On Apr 22, 2019 The Delhi High Court allowed two Indian drug companies to export drugs for the purposes of development and clinical trials for regulatory clearances under Bolar provision.
Natco & Alembic applied for permission to export, Sorafenib & Rivaroxaban respectively for development of drug for regulatory purposes. Bayer, opposed & said in its writ petition, that if permission were granted to Natco/Alembic, it would be contrary to Section 107A and that such a transaction would be a commercial sale and hence, a patent infringement.
Section 107A of Indian Patent Act (Bolar provision) is:
“For the purposes of this Act,—
(a) any act of making, constructing, using, sellingor importing a patented invention solely for uses reasonably related to the development and submission of information required under any law for the time being in force, in India, or in a country other than India, that regulates the manufacture, construction, use, sale or import of any product;
(b) importation of patented products by any person from a person who is duly authorised under the law to produce and sell or distribute the product, shall not be considered as a infringement of patent rights.”
The central question of dispute was whether “export” of pharmaceutical drug for uses reasonably related to the development and submission of information to regulatory purpose falls under Section 107A (Bolar provision) or not?
Bayer contended that Section 107A was not applicable, because Natco/Alembic was not conducting research. The sale of drug, therefore, amounted to infringement of its patent. Bayer’s interpretation of Section107A was that the provision mentions the word “sale” and also “import”, but the legislature consciously excluded the term “export”. Bayer further argued that Section 48 of the Act implicitly defines infringement by listing the exclusive rights of the patentee. Section 107A of the Act describes a particular set of circumstances in which acts that are largely those named in Section 48 would “not constitute infringement”. Therefore, it is clearly a proviso/exception. Thus the Section 107A constitutes an exception to Section 48 and does not confer a right.
Bayer next argued that the legislative intent behind Section 107A of the Act is only to ensure the availability of a competitor’s product immediately after the expiry of patent in the Indian market without having to wait for regulatory approval post patent expiry. However, this intent does not extend to ensuring the availability of the same in other countries or for export purpose. Bayer further argued that the expression “exports” occurs in various other provisions of the Act such as in Sections 84, 90(1) and 92A. They prescribe restrictions and export of a patented product may be allowed only within the ambit of such restrictions. All these show that the legislature has consciously used the expression “export” whenever it was necessary. However, no such explicit mention of export or corresponding restriction as found in these provisions can be seen in Section 107A of the Act.
Bayer next argued that the word “selling” does not include exports, because firstly the Act is territorial in nature and explicitly states in Section 1 that it “extends to the whole of India”. Next, the nature and purpose of the Act is primarily to safeguard the interests of the patentee and the nature and purpose of Section 107A of the Act is an exception to the patentee’s rights so that the generic versions of the drug may be made available immediately upon expiry of the patent in the Indian market. Thus, making, constructing and using of the product are permitted in India alone and export for that purpose is not contemplated.
Bayer lastly argued that in any event, the learned single judge failed to even consider the quantities sought to be exported by the respondent. They have to be compared with the quantities that are required by the regulatory regime to which information is to be submitted. This is crucial in confirming the purpose for which the non-patentee is undertaking the export. For instance, in the present case, more than 90 kgs of the patented product has been exported by the respondent. Non-consideration of the same runs contrary to the requirements of Section 107A of the Act.
Court said that two clear strands of reasoning have prevailed in various judgments of the Supreme Court, while interpreting the meaning and purport of general words. One, that plain and natural meaning should be preferred ordinarily, and two, that the context and purpose of the provision should always be kept in mind. Given these circumstances, this Court is of the opinion that “exports” is used in different contexts in Sections 84, 90 and 92A. Having regard to this, it cannot be held that the Parliament intended to per se exclude “exports” from the sweep and width of the term “sale” in Section 107A.
With respect to the proviso/exception clause court held that Section 107A is not made subject to the other provisions of the Act – on the other hand, Section 48, which talks of the rights of a patent holder is subject to other provisions of the Act that includes Section 107A. Furthermore, Bayer‟s argument that Section 107A constitutes an exception, cannot be accepted. It is an independent provision with a specific history behind it and was subject to intensive Parliamentary debate and scrutiny by a Joint Committee report. Bayer‟s argument that Section 107A has to be read as subordinate to the main provision of Section 48 has to, therefore, fail.
With respect to the question of territoriality, court said that once it is held that patented inventions can be sold for the purpose of carrying on research which fulfils the regulatory requirements of India, there cannot be any bar or an interpretation narrowing the scope of such sale. What is important is the purpose of the sale i.e. objective of carrying on experiment, research and developing information. Moreover, it is plausible- even reasonable- that many nations may require experimentation or research to be carried on in their soil nationally so as to be able to supervise the process and then oversee the outcome. It is, therefore, not possible to dictate the behaviour and legal requirements of other nations by confining the research exception within the territory of India.
Court further said that it is clear, therefore, that neither the quantity used nor the place of research and development or information (i.e. within the country granting patent or on foreign soil) is per se conclusive that the claim to use the Bolar or research exception has to be rejected. Instead, the conduct or action of the individual or entity making, using, constructing or selling the patented product or invention and the purpose for which it sought to be used (i.e. end use and that it should not be commercial) would be important and decisive whether the exporting or purchasing entity intends to use the patented product for commercial purposes.
Thus keeping in view of the above court provided some pointers to decide whether the export is for research/experimental purpose or for commercial purpose. These are:
ü The patent granted;
ü The nature of the product sought to be exported;
ü The details of the party or party importing the product,
ü The quantity sought to be exported;
ü Other particulars with respect to the end use of the product, to establish that it is solely for research and development purpose;
ü All particulars regarding the relevant regulations, covering the kind and scope of inquiry, including the quantities of the product. These details must be supplied by the exporter/seller of the product to the overseas buyer;
ü If the regulations are in the language of that country, an authentic English translation to facilitate a speedy resolution;
ü Appropriate interim order, including undertaking by way of affidavit to compensate the plaintiff, in the event the suit was to be decreed and the extent of such monetary compensation;
ü If necessary, verification through the Indian mission (and its trade division) abroad regarding the authentication of the third party and/ or its facilities abroad;
ü If it is held by the court that the exporter is not involved in sale or export of any patented product, but a generic article, unprotected by patent law, when denying relief, suitable restitutionary relief should be awarded to the defendants in monetary terms, to preclude litigation that prevents trade or competition.
The above aspects are only indicative of the matters that need examination, they are in no way exhaustive and the court may consider any other matter relevant to the subject.
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