India: Bolar Exemption: Delhi High Court Upholds The Exploitation Of Patented Invention For Research And Development Purposes

Once a patent is granted the patentee has complete rights over that particular invention in the jurisdiction the patent was granted. This grant restricts everyone else from manufacturing, selling or importing said invention for a specific term, typically 20 years from the date of filing. However, Section 107A of the Indian Patents Act, also known as "Bolar provision", offers protection against patent infringement if the patented invention is exploited by the third-party for research and development. Particularly, in case of pharmaceutical patents, the third party entities require a considerable period for getting regulatory approval for commercializing the expired patent. This results in increased term of monopoly over the patent. The provision under Section 107A also prevents this extension in the term of patent, wherein the third-party entity can perform the patented invention for research and development activities for getting regulatory approvals.

The Section 107A of The Patents Act 1970, states that,

Facts of the case

Merck Sharp and Dohme Corp. & Anr (hereafter called as 'the plaintiff') alleged that SMS Pharmaceuticals Limited (hereafter called as 'the defendant') had been exporting their patented invention, Sitagliptin, an anti-diabetic drug. The investigator working for the plaintiff learnt that the defendant had and is willing to provide Sitagliptin an Active Pharmaceutical Ingredient (API) for sale in the domestic market. Considering this along with other arguments presented by the plaintiff, on 21st October 2020, the court granted an ex-parte ad-interim injunction against the defendant in terms of prayer. Consequent to issuance of summons, the defendant responded with a written statement. The written statement asserted the fact that the defendant is a Research and Development based API manufacturing group and participates in research to obtain pharmaceutical products at an affordable cost. The statement further asserted that M/s Chemo AG Lugano and the defendant executed a joint venture after obtaining due permissions from Governmental and Drug Control Authorities to conduct research and development of generic drugs. In July 2021, the defendant filed an application to take vacation/modification from the ex-parte ad-interim injunction dated 21st October 2020, passed by the court. The defendant argued that the drug was being used for the sole purpose of research and development. Also, a joint venture had been created between the defendant and M/s Cheo AG Lugano to research to launch the drug in the market after the patent terms expired. The defendant submitted that all the dealings of the defendant were conducted after receiving due permission from the Governmental and Drug Control Authorities and within the scope of patent laws. The defendant relied on judgement of the court in Bayer Corporation v. U.O.I and referred to the section 107A of the Patent Act, to contend that the defendant engaged in sale and export of the drug for the purposes of research and development and activities of the defendant were permissible. The court assessed the situation and arguments and decided to grant permission to the defendant to continue exporting said drug to M/s Cheo AG Lugano and Verben, Sitagliptin under some conditions.

Analysis and conclusion

The judgement granted by the court towards the proceedings is considered appropriate. The plaintiff was unable to prove that drugs being sold by the defendant were being used for commercial purposes. The court opined that the defendant was producing and distributing the drug solely for research purposes. The judgement was passed with some conditions that the defendant will need to satisfy any dealings with the drug in future. The court made it mandatory for the defendant to collect undertaking from the foreign buyers that the drug is being procured for research and development purposes alone and submit along with an affidavit before this court setting out quantities of the drug being exported. Additionally, the defendant will need to submit any information related to the sale of the drug to Government and Drug Control Authorities of India. In our opinion the decision granted by the court clears air for many other companies which might be interested in investing in research and development of already patented products. Also, in the absence of section 107A, the plaintiff would have gained extended exclusivity over the granted patent and denied availability of the cheaper generic drugs in the market soon after the expiry of the patent term.

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