Bayer Corporation Vs. Union of India & Ors.

Decided on 22.04.2019

In a decision that is likely to have a significant impact on pharmaceutical patents and access to medicines, a Division Bench of the Delhi High Court upheld a Single Judge’s decision and ruled that the ‘export’ of a patented invention for experimental purposes is also covered under Section 107A of the Patents Act, 1970 (India’s Bolar exception), and thus does not amount to patent infringement.

FACTS:

Bayer filed a suit for injunction against Natco from making, importing, selling, offering for sale ‘Sorafenib’, Sorafenib Tosylate’ (Bayer Drugs) or any generic version or any other drug or product thereof which was a subject matter of Bayer’s Patent. When the Suit was pending Natco applied to the Patent office for grant of compulsory licence against the patent. Natco’s application was granted on 09.03.2012, by the Patent Controller, under S. 84 of the Patents Act 1970. The compulsory license granted was solely for the purposes of making, using, offering to sell and selling the drug covered by the patent within the territory of India. However Natco apart from manufacturing and selling the drug in Indian market, exported the products covered under compulsory licence outside India.

Bayer filed a writ petition seeking a direction to custom’s authority to seize the consignments for export containing products covered by compulsory license including Sorafenat manufactured by Natco.

NATCO next applied for permission to export 1 Kg of Active Pharmaceutical Ingredient (hereafter “API”) Sorafenib to China to conduct clinical studies and trials for development of drug for regulatory purposes. Bayer opposed the said application stating that 107A of Indian Patent Act does not allow exporting of drug even for the purposes laid down under 107A. And that absence of the word ‘export’ clearly indicates the purpose of the law – not to allow the export of the patented invention. And the words ‘in a country other than India’ should be interpreted only to allow export of the information generated by experiments in India. It held that the word “selling” should be interpreted to mean “selling in India and not outside the country”. Bayer alleged that if law intended to allow export, language would have expressly included that as it has included import. In summary, Bayer requested the court to interpret the word ‘sell’ to mean selling without exporting, i.e. selling in India. And such export of patented invention is violation of law.

On similar lines, Bayer filed an injunction against Alembic from making, selling, distributing, advertising, exporting, offering for sale and in any manner directly or indirectly dealing in Rivaroxaban and any product that infringes Bayer’s patented product. Alembic was manufacturing and exporting RIVAROXABAN to the European Union and had made multiple Drug Master File submissions to the USFDA in the USA for the drug RIVAROXABAN. Alembic alleged that exports being effected by Alembic were within the meaning of Section 107A only.

HELD:

Learned Single Judge with regard to section 48 and section 107A in Bayer Vs. Natco, held that the words ‘sale/ selling’, as per their literal/textual meaning are without any geographical limitations and in Section 107A are not to be understood as within India only and if such sale / selling were to involve transfer of the patented invention / product to a country other than India though would also qualify as export / exporting but would not cease to be sale / selling. Observations of Ld. Single Judge are given below.

1. The terms “constructing” in Section 107A and “offering for sale” in Section 48 were not important. It was then held that – It is thus the purpose for which the said acts are done which distinguishes, whether the acts constitute infringement of patent or not. If the said purpose is within the confines of Section 107A, the acts so done would not constitute infringement and vice versa. (para 9, page 6)
2. That the words ‘sale/ selling’ thus, as per their literal/textual meaning are without any geographical limitations and in Section 107A are not to be understood as within India only and if such sale / selling were to involve transfer of the patented invention / product to a country other than India though would also qualify as export / exporting but would not cease to be sale / selling (para 35, page 9)
3. It becomes immediately evident that ‘selling’ permitted by Section 107A is of a patented invention i.e. a product and not of ‘information’ (para 29, page 8)
4. the words “law for the time being ‘in a country other than India’ is evidence of, obtaining regulatory approvals in countries other than India being contemplated by the legislature. Certain acts mentioned in Section 107A, required to be done for the purpose of obtaining such approval, would not be considered as infringement of patent rights. One of such acts is of selling of patented invention. The plain meaning of Section 107A is that selling of patented invention for obtaining regulatory approval in country other than India would entail transfer of patented invention i.e. product from India to that country. There is nothing in the language of Section 107A to suggest that only the information generated / collected in India could be transported out of India and not the patented invention. Therefore, the word ‘selling’ in Section 107A cannot be restricted to India only. (para 37, page 9)

The High Court bench comprising of two Learned Judges, after referring different dictionaries and relying on landmark judgements, finally observed that:

i. There cannot be ironclad or bright line rule as to what acts are reasonably related to use or sale of product, with the object of using the developed information to satisfy the regulations, as stated below.

    “That brings the question to what is use, sale, etc. “reasonably related” for the purpose of developing information, ultimately used for in compliance with regulatory processes and laws in or outside India? Ultimately, on this aspect, there cannot be an ironclad rule or bright line as to what acts are reasonably related to the use or sale of the product, with the object of using the developed information to satisfy the regulations.” (para 107, page 80,81)

ii. The sale, use and construction of patented products in terms of section 107A of the Act for purposes both within country and abroad is authorized and legally provided, as stated below.

“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 impugned judgment of the learned single judge and the findings recorded on this aspect are accordingly affirmed.” (para 119, page 89)

iii. That section 107A is not to be treated as an exception to section 48 of Indian Patent Act as pleaded by Bayer. Discussion in parliamentary Joint Committee Report makes it a special provision dealing with right of patented invention for research purposes.

“In the light of the above discussion, the court is of the opinion that there is no question of treating Section 107A(a) as an exception to Section 48. Its history of interpretation by TRIPS, the discussion in the Parliamentary Joint Committee Report, all clearly point to its being a special provision that deals with the rights of the patented invention for research purposes.” (para 89, page 67)

iv. That the section 107A is in line with provisions of TRIPS agreement and other international guidelines too.