BOLAR PROVISION:Section 107 A of Patent Act 1970:Section 107A permits the sale and export of patented drugs for regulatory approval in other countries and for research purpose only.
Introduction:
The case of Bayer Corporation vs. Union of India & Ors., decided by the Delhi High Court on April 22, 2019, concerns the interpretation of Section 107A of the Patents Act, 1970, commonly known as the "Bolar provision."
The central issue in this case was whether the sale or export of a patented drug for the purpose of regulatory approval in another country constitutes patent infringement.
Bayer Corporation, a multinational pharmaceutical company, filed legal proceedings against Natco Pharma and Alembic Pharmaceuticals, challenging their export of patented drugs under Section 107A. The case is significant for its impact on the pharmaceutical industry, particularly concerning the balance between patent rights and the promotion of generic medicines.
Factual Background:
Bayer Corporation held a patent for Sorafenib Tosylate, a drug used to treat kidney and liver cancer, under Patent No. 215758. In 2011, Natco Pharma applied for a compulsory license under Section 84 of the Patents Act, which was granted in 2012 by the Patent Controller. The license allowed Natco to manufacture and sell the drug in India at an affordable price. However, Bayer filed a writ petition when it discovered that Natco was also exporting Sorafenib Tosylate outside India, arguing that this was beyond the scope of the compulsory license.
Simultaneously, Alembic Pharmaceuticals was manufacturing and exporting Rivaroxaban, another patented drug, for regulatory purposes. Bayer filed a suit against Alembic, alleging that its export of Rivaroxaban infringed Bayer’s patent rights. Alembic contended that the exports were covered under Section 107A, which allows the sale of patented products solely for uses reasonably related to the development and submission of information required under any law.
Procedural Background:
Bayer initially filed a suit against Natco in 2011, seeking an injunction against the sale and export of Sorafenib Tosylate. The Patent Controller granted a compulsory license to Natco in 2012. Bayer then approached the Delhi High Court, seeking to prevent Natco from exporting the drug.
In parallel, Bayer filed a suit against Alembic in 2016, seeking an injunction against the export of Rivaroxaban. During the proceedings, Alembic argued that its exports were permissible under Section 107A.
The learned Single Judge ruled in favor of Natco and Alembic, holding that Section 107A permitted the sale and export of patented drugs for regulatory purposes. Bayer appealed the decision, leading to the present judgment by the Division Bench of the Delhi High Court.
Issues Involved in the Case:
The primary issue in this case was whether Section 107A of the Patents Act permits the export of patented drugs for the purpose of obtaining regulatory approvals in other countries?
Whether the word "sale" in Section 107A includes export or is limited to sales within India?
Whether the acts of Natco and Alembic constituted infringement under Section 48 of the Patents Act.
Whether the purpose of Section 107A was to facilitate only the Indian market or to allow global generic competition.
Whether the burden of proof lay on the patent holder (Bayer) or the generic manufacturers (Natco and Alembic) to prove the intended use of the patented product.
Submissions of the Parties:
Bayer argued that Section 107A is an exception to the patentee's rights under Section 48 and should be interpreted narrowly. Bayer contended that the provision does not explicitly mention "export," and therefore, sale under this section should be restricted to India. Bayer further relied on foreign precedents, including the U.S. Bolar exemption and German and Polish case law, to argue that the sale of a patented drug for regulatory purposes should be limited to the domestic market. Bayer emphasized that allowing exports under Section 107A would contravene the TRIPS Agreement and international patent norms.
Natco and Alembic countered that Section 107A allows the sale of patented products for the purpose of developing and submitting regulatory information in other countries. They argued that the plain language of the provision does not restrict sale to India. They also pointed out that regulatory authorities in many countries require local clinical trials, which necessitate the export of the drug. They cited WTO rulings and global practices to support their interpretation.
Discussion on Judgments and Citations:
The court examined the legislative intent behind Section 107A and compared it with similar provisions in other jurisdictions. The court relied on the WTO Dispute Settlement Panel's ruling in the Canada-Patent Protection of Pharmaceutical Products case (WTO/DS114/R), which upheld the Bolar exemption. The court also referred to the U.S. Supreme Court’s decision in Merck v. Integra Lifesciences (545 U.S. 193), which interpreted the American Bolar exemption broadly.
Additionally, the court considered the decision in Intermedics Inc. v. Ventritex (775 F. Supp. 1269), which allowed the export of patented products for regulatory approval. The court rejected Bayer’s reliance on German and Polish case law, holding that Indian law provides a broader exemption than those jurisdictions.
Reasoning and Analysis of the Judge:
The court held that the plain meaning of Section 107A does not restrict "sale" to India and that the term includes exports.
It observed that the provision was intended to facilitate the development of generic medicines globally and that restricting sales to India would defeat this purpose. The court noted that requiring generic manufacturers to conduct separate trials in each country would be impractical and contrary to international trade practices.
The court also rejected Bayer’s argument that the burden of proof should be on the generic manufacturers. It held that placing the burden on the patentee to prove wrongful use was consistent with international norms and would prevent unnecessary litigation.
The court further reasoned that allowing exports under Section 107A was consistent with India’s obligations under the TRIPS Agreement, as it did not unreasonably prejudice the patent holder’s rights. The court emphasized that regulatory approvals are necessary for timely market entry and that a restrictive interpretation of Section 107A would hinder access to affordable medicines.
Final Decision:
The Delhi High Court upheld the Single Judge’s ruling and dismissed Bayer’s appeal.
The court held that Section 107A permits the sale and export of patented drugs for regulatory approval in other countries and for research purpose only.
It ruled that Bayer had failed to establish that Natco and Alembic’s actions amounted to infringement.
The court also directed that Bayer’s patents could not be used to block exports of drugs intended solely for regulatory purposes.
Law Settled in This Case
The judgment clarified that Section 107A of the Patents Act includes the right to export patented drugs for regulatory approval. The decision reinforced that patent rights are subject to reasonable exceptions aimed at promoting public health and access to medicines. The ruling also established that the burden of proof lies on the patentee to prove infringement rather than on the generic manufacturer to justify its actions.
Case Details:
