India: Export Under Section 107A Of Indian Patent Act, 1970

Last Updated: 22 March 2017
Article by Swapnil Patil

In the case of Bayer Corporation versus Union of India & ors (W.P.(C) 1971/2014) and Bayer Intellectual Property Gmbh & Anr versus Alembic Pharmaceuticals ltd (CS(COMM) No.1592/2016), High Court of Delhi in the consolidated decision dated March 08, 2017, adjudicated on the issue whether 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.

Though it's been almost five years after first compulsory license (in India) was granted to Natco in 2012 against Bayer's Patent IN215758 covering Nexavar (Sorafenib ), Bayer and Natco are fighting it hard in 2017 as well. One of the terms of Compuslory License was "solely for the purposes of making, using, offering to sell and selling the drug covered by the patent for the purpose of treating HCC and RCC in humans within the territory of India".

Subsequently, Natco was permitted to export the drug SORAFENIB TOSYLATE not exceeding 15 gm for development / clinical studies and trials. Natco again applied for permission to export 1 Kg. of Active Pharmaceutical Ingredient (API) SORAFENIB to China for the purposes of conducting development / clinical studies and trials, to which Bayer objected.

To better understand the issue at the heart of this decision, it's important to understand section 48 of the Indian Patent Act, 1970 which gives rights of Patentee and section 107A of the Indian Patent Act, 1970 which lists out activities which shall not be considered to be infringement of Patent.
Both the sections have been reproduced below for convenience.

Section 48:

Subject to the other provisions contained in this Act and the conditions specified in section 47, a patent granted under this Act shall confer upon the patentee—

(a) where the subject matter of the patent is a product, the exclusive right to prevent third parties, who do not have his consent, from the act of making, using, offering for sale, selling or importing for those purposes that product in India;

(b) where the subject matter of the patent is a process, the exclusive right to prevent third parties, who do not have his consent, from the act of using that process, and from the act of using, offering for sale, selling or importing for those purposes the product obtained directly by that process in India.

Section 107A:

For the purposes of this Act,— 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.

Natco pleaded that export of the Patented invention for the use 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 is squarely covered under section 107A. It also submitted that its intentions were not for commercial purpose. Natco also submitted that grant of Compulsory License does not take away the rights to export the Patented invention for the purposes of section 107A.

Bayer alleged that 107A of Indian Patent Act does not allow exporting of drug even for the purposes of 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. Bayer tried to draw attention to the fact that language of section 107A does not use the word 'export' but uses the word 'import'. Bayer alleged that absence of the word 'export' clearly indicates the purpose of the law was not to allow the export of the patented invention and the words 'in a country other than India' should be interpreted only to allow export of the information generated by experiments in India. Patented invention as such cannot be exported from India to generate information to be submitted in other countries. The word selling should be interpreted to mean selling in India and not outside. Bayer alleged that if law intended to allow export, language would have expressly included that as it has included import. In summary, Bayer requested the court to interpret the word sell to mean selling without exporting, i.e. selling in India. Bayer importantly also alleged that exporting under 107A of Patented invention for which compulsory license was granted would result in the abuse of law.

On 5th November, 2014, Natco was permitted export of SORAFENIB for carrying on activities for obtaining regulatory approvals within the meaning of Section 107A of the Act. Bayer preferred appeal against the said order and which was disposed of by expediting the hearing of the writ petition and by prohibiting export till the decision of the writ petition. The hearing of the writ petition commenced on 7th September, 2015 and concluded on 8th July, 2016, when orders were reserved.

Natco had also brought attention to the fact that China requires clinical trials to be conducted in China and do not recognize clinical trials conducted in India. This makes it mandatory for Natco to seek export under section 107A so that it can launch the product in China immediately after term of patent is over.

CS(COMM) No.1592/2016 was filed by Bayer to injunct 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 was manufacturing and exporting RIVAROXABAN to the European Union and had made multiple Drug Master File submissions to the United States Food and Drug Administration in the United States of America for the drug RIVAROXABAN. Alembic alleged that exports being effected by Alembic were within the meaning of Section 107A only.

For both cases, court held after referring different dictionaries that selling cannot be interpreted to mean to exclude exporting. Also court found that Patent Act does not require court to do so. Court also brought attention to the fact that even absence of the word 'export' in section 48 does not prevent Patentee from restricting third parties from exporting patented invention. Court explained that it's not the exporting of information is allowed but it's the Patented invention. The words 'in a country other than India' are for the law in force (of country where information is required).
Court also went on to hold that even when compulsory license is granted, Natco as a non-patentee cannot be deprived of making, constructing and selling by way of export a patented invention for purposes specified in Section 107A.

Court gave the liberty Bayer to, if makes out a case of the exports effected or to be effected being for purposes other than specified in Section 107A, take appropriate proceedings therefor.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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