201905.03
11

Delhi High Court Rules no bar on quantum of export under Bolar Provision

The scope of “Bolar provision” (under Section 107A of the Indian Patent Act) is bone of contention between two generic companies Natco and Alembic Pharmaceuticals Ltd (Alembic) pitted against Bayer. One of the major issue addressed by this decision is whether a non-patentee can export the patented drug under Section 107 A, taking refuge under Bolar provision. The Bolar provision (under Section 107A) contained in Indian Patent Act was included by amendment in 2002 (the second Amendment After TRIPs) so that the generic manufacturers can prepare for obtaining regulatory approvals and are ready with approvals for launch of a patented product as soon as the patent expires.

Briefly, the facts of the case being that the generic pharmaceutical companies Natco and Alembic  were manufacturing and exporting Bayer’s patented drugs (i.e. Sorafenib by Natco and Rivaroxaban by Alembic) claiming they are for clinical studies and regulatory purposes. Bayer filed separate infringement suits against both parties arguing that export is not permitted under section 107A of Indian Patent Act. It is pertinent to mention that Natco in the year 2012 had been granted compulsory license for Sorafenib (marketed under the name NEXAVAR). The facts of Natco’s case can be accessed from our earlier post here. Our earlier post also discussed the reasoning given by the single judge in permitting export by Natco. The decision was appealed by Bayer and the division Bench (two judge bench) granted interim relief to Bayer restraining Natco from any further export of API. This decision by the court deals appeal filed by Bayer in the infringement actions against Natco and Alembic including the writ seeking direction to the custom authorities to seize the consignment of Natco for export.

Division Bench Ruling

The Court had reserved its decision on 12th October 2018 and pronounced it on 22nd April 2019. As the issues in all the cases were common that is “correct interpretation of Section 107A (the Bolar provision)”, the Court heard arguments of Natco and Alembic at the same time. The Court discussed legislative history of Section 107A in detail. It also referred similar provisions in Canada and leading decisions in this context. The important excerpts from the judgment (running through 90 pages) interpreting the “sale” and whether it encompasses “exports” are outlined below:

  1. “Exports” is used in different contexts in the Patent Act. It cannot be held that the Parliament intended to per se exclude “exports” from the sweep and width of the term “sale” in Section 107A.
  2. In the context of Bolar Provision, the conduct or action of the individual or entity making, using, constructing or selling the patented product or invention and the purpose for which it sought to be used (i.e. end use and that it should not be commercial) would be important and decisive.
  3. Sale, use, construction of patented products (by individuals and entities that do not hold patents) in terms of Section 107A of the Act both within the country and abroad is authorized and legal. The seller must however ensure that the end use and purpose of sale/export is reasonably related to research and development of information in compliance with regulations or laws of India (or the importing country), for its submission in accordance with such laws.
  4. The court mentioned inquiry would have to be conducted to consider factors such as (i) patent granted (ii) nature of the product or elements sought to be exported (iii) details of the party or party importing the product (iv) quantity sought to be exported (v) other particulars with respect to the end use of the product to establish that it is solely for research and development of information to regulatory authorities in the other country (vi) particulars regarding the relevant regulations, covering the kind and scope of inquiry, including the quantities of the product (i.e the patented product or compound, API or fine chemical needed).
  5. A dispute about the sale, i.e. whether it is legitimately related to the reasonable end use or purpose of research etc. for submission of information is properly the subject matter of a civil suit. In a civil suit, the full range of reliefs available in law can be granted having regard to the circumstances and the evidence led.
  6. The court also remarked an appropriate interim order would include undertaking by way of affidavit, from the exporter, to compensate the plaintiff, in the event the suit/s were to be decreed and the extent of such monetary compensation. The affidavit should be of an authorized personnel, on behalf of exporter, and kept alive during the pendency of litigation.
  7. To protect the interest of exporter and to preclude litigation that may hamper trade or competition, it held that restitutionary relief should be awarded to the defendants in monetary terms (by the plaintiff).

To sum up:

The decision of the Delhi High court confirms that the ‘purpose’ of export (irrespective of the quantity) to be the most important factor for qualifying it to fall under “Bolar provision”/Section 107A of Indian Patent Act. This has been for the first time where the court has dealt with various aspects crucial in determining whether the export has been for the commercial /regulatory purpose.The onus will be on exporter to show that the export is for the research and development purpose and not for the commercial use.