Export of an active pharmaceutical ingredient (API) is not an infringement under Section 107A of the Patents Act.

On November 5th, in Bayer Corporation (Bayer) v. Union of India & Ors (NPL), the High Court of Delhi (Court) examined the scope of India’s Bolar exemption. Specifically, the issue to be decided in this case was whether the exportation of an active pharmaceutical ingredient (API) constituted a defense to infringement under Section 107A of the Patents Act.
The decision:

After a review of the facts, the Court accepted that the product NPL sought to export was not for commercial purposes since the amount was only sufficient to make 1000 to 2000 tablets (which was approximately the single trial batch size required by the Chinese Regulatory Authorities). Thus, according to the Court, the only question that had to be addressed was whether Section 107A covered export of a patented product for use by an overseas importer to conduct studies and generate data for the purpose of seeking regulatory approval in that country. 

After reviewing the history of the Bolar exemption in the U.S., India’s accession to the TRIPS agreement, the introduction of Section 107A in the Patents Act in 2002 and its subsequent amendment in 2005, the Court stated that the exclusion to a patentee’s right as provided under Section 107A was wider than the exceptions provided by the laws of the U.S. Specifically, the Court stated: 

“India is one of the largest producers of generic versions of drugs around the world. Given the economic realities of our country, providing cheaper medicines is a necessity. The parliament in its wisdom has, thus couched the exclusion to a patent, as provided under Section 107A, in wide terms. The sweep of the plain language of Section 107A, thus, cannot be restricted in the manner as canvassed on behalf of Bayer. 

…Plainly, Section 107A of the Act takes within its fold any sale of a patented invention which is required for development and submission of information under any law in a country other than India that regulates the manufacture or sale of any product. Indisputably, under the Chinese Law, submission of studies and data related to bio-equivalence and bio-availability of API in a generic version, is required as discussed earlier and the sale of 1 kg. of Sorafenat to HPCL can be reasonably stated to be related to the studies that are required to be conducted by HPCL for obtained the regulatory approvals. 

…[t]he language of Section 107A of the Act is determinative of the question whether export as sought for by NPL is permissible within the exemption of Section 107A of the Act. The use of the expression ‘reasonably related to’ as used in Section 107A of the Act would plainly mean a reasonably nexus. Thus, the only question that needs to be answered is whether there is any reasonable nexus between the sale of Sorafenat by NPL to HPCL and submission of information under the law in force in China. In my view, the answer to this question is clearly in the affirmative. 

…It is also important to note that the language of Section 107A of the Act is materially different from the law as applicable in U.S. Whilst, the US Law restricts the safe harbour to a sale within United States and solely for purposes related to information under a Federal Law, Section 107A of the Act is circumscribed by no such conditions. Thus, a sale even outside India would fall within the sweep of Section 107A, provided it is reasonably related to development and submission of information as required under a law in force in India or outside India.”

The Court also rejected Bayer’s arguments that the language of Section 107A excluded “exports” because this term was not specifically recited. Specifically, the Court stated:

“I am not inclined to accept this contention for the reason that the expression ‘selling’ is wide enough to even include cross border sales (i.e. exports). If the Parliament intended to restrict the exception to only sales within India, the same would have been expressly stated as was done by the US Congress under 35 US Code 271(e)(1).”

Finally, the Court examined the question of whether Section 107A should be read to include only sales made “within” India. The Court answered the question in the negative for three reasons: 

1.  The plain language of the section did not support such an interpretation. Specifically, there were no “words or expressions” that allowed such a restriction to be read into this section. In fact, to the contrary, Section 107A expressly permits use for submission as required by the laws outside of India.

2.  Even if a purposive interpretation of Section 107A is attempted, such an interpretation favors permitting export. According to the Court: 

“[T]he purpose for excluding development activities and uses for regulatory approvals is to ensure that exploitation of patented invention is not restricted beyond the period or sphere of exclusivity granted to the patentee. Thus, although initiative and effort of an inventor must be rewarded, the protection is limited and should not stifle further development and restrict participation beyond the period of exclusivity. There is a strong case for enhancing availability of essential drugs at affordable prices and the safe harbor exception must extend to permit developing overseas sources also.” 

3.  National barriers offer only limited barriers to trade. As a result, confining the exclusion of Section 107A to sales within India would not aid the object of such exclusion. 

Source: Lisa Mueller