Recently, Bayer Corporation and Bayer Intellectual Property GMBH & Anr (Bayer) filed two appeals against Natco and Alembic Chemicals Ltd (Alembic). Both suits dealt with the Bolar provision that concerns the correct interpretation of Section 107A of the Patents Act, 1970 (“the Act”).
1st Suit:
Bayer filed for injunction against Natco from making, importing, selling or offering for sale the drugs Sorafenib, Sorafenib Tosylat, their generic versions or any other drug or product thereof which was a subject matter of Bayer’s Patent No. 215758.
Bayer alleges that while the suit was pending, Natco applied to the Patent Office for a compulsory licence which was granted by the Patent Controller under Section 84 of the Patents Act 1970 ( “the Act”). This licence was granted solely for the purposes of making, using, offering to sell and selling the drug within India. However, it alleged that Natco manufactured the drug for export.
Natco also applied for permission to export 1 Kg of Active Pharmaceutical Ingredient (hereafter API) Sorafenib to China to conduct clinical studies and drug development trials for regulatory purposes. Bayer argued that such a transaction constitutes a commercial sale that amounts to a patent infringement. The company canvassed for a restricted interpretation of Section 107A to prevent Natco from exporting the drug outside India.
2nd Suit:
Bayer filed this suit to injunct Alembic from making, selling, distributing, advertising, exporting, directly or indirectly dealing and offering for sale Rivaroxaban and any product that infringed Bayer’s Patent No. IN 211300. It also asked for ancillary reliefs.
High Court’s observations and opinions
The HC opines that the term ‘exports’ is used in different contexts in Sections 84, 90 and 92A.
A provision in Section 84 includes enables compulsory licensing of certain conditions.
Section 84(7) enumerates what constitutes ‘reasonable requirements’ of the public, which are deemed not to have been satisfied if a market is not being supplied or developed for the patented article manufactured in India.
Section 90(1) (vii) ensures that the license is granted with the predominant purpose of supply to the Indian market. However, the licensee may also export the patented product.
HC further opines that Section 92A constitutes an exception to the general rule that compulsory licensing predominantly applies to the needs of the domestic market.
HC finds that it cannot be assumed that Parliament intended to per se exclude ‘exports’ from the sweep and width of the term ‘sale’ as given in Section 107A.
HC ruled that it cannot accept Bayer’s argument that Section 107A constitutes an exception, stating that this is an independent provision that was enacted in response to TRIPS to facilitate national research and progress in the fields covered by the patent. It also opined that Section 107 A (a) is a special provision that deals with the rights of the patented invention for research.
HC refused to accept Bayer’s interpretation of territoriality and called it strained and artificial. It also added that patented inventions can be sold for carrying out research and development which fulfils the regulatory requirements of India, and that there cannot be any interpretation to narrow the scope of such a sale or confine the research exception within India’s territory.
HC further notes that in the case of sale, construction or use of the patented article (within India or abroad), injury to patent owner’s interest does not ordinarily occur if that particular transaction is solely carried out for experimentation or research and development that are reasonably related to the requirements of Indian or overseas law.
For all these reasons, the HC rejected Bayer’s arguments.
With regards to Bayer’s subsidiary submission that Rule 122B of the Drugs and Cosmetics Rules, 1945 permits the licensing authority to grant permission (for a product) based on data available from other countries, the HC rejected the argument. It stated that the broad nature of the provision enables development and research of the product and related information if regulatory or other legal requirements of India and other countries are fulfilled. Therefore it should not be construed narrowly that permits such activities only in India. HC further opines that Natco’s status as compulsory licensee did not preclude it from exporting the product as long as it satisfied the underlying condition in Section 107A.
Regarding Bayer’s reliance on the case of Canada-Patent Protection of Pharmaceutical Products (“Canada Dispute”), the HC states that the conduct or action of the entity making, using, constructing or selling the patented product/invention as well as the purpose for which it sought to be used would be decisive, whether the exporting or purchasing entity intends to use the patented product for commercial purposes.
HC finds that the many reliefs claimed by Bayer including direct seizure of export consignment, direction to customs authorities to insist on labelling of products to facilitate their seizure, etc, cannot be granted. It observed that such seizures, prohibitions or mandated labelling are aspects that fall under the purview of the executive government at the policy level, and not of the court’s at any level.
HC observed that if the patent proprietor alleges that the infringement was to institute legal proceedings to injunct the alleged exporter or seller, the seller or exporter might also seek a declaration or appropriate relief (including a suit for groundless threat) stating that its overseas sales are for research and purposes covered by Section 107A.
High Court’s rulings
The HC opines that the Bolar exemption is the global community’s attempt to ensure that intellectual property rights granted to inventions do not last beyond the term assured. Every society guarantees the end of the bargain while sealing a patent which the general public is afforded with.
Accordingly, it passed an order authorising and legalising the sale and use of patented drugs in terms of Section 107A of the Act both within the country and abroad, as long as the seller ensures that the end use and purpose of sale/export is related to research and development in compliance with regulations or laws of India (or the importing country).
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