IP Representations and Warranties in Share Purchase Agreements in India: A Practical Legal Guide

Understand IP representations and warranties in Share Purchase Agreements in India. Learn how intellectual property clauses protect buyers in M&A transactions and startup investments.

AUTHOR- NARGIS

Keywords

• IP Representations and Warranties in Share Purchase Agreements in India 

• Intellectual property clauses in SPA

• IP due diligence India

• Share purchase agreement IP risks

• M&A intellectual property India

Introduction

In India, M&A or IP often creates the backbone of a company’s value, especially in startups, technology companies, pharmaceutical businesses, and D2C brands. When shares are transferred under a Share Purchase Agreement (SPA), the buyer does not acquire equity, but they acquire the underlying assets, including patents, trademarks, copyrights, trade secrets, and proprietary technology. This is where IP representations and warranties become critical.

What Are Representations and Warranties?

Representations and warranties come up frequently in each of the contexts above; there are differences in the meanings of the terms “representations” and “warranties”, at least in legal terms. The differences can be summarised below:

In a Share Purchase Agreement, representations and warranties are contractual statements made by the seller about the condition of the company. They serve two purposes:

1. It allocates risk between buyer and seller

2. They provide a legal remedy if statements found false

In the IP context, these clauses confirm that the company is truly owns, controls, and can legally exploit its intellectual property.

 Why Representations and Warranties Matter

• Risk Allocation- The representation and warranty provisions take certain risks away from the buyer and put them on the seller; specifically, in instances where there may be unknown or undisclosed liabilities which could materialize after the closing.
• Due Diligence Support- The Reps and warranties further the due diligence process by requiring the seller to affirm very important facts about the company such as the company’s financial information, operations, compliance status, etc.
• Basis for Indemnification- Any breach creates the basis for indemnification claims which serve as a contractual safety net for the buyer.
• Building Trust- They lessen asymmetry in information, promote transparency, and improve the buyer’s confidence in the deal.

If these issues are not disclosed during the transaction, the buyer may inherit serious legal risk. Therefore, IP representations act as a legal safety net.

Common IP Representations in Indian SPAs

1. Ownership Representation:- The seller confirms that:

• The company is the sole and exclusive owner of all intellectual property.

• No third party has ownership claims.

This is found crucial in founder-driven startups.

2. Validity and Registration:- The seller represents that:

• All patents, trademarks, and copyrights are valid.

• Registrations are enforceable.

3.  Non-Infringement:- The seller confirms that:

• The company’s IP does not infringe third-party rights.

• No infringement notices are pending.

This protects buyer from the litigation risk.

4. Assignment from Employees and Contractors

In India, copyright in employee-created work automatically belongs to the employer only if created during employment. But ambiguity exists in contractor arrangements. Thus, SPAs often include representation that all employees and consultants have executed IP assignment agreements.

5. No Encumbrances:- The seller confirms that:

• IP assets are not pledged or under dispute.

Consequences of Breach

If a representation proves that it is false:

• The buyer can claim indemnity

• Purchase price adjustment may occur

• Escrow amounts may be invoked

• Litigation risk increases

In India, courts are generally enforce contractual indemnity provisions strictly, especially in commercial agreements Cases.

Role of IP Due Diligence

Representations alone are not enough. Buyers typically conduct:

• Trademark registry search

• Patent database verification

• Software ownership audit

• Open-source compliance review

In Indian transactions, inadequate due diligence is a common risk factor.

Emerging Trends in India   

• Increased scrutiny in tech acquisitions

• Rise IP-backed startup valuations

• Greater focus on source code ownership

• Investors are demanding stronger warranty protection

 India’s startup ecosystem matures, and IP clauses in SPAs are becoming more detailed and negotiation-heavy.

Practical Drafting Considerations

For legal Professionalism drafting SPAs in India:

• Clearly define “Intellectual Property”

• Include detailed disclosure schedules

• Provide a survival period for IP warranties

• Align indemnity caps with IP risk exposure

Case Law

Peek v. Gurney (1873) LR 6 HL 377 (UK)

This case represents an early decision that established the idea that the failure to disclose material facts could amount to fraudulent misrepresentation. The court held that vendors cannot leave out material facts when making representations, particularly in share prospectuses. The case illustrates the principle of full disclosure, which is an important principle in SPAs that can protect from fraud liability.

Shobika Impex Pvt. Ltd. v. Peerless General Finance (2021) SCC OnLine Mad 2116 (India)

This case from India illustrates how courts enforce representations and warranties in SPAs. The vendor was liable for misrepresenting the financial situation of the target company. The judgment provides confirmation that misrepresentations can make the contract voidable and give rise to damages under Indian law.

Omkara Assets Reconstruction Pvt. Ltd. v. Anand Rathi Global Finance Ltd. (2023 SCC OnLine Del 1252) (India)

In this recent case, the Delhi High Court held that failing to disclose material financial defaults by the vendor amounted to a breach of warranty. The case demonstrates Indian courts’ willingness to protect purchasers from undisclosed financial risks and highlights the importance of full disclosure in SPAs.

Conclusion

In Today's digital world,  Indian corporate transactions, intellectual property is often the most valuable asset being transferred. IP representations and warranties in Share Purchase Agreements are not mere boilerplate clauses—they are core risk allocation tools.

For buyers, they ensure protection.

For sellers, they define liability boundaries.

In an accelerating evolving startup and technology landscape, precise drafting of IP clauses can determine whether a transaction succeeds smoothly or turns into prolonged litigation.

Doctrine of Exhaustion of Patent Rights: Meaning, Types & Impact

Doctrine of Exhaustion of Patent Rights: What It Means and Why It Matters

Explore the doctrine of exhaustion of patent rights — how it works, differences in global law, types (national, regional, international), and why it matters for innovation, trade, and access.

AUTHOR- NARGIS 

Introduction

The purchase of a product leads to the permanent loss of patent rights according to patent law. The answer in patent law is yes — but only under a specific principle called " the Doctrine of Exhaustion of Patent Rights."

The basic meaning of this doctrine states that:

The patent owner loses all rights to a patented product after they sell it or give someone else permission to sell it. The purchaser can use, resell, or distribute that item without further permission.

This concept is essential because it affects global trade, generics, parallel importation, and how manufacturers protect their rights after the first sale.

What Is the Doctrine of Exhaustion?

A patent grant creates exclusive rights for its owner, which permit the owner to manufacture, distribute and import the patented invention. The doctrine of exhaustion restricts these rights after the first authorised sale of the patented product.

The owner loses all control over a patented product after selling it together with its authorised sales. The system creates a balance between patent rights and unrestricted product distribution. The United States and common law countries use the First Sale Doctrine as the common name for the Doctrine of Exhaustion.

The concept contains a basic structure which states:

• Patent owner sells a product
• Patent owner loses control over that particular product
• Buyer can resell, use, or export it freely.

Types of Exhaustion Regimes Around The World

Patent exhaustion is not the same. Countries have rules when it comes to patent exhaustion.

1. National Exhaustion: Patent rights for a product are exhausted in the country where the patent was issued. For example if a product is sold in India the patent owner loses control over that product in India not in other countries. 2. Regional Exhaustion: Patent rights are exhausted in a region like the European Union. If a product is sold in the European Union, the patent owner cannot stop it from being sold or used in European Union countries. 3. International Exhaustion: If a product is sold anywhere in the world by the patent owner, the patent rights are exhausted everywhere. This means that the patent owner cannot control the product anymore, no matter where it is sold. This approach is good for trade. Not all countries follow it.

How Different Countries Treat Patent Exhaustion

1. In the United States, patent rights are exhausted nationwide when a product is sold. This is because of the First Sale Doctrine. Once a product is sold, the patent owner cannot control it anymore.
2. In the European Union: The European Union follows exhaustion. This means that if a product is sold in one European Union country it can be sold or used in European Union countries without the patent owners permission.
3. In India: India follows exhaustion. This means that patent rights are exhausted in India if a product is sold in India. The patent owner still has control over the product in certain countries.
4. Why This Matters To People: Different exhaustion rules affect things, such as:

• Parallel imports
• Price differentiation
• Cross-border resale
• Market segmentation by manufacturers

Why The First Sale Doctrine Matters To People

1. Access To Cheaper Products

If patent rights are exhausted after a sale, people can buy and sell products at lower prices.

2. Parallel Imports Products can be imported from countries without the patent owners permission as long as they were originally sold with permission. 3. Limits Patent Control

The First Sale Doctrine ensures that patent owners do not have control over a product forever. Once a product is sold the patent rights disappear. This is important for patent exhaustion and the rules that countries follow. Patent exhaustion is important because it affects how products are sold and used around the world. Patent exhaustion rules are different, in each country. This affects people who buy and sell products.

Real Life Examples

If a consumer purchases a smartphone that is patented in India, the manufacturer is not allowed to prohibit the consumer from reselling the smartphone.

A drug sold in the EU and that enjoys patent protection cannot be limited from resale within the EU market.

Policy Debate and Future Trends

The doctrine is no longer just an academic matter. It no longer just an academic doctrine, it affects: In different countries, companies set a different price for a product. Exhaustion rules decide on the reselling of imported goods.

In developing countries, exhaustion can help in reducing drugs prices through parallel importation. With software, eBooks and APIs, exhaustion rules keep changing – especially in cases where ‘sale’ is ambiguous. With global trade agreements and WTO negotiations, countries may revisit exhaustion principles.

Common Misconceptions

1. It only applies to that particular item after the first sale.
2. Manufacturing, production, and first sale decisions remain under the control of patent owners.
3. It depends on the exhaustion regime of every country.

Conclusion

The Doctrine of Exhaustion of Patent rights is one of those legal maxims that silently controls the manner in which products, markets, and the global trade operate. It creates a balance between: Rights of Patent Owner Freedom of Buyers After Buying Trade efficiency and prices Understanding this doctrine is therefore essential for businesses, lawyers, and policymakers as markets become more global and digital.

How US, EU and India Differ in Patent Law

Comparative Analysis of US, EU and Indian Patent Systems: Legal Framework, Patentability Standards and Enforcement Mechanisms

Comparative Analysis of US, EU and Indian Patent Systems: Legal Framework,
Patentability Standards and Enforcement Mechanisms 

AUTHOR- NARGIS

Introduction

Patent law is critical to promoting technological advancement and safeguarding innovators' rights. As nations advance economically, technologically and in support of public policies, they develop their national patent legislation. The United States, the European Union and India all have administered patent systems to provide for the principles outlined in their respective patent laws in a similar manner, but have addressed many topics differently. 

This article uses a legal framework, patentability criteria, scope of protection, opposition procedures, compulsory licensing provisions and enforcement systems to assess the patent systems found in the US, EU and India.

Historical Development of Patent Systems

The patent system of the United States is one of the oldest systems. It has historically been based on supporting industrial growth and the advancement of technology. The protection offered to inventors and corporations has increased with the evolution and expansion of the US patent system. 

The patent systems of Europe were developed from the desire to create harmony for the patent laws of individual nations through a system that did not mandate a single country's patent application. Europe was able to establish an entity that examines patent applications in a central manner to ease the process of obtaining a patent in each country. 

In India, the patent system was influenced by its economic situation following its independence; the Indian Parliament enacted the Patents Act, 1970, which limited monopolies and proved helpful to the country's domestic industry. As India's economy has modernised, amendments to the patent law have been made to comply with international obligations and provide protection to domestic institutions.

 

Existing Legal Structure & Legislation That Governs the Law Relating To Patents

The law relating to patents within the United States is governed by the Patent Act, which sets out the criteria for patentability as well as details about the enforcement of patents. 

The law relating to patents within the European Union is governed by the European Patent Convention. Each member state will be responsible for enforcing the patents granted under the EC Patent Convention at the European Patent Office; however, the patent examination process (patentability) will be centralised.

 In India, the law relating to patents is governed by the Patents Act, 1970 (amended); this Act sets out the requirements for application, examination, opposition, and compulsory licensing of patents.

The Requirements For Patentability

All three jurisdictions (the US, the EU and India) require three elements for patentability of an invention to meet the basic requirements of: 

•  It is new;
•  It has a non-obvious (inventive) step involved in its conception;
•  It is capable of industrial application, e.g., can be manufactured economically.

 However, each country interprets these requirements differently: 

1. The United States generally takes a broader approach to the definition of patentable subject matter. 
2. The EU requires that to qualify as patentable, an invention must make a technical contribution to the resolution of a technical problem (known as the “technical contribution test”). 
3. India tends to scrutinize the above elements with greater diligence in specific categories and has exclusions defined in Section 3 of the Patents Act, which results in a more conservative patenting system than in the other two jurisdictions, thereby delaying the grant of a patent in India.

Duration & Set Area of Patent Rights

Across the three areas that are subject to these outstanding invention patents, the maximum duration of patent rights will normally be for twenty years from the filing of the patent application. However, the scope of rights under patents in each respective area will vary based on how the claims are written and interpreted.

 The US courts have consistently been known for aggressively enforcing patents. The interpretation of patent protection will vary across European countries during the enforcement phase. India, in order to elevate innovative ideas while simultaneously protecting the patent owner's rights, provides a balanced framework to protect patents with exception for certain instances that are in the best interest of the public.

Examination of Patent Applications & Grant Repeated Requests.

In the US, patents will be examined by the United States Patent and Trademark Office. The examination process includes a detailed review of the application by a patent examiner and communication between the patent examiner and the inventor/applicant.

 In Europe, the examination of patents occurs in a central location at the European Patent Office. After a patent is granted, a patent owner must obtain validation from each individual country where protection is desired. In India, the Indian Patent Office will review the patent application once a request for examination is made by the patent applicant.

 The examination process in India has the potential to include objections to the application, amendments to the application, and may include formal hearings before the grant of the patent.

Opposition & Post-Grant Review Systems

 Both pre-grant and post-grant opposition is allowed under Indian law, meaning third parties may challenge a patent prior to its being issued or after issuance. This enhances transparency, but it could lengthen the overall process. The European Union has established a system to centrally oppose patents within nine months of a patent being granted. The United States primarily relies upon post-grant review and court litigation to challenge patents.

 Compulsory License & the Power of Government

 When a compulsory license is granted, there are certain conditions under which a government can give permission for an individual or company to use an invention even though they did not receive the permission of the owner of the patent. 

India has very clearly set forth legislation governing compulsory licensing in cases where there is a public interest. In the European Union and the United States, there is the possibility to issue compulsory licenses, but they are not often issued. The idea behind the United States and the European Union would be to resolve issues in a manner consistent with the free-market economy instead of through a compulsory license.

Enforcement & Remedies

A patent owner from any of the three systems can seek a variety of remedies for the infringement of their patent, including seeking injunctive relief, damages, and accounting for profits. In the United States, the patent system is very litigation-oriented, with damages given to patent owners exceeding those in any other jurisdiction and is often very high in some cases.

 Enforcement in the European Union is left to the applicable countries' courts. India provides civil remedies for patent infringement and, in some circumstances, provides for criminal prosecution for patent infringement.

A Comparative Exam

 The United States has developed a patent system that encourages innovation through support from the marketplace. The European Union's approach is to unify the patent system through standardisation and systematic examinations. The Indian approach is to create a balance between promoting innovation on behalf of the public and stimulating economic growth. 

The policies from the US, the EU, and India reflect the economic priorities and policy goals for each of the different countries.

 Conclusion

While these three jurisdictions (US/EU/INDIA) all share fundamental principles on which a patent system is developed, there are significant differences between the way that each jurisdiction has put those principles into practice. 

Each jurisdiction's patent laws reflect the respective government’s choice of policies that have been impacted by their respective levels of development, level of industrialization, level of economic development and the impact such choices will have on public good. 

A comparative study of the patent systems in these countries is advantageous to policy makers, researchers and innovators working in today’s global environment.

 

Biopiracy & Patent Abuse in Herbal Medicine: Legal Challenges & Remedies

Biopiracy & Patent Abuse in Herbal Medicine: Protecting Traditional Knowledge

Explore how biopiracy threatens herbal medicine, how patents are misused, and how traditional knowledge is legally protected through IP laws and TKDL.

AUTHOR- NARGIS 

Introduction: Ancient Knowledge at Risk

 Herbal medicine exists as the oldest healing practice which serves as the fundamental method of treating medical conditions. 

The following systems treat medical conditions while preserving human wellness and stopping illnesses from occurring:

• Ayurveda
• Unani
• Siddha
• Chinese medicine

The systems contain all knowledge which has been developed through multiple generations who used their skills to study and test different concepts. The ancient knowledge system of today faces modern dangers because of biopiracy. 

Biopiracy occurs when corporations or individuals take traditional herbal knowledge, patent it, and profit from it without consent or compensation to the communities that created it. The action presents an ethical violation which also damages the indigenous peoples' rights to cultural legacy and legal protections.

Understanding Biopiracy in Herbal Medicine

Biopiracy can occur through various methods:

1. Patent Misuse: Some companies attempt to patent herbal formulations that have existed for centuries, claiming novelty.

Exploitation of Indigenous Knowledge:

Outsiders commercialize oral traditions and documented local remedies through imitation.

2. Commercialisation of Herbal Ingredients: The original communities receive no benefits from the global market, which transforms traditional medicinal plants into expensive worldwide products.

Real-World Example: The Neem Controversy

A U.S. company attempted to patent Neem extract in the 1990s for its antifungal properties. Neem has been used in India for centuries in medicine, agriculture, and personal care.

India succeeded in patent opposition, which established a crucial precedent for safeguarding traditional knowledge. The article examines patent exploitation within traditional herbal treatment methods. 

Patents exist to safeguard novel inventions, but people frequently misuse this system through two specific practices.

• The first problem occurs when people patent existing traditional remedies which they discover in historical texts.
• The second problem arises when people claim their work as new because they made only small adjustments to existing designs.
• The third problem prevents original medicine creators from sharing their inventions which leads to legal disputes and ethical issues in India where people use traditional medicine as their primary healthcare method.

The legal system uses intellectual property rights to safeguard traditional herbal medicine practices.

Intellectual Property Laws Protecting Herbal Medicine

IP laws offer two distinct methods to safeguard traditional knowledge through their protective mechanisms.

1. Defensive Protection

The purpose of this system is to stop other people from acquiring patents on traditional knowledge. The system uses two components.

• TKDL system stores records about herbal medicines and their traditional use in medicine.
• The Prior Art Databases system provides evidence to patent offices that certain knowledge existed before the designated patent time.

2. Positive Protection

The system enables communities and nations to obtain advantages from their traditional knowledge systems. The system uses three types of methods.

• Geographical Indications (GI) protection system safeguards herbal plants and traditional remedies which originate from specific geographic areas.
• The benefit-sharing agreements system ensures communities receive a portion of all earnings.
• The system enables researchers and local knowledge custodians to share ownership rights through collaborative patents.

The Role of Traditional Knowledge Digital Library (TKDL)

The Traditional Knowledge Digital Library (TKDL) serves a vital purpose through its main function. 

TKDL provides India with an international standard for safeguarding intellectual property rights over its traditional herbal remedies.

The main functions of TKDL include the following activities. 

• The system transforms traditional knowledge documents from Sanskrit and Arabic and Persian and other languages into formats that patent offices throughout the world can easily understand.
• The system provides prior art references which help to stop incorrect patent applications.
• The organization has successfully eliminated hundreds of fraudulent patents from various countries worldwide.

The absence of TKDL enables companies to patent ancient formulas which leads to widespread biopiracy.

Ethical Challenges in Herbal Medicine Patents

Herbal medicine presents special ethical problems because patents serve their primary function of safeguarding innovation.

• Who owns knowledge that belongs to a community?
• Should centuries-old remedies be patented at all?
• Is profit the right reward for traditional wisdom?

The questions demonstrate how intellectual property laws must create an equilibrium between promoting innovation and maintaining community rights and public health interests.

Biopiracy in the Global Context

Biopiracy exists as a problem that extends beyond the boundaries of India.

• Brazil: Traditional Amazonian plants patented abroad without benefit-sharing.
• China: Medicinal herbs and formulas facing international patent claims.

The country of Indonesia works to safeguard its traditional herbal knowledge (Jamu) through international treaty agreements.

International treaties, such as the Convention on Biological Diversity (CBD) and TRIPS, provide frameworks for protecting traditional knowledge and benefit-sharing, but enforcement remains challenging.

How Communities Can Protect Their Herbal Knowledge

Communities and governments can adopt several strategies:

• Document Remedies: Convert oral knowledge into written or digital formats.
• Register Intellectual Property Rights: Apply for geographical indications or community-based IP protection.
• International Patent Monitoring: The organization should track worldwide patent filings to stop patent misuse.

The organization needs to work together with NGOs and Governments to establish legal support which will defend against unauthorized exploitation.

The Benefit-Sharing Models: The system guarantees that communities receive financial benefits when their traditional knowledge gets used for commercial purposes.

Economic and Social Impact of Biopiracy

Biopiracy can hurt both communities and national economies:

• Indigenous groups lose their revenue sources
• Local practitioners lose their motivation to work
• Money for sustainable harvesting projects experiences a decline
• Global companies benefit from unfairly accessing knowledge which humanity has developed over many years

Herbal knowledge protection brings about equitable outcomes while preserving traditional medicine and fostering new developments.

Biopiracy: Legal Remedies

Legal actions can be taken by communities, institutions, or governments against biopiracy.

• Challenging Unjust Patents: Making use of Traditional Knowledge Digital Library (TKDL) or prior art to prove a patent is invalid.
• Civil Claims: Asserting that you own something or preventing someone from using something without your consent.
• Dynamic Injunction: Preventing the registration of a foreign patent.

International Cooperation: Working together with the World Intellectual Property Organization (WIPO) and other intellectual property offices to combat biopiracy around the world.

The Future of Biopiracy: Balancing Innovation with Tradition.

In order to protect the use of herbal medicine in the 21st century, please consider the following actions to take immediately:

• Legal Reforms - Legislation must be established that recognises that some innovation is derived from community-based knowledge.
• Global Treaties - Establishing global framework treaties to enforce equitable sharing of benefits arising from the use of traditional knowledge.
• Technology Adoption - Create digital repositories and libraries, as well as develop a mechanism for documentation and tracking of herbal medicines.
• Ethical Commercialisation - Generating a reasonable profit from the sale of herbal medicine while adhering to appropriate ethical practices.

Only when the actions above have been implemented will traditional knowledge be preserved for future generations and used to effectively benefit the global community.

Conclusion: Preserving Knowledge, Establishing Justice

Herbal medicine is an important part of our heritage, and has been used by many cultures throughout history; however, biopiracy and the abuse of patents pose a serious threat to its continued existence.

The preservation of traditional knowledge is a collaborative effort requiring:

• Documenting
• Legal Protections
• Ethically Commercialising
• International Cooperation

With proper protections, traditional knowledge will continue to provide health and benefit from its use.

AI in Drug Discovery and IP Ownership: Legal Challenges in Pharmaceutical Innovation

 

AI, Drug Discovery & IP Ownership: Who Owns AI-Created Medicines?

Explore how artificial intelligence is transforming drug discovery and the complex
Intellectual property ownership issues surrounding AI-generated pharmaceuticals.

AUTHOR- NARGIS  

Keywords

AI drug discovery IP ownership, artificial intelligence pharmaceutical patents, AI generated drugs patent law, intellectual property AI medicine 

Introduction

Artificial Intelligence is revolutionising the way new medicines are developed.

Earlier, developing a new medicine would take:

•        10 to 15 years
•        Billions of dollars
•        Thousands of experiments

Today, AI computers can process massive amounts of information in a matter of minutes. They can identify new molecules, predict side effects, and even assist in developing medicines. However, this raises a very significant legal issue:

Who owns a new medicine if AI assists in its development?
 Is it:

•      The scientist?
•       The company?
•        The AI developer?
•           Or the AI itself?

This is where intellectual property law gets tricky.

How AI Is Used in Developing Medicines

 AI works by processing massive amounts of information such as:

•  Patient medical records
• Chemical compound libraries
• Genetic information
• Clinical trial data

Instead of conducting thousands of experiments manually, AI can predict which molecule will work best.

For example, companies such as DeepMind have created computers that can predict protein structures. This is a critical step because knowing protein structures helps scientists develop better medicines.

Large pharmaceutical companies such as Pfizer and Novartis are also using AI computers to accelerate the development of new medicines.

AI computers do not get tired. They can process millions of combinations in a matter of hours. This is why AI is becoming so powerful in the field of medicine.

The Big Legal Question: Can AI Be an Inventor?

Under current patent laws in most countries:

Inventors must be human beings according to current patent laws, which apply throughout most countries.

Patent law originates from the concept that human intellect produces unique inventions.

But what happens if:

•        AI creates an entirely new molecular structure?
•        The molecule was not conceived by any human being?
•        The AI system produced the results without any human assistance?

This situation marks the beginning of the problem. Currently, AI systems lack legal recognition as inventors.

 A Famous Legal Example

The case established an important legal precedent through its examination of DABUS which Stephen Thaler developed as an artificial intelligence system. The patent applications identified AI as the inventor according to this case.

Patent offices in:

• United States
• United Kingdom
• Europe
• Australia

The application received rejection from patent offices. The reason was simple: The law requires that an inventor must be a human being. The ruling establishes direct implications for AI-based drug discovery research. 

So Who Owns an AI-Discovered Drug?

 At present, ownership usually goes to:

1. The Human Researcher

A scientist becomes an inventor when they lead the research process while using AI as a research instrument.

2. The Company

The company that employs researchers usually secures patent rights for work performed during their employment.

3. The Organisation Funding the Research

Ownership rights are determined through contract agreements.

The process of establishing human involvement becomes problematic when AI operates with substantial autonomy. Future legal conflicts will emerge because of this issue.

Why IP Ownership Is So Important in Pharma

Drug development costs require high financial investments. Companies invest billions of dollars in:

•        Research
•        Testing
•        Clinical trials
•        Regulatory approvals

Without patents, competitors could copy the drug immediately. Patents provide companies with exclusive rights to their products, which last for 20 years, allowing them to recover their research expenditures. Companies willBGTEto conductAI research when AI-generated drugs face patenting issues.

Another Problem: Who Owns the Output of AI?

Imagine this situation:

• A tech company develops an AI tool.
• A pharma company uses that AI tool.
• The AI system develops a new drug formula.

Now the question is: Does the patent belong to:

• The AI software company?
• The pharma company?
• Both?

The answer depends on the contracts between them. In modern research collaborations, contracts must clearly mention:

• Who owns the data?
• Who owns the results?
• Who can file patents?
• How will profits be shared?

 Lawsuits will emerge when the contracts become difficult to understand.

AI Tool vs AI Creator

People can analyses AI applications in law through two main perspectives:

View 1: AI Is Just a Tool

A microscope exists as a scientific instrument used to examine small objects but The human using it is still the inventor.Presently most countries consider AI systems to function as tools.

View 2: AI Is an Independent Creator

The law needs to change if AI can create works without any human help. Most legal systems now accept the first perspective.

 Ethical Questions

This issue has both legal and ethical dimensions. Some important questions are:

•           If AI discovers a life-saving drug, should it be very expensive?
• ·       Should technology that uses public data be privately owned?
• ·       Should AI innovation benefit everyone equally?

The upcoming years will see a major argument about how to balance public health needs with profit requirements.

What Might Happen in the Future?

 Laws may undergo changes during the upcoming years. The possible changes will include:

•        The legal recognition of AI-assisted inventorship
•        The establishment of new patent standards
•        The creation of distinct regulations for AI advancements
•        The establishment of regulations requiring human oversight

The government establishes a progressive approach to fundamental transformations. Human participation remains essential for legal purposes at this moment.

Final Thoughts

Artificial intelligence (AI) has significantly influenced the drug discovery process in various positive ways. AI allows for:

• More rapid drug development;
• Less expensive drug development;
• More precise drug development.

However, the current state of intellectual property (IP) is based on "human" creation. Currently:

• AI is not able to be listed as the inventor of a patent.
• A person needs to be named in a patent in order for the patent to be valid.
• Ownership will continue to be governed primarily by a contract or employment agreement

As AI evolves and becomes increasingly autonomous, the laws regarding intellectual property will also need to change. In the interim, companies who are using AI will need to be diligent in developing an intellectual property strategy to limit the potential of future legal issues.