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PRESIDENTIAL DECREE NO. 1263
PRESIDENTIAL DECREE NO. 1263 -
AMENDING PORTIONS OF REPUBLIC ACT NO. 165 OTHERWISE KNOWN AS THE PATENT
LAW
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chanroblesvirtualawlibrary
WHEREAS,
certain provisions of Republic Act No. 165, otherwise known as the
Patent Law, have become obsolete and are inadequate to meet the demands
of our primordial goal of industrial and overall national economic
development; chanroblesvirtualawlibrary
WHEREAS, this goal can, to a significant extent, be promoted through
the licensing of patents.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers vested in me by the Constitution, do hereby
order and decree the following:cralaw:red
Section 1. Chapter VIII of republic Act Numbered 165
is hereby amended to read as follows:cralaw:red
"CHAPTER VIII — Licensing
"ARTICLE ONE. — Voluntary Licensing
"Sec. 33-A. Voluntary License Contracts. — (1) All
voluntary license contracts as well as renewals thereof involving
payment of royalty for the use of patents, transfer of technology, or
furnishing of services respecting patents of technology, or furnishing
of services respecting patents shall, whenever entered into between
residents and non-residents, be submitted to the Technology Resource
center for prior approval and registration.
"(2) The royalty to be granted in all license
contracts involving manufacturing (including actual transfer of
technology services such as secret formulate, processes, technical
know-how and the like) shall, whenever entered into between an alien
licensor and a Filipino licensee, not exceed five per cent (5%) of the
net wholesale price of the articles manufactured under the royalty
agreement and shall be equally distributed to all the patentees in
cases where more than one patent similar to that contemplated in
Section 34-C hereof are involved. chanroblesvirtualawlibrary
(3) The term "net wholesale price" means the gross
amount billed for the patented product subject to royalty less:cralaw:red
"(a) Trade, quality, or cash discounts, and broker's
or agent's commission, if any, allowed or paid;chanroblesvirtualawlibrary
"(b) Credits or allowances, if any, given or made on
account of rejection or return of the patented product previously
delivered; and
"(c) Any tax, excise or other government charge,
included in such amount, on, or measured by, the production, sale, use
or delivery of the patented product.
"(4) Unless and until approved and registered in
accordance with paragraph (1) of this section, the license contract
contemplated therein may not be the subject of an application filed
with either the Board of Investment or the Central Bank of the
Philippines. Neither will it have an effect against third persons until
such registration.
"Sec. 33-B. Rights of Licensor. — (1) In the absence
of any provision of the contrary in the license contract, the grant of
a license shall not prevent the licenses from granting further licenses
to third persons nor from exploiting the invention himself.
"(2) Without prejudice to the grant of a compulsory
license in accordance with Section 34 hereof, the grant of an exclusive
license shall prevent the licensor form granting further licenses to
third persons and, unless otherwise expressly provided in the license
contract, from exploiting the invention himself. chanroblesvirtualawlibrary
"Sec. 33-C. Rights of Licensee. — (1) The license
shall be entitled to exploit the invention during the whole duration of
the patent in the entire territory of the Philippines through any
application of the invention, and in respect of all acts referred to in
sections 37 and 42.
"(2) Clauses of the following tenor contained in
license contracts shall be null and void:cralaw:red
"(a) 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;chanroblesvirtualawlibrary
"(b) 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;chanroblesvirtualawlibrary
"(c) Those that contain restrictions regarding the
volume and structure of production;chanroblesvirtualawlibrary
"(d) Those that prohibit the use of competitive
technologies;chanroblesvirtualawlibrary
"(e) Those that establish a full or partial purchase
option in favor of the licensor;chanroblesvirtualawlibrary
"(f) Those that obligate the licensee to transfer to
the licensor the inventions or improvements that may be obtained
through the use of the licensed technology; chanroblesvirtualawlibrary
"(g) Those that require payment of royalties to the
owners of patents for patents which are not used;chanroblesvirtualawlibrary
"(h) Those that prohibit the licensee to export the
licensed product; and
"(i) Other clauses with equivalent effects.
"ARTICLE TWO. — Compulsory Licensing
"Sec. 34. Grounds for Compulsory Licensing. — (1) Any
person may apply to the Director for the grant of a license under a
particular patent at any time after the expiration of two years from
the date of the grant of the patent, under any of the following
circumstances:cralaw:red
"(a) If the patented invention is not being worked
within the Philippines on a commercial scale, although capable of being
so worked, without satisfactory reason;chanroblesvirtualawlibrary
"(b) If the demand for the patented article in the
Philippines is not being met to an adequate extent and on reasonable
terms;chanroblesvirtualawlibrary
"(c) If, by reason of refusal of the patentee to
grant a license or licenses on reasonable terms, or by reason of the
conditions attached by the patentee to article or working of the
patented process or machine for production, the establishment of any
new trade or industry in the Philippines is prevented, or the trade or
industry therein is unduly restrained;chanroblesvirtualawlibrary
"(d) If the working of the invention within the
country is being prevented or hindered by the importation of the
patented article; or
"(2) In any of the above cased, a compulsory license
shall be granted to the petitioner provided that he has proved his
capability to work the patented product or to make use of the patented
product in the manufacture of a useful product, or to employ the
patented process.
"(3) The term "worked" or "working" as used in this
section means the manufacture and sale of the patented article, of the
patented machine, or the application of the patented process for
production, in or by means of a definite and substantial establishment
or organization in the Philippines and on a scale which is reasonable
and adequate under the circumstances. Importation shall not constitute
"working."
"Sec. 34-A. Products of Processes Vital to National
Defense, Economy of Health. — The National Economic Development
Authority may, by order, provide that for certain categories of such
products or processes or for certain categories of such products or
processes, which are declared in such order to be of vital importance
to the country's defense or economy or to public health, compulsory
license may be granted under the conditions provided in the next
preceding section the conditions provided in the next preceding section
even before the expiration of the period mentioned therein.
"Sec. 34-B. Product, Substances or Processes Subject
of Project Approved by the Board of Investments. — (1) All products or
substances and/or processes involved in any industrial project approved
by the Board of Investments under the Investment Incentives Act shall
be deemed products or substances and/or processes vital to the national
defense or economy or to public health. If the proponent of the project
is neither a patentee not licensee of any of the products, substances
or processes involved therein, a compulsory license may, upon
application by the proponent or endorsement made by the Board of
Investments, be issued in his favor by the Director of Patents without
need of complying with the provisions of Section 34 and 34-A.
"(2) In cases falling under the foregoing
paragraph, the requirements of Sections 34-D and 34-E shall be complied
with, but no hearing shall be necessary except to determine the
identity of the patent owner of the products, substances or processes
subject of the application or endorsement. If two or more patents exist
for the same product, substance or process, the license shall be
granted under all subsisting patents involved.
"Sec. 34-C. Compulsory License Based Upon
Interdependence of Patents. — If an invention protected by a patent
within the country cannot be worked without infringing rights derived
from a patent granted on a priority, a compulsory license may, upon
application and without necessity of complying with the requirements of
Sections 34, be granted under the conditions specified in Section 35 to
the registered owner of the latter patent, to the extent necessary for
the working of his invention and insofar as such invention forming the
subject of the earlier patent, or constitutes noteworthy technical
progress in relation to it.
"Sec. 34-D. Form and Contents of Petition. — The
petition for compulsory licensing must be in writing and verified by
the petitioner and accompanied by the required filing fee. It shall
give the name and address of the petitioner as well as those of the
necessary party or parties respondent; and shall state the number and
date of issue of the patent in connection with which compulsory license
is sought; the name of the patentee; the title of the invention; the
statutory ground of grounds upon which compulsory license is sought;
the ultimate facts constituting the petitioner's cause of action; and
relief prayed for.
"Sec. 34-E. Notice of Hearing. — (1) Upon filing of a
petition under Section 34, a notice shall be given in the same manner
and form as that provided in section 31, Chapter VII hereof. The
resident agent or representative appointed in accordance with the rules
of practice before the Patent Office in patent cases shall be found to
accept service of notice of filing of the petition within the meaning
of this section.
"(2) In every case, the notice shall be published in
a newspaper of general circulation in the country three times for three
consecutive weeks.
"Sec. 35. Grant of License. — (1) If the Director
finds that a case for the grant is a license under Section 34 hereof
has been made out, he shall, within one hundred eighty days from the
date the petition was filed, order the grant of an appropriate license.
The order shall state the terms and conditions of the license which he
himself must fix in default of an agreement on the matter manifested or
submitted by the parties during the hearing.
"(2) A compulsory license sought under Section 34-B
shall be issued within one hundred twenty days from the filing of the
proponent's application or receipt of the Board of Investment's
endorsement.
"Sec. 35-A. Rights of Compulsory License. — The
compulsory license shall give the licensee the right of patentees
referred to in Section 37 and 42 hereof. chanroblesvirtualawlibrary
"Sec. 35-B. Terms and Conditions of Compulsory
License. — (1) A compulsory license shall be non-exclusive, but this
shall be without prejudice to the licensee's right to oppose an
application for a new such license.
"(2) The terms and conditions of a compulsory
license, fixed in accordance with Section 35, may contain obligations
and restrictions both for the licensee and for the registered owner of
the patent.
"(3) A compulsory license shall only be granted
subject to the payment of adequate royalties commensurate with the
extent to which the invention is worked. However, royalty payments
shall not exceed five per cent (5%) of the net wholesale price (as
defined in section 33-A) of the product, substance, or process subject
of the compulsory license is involved in an industrial project approved
by the Board of Investments, the royalty payable to the patentee or
patentees shall not exceed three per cent (3%) of the net wholesale
price (as defined in Section 34-A) of the patented commodity
manufactured under the patented process; the same rate of royalty shall
be paid whenever two or more patents are involved, which royalty shall
be distributed to the patentees in rates in rates proportional to the
extent of commercial use by the licensee giving preferential values to
the holder of the oldest subsisting product patent.
"Sec. 35-C. Transfer of Compulsory License. — A
compulsory license can only be transferred with the undertaking which
uses the patented invention. Any such transfer shall, on pain of
invalidity, require the authorization of the Director of Patents and
its registration in accordance with Section 33-A.
"Sec. 35-D. Amendment and Cancellation. — (1) Upon
request of the registered owner of the patent or of the licensee, the
terms of the compulsory license may be amended by the Director of
Patents when new facts justify it, in particular when the registered
owner of the patent grants contractual licenses on terms more favorable
to the contractual licensees.
"(2) At the request of the registered owner of the
patent, the compulsory license may be cancelled if the licensee does
not comply with the prescribed terms of the license.
"(3) The provisions of Sections 33-A and 35 shall
apply with respect to amendments and cancellations of compulsory
licenses."
"ARTICLE THREE — Common Provision
"Sec. 35-E. Licensee's Exemption form Liability. —
(1) Any one who works a patented product, substance and/or process
under a license granted under this Chapter shall be free from any
liability for infringement, provided that in the case of voluntary
licensee no conclusion with the licensor is proven. This is without
prejudice to the right of the rightful owner of the patent to recover
from the licensor whatever he may have received as royalties under the
license.
"(2) The existence of a conflict between two or more
patents shall in no way affect the right of the licensee under this
Chapter to work the invention, and no injunction or other court process
shall be valid and enforced which interferes with this right. Any
person violating this provision shall be punished by a fine not less
than Five Thousand Pesos but not exceeding Thirty Thousand Pesos but
not exceeding Thirty Thousand Pesos or by imprisonment of not less than
one year but not exceeding five years." chanroblesvirtualawlibrary
Section 2. Section 75 of the same Act is hereby
amended to read as follows:cralaw:red
"Sec. 75. Fees. — The following fees shall be paid
for filing an application for patent which shall include the cost of
publication in the official Gazette, Four Hundred Pesos, if it is an
invention patent and Two Hundred pesos, if it is a utility model or
design patent, upon filing each application and, if it is on invention
patent, Twenty-Five Pesos for each claim in excess of five claims
presented on filing or at any other time.
For issuing each original invention patent, One Hundred Pesos.
For annual fees due at the beginning of the fifth and each succeeding
year, Two Hundred Pesos each; for surcharge for delayed payment of
annual fee, Fifty Pesos; for reinstating a lapse patent, Two Hundred
Pesos; for filing a petition for cancellation, except when filed by the
Solicitor General, One Hundred Pesos; for filing a petition for
compulsory license, Two Hundred Pesos; for copies of records of the
Office, Two Pesos per hundred words of typewritten copy;chanroblesvirtualawlibrary
"For each certification of copy of any record, Twenty Pesos;chanroblesvirtualawlibrary
"For recording assignment, and other documents relating to title and
license, Twenty Pesos;chanroblesvirtualawlibrary
"For notice of appeal to the Court of Appeals from an order or decision
of the Chief Patent Examiner, Fifty Pesos;chanroblesvirtualawlibrary
For renewing a design or utility model patent, One Hundred Fifty Pesos;chanroblesvirtualawlibrary
"For surcharge of delayed renewal of a design or utility model patent,
Forty Pesos; and
"For services not otherwise specified, the Director shall provide, by
regulation, the fees therefor.
"The Director may by rule fix higher fees for nationals from the
developed countries.
"The Philippine Investors Commission shall be exempt from paying the
above fees but only with respect to application filed by it in behalf
of indigent inventors."
Section 3. The same Act is further amended by
inserting between Sections eighty-two and eighty-three the following
new section:cralaw:red
"Sec. 82-A. The Director shall authorized to use and
spend a portion not to exceed fifty per cent of the Office's total
income for the improvement of facilities and services as well as for
equipment outlay, for implementation of this Act including expenses for
participation in the World Intellectual Property Organization and
similar organizations concerned with international cooperation in the
expeditious processing of patent applications."
Section 4. This Decree shall become effective thirty
days following its promulgation. chanroblesvirtualawlibrary
Done in the City of Manila,
this 14th day of December, in the year of Our Lord, nineteen hundred
and seventy-seven.
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