India: Delhi High Court Reads "Export" Included In The Indian Bolar Exemption - Section 107A

Last Updated: 18 April 2017
Article by Shrimant Singh

Most Read Contributor in India, December 2018

The grant of patent confers upon the Patentee a right to prevent others from making, using, or selling the patent without his consent, however, the same is subject to some conditions. Section 48 of the Patents Act, 1970, ("the Act" hereinafter) stipulates:

48. Rights of patentees. – 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 47 of the Act covers exclusions such as manufacture/use of patented product or process by the Government for its own use or the use of the patented product or process by any person for the purpose merely of experiment or research. Further, Section 107A of the Act stipulates:

107A. Certain acts not to be considered as infringement- 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.

Accordingly, Section 107A provides for further exemption to infringement of patents in form 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".

The said section came up for interpretation before the Delhi High Court in the writ petition Bayer Corporation and Ors. Vs. Union of India and Ors.15 To briefly put historical events in-line: in 2012, the Patent Office allowed a compulsory license over Bayer's Patent SORAFENIB TOSYLATE to Natco Pharma "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". In the writ petition W.P.(C) 1971/2014, Bayer prayed before the Court that the compulsory license so granted to Natco was limited to the territory of India and export of the same outside India by Natco is contrary to the terms of Compulsory License amounting to infringement under Section 48 of the Act. Pursuant to the same, the Customs Authorities were directed to ensure that no consignment from India containing 'SORAFENAT' covered by Compulsory Licence was exported, however, liberty was given to Natco to apply to the Court for permission to export the drug as and when it obtained permission from the Drug Controlling Authority for clinical purposes. Subsequently, on 23rd May, 2014, Natco pointed out that it has already been granted a drug licence and with the consent of the counsel for Bayer, 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 kilogram of Active Pharmaceutical Ingredient (API) SORAFENIB to China for the purposes of conducting development/clinical studies and trials. The said application was contested by Bayer. Natco, in its counter affidavit along with other grounds for export of the drug, stated that "that the activity of conducting studies for regulatory approval is squarely covered under Section 107A of the Act and Natco had never exported the finished product 'SORAFENAT' to any party outside India for commercial purpose". Bayer contested the said ground by submitting that that Section 107A has no application here as the acts contemplated in Section 107A of making, constructing, using, selling or importing a patented invention, are to be performed within the territory of India and the information from such activity can be submitted with the regulatory authorities either in India or with the countries other than India, and the Section 107A of the Act does not contemplate export of product per se but is limited to information generated within the territory of India.

Bayer also pointed out that by obtaining Compulsory License, Natco has surrendered its rights under Section 107A and is governed by the terms of the Compulsory License. Further, Bayer tried to draw the attention towards the fact that while Section 107A mentioned terms like "making", "selling", "import" but does not include the word "export", hence, the absence of "export" can only mean that the purpose of the law was not to allow the export of patented invention under Section 107A. The counsel for Bayer emphasized that the term "selling" in Section 107A should be interpreted to mean selling within the territory of India and not outside India and the same does not include "export" of patented product outside India.

The counsel for Natco pleaded that that the exports intended by Natco are only for research and development purposes and to obtain the drug regulatory approvals in the countries to which exports are intended and Natco is not intending export of the product covered by the Compulsory Licence for commercial purposes. It was submitted that the rights of Natco under Section 107A is independent of Compulsory License. Further, Natco emphasized that the drug regulatory regime in 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, it was also submitted that process for obtaining drug marketing approvals takes two years time, therefore, not allowing the non-patentee to apply for marketing approvals would amount to extending the life of a patent from 20 year to 22 years or more.

Another Writ Petition - CS(COMM) No.1592/2016 was filed by Bayer to injunct Alembic from making, selling, distributing, advertising, exporting, offering for sale of 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 submitted that said exports by Alembic were within the meaning of Section 107A only.

After considering the arguments in respective parties, the Court observed that the point of difference between Bayer and Natco/Alembic is qua selling outside India. While Bayer contends that the word 'selling' in Section 107A is confined to within the territory of India and selling of patented invention outside India even if for purposes specified in Section 107A would constitute infringement, the contention of Natco/Alembic is that use of the word 'selling' under Section 107A is without any such restriction of being within India only and would include selling outside India also, so long as solely for the purposes prescribed in Section 107A.

The Court refused to agree with Bayer's contention that Section 107A does not contemplate export of product per se but is limited to "information" and noted that Section 107A clearly mentions selling of "patented invention". Further, the Court after quoting several dictionaries held that words 'sale'/'selling', as per their literal/natural/textual meaning are without any geographical limitations and in Section 107A are not to be understood as 'within India' only. The Court went on to hold that language of Section 107A of Patents Act permits exports from India of 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. Accordingly, it was held that no suit prohibiting export per se of a patented invention can lie.

Further, the Court observed that 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 for the reason of having been granted the Compulsory License.

Accordingly, the Court allowed Natco and Alembic to continue export of the patented invention for the purposes specified in Section 107A of the Act and 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.


15 W.P.(C) 1971/2014 and CS(COMM) No. 1592/2016

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