In the United States, a patent licensee may have a patented product manufactured by an unlicensed third party (“have-made” rights). Courts there have recognised such rights even where licensing agreements expressly prohibit sub-licensing or reserve all ungranted rights. But would Indian law take the same approach? Eleen Garg examines how Indian courts might respond to claims of “have-made” rights and argues that they are unlikely to recognise them. He argues that this question assumes particular significance in light of India’s push to expand semiconductor manufacturing under the ISM framework, where third-party foundries are integral to the supply chain. Eleen is an advocate practicing before the Delhi High Court and the District Courts. He holds a Master’s Degree in Commercial Law from the University of Cambridge. [Long post ahead]
Infringement Against Contract Manufacturers: Can Patentees Restrain ‘Have-Made’ Rights in India?
By Eleen Garg
Patentees often license their patents, enabling licensees to commercially exploit a patented product in return for royalty payments. For reasons of cost efficiency or increased production, the licensee may hire a third-party manufacturer to exclusively ‘make’ the patented product on its behalf. Such an arrangement raises concerns because the manufacturer gains access to patented technology that the patentee intended to share solely with the licensee. In these circumstances, the patentee may proceed against the licensee for breach of the license agreement and for patent infringement. The patentee may also sue the manufacturer for patent infringement for the unauthorised ‘making’ of the patented product.
While this may initially appear to be a straightforward infringement claim under Section 108 of the Patents Act, 1970 (Indian Patents Act), complexities arise when the licensee asserts that it possesses the right to ‘have-made’ the patented product through a third-party manufacturer, and the third-party manufacturer seeks protection under such alleged ‘have-made’ rights.
The enquiry thus moves beyond a conventional infringement analysis to questions concerning the scope of license, the legality of ‘have-made’ rights, and their recognition under Indian law. Indian courts would thus be required to interpret whether existing statutory provisions could support recognition of such rights, specifically in light of international jurisprudence. This post contemplates the balancing approach Indian Courts may adopt when faced with such a dilemma.
The Evolution of ‘Have-Made’ Rights in U.S. Patent Jurisprudence
A ‘have-made’ right is a sub-product of the right ‘to make’ qua which the licensee may request an unlicensed third party to manufacture the patented product for the licensee. The case of Carey v. United States (1964) is pertinent, in which the US Court of Claims expanded the scope of patent rights to ‘make, use and sell.’ It held that such rights, when vested in alicensee, cannot be restricted to ‘make by licensee personally or use by him personally or sell by him personally.’ Subsequently, in Intel Corporation v. Broadcom Corporation (2001) the US District Court for the District of Delaware interpreted the right ‘to make’ in Section 271(a) of the 35 U.S. Code to encompass a ‘have-made’ right enabling the licensee to request an unlicensed third-party manufacturer to make the licensed goods.
The US Courts have recognised and upheld this defence (see Cyrix Corporation v. Intel Corporation (US Court of Appeals for the Federal Circuit, 1996)). Effectively, US Courts have divested the patentee of its right to sue the unlicensed third-party manufacturers to whom it never intended to convey its patented technology. The rationale for such divestiture of the patentee’s right is that once it has received royalties on each patented product (regardless of whether the licensee or a third party manufactures it), it can no longer sue for infringement. By virtue of such interpretation, the ‘have-made’ rights have evolved into a significant defensive tool in US patent infringement litigation.
India’s Semiconductor Mission and the Approaching ‘Have-Made’ Rights Conundrum
Semiconductor foundries are capital-intensive units that manufacture chips based on designs of other companies. Consider a scenario where a patentee grants a licensee a broad licence to ‘make, use and sell’ its patent. The Licensee then hires a specialised manufacturer (foundry) to make the patent. Parallelly, a third-party design company, lacking production capability—or whose design risks infringing the patentee’s rights—contracts the foundry to manufacture chips embodying its design. In fulfilling this request, the foundry may produce a product that combines the patented technology with the third party’s design, potentially resulting in direct infringement (Intel Corp. v ULSI). This concern is aggravated where the design entity is a direct competitor of the patentee.
In the given scenario, the Semiconductor Integrated Circuits Layout-Design Act, 2000, which governs the registration of layout designs in India is unlikely to apply. This is because foundries merely fabricate chips based on designs of other companies and do not create or commercially exploit the layout design as their own. Accordingly, if the foundry fabricates a chip embodying the patented invention, any resulting infringement would be enforceable under the Indian Patents Act.
In the US, disputes have arisen over licenses that were unclear about the transfer of ‘have-made’ rights, specifically in foundry-driven manufacturing ecosystems. (Intel v U.S. International Trade Commission, Cyrix v Intel (supra), LG Electronics v Bizcom Electronics)
This issue assumes particular significance in India with the Union Cabinet approving ten projects under the India Semiconductor Mission. These projects represent investments of approximately Rupees 1.60 lakh crores and indicate that the semiconductor fabrication system is set for rapid extension. As foundries begin fabricating chips for multiple entities, the allocation of manufacturing rights under patent licences will become critical. Drawing from U.S. jurisprudence, the question in India is not whether ‘have-made’ rights will be litigated, but when.
Notably, the Indian Patents Act does not expressly recognise ‘have-made’ rights. Sections 68 and 69, however, warrant attention. Section 68 requires that a license be in writing and duly executed. Section 69 mandates registration of such licenses or any creation of interest in a patent with the Controller. Moreover, Rule 10 of the Patent Rules, 2003 empowers the Controller to require proof of the right or title where an interest in a patent is claimed by way of assignment. By contrast, Section 261 of the U.S. Code similarly requires assignments and licences to be in writing. However, it does not mandate their registration with the USPTO in the manner contemplated under Section 69 of the Indian Patents Act.
The Indian Patents Act therefore imposes a two-step statutory requirement: (i) a written and executed instrument, and (ii) its registration with the Controller. Consequently, any claim to ‘have-made’ rights must be traceable to a written, executed, and registered instrument that satisfies these statutory requirements.
The Likely Approach of Indian Courts towards ‘Have-Made’ Rights
At the outset, the Indian courts shall consider the terms of the licensing agreement in light of the statutory framework governing patent transactions. The courts shall peruse whether sub-licensing is allowed under the agreement to understand the intention of patentee. This inquiry helps determine whether the patentee intended to grant access to the patent exclusively to the licensee. Given the mandatory requirements under Sections 68 and 69 of the Indian Patents Act, courts are likely to adopt a compliance-based approach. Significantly, if sub-licensing is absent or expressly denied, Indian courts will adopt a stricter view of ‘have-made’ rights, unlike the broader recognition accorded by US courts. This stems from the Indian courts’ preference for literal construction of licence terms and their emphasis on giving primacy to the parties’ expressed intention (Annaya Kocha v Laxmibai Narayan, (Supreme Court, 2025)).
In this backdrop, the tension between contractual intent and implied ‘have-made’ rights assumes significance. While Indian courts are likely to put statutory rights and contractual terms on a higher pedestal, the US courts have adopted a liberal approach and read ‘have-made’ rights into the exclusive rights of ‘make, use and sell.’ This variation in judicial reasoning warrants closer scrutiny. Corebrace v. Star Seismic (US Court of Appeals, 2009), provides a useful lens to examine whether a licensee can outsource manufacturing despite an express prohibition on sublicensing, and whether such an approach would find acceptance in India.
In Corebrace, the US Court of Appeal examined whether a non-exclusive license to ‘make, use and sell’ included a right to ‘have-made.’ The Inventor had granted Star such a license and later assigned the patent to Corebrace. The License Agreement prohibited assignment or sublicensing and reserved all rights not expressly granted. The Agreement did not expressly confer a ‘have-made’ right. Nevertheless, Star engaged an unlicensed third-party to manufacture the patented product for its own use.
Corebrace sued for breach of license and infringement. The Suit was dismissed by both the District Court and the Court of Appeal. The Court of Appeal held that first, nothing in the contract precluded Star from having a third-party manufacturer; second, the alleged breach did not frustrate the purpose of license since Corebrace received royalty on each product; third, right to ‘make, use and sell’ inherently includes within its ambit right to ‘have-made’ the product by a third party, unless indicated contrary thereto.
In a similar set of circumstances, the author argues that Indian courts would have allowed the Corebrace’s suit for breach of agreement and patent infringement. This position finds support in the jurisprudence on Sections 68 and 69 of the Indian Patents Act. As discussed below, these provisions emphasise strict compliance with statutory requirements of registration of written instruments.
The Delhi High Court in NRDC v ABS Plastics (2009) held that, as per Section 68 of the Indian Patents Act, where a right under a patent is licensed in favour of someone, it ought to be in writing and registered with the Controller. The Court rejected a patentee’s suit to enforce royalty claims arising from an unregistered license, holding that it lacked legal validity.
This approach finds further support in Sergi Transformers v Kumar Pratap Anil (2014). The Delhi High Court held that unless a document is registered in accordance with Section 69(5) of the Indian Patents Act, it cannot be relied upon as evidence of rights in a patent. The Court further observed that where there is a dispute concerning title or the parties’ rights, the Controller may decline to act until such rights are finally determined by a competent civil court.
The Delhi High Court’s ruling in Sotefin SA (2022) is corroborative. The Court was called upon to balance the exclusive rights of an Indian patentee against parallel imports under Section 107A(b) of the Indian Patents Act. It held that a product not authorised by the patentee in India cannot qualify as a patented product for the purposes of the provision. Section 107A(b) cannot be interpreted to permit imports that bypass the patentee’s consent. The Court emphasised that the Indian Patents Act cannot be construed in a manner that negates the rights of an Indian Patentee and any interpretation to such effect is impermissible.
A cumulative reading of these judgements underscores a consistent judicial approach that rights in a patent must comply with statutory conditions and cannot be assumed or implied. Where the primary license is silent on, or expressly prohibits sub-licensing, courts are unlikely to recognise downstream manufacturing arrangements as legally enforceable. Read in this light, the statutory framework indicates that derivative claims such as ‘have-made’ rights would invite close scrutiny. In effect, Indian law leaves little room for informal or implied ‘have-made’ rights.
Applying this framework to the facts of Corebrace, Star—faced with an express prohibition on sub-licensing could not have lawfully registered any arrangement with the third-party manufacturer. In the absence of valid registration and in light of Sections 68 and 69, the manufacturing arrangement would lack legal recognition in India. Consequently, any assertion of ‘have-made’ rights flowing from an unregistered and contractually impermissible arrangement would be rejected by Indian courts. As a result, the patentee’s action for breach and infringement would stand on considerably stronger footing compared to US.
Conclusion
Sections 68 and 69 of the Indian Patents Act and the jurisprudence conclusively indicate that rights or claims cannot emanate from unregistered agreements. Hence, any arrangement conferring ‘have-made’ rights, until expressly written and registered, will not be recognised by the Indian courts.
In this manner, the Indian Patents Act consciously fortifies the patentee’s monopoly rights, ensuring that ‘have-made’ rights do not dilute the exclusivity that the Act seeks to protect.
That said, with the rapid expansion of semiconductor foundry operations in India, the practical realities of contract manufacturing may soon test this statutory rigidity. It remains to be seen how Indian courts will reconcile the commercial logic of ‘have-made’ rights with the formal requirements of the Indian Patents Act in the disputes that inevitably follow.