Export within ambit of Bolar exemption

Justice Endlaw, today, pronounced the Judgment (Bayer v UOI & Bayer v Alembic order) in the Bayer Intellectual Property GmbH Vs. Alembic Pharmaceuticals Ltd. and Bayer Intellectual Property GmbH Vs. UOI (Natco Pharma Ltd.) cases relating to Section 107A of the Indian Patents Act (Bolar Exemption). The question for adjudication in both the proceedings was, whether the language of Section 107A of the Patents Act, 1970 permits export from India of a patented invention, even if 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.

As per the Court, export, of the patented drug, for research and development  is exempted under Section 107A of the Indian Patents Act.  Natco Pharma Ltd. and Alembic Pharmaceuticals Ltd., can therefore export small quantities of sorafenib and rivaroxaban respectively for research purposes.

S.107A of the Indian Patent Act, known as India’s Bolar Exemption, is a defence for patent infringement, when the invention is used or sold by a third party for purposes related to research and development.  The provision allows generics to conduct research on the product while the patent is still valid.

The first proceeding, a writ, was filed seeking a mandamus to the Customs Authorities to seize the consignments for export containing products covered by Compulsory Licence including Sorafenat manufactured by Natco Pharma Limited (Natco) and further seeking a direction to all the Customs Ports to not allow exports thereof.

 It was argued by Bayer that a person is permitted/ exempted under Section 107 A to make a drug or buy a drug for research purposes so long as the making and selling is all within India and is for the purpose of generating data also within India. It was also the contention of the Petitioner that  Natco was manufacturing the product covered by the Compulsory Licence for export outside India and the export by Natco was contrary to the terms of Compulsory Licence and amounted to infringement of the patent within the meaning of Section 48 of the Patents Act.

Natco contended that a grantee of Compulsory Licence cannot be deprived of his rights under Section 107A of the Act. The condition of Compulsory Licence to which attention is drawn is for making, using, and selling the drug covered by the patent  within the territory of India. However the purpose of sale under Section 107A is different and is only for obtaining the regulatory approvals under the laws of India or in a country other than India. Thus, the grant of Compulsory Licence would not come in the way of Natco exercising its rights under Section 107A as a non-patentee.

It was also argued by the petitioner that Section 107A of the Act uses the word “import” and absence of the word export therefrom, the only logical conclusion is of exports of patented invention being outside the ambit of Section 107A of the Act and also that the patented invention can be used only in India for conducting trials and the information generated from the said trials can be furnished to the concerned authorities in a country other than India. It was on the other hand contended by  Natco that Section 107A, during the validity of patent also, permits generation of data required by the laws of other countries for obtaining approval for manufacture, use and sale of products; if the laws of any other country require making and use of the patented invention in that country, for the purpose of granting the requisite approvals. It was also contended  to hold that Section 107A prohibits export of API to that country would amount to restricting the scope of Section 107A.

 The second proceeding is a suit filed by Bayer Intellectual Property GmbH and Bayer Pharmaceuticals Ltd to injunct Alembic Pharmaceuticals Ltd. (Alembic) from making, selling, distributing, advertising, exporting, offering for sale and in any manner directly or indirectly dealing in Rivaroxaban and any product that infringes Bayer‘s patent IN 211300. Alembic stated that the exports being effected by Alembic were within the meaning of Section 107A only.

The Court made the following observations:-

  • Sale by a non-patentee ( even if the non-Patentee is a compulsory Licensee ) of a pharmaceutical product solely for the purposes prescribed in Section 107A would also not be infringement;
  • Use of the word selling in section 107A refers to selling within India, and also exports;
  • Merely because no provisions are stated to exist in laws relating to export of pharmaceutical products, for ensuring that API exported is used in the destination country for the purposes for which it has been exported, does not allow Court to interpret Section 107A as not permitting export;
  • Natco and Alembic can export the patented invention for purposes specified in Section 107A of the Patents Act, and for no other purposes.
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