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, selling
or 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’s analysis:
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.
