an individual or corporation.
Value-Added Tax (VAT): Licensing and royalty payments are subject to VAT if they qualify as a sale of services.
Donor’s and Estate Tax: Patents form part of a patent holder’s estate upon death and are subject to estate tax. Transfers of patents via donation are also subject to donor’s tax.

8. Patent Licensing and Assignment

Licensing:
- Patentees can grant licenses for others to use their invention while retaining ownership.
- Licenses can be exclusive (one licensee) or non-exclusive (multiple licensees).
- Licensing agreements must be registered with IPOPHL to be enforceable.
Assignment:
- Patents are assignable property rights, and assignment (transfer of ownership) must be registered with IPOPHL to be enforceable against third parties.

9. Patent Cooperation Treaty (PCT)

The Philippines is a member of the PCT, allowing Filipino inventors to file international patent applications with a streamlined process.
Process:
- A PCT application filed in the Philippines acts as a placeholder for national filings in other PCT member states, preserving the filing date.
- This enables Filipino inventors to secure patents internationally with reduced procedural steps.

10. IPOPHL Services and Assistance

Assistance Programs:
- IPOPHL offers patent drafting assistance and access to patent information databases to help inventors and businesses.
Patent Prosecution Highway (PPH):
- Through PPH agreements, IPOPHL expedites examination of patents that have already been approved in certain foreign jurisdictions.

11. Notable Jurisprudence in Philippine Patent Law

The Supreme Court has issued landmark decisions clarifying various aspects of patent law:
- Patentability Standards: Courts have defined standards for novelty and inventive step.
- Patent Infringement: Landmark cases address the interpretation of infringement and defenses.
- Compulsory Licensing: Courts have clarified the grounds for and limitations of compulsory licensing.

Conclusion

Patent law in the Philippines provides a robust framework for protecting and commercializing inventions, balancing inventors' rights with public interest. By enforcing patent rights and fostering innovation, the Philippines aligns with international IP standards, including the TRIPS Agreement and the PCT.