Correct Interpretation of section 107A of the Indian Patents Act: Judgement in Bayer Vs. Natco & Alembic

In a recent decision, the Divisional bench of Delhi high court has dealt with correct interpretation of Section 107A of the Patents Act, 1970, commonly known as the Bolar provision.The ruling came as a result of two appeals made by Bayer Corp. Ltd.  against the Natco Pharma and Alembic Pharmaceuticals for infringement of its patents for its drugs Nexavar and Xarelto. Both the appeals dealt with the identical issue.

Background of the Case:

Bayer had approached Delhi high court to stop Alembic Pharmaceuticals from exporting Rivaroxaban, the active ingredient of its patented drug ‘Xarelto’ and Natco Pharmaceutical from exporting Sorafenib, the active ingredient of its patented drug Nexavar. Both the Indian drug manufacturers were granted compulsory licenses for manufacturing respective drugs. According to records, both the patents for the drugs ‘Xarelto’ and ‘Nexavar’ granted to Bayer would cease to be in force from 2020.

On March 8, 2017, a single-judge Bench of the Delhi high court lead by Justice Rajiv Sahai Endlaw had allowed Natco Pharma and Alembic to export the active pharmaceutical ingredient (API) Sorafenib and Rivaroxaban for research and development of information for regulatory submissions.

Natco pharma and Alembic pharmaceuticals affirmed that they will export Bayer’s patented drugs only for the purposes allowed as per section 107A of the Patent Act, 1970.

Some of the findings of the single- judge bench were as follows: –

  • Sale by a non-patentee (even if the non-Patentee is a compulsory Licensee) of a pharmaceutical product solely for the purposes prescribed in Section 107A would also not be infringement;
  • Use of the word selling in section 107A refers to selling within India, and also exports;
  • Merely because no provisions are stated to exist in laws relating to export of pharmaceutical products, for ensuring that API exported is used in the destination country for the purposes for which it has been exported, does not allow Court to interpret Section 107A as not permitting export;
  • Natco and Alembic can export the patented invention for purposes specified in Section 107A of the Patents Act, and for no other purposes.

Aggrieved by the judgement, Bayer Corp. Ltd. Appealed to the Division bench of the Delhi high court for correct interpretation of Section 107A.On 22nd of April 2019, the divisional bench gave its final verdict in both the cases.

Bolar provision-Interpretation:

The decision of the divisional bench of the Delhi high court dealing with the issue of correct interpretationof Section 107A(a) of the Patent Act, 1970 relating to “Bolar Provision” concluded that:

The Bolar exemption is the global community’s thought out design to ensure that –

the enclosure of intellectual property rights, granted to inventions, does not last beyond the term assured and that

the general public is afforded with the end of the bargain which every society guarantees while sealing a patent i.e. access to the technology or invention for generations to come.

But for a Bolar exemption, a third party manufacturer would not be able to start experimentation and ready a product, for its availability to the general public after the expiry of the patent term.

Final Judgement of the Divisional bench of the Delhi high court:

On 22nd April 2019, the division bench of Justice S. Ravindra Bhat and Justice Sanjeev Sachdeva affirmed the findings of the single bench Judge Rajiv SahaiEndlaw.

The decision of the divisional bench confirmed that the sale, use, construction of patented products (by individuals and entities that do not hold patents) in terms of Section 107A of the Act for purposes both within the country and abroad is authorized and legal provided the seller ensures 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.

The divisional bench held that any dispute over the end use or purpose of the export, whether it is reasonably for research or regulatory submissions will be the subject matter of a civil suit, where the relief can be granted based on circumstances and the evidence.

The divisional Bench directed that the court trying the suit would decide the case in accordance with law taking into account discussion and factors indicated in this judgment.

Author: Ms. Mita Sheikh – Associate Director  and Co- Author- Dhanada Deshpande , Intern at Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at mita@iiprd.com .

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