Journal of Intellectual Property Rights

Vol 8, January 2003, pp 50-57

PCT System and Its Impact on the Developing Countries

Rajeev Ranjan

Department of Industrial Policy & Promotion, Ministry of Commerce & Industry

Udyog Bhawan, New Delhi 11000

(Received 30 October 2002)

Protection and enforcement of intellectual property rights (IPR) are major components of
international economic trade and scientific cooperation, and the Patent Cooperation Treaty
(PCT) has ushered an era of international cooperation in the diverse international property
systems with reference to patents. The paper discusses about the benefits of the PCT system
under which the filing of one international patent application leads to protection in several
countries. Emergence of PCT system and its benefits, e.g. long term gains, availability of best
technology, faster industrial progress and development, increase in the foreign direct investment
(FDI), and raising the level of patent work in the country, are discussed in detail. The
developing and the least developed countries have also benefited from the PCT and account for
the majority of the 117 members. Among the developing countries, India has also gained
substantially and holds the third position in international filing of patent applications and the
Council of Scientific & Industrial Research (CSIR) is second to Biowindow Gene Development
Inc from China. The paper also discusses briefly about the PCT reforms and automation to make
the system more useful and beneficial.

The demands for remaining innovative Emergence of the Patent Cooperation

and maintaining an edge in international Treaty
competition require substantial efforts to PCT is a facilitating treaty and one of
use IPR regimes as a tool to bring about most significant advancement in
desired level of technical change and international cooperation in the field of
development. In the post TRIPS era, the patents. The principle objective of the
formulation and adaptation of the right PCT is to provide a more effective and
IPR policy is strategic in deriving the more economical means for applying for
optimal benefits offered by the IPR patent protection in several countries. As
system. In this context, the protection and per conventional system, an inventor has
enforcement of IPR has now become a to file separate applications in each
major and inevitable component of country where he desires to seek
international economic trade and protection for his invention. Under the
scientific cooperation relations. PCT system, the inventor is required to
 RANJAN: PCT SYSTEMS AND ITS IMPACT 51

file a single application (properly known application is subjected to an

as an international application) in one international search carried out by one of
language having effect in each of the the major patent offices acting as an
countries party to the PCT by indicating International Searching Authority under
the names of the countries (known as the PCT, which gives a report about the
designations) where he desires the relevant prior art. Eighteen months after
protection. This system also provides the priority date, the international
formal examination of the international application is published by the
application by a single office and also International Bureau, together with the
international search on the prior art. The international search report and any
national patent offices are, however, free amendments of claims, which might have
to examine the application from the been made by the applicant, and is
perspective of national legislations and transmitted to the applicant and to the
charge the fee for the same. Presently, designated office. If the applicant
117 countries are members of the PCT. requests an international preliminary
examination under PCT, it is done by one
PCT, which is a special agreement of the patent offices acting as
under the Paris Convention, is largely a International Preliminary Examining
treaty for rationalization and cooperation Authority, setting out whether the
with regard to filing, searching and claimed invention fulfils the criteria of
examination of patent applications and novelty, inventive study and industrial
dissemination of technical information. applicability. The applicant, on receiving
The PCT does not provide for the grant of the international search report and the
international patents. The responsibility international preliminary examination
for grant of patents remains solely with report is in a much better position to
the patent offices of member countries as decide whether to proceed with the
per their laws. application in the respective designated
The PCT essentially sets up a system patent offices or not. In case, the
of patent cooperation whereby filing only applicant decides to seek patent
one international application with one application in several countries, he can
patent office, the applicant can obtain the then decide to pay the national fees and
effect of regular national filings in any of prosecute the application in that country.
the designated PCT contracting countries This gives the applicant more time to
without initially having to furnish a decide about the need for the patent
translation of the application or paying protection. In view of the availability of
national fees. This means that the the international search report and in
expenses related to national patent many cases, the international preliminary
granting procedure are postponed in examination report, the PCT applicants
majority of the cases, by up to 18 months can take a well informed decision keeping
as compared to the traditional patent in mind the increased knowledge of the
system. Subsequently, each international technological value and commercial
52 J INTELLEC PROP RIGHTS, JANUARY 2003

prospects of the invention and its — Fostering and accelerating the

feasibility. economic development of developing
countries
Benefits of PCT System
The PCT system offers inventors and The principal objectives of the PCT
industry a better route for obtaining specifically are:
patent protection internationally as by
filing one international patent application — o offer solutions and options for
protection for an invention can be addressing the limitations of the
simultaneously sought in 117 countries, traditional patent system, especially
which are signatories to the PCT. This when patenting is desired in many
system is advantageous both to the countries
applicants and patent offices of the PCT — To simplify (to make more efficient
member countries as there is certain and more economical) the procedure
uniformity in the formality requirements, for seeking patent protection for the
the international search and preliminary users of the patent system (applicants
examination reports and the centralized and inventors); and patent offices
international publication provided by the
PCT system. The PCT is useful as it gives more time
While the traditional patent system and information to the applicant in
requires filing of individual patent order to:
application in each country where patent
protection is sought which involves not — Evaluate and better the chances of
only preparation and filing of patent protecting the invention before major
applications in several countries in costs in foreign countries are incurred
different languages in different systems — Keep options while investigating its
but also added cost in terms of payment commercial possibilities abroad
of fees to the patent offices, expenses on — Help obtain more reliable patents
translation, fees to attorneys, etc. abroad.
The aims of the PCT are generally to
facilitate the attainment of the larger Long Term Gains
objectives of the patent systems, viz.: Apart from above mentioned
advantages, PCT system also helps in: (i)
— Making a contribution to the progress Improving the status of the country in the
of science and technology area of intellectual property worldwide,
— Providing optimum legal protection (ii) Paving the way for generating foreign
of inventions exchange through exports, (iii)
— Simplifying and rendering more Encouraging filing of applications in
economical protection of inventions other countries, (iv) Efficient patent
— Facilitating and accelerating access portfolio management, (v) Allowing
by the public to technical information staggering of expenses, and (vi) Allowing
 RANJAN: PCT SYSTEMS AND ITS IMPACT 53

additional time for taking more informed Raising the Level of Patent Work in the
decisions. Country
More number of applications means
Availability of the Best Technology more business for the patent agents. The
The PCT system paves way for more PCT system gives an additional
opportunities for technology transfer from advantage to the patent practitioners. In
foreign countries based on patent fact, the advantage available under this
protection. In the era of fast rate of system is not only limited to large
technological obsolescence, availability multinational corporations but is also
of competitive technology helps in available to individual applicants and
selection of the best technology. local entrepreneurs. It also helps local
applicants to seek patent protection
Faster Industrial Progress and
abroad, which would serve as a fillip in
Development
increasing the penetration of export
The developing countries have
markets by local industry. With the
invariably remained a target area for the
increase in local inventive activity and
big corporate groups to expand their
receipt of large number of patent
activities. Driven by the availability of
applications from contracting states, the
large number of scientists, engineers and
volume of patent work in the receiving
technical manpower, these groups come
country would increase without any
forward to invest in the developing
doubt.
countries, which helps in establishment
The enormous benefits brought by the
and development of local industries.
PCT to the patent applicants, designated
Creating more local jobs and
offices, elected offices and industrial
enhancement in technical skill levels
enterprises are testified by the
leads to more industrial progress and
phenomenal growth of international
accelerated development of the national
applications filed under the PCT over the
economy.
years. Realizing the tremendous cost
Increase in FDI saving potential of filing the patent
The developing countries and the least application through the PCT route, a large
developed countries require FDI for number of world’s well-known
establishment of vital industrial sectors. enterprises have utilized this system and
The economic liberalization policy is several of them are also from the
sometimes not enough to attract sufficient developing countries. The importance of
FDI. Something more is required to be PCT is evident from the growth in the
done to remove the irritants standing in PCT filings worldwide. From as low a
its way. Effective protection of figure of few thousands in the late 70s, it
intellectual property would certainly help has grown exponentially to a figure of
in garnering more FDI especially in some 1,03,947 in 2001. The 2,50,000th
critical areas of technology like international application under the PCT
pharmaceuticals, etc. was received in February 1996, 18 years
54 J INTELLEC PROP RIGHTS, JANUARY 2003

after the start of PCT operations; it took intellectual property management in their
only four years until March 2000, to national economies. PCT also offers
receive the next 2,50,000th application. practical ways of reducing the
An analysis of the technical fields for administrative burden on individual
published PCT applications in 2001 patent offices by facilitating search and
showed that almost all fields of examination and eliminating much of the
technology are utilizing the PCT system formality of checking, data entry and
with physics accounting for 21%; processing and publication.
chemistry, metallurgy 21%; electricity From the perspective of developing
18%; human necessities 17%; performing countries also, the PCT filings have
operations, transporting 13%; mechanical shown a significant growth. In 2001,
engineering, lighting, heating, weapons there was an overall 70.6% increase over
blasting 6%; fixed constructions 3% and the 2000 figures in terms of PCT
textiles, paper 1%. applications filed in developing countries
Contracting States. This high increase is
PCT and Developing Countries largely due to larger number of
It is heartening to note that more and applications filed in China (growth of
more companies and individual applicants 188.4%), India (102.6%), Republic of
are using the PCT route for filing Korea (53.1%) and Mexico (50.1%). The
applications in various contracting States. total number of international applications
The simple reason behind this is that the originating from developing countries
PCT procedures are being continually was 5,378, with the highest numbers from
revised and refined to make it cost Republic of Korea (2,318), China (1,670),
effective, easy, and advantageous to South Africa (418), India (316) and
greater number of applicants. No other Singapore (271). Almost 85.4% of
IPR system provides such flexibility to international applications from
suit the needs of the applicants. The PCT developing countries originated from the
union, which commenced in 1978 with 18 Asia Pacific region in 2001. It is
members in the beginning, has over the gratifying to see the developing countries
period of twenty-four years gained the making use of the PCT system in an
membership of 117 States, out of which advantageous manner.
more than half the members are from
developing countries, amply providing India and the PCT
the benefits to all stakeholders. India acceded to the Paris Convention
Interestingly, the developing countries are for the Protection of Industrial Property in
striving hard for making inroads for their December 1998 and joined the PCT
own products in the global market and are Union at the same time. The accession to
joining such international arrangement in the PCT is a landmark decision in the
large numbers. This strategic policy not history of the patent system in India. It
only boosts the investors’ confidence but has opened the gateway for entry of the
also adds economic value to promote advance technology in India. In the year
 RANJAN: PCT SYSTEMS AND ITS IMPACT 55

1999 ,a beginning was made by posting the same period. Other important PCT
61 PCT applications originating from applicant companies from India during
India. Since the joining of the PCT, India the same period are Ranbaxy
has been designated in over 2,50,000 Laboratories Ltd(27 applications) and Dr
international applications. The entry into Reddy’s Laboratories Ltd (9 applications)
the national phase has already during the same period. Other
commenced from August 2000 and over pharmaceutical companies from India like
13,000 such applications have been Orchid Chemicals & Pharmaceuticals
received till now. Ltd, Biocon Ltd, Lupin Lab and Sun
The importance of PCT applications in Pharmaceutical Industries Ltd, are also
India has grown substantially and from a using the PCT system fruitfully.
low figure of 3% in 1999-2000 it has Thus ,it is seen that after accession of
grown to almost 50% in 2000-01 and has India to the PCT, Indian inventors have
surpassed the national filing in 2001-02. started taking full advantage of the PCT
While there were 4,164 national phase system and a lot of applications from
PCT applications against 4,339 normal abroad are also being received under the
filings under the Indian Patent law in PCT system, accounting for the major
2000-01, the PCT filings increased to proportion of applications received by the
6,351 in 2001-02 against the normal patent offices in India.
filing of 4,241 applications. In the current
year, it is expected that the national phase PCT—Global Reach with Flexibilities
filing under PCT would be as high as The PCT is a treaty of global scope
7,500 as compared to normal filing of with the purpose of assisting in the filing,
4,500 and in the coming years, this trend searching and examination of patent
would become even more pronounced. It applications. The binding procedural
is estimated that the PCT filings in 2003- patent provisions of the PCT are in
04 would be more than double the general agreement with the corresponding
national filings and in future years would binding TRIPS provisions. Hence PCT
be almost four to five times of the Contracting States, which are also WTO
national filing. Therefore, the importance Members, are not faced with having to
of PCT can be gauged from the fact that comply with two conflicting agreements.
of the total patent applications filed in the The non-binding substantive PCT
country, PCT presently accounts for provisions are not prima facie in conflict
almost 0.6% and it is estimated to account with corresponding TRIPS provisions.
for more than 85% of the total filings. In view of the flexibilities in the PCT
The CSIR, India, has filed 101 system, the enactment of TRIPS did not
applications during the period January to necessitate changes in the PCT to bring
June 2002 and it is second to only them in conformity. Applications when
Biowindow Gene Development Inc. from received by members would help in
China, among the developing countries, processing the increasing number of
which has filed 136 applications during applications because when the application
56 J INTELLEC PROP RIGHTS, JANUARY 2003

enters the national phase, it will be PCT⎯ Reforms and Automation

accompanied by a PCT search report, and As a means for unifying the patent
in the most cases, by a PCT examination filing procedure, the PCT has been very
report also, to know that the formality and successful. The PCT is now by far the
disclosure requirements have been preferred means if an application is to be
satisfied or not. Nevertheless, the PCT is filed in a number of states. However, as a
of rather limited assistance in a manner of means for unifying search and
speaking since it is more a patent filing examination procedure, it has been not
procedure with some elements of a patent that successful. The purpose of the
examination procedure (in the form of a mandatory PCT search and the optional
mandatory PCT search and an optional PCT examination – minimizing repetition
non-binding and preliminary PCT of search and examination efforts in
examination) rather than a full and different offices and corresponding
complete search and examination efforts by applicants – has only been of
procedure. However, it is this limited success. Virtually all-major
characteristic of PCT which has made it examining offices normally repeat (if
attractive for so many countries to join as only in a supplementary fashion) the
it gave them the flexibility of an search and examination unless it was the
international filing system without having
same office, which performed the PCT
to compromise on substantive issues of
search and the PCT examination. Many
patent law which can at times be difficult
offices require additional proof of
and may take time to consider after
patentability – often in the form of patent
evolving a suitable consensus. Processing
grants of corresponding application. All
a large number of PCT applications in the
attempts to give the PCT wider role have
national phase, even if accompanied by a
PCT search report and examination not succeeded so far, mainly because of
report, does require considerable differences in patent law and practice as
administrative efforts by a designated well as lack of political will to overcome
office. Nevertheless, there is a great such differences and to rely on the “work
advantage in having the PCT search product” of another office.
report accompanying the PCT From a global perspective, there are a
applications in the national phase, as it few other practical alternatives to the
helps the patent office substantially. PCT and its further development.
Furthermore, the case of filing Therefore, substantive efforts for the
applications through the PCT has the reforms of the PCT are being made and
effect that many more applications are spearheaded by WIPO. Some of the
filed. Hence, being a PCT Contracting issues relating to duplication of work,
State could in certain situations actually special needs for small and medium
increase the administrative burden. The offices of the developing and least
solution to this would be to further developed countries, balancing of
develop the PCT procedure in order to applicant and third party interests,
streamline and simplify it. reduction of costs, simplifying and
 RANJAN: PCT SYSTEMS AND ITS IMPACT 57

streamlining of the PCT procedures are Conclusion

being addressed through the PCT reforms Several advantages of the PCT in terms
process. of enabling more applicants from
India has also submitted specific developing and least developed countries
proposals for the reform of PCT. These to seek patent protection in more
proposals cover simplification and contracting States, opportunities arising
streamlining of the procedures, reduction for technology transfer from foreign
of cost, maintaining of appropriate countries and in turn stimulating
balance between interest of the applicant, technology related FDI, development of
other parties and government, etc. As the local industries using better and
importance of PCT to the Indian patent appropriate technologies, upgradation of
system is growing significantly and as the technical skills and providing a stimulus
number of patent applications filed under for economic and technological
the PCT is already more than the normal development etc. are there for all to see.
patent applications filed in the country, it Other than the general economic benefits
is very necessary that information to the national economy in terms of better
dissemination about the PCT system is technology transfer, creation of jobs, etc.,
given due importance. there are several advantages for the
Simultaneously, the PC automation Contracting States in terms of
through the projects of IMPACT strengthening of international cooperation
(Information Management for the Patent with other Contracting States, as well as
Cooperation Treaty) is with the objective with other patent offices, greater
of streamlining the work procedures and awareness and publicity among the
facilitating electronic data exchange
applicants about the country’s patent
between the intellectual property offices
system. Access to PCT for the country’s
in order to provide improved services to
PCT applicants and enable reduction of inventors and industry, facilitates access
costs. Similarly, the other automation to more technical knowledge and more
project PCT–EASY (Electronic inflow of latest technology is certainly
Application System) software is being beneficial. Therefore, as amply testified
used by over 35% international applicants by India’s experience in the last four
and PCT – SAFE (Secure Applications years the PCT has resulted in large
Filed Electronically) is being developed number of designations in the
for enabling electronic filings and international applications followed by
processing of PCT applications. This national phase applications giving a fillip
would help greatly in the utilization of the to inventive activity and greater
PCT system by the developing and least awareness among the applicants both
developed countries and help the patent nationally and internationally and it is
offices to have an integrated IT enabled expected that with the future PCT
patent administration and uniform development/reforms, the system will
electronic filing/communication and data prove to be even more useful and
exchange standards. beneficial.