Bolar Provision provided under Section 107 A of the Indian Patent Act was subject of next round of litigation between Natco and Bayer over Sorafenib (marketed as Nexavar). Natco already holds compulsory license for manufacturing generic version of Sorafenib. Please see our earlier post here and here on compulsory license decision. As is widely acknowledged, the provisions under section 107A were included so that the generic manufacturers can prepare for obtaining regulatory approvals and are ready with approvals for the launch of a patented product as soon as the patent expires. This provision under Section 107 A of the Indian Patent Act is subject of detailed discussion in this dispute between Bayer and Natco.

Facts and Background:

Compulsory License under Section 84 of the Patents Act granted to Natco was with respect to ‘Sorafenib’ (marketed as Nexavar). The license was granted for the purpose of making, using, offering to sell and selling the drug covered by the patent for the purpose of treating Hepatocellular Carcinoma and Renal cell carcinoma in humans within the territory of India. Allegedly, Natco started export of drug claiming it for the purpose of generating clinical trial data. Bayer initiated infringement proceedings to stop Natco from exporting the drug relying on the fact that compulsory license as granted to Natco do not allow it to export the drug. Natco has already been granted a drug licence and with the consent of the counsel for Bayer, Natco was permitted to export to export the drug SORAFENIB TOSYLATE not exceeding 15 gm for development / clinical studies and trials. However, at this time Natco sought permission to export 1 Kg. of Active Pharmaceutical Ingredient (API) SORAFENIB to China for the purposes of conducting development / clinical studies and trials.

Issue:

Whether Section 107A allows non-patentee to export the patented product and whether ‘selling’ includes ‘exporting’.

Discussion and Finding:

Bayer in its argument contended 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 which can be prevented by patentee. While, Natco argued 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 it for the purposes prescribed under Section 107A.

The court in its detailed analysis of section 107A mentioned that ‘selling’ permitted by Section 107A is of ‘a patented invention’ i.e. ‘a product’ and not of ‘information’. The judgement also referred ‘sale’ as entailing transfer of goods out of territory of India, would also qualify as ‘export’ but still it will remain sale. Also, it referred that when Section 107A permits import of a patented Invention in India, there cannot be a reason to consider selling as excluding exports, continuing to held that “as long as the sale by way of export is declared to be for purposes of Section 107A and there is nothing to suggest that it is otherwise, no fetters can be imposed”. This interpretation in other way implies that ‘export’ will be considered as ‘sale’ and thus falls under the ambit of Bolar provision. The full copy of judgement can be found here.

Appeal to the Division Bench:

Bayer aggrieved with the order, appealed to the Division Bench (two judges bench) relying on the fact that exports under section 107A of the Patents Act, 1970 in undisclosed & unlimited quantities are prejudicial to the appellant’s rights. It was also argued that Natco did not specify the quantity of the patented product intended to be exported before the court along with submissions that “if respondent No.5 was really bona fide exporting for the purpose of experimentation alone, it is the active pharmaceutical ingredient only which would have been exported, that too in restricted quantities. But this is admittedly not so”. The full copy of judgement can be found here.

Ruling:

The Bench considered Bayer’s submission and observed it would suffer irreparable loss and damage, if the interim protection was not granted, and directed that Natco shall stand prohibited from exporting the patented drug till next date of hearing (21st September, 2017). The modification of the Order of Single Judge by the Division Bench implies that while deciding whether export of the product under section 107(A) constitutes infringement or not would depend upon (a)the quantity of product being exported (b) if the finished product or its active pharmaceutical ingredients is being exported.