[Ip-health] Division Bench Of Delhi High Court rules on Section 107A, Patents Act (Bolar exemption)

Priyam Lizmary Cherian priyamlizcherian at gmail.com
Fri Apr 26 06:15:47 PDT 2019


*Division Bench Of Delhi High Court rules on Section 107A, Patents Act
(Bolar exemption)*


The Division Bench of Delhi High Court on April 22, 2019 dismissed the
appeal filed by Bayer Corporation that had challenged the order of the
Single Judge allowing export of patented product for development and
submission of information required under any law in India or of a country
other than India under Section 107A, Patents Act.



The issue was whether an Indian generic pharmaceutical company can export
active pharmaceutical ingredient (API) that may be patented in India to
other countries for conducting studies on them to generate data and submit
them to drug regulatory authorities in those countries for marketing
approval there, under Section 107A of the Patents Act.



Section 107A of the Patents Act (also known as the Indian version of the
Bolar exemption) makes certain acts, which would otherwise infringe a
patentee’s right, to be not considered as infringement during the
subsistence of patent. Such acts under Section 107A include use of the
patented invention solely for the uses reasonably related to the
development and submission of information required in India or any other
country. The TRIPs agreement also allows for such export of patented
product for development of information for submission before relevant
authority.



If the generic companies can, in accordance with TRIPS and Section 107A
export drug to other countries for generating data to submit it regulatory
authorities during the subsistence of the patent and approval is granted
during the subsistence of the patent, the drug can be launched immediately
on the day of the expiry of the patent. On the other hand, if Indian
generic companies are restricted from exporting the drug to generate data
for submission to drug regulatory authorities abroad during the subsistence
of the patent, the process of the approval would begin only after the
expiry of the patent, and delay the entry of the generic drugs for a period
of about three years.



The immediate dispute over whether export to other country is allowed under
Section 107A while a patent is operating originated in 2014, with a writ
petition filed by Bayer Corporation before the Delhi High Court, seeking
injunction against the Indian generic company, Natco Pharma, claiming that
Natco’s export of Bayer’s patented drug Sorafenib Tosylate, for generating
data on that drug in China and submission of information to Chinese Drug
Regulatory Authorities infringed its patent rights and terms of compulsory
license granted to Natco, and prayed that all export consignments of Natco
be seized.



Bayer was granted a patent over Sorafenib Tosylate (marketed as Nexavar) -
a crucial drug for kidney and liver cancer, in 2008. Being sold at Rs. 2,
84,000 (USD 4000) per patient per month, Bayer’s Nexavar was unaffordable
to most patients in India. Consequently, the Patent Controller granted the
first ever compulsory license in India to Natco to market a more affordable
generic version of Nexavar (marketed under the name “Sorafenat”) at around
Rs. 8,800 (USD 126).



Independently of the compulsory license, Natco was exporting the API of
Sorafenib Tosylate to China in order to facilitate bioequivalence and
bioavailability studies to be conducted and generate data for submission to
Chinese Authorities Drug Regulatory authorities for marketing approval of
that drug in China. Bayer had filed a writ challenging such export. If the
studies thus conducted were approved in China, the generic version of
Nexavar could be put into market as soon as the patent would expire there,
thereby ensure sooner access to affordable drug.



In May 2014, as an interim relief, the Delhi High Court speaking through
Justice Manmohan, had allowed Natco to export only 15 grams of the API of
Sorafenib Tosylate. Again in November, 2014, the Justice Vibhu Bhakru
allowed Natco’s application to export 1kg of Sorafenib Tosylate.  However,
Bayer filed an appeal challenging the order, claiming that the export made
by Natco was for commercial purposes. The Division Bench comprising Chief
Justice Rohini and Justice Endlaw remanded the matter back it to the Single
Judge and stayed further exports till the final disposal of the writ.



In the meantime Bayer had also filed a suit against Alembic for export of
generic version of Rivaroxaban (an anticoagulation drug).



The Single Judge, Justice Endlaw, vide his judgment dated 08.03.2017
decided the writ petition filed against Natco and the suit against Alembic
together. He held that acts of exporting patented product for submission of
data to overseas Drug Regulatory Authorities was within the scope of
Section 107A, and therefore, found no infringement of Bayer’s patent.



On April 13, 2017 Bayer filed an appeal against the order of the Single
Judge. The Division Bench, comprising Chief Justice Gita Mittal and Justice
Anu Malhotra had stayed the export of the API. The appeal was finally heard
by a Division Bench comprising Justice Ravindra Bhatt and Justice Sanjeev
Sachadeva.



Mr. Anand Grover, Senior Advocate briefed by Rajeshwari & Associates,
appearing on behalf of Natco and argued that rights of the patentee under
Section 48 of the Patents Act were not infringed as Natco was not selling
the API for commercial purposes but was exporting it only for development
studies to generate data for submission to Chinese authorities-an act
covered under Section 107-A of the Patents Act, 1970. Such act was also
independent of grant of compulsory license, he had argued.



Discussing the history of introduction of Section 107A in the Patents Act,
the Court noted that the various stages of amendment of similar provisions
in the Act indicated the nuanced of the Parliament in introducing and
revising Section 107A with the current provision reading as:

“*Section 107A: For the purposes of this Act*

*(a) any act of making, constructing, using selling or importing a patented
invention solely for uses reasonably related to the development and
submission of information required under any*

*law for the time being in force, in India or in a country other than
India, that regulates the manufacture, construction, use or sale or import
of any product*”



The Court was of the opinion that Section 107A is not an exception to the
rights of the patentee, rather a special provision that deals with the
rights of the patented invention for research purposes. The Court also
clarified that third party holding a compulsory license for the patenting
product was not barred by the terms of the license from exporting the
patented product under Section 107A.



As for the quantity of the patented product that may be exported for
development or submission of information, the Court noted that it has to be
determined on a case to case basis after analysis of the regulatory
requirements. For this purpose, the Court noted that either the exporter
may seek a declaration from the court that the export is for research and
purposes covered by Section 107A or the patentee may file a suit for
infringement.



While determining the applicability of Section 107A, the court will *inter
alia* look into:

a.       patent granted;

b.      nature of the product sought to be exported;

c.       details of the party or party importing the product;

d.      quantity sought to be exported;

e.       particulars to establish that export is solely for research and
development of information to regulatory authorities in the other country;

f.        particulars regarding the relevant regulations, covering the kind
and scope of inquiry, including the quantities of the product (i.e. the
patented product or compound, API or fine chemical needed).



The decision is a big victory for advocates of access to medicines as this
will ensure that the generic pharmaceutical manufacturers can enter the
market, providing affordable drugs as soon as the patent expires in other
countries.



The order is available here:
http://lobis.nic.in/ddir/dhc/SRB/judgement/24-04-2019/SRB22042019LPA3592017.pdf



  --

Priyam Lizmary Cherian

Legal Officer

Lawyers Collective

A-13, First Floor

Nizamuddin West, Delhi- 110013

Telephone: +91 11 46805507


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