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TMI Blog2019 (4) TMI 1626X X X X Extracts X X X X X X X X Extracts X X X X ..... re deemed not to have been satisfied if under Section 84(7)(a)(iii), a market for the patented article manufactured in India is not being supplied or developed. Section 90(1)(vii) is in a sense, complimentary to Section 84 and has to be read with it: it guides the Controller to ensure inter alia that the license granted under Section 84(7)(a)(c)(iii) is with the predominant purpose of supply to the Indian market and that the licensee may also export the patented product. Having regard to all these factors, it cannot be held that the Parliament intended to per se exclude exports from the sweep and width of the term sale in Section 107A regard being had to the disparate and differing objectives of Sections 84, 90 and 92A all of which in some way or the other primarily deal with compulsory licensing and on the other hand, Section 107A is the only provision that allows an exception to be used- construction and sale of a patented article only for research purposes and subject to fulfillment of the conditions specified therein. 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alia, apart from producing the drug for the Indian market, Natco manufactured the product covered by the compulsory licence for export outside India. Bayer filed a writ petition seeking a direction to the Customs Authorities to seize the consignments for export containing products covered by compulsory Licence including Sorafenat ( Natco drugs hereafter) manufactured by Natco. Notice of writ petition was issued by a learned single judge of this court; the customs authorities were directed to ensure that no consignment from India containing Sorafenat covered by compulsory licence was exported. At the same time, Natco was given the liberty to apply to the court for permission to export the drug. Later, on 23.05.2014, Natco pointed out that in fact it has already been granted a drug license and it was permitted to export the drug Sorafenib Tosylate not exceeding 15 gm for development/ clinical studies and trials. 3. 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. That application was rejected by Bayer, which ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing, packaging and storing of one or more human drugs; v) that Alembic has also filed a patent application for grant of a process patent for Rivaroxaban which specifically referred to Bayer s patent and said that Rivaroxaban is disclosed by Bayer s patent; thus, clearly showing that Alembic infringed Bayer s patent. 6. During the hearing, Alembic stated that the exports being effected by it are covered by Section 107A. Thereafter, on 15.12.2016, Alembic categorically stated that till then it had not commercially launched Rivaroxaban and had only exported it within the meaning of Section 107A; further, that in the event Alembic, in the future, intended to launch Rivaroxaban, it would give one month s notice to Bayer to enable the latter to avail of its remedies. Bayer argued on that date that Alembic exported at least 90 Kg. Rivaroxaban worth ` 3 crores and export of such quantity could not be within the meaning of Section 107A. 7. Parties in the Alembic suit were informed during the hearing, on 15.12.2016, that the Natco s writ petition had been heard, (involving an identical issue of law) in which judgment had been reserved; in the circumstances, si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an prevent non-patentee from doing them. 10. The learned single judge then held: 27. The point of difference between Bayer and Natco / Alembic is qua selling outside India. While Bayer contends that the word selling in Section 107A is confined to within the territory of India and selling of patented invention outside India even if for purposes specified in Section 107A would constitute infringement which can be prevented by patentee, the contention of the senior counsels for Natco / Alembic is that use of the word selling under Section 107A is without any such restriction of being within India only and would include selling outside India also, so long as solely for the purposes prescribed in Section 107A. 28. The counsels for Bayer, to explain why Section 107A refers to the purpose of development and submission of information required under law in a country other than India that regulates manufacture, construction, use and sale of pharmaceutical products, if selling referred to in Section 107A was to be within the confines of India contend that the information generated in India and required under law of a country other than India to be submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls for Bayer, qua selling within India, admit can be of patented invention i.e. of the product, by Fine Chemical Producers of India to manufacture or producers of pharmaceutical products in India and do not insist, should be of information only. However when it comes to selling outside India, they insist cannot be of patented invention or product and can be of information only. I am unable to read such dichotomy in the language of Section 107A. It is not found to distinguish between making, constructing, using, selling for submission of information required under law in India and under the law of a country other than India. 31. I am also unable to accept the contention of Bayer that, use of the word selling refers to selling within India only. 32 Sale , in Black s Law Dictionary, 10th Edition, is defined as transfer of property or title having the elements of i) parties competent to contract; ii) mutual assent; iii) a thing capable of being transacted; and, iv) a price in money paid or promised to be paid. Thus, use of the word sale / selling entails transfer of property or title in a thing and does not contain any territorial limitations viz. of b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Advocate (for Bayer) argues that Section 48 of the Act implicitly defines infringement by listing the exclusive rights of the patentee. Section 107A of the Act describes a particular set of circumstances in which acts that are largely those named in Section 48 would not constitute infringement . Thus, Section 107A of the Act clearly provides for circumstances/actions which, but for its existence, would be covered as an infringement under Section 48. Therefore, it is clearly a proviso/exception. But for Section 48, Section 107 has no purpose. Therefore, the latter constitutes an exception to Section 48 and does not confer a right. He relies on the Supreme Court decision in S. Sundaram Pillai v. V.R. Pattabiraman AIR1985 SC 582 that the nature of a proviso is such that it: it is meant to be an exception to something within the main enactment or to qualify something enacted therein which but for the proviso would be within the purview of the enactment. [Emphasis supplied] 12. Furthermore, the nature of Section 107A of the Act as a proviso/exception can be seen from its placement in the statute by the legislature. It finds mention in Chapter XVIII wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nformation in countries other than India so that the data generated in India may be submitted around the world, as is an accepted practice in the pharmaceutical industry. In fact, India is becoming a favoured global destination for conducting clinical trials and the data generated in this process is often used before regulatory regimes around the world. The expression in Section 107A (i.e. sale, construct etc.) is qualified by the word law with the phrase in a place other than India'. The latter phrase has clearly not been used to describe the acts of making, selling using , etc., i.e. it cannot possibly intend to authorise the commission of acts outside the territory of India. The phrase has merely been included so that companies in India may avail the Bolar exemption not only to obtain approvals in India but around the world, without having to conduct separate clinical trials for every instance of submission of data. It is argued that Section 107 has three important elements, i.e. the activities (selling, making, constructing) the purpose, which can only be development and submission of information ; and the law i.e. that such development (and submission of information) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tside India. Moreover, as was held in the judgment of the Supreme Court in GvkInds Ltd. Anr. v The Income Tax Officer Anr. (2011) 4 SCC 36 only those extra-territorial aspects which have an impact or nexus with India and are enacted with the intent of creating some benefit for India would fall within the constitutionally sanctioned idea of legislative competence. Next, the nature and purpose of the Act is primarily to safeguard the interests of the patentee and the nature and purpose of Section 107A of the Act is an exception to the patentee's rights so that the generic versions of the drug may be made available immediately upon expiry of the patent in the Indian market. Inclusion of export within this provision would not serve the Indian market as envisioned by the Legislature and therefore, the same would be impermissible as per the law on extraterritorial legislative action. Thus, making, constructing and using of the product are permitted in India alone and export for that purpose is not contemplated. 17. Moreover, since the act of selling in Section 48 refers to sale in India only (as can be seen from the provision), it cannot be said that Section 107A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all within the meaning of the word selling . The construction placed by the learned Single Judge to the provision really amounts to supplying casus omissus. This is contrary to the settled principles of statutory interpretation. 21. It is argued that the Section must be read in accord with global standards applicable to the Bolar Exemption. Reference is made to the Joint Parliamentary Committee Report which clarifies that Section 107A of the Act was meant to be in line with the global standards in respect of the Bolar exemption. Furthermore, allowing export under Section 107A of the Act would be in violation of Article 30 of the TRIPS (Annexure-14) which allows for exceptions to patent rights so long as the exception is (a) limited ; (b) does not unreasonably conflict with the normal exploitation of the patent ; and (c) does not unreasonably prejudice the legitimate interests of the patentee. It is pertinent to note that these were the very issues that were considered in the case of Canada-Patent Protection of Pharmaceutical Products [DS 114, hereafter Canada Dispute or Canada Patent Dispute] decided by the WTO Dispute Settlement Panel ( DSP hereafter) when adjudicate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 107 of the Act is a defence/exception, as shown above. The burden of proof must clearly lie on the party who relies on the exception to justify their acts. Consequently, the non-patentee who relies on the fact that their export is for the purposes allowed by Section 107A of the Act must be the one who is required to prove the same, because it is the exporter/non-patentee who is privy to all the details relevant to proving the applicability of Section 107A of the Act such as manner of export, quantities, identity of the importing party etc. Learned Senior Counsel faults the impugned judgment which held that this court cannot proceed to interpret the laws of the countries of intended export to determine whether the export intended in a given case is for the purposes prescribed in Section 107A of the Act. All exports by a non-patentee of a patented invention are deemed to be for the said purpose and only if proved to be otherwise, can make the exporter liable for consequences thereof in an appropriate legal proceeding. 24. It was submitted that this approach effectively shifts the burden of proof on the patentee to show that the non-patentee's acts are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of this country are only concerned with the sale by way of export from this country being for the purposes prescribed, 26. Bayer stated that this completely prejudices the interests of the patentee, which cannot be in congruence with the object of the Act. The patentee's interests are prejudiced because: (i) The patentee may not have a patent in the country of export which would leave the patentee completely remedy-less. (ii) Even if the activities undertaken in the destination country post-export may not be actionable in India, the original act of intention to export or offer for sale itself certainly falls within the judicial scrutiny of the courts in India. By deigning to scrutinise and thus permitting, an unqualified entitlement to export, the potential for future abuse increases manifold. This would surely prejudice the rights of the patentee. (iii)The patentee will have to undertake a global surveillance, tracking the products exported to establish what purpose they are being used for and then enforce their patents (if any) in multiple countries. This will give the defendants a free reign to export patented products without fea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the expiry of its term. Natco denies Bayer s allegation that, under the guise of the grant of compulsory license, it is exporting the formulation to diverse countries, as baseless. It is argued that Bayer concedes that a generic manufacturer in India can carry on activities of making, constructing, using, selling or importing the patented invention for the development and generation of data to Indian authorities or foreign authorities, but however, contends that the patented article cannot be exported for development and generation of data abroad for submission to the foreign regulatory authorities. Natco submits that i) The TRIPS Agreement took note of the global nature of the pharmaceutical industry, the global need of access to affordable medicines. (ii) TRIPS also took note of extant practice under the US Bolar provision of exporting a patented article abroad for, developing and generating data abroad for submission to the US regulatory authorities, as exemplified by the US Supreme Court in Intermedics Inc. v Ventrilex, 775 F. Supp. 1269 (N. D. Cal. 1991). Mr Grover argued that Section 107A is enacted pursuant to Article 30 of the TRIPS Agreement (Providing for limited exceptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation and data before the expiry of the patent, i.e. during a patent s term, to launch the product in the market immediately on expiry or invalidation of the patent. It is submitted that the global nature of the pharmaceutical industry is so structured that such generic producers are in a few countries; in some countries there are no generic producers at all. At times, even developed countries procure fine chemicals from other countries. Countries without generic industries do not necessarily have domestic markets that support operation of the industry on an economic scale. In such situations, the economies of scale for the generic manufacturers would be achieved if the product is also exported. Learned Senior Counsel also highlighted the leadership role played by Indian generic pharmaceutical entities in the global pharmaceutical market and flagged the support given to developing nations in Africa, South America, Central Asia and Eastern Europe stating that they supply over 90% of Anti Retro Viral Drugs to the developing countries. He also quoted a leading author, Brenda Waning, (Journal of AIDS Studies, 2010, 1335, A lifeline of treatment: the role of Indian generic maufacturers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pective of the quantity involved, because of the narrow scope of its curtailment of Article 28.1 choices (under TRIPS).So long as the exception is confined to conduct necessary to comply with the requirements of the regulatory approval process, the extent of the acts unauthorized by the right holder that are permitted by it are small and narrowly bounded. Though regulatory approval processes may require substantial amounts of test production to demonstrate reliable manufacturing, the patentee's rights are unimpaired, by the size of such production runs, so long as they are solely for regulatory purposes and no commercial use is made. (Ref para 7.45 at of the Canada Dispute). Hence, the DSP clarified that there would be no infringement of Patent, regardless of the amount so used or exported, provided the use or export is solely for regulatory purposes and not commercial use of final product. 34. Mr. Grover next dwelt on the legislative history of Section 107A, stating that it was introduced after the DSP decision in Canada Dispute. In 1999, the Patents Act (Second Amendment) Bill, 1999 ( 1999 Bill ) was introduced in the Rajya Sabha to meet India's obligations under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia, which is absent in the US law, a fortiori India permits export to other countries in accordance with their law for submission of data of development studies. As a result, Section 48 does not prohibit, but allows export. Indian law would apply to the territory to which the medicines are imported by the expression importing which needs to be in every patent law by virtue of the minimum standards of TRIPS compliant intellectual property regime. Therefore, the expression import for another country, in so far as Section 107A is concerned, would mean an export from India. Therefore, export is actually contemplated under Section 107A. 37. Mr. Grover states that it is an established position in law that any term in a provision should be given plain meaning. Bayer s reading into Section 107A, limitations is therefore impermissible. Non-existent limitations in a statute cannot be read into it. Reference is made to GP Singh s Principles of Statutory Interpretation 12th Edition and State of Orissa v Joginder Pattjoshi (2004) 9 SCC 278. Also, sale is a compendious term that includes export ; in any event, importantly, patent law is territorial in nature and does not co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orities for marketing approval, that is the patented product is not sold in the market, whereas Section 84 operates on marketing of the patented product for commercial purposes. Stressing on the need to harmoniously interpret all parts of the statute, it is stated that such consistent reading excludes the idea that one provision can trump the other and render it otiose, unless specifically provided. Counsel referred to Padma Ben Banushali Another v Yogendra Rathore and Others, (2006) 12 SCC 138. Reference is also made to High Court of Gujarat v Gujarat Kishan Mazdoor Panchayat (2003) 4 SCC 712. It is urged that the argument with respect to the relationship between Section 107A and Section 84 is flawed. The learned single judge noted that the purpose of Section 107A is different from Section 84, which is only for obtaining the regulatory approvals under the laws of India or in a country other than India. 40. Without prejudice, it is submitted that the compulsory license under Section 84 operates as a deed or contract between the Controller and Natco, the grantee of compulsory licence (Section 93). Such a deed being a contract, cannot override a provision of law. Hence, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be regarded as an infringer, who is then required to plead Section 107A as a defense to Section 48 of the Act. 42. It is urged that the placement of Section 107A in the Act, as a separate and distinct section, different from Section 107 which deals with defences, etc., in suits for infringement is evidence of the intent of the Legislature that Section 107A ought not to be treated as a defence to Section 48, but is required to be treated as an independent section which specifically provides for certain acts not to be considered as infringement. 43. Ms. Chaudhary said that the shift in Indian Patent law is evident upon a plain reading of Sections 107A and Section 48 of the Act, both of which were inserted/substituted simultaneously by Act 38 of the 2002 so as to make India TRIPS compliant. Section 48 of the Act, in comparison to other legislative provisions pertaining to protection of IP Rights in India such as trade mark, copyright etc., is peculiar in nature inasmuch as it is a negative right, whereby a patentee is legally entitled under the Act 'to prevent third parties, who do not have his consent, from the act of making, using, offering for sale, selling o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arty constitute commercial exploitation and is outside the purview of section 107A i.e. regulatory use. If, and only if a patentee can succeed in proving that a complained act results in commercial use or exploitation, can a regulatory use defence fail. The mere fact that a pharmaceutical product/drug is developed into a finished formulation form and is sold in India or abroad for the purpose of procuring regulatory approval is however, insufficient to establish infringement; a plaintiff patentee has to establish how the act complained of falls within the purview of Section 48 due to which a suit for infringement is maintainable. This is especially important because Section 107A permits third parties to carry out trade by way of any act of making, constructing, using, selling or importing a patented invention thereby allowing such parties to profit with the only limitation being that such trade is be 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, sole or import of any product. 45. Ms. Chaud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nducting tests and procuring requisite data which was exclusively used to seek regulatory approval in the USA. Accordingly, in view of the fact that Section 107A specifically provides for uses reasonably related to seeking regulatory approval in countries other than India, it cannot be argued that Section 107A prohibits exports. 47. Bayer s reliance on the 'Notes on Clause' of the Patents (Second amendment) Bill, 1999 which first sought to introduce section 107A, was contested and it was submitted that the Joint Parliamentary Committee made numerous changes to the provision, which is evident from a bare perusal of the final provision which was enacted as also the Notes on Clauses detailed in the Joint Parliamentary Committee Report of the 1999 Bill. Therefore, it is evident that the scope of the said Section was expanded beyond India and the limitation of only the Indian market were specifically removed. 48. Ms. Chaudhary urged that a look at Section 107A reveals that it does not impose any restriction on the quantity which can be made, constructed, used, sold or imported as long as all such quantity is utilized solely for uses reasonably related to develo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 48, 84, 92A, 107 and 107A of the Act read as follows: 48. Rights of patentees Subject to the other provisions contained in this Act and the conditions specified in section 47, a patent granted under this Act shall confer upon the patentee- (a) where the subject matter of the patent is a product, the exclusive right to prevent third parties, who do not have his consent, from the act of making, using, offering for sale, selling or importing for those purposes that product in India: (b) where the subject matter of the patent is a process the exclusive right to prevent third parties, who do not have his consent, from the act of using that process, and from the act of using, offering for sale, selling or importing for those purposes the product obtained directly by that process in India: XXXXXX XXXXXX XXXXXX 84. Compulsory licences (1) At any time after the expiration of three years from the date of the 1 [grant] of a patent, any person interested may make an application to the Controller for grant of compulsory licence on patent on any of the following grounds, namely:- (a) that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able period as the Controller may deem fit: PROVIDED that this clause shall not be applicable in case of national emergency or other circumstances of extreme urgency or in case of public non-commercial use or on establishment of a ground of anticompetitive practices adopted by the patentee, but shall not be required to take into account matters subsequent to the making of the application. [ Explanation : For the purposes of clause (iv), reasonable period shall be construed as a period not ordinarily exceeding a period of six months.] (7) For the purposes of this Chapter, the reasonable requirements of the public shall be deemed not to have been satisfied- (a) if, by reason of the refusal of the patentee to grant a licence or licences on reasonable terms,- (i) an existing trade or industry or the development thereof or the establishment of any new trade or industry in India or the trade or industry in India or the trade or industry of any person or class of persons trading or manufacturing in India is prejudiced; or (ii) the demand for the patented article has not been met to an adequate extent or on reasonable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the licensee is non-assignable; (vi) that the licence is for the balance term of the patent unless a shorter term is consistent with public interest; 179 [(vii) that the licence is granted with a predominant purpose of supply in the Indian market and that the licensee may also export the patented product, if need be in accordance with the provisions of sub-clause (iii) of clause (a) of sub-section (7) of section 84; (viii) that in the case of semi-conductor technology, the licence granted is to work the invention for public non-commercial use; (ix) that in case the licence is granted to remedy a practice determined after judicial or administrative process to be anticompetitive, the licensee shall be permitted to export the patented product, if need be.] (2) No licence granted by the Controller shall authorise the licensee to import the patented article or an article or substance made by a patented process from abroad where such importation would, but for such authorisation, constitute an infringement of the rights of the patentee. (3) Notwithstanding anything contained in sub-section (2), the Central Government ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r importation of any machine, apparatus or other article or by the using of any process or by the importation, use or distribution or any medicine or drug, it shall be a ground for defence that such making, using, importation or distribution is in accordance with any one or more of the conditions specified in section 47. 107A Certain acts not to be considered as infringement. -For the purposes of this Act,- (a) any act of making, constructing, 197 [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, 198 [use, sale or import] of any product; (b) importation of patented products by any person from a person 199 [who is duly authorised under the law to produce and sell or distribute the product], shall not be considered as a infringement of patent rights. TRIPS- Relevant provisions 50. The relevant TRIPS provisions are extracted below: Article 30 Exceptions to Rights Conferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se de minimis. It is no trifle in its economic effect on the parties even if the quantity used is small. It is no dilettante affair such as Justice Story envisioned. We cannot construe the experimental use rule so broadly as to allow a violation of the patent laws in the guise of scientific inquiry, when that inquiry has definite, cognizable, and not insubstantial commercial purposes. 53. Soon after this judgment, the US Congress enacted a law permitting use of patented products in experiments for the purpose of obtaining Food and Drug Administration (FDA) approval [Section 271(e)(1)]. This provision, known as the research exemption, consolidated the Bolar research exception articulated by the US District Court, which was reversed in the Federal Circuit decision. The new provision (Section 271 (e)(i)) reads as follows: (e) (1)It shall not be an act of infringement to make, use, offer to sell , or sell within the United States or import into the United States a patented invention (other than a new animal drug or veterinary biological product (as those terms are used in the Federal Food, Drug, and Cosmetic Act and the Act of March 4, 1913) which is primarily m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esearch exception based argument. This ruling was affirmed by the Federal Circuit court, which held that: the Scripps work sponsored by Merck was not clinical testing to supply information to the FDA, but only general biomedical research to identify new pharmaceutical compounds. 57. The US Supreme Court judgment unanimously reversed the Federal Circuit judgment and disapproved the narrow interpretation of the experimental use provision, stating that: as an initial matter, we think it apparent from the statutory text that 271(e)(1)'s exemption from infringement extends to all uses of patented inventions that are reasonably related to the development and submission of any information under the FDCA. 58. The Supreme Court further said this [information] necessarily includes preclinical studies of patented compounds that are appropriate for submission to the FDA in the regulatory process. And that to construe 271(e)(1) what the Federal Circuit did: is effectively to limit assurance of exemption to the activities necessary to seek approval of a generic drug. 59. In Japan, acts relating to the marketing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al and Veterinary Supplies and Others [1999] RPC 397 is in line with this, as it holds that making and experimenting with a patented invention merely for the purposes of gaining official approval would not fall within the Original Experimental Use Exemption. The facts of the Auchincloss case again concern agrochemicals: a sample of a dry watersoluble biocidal composition sent by the defendant to MAFF, the old Ministry of Agriculture, Fisheries and Food. Here, the Court of Appeal held that supplying a sample to MAFF in order to obtain official approval rather than to discover something unknown or to test a hypothesis, was not covered by the exemption. The UK courts thus distinguish between application of the experimental use exemption to activity conducted for the purpose of discovering something new (about the subject matter of the invention), and mere verification of what is already known. If trials and tests on a substance for regulatory approval of that substance are not discovering something new, the exemption is inapplicable. It is accepted that this is the case as regards bioequivalence studies for an abridged application they cannot be protected; there is also lack of clar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d is not restricted to pharmaceuticals. The disputes before the Canadian courts are primarily in the pharmaceutical area, most often in the context of generic manufacturers performing tests in respect of a patented drug. Also, this provision relates to information that may be required by a regulatory body anywhere (and not just in Canada). 66. A leading Canadian decision, Merck et al. v. Apotex (2006) FCA 323, (Federal Court of Appeal), was in the context of a generic drug development. The court held that the defendant prepared and tested the patented Lisinopril drug for the purposes of filing abbreviated new drug submissions necessary to sell Lisinopril in Canada and the USA. Some of the data was referenced in Apotex's submissions, directed to that purpose. Apotex also had stored samples in the event that they were required for future reference by the government. The court held that Section 55.2(1) was broad enough to exempt such generic drug development activities from infringement. The safe-harbour provision can protect activities reasonably related to development and submission of information required by law, either before or after market approval. The court also f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use of the patented articles or processes or the use of articles or products made by the use of the patented process or patented machine or apparatus for experimental purposes from being actionable as an infringement. 70. The amendment of 1999 to the Patents Act was pre-dated by a report of the Joint Parliamentary Committee. It recommended introduction of a Bolar exemption provision. The report explained the reason for Clause 51 (which was to be the amendment): Clause 51: this clause seeks to insert a new Section 107A in the principal Act, relating to certain acts which are not to be considered as infringement. This provision has been made to ensure prompt availability of products, particularly generic drugs, immediately after the expiry of the term of the patent. The amendment in this clause has been made to make a provision in consonance with the Bolar Provisions at the global level. The other amendment in this clause is correction of a typographical error. 71. The Notes on clauses, amending the Act, through the Bill reads as follows: this clause seeks to insert a new section 107A in the Act, relating to certain acts which are not to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India or in a country other than India, that regulates the manufacture, construction, use or sale of any product 76. Eventually, the Patents Amendment Act, 2005 which proposed the amendment in its present form, was enacted; it reads as follows: 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 77. These stages in the amendment of the Act and the introduction of India s Bolar exemption demonstrate that Parliament took a careful and nuanced view of the matter; it also had the benefit of provisions enacted in other countries, including the US and Canadian law. A Interpretation of sale and whether it encompasses exports 78. Rival arguments were addressed with respect to the expression sale and whether it comprehends export . Bayer contended that the use of sale along with import excluded the ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the context and purpose of the provision should always be kept in mind. Thus, in Polestar Electronic (Pvt.) Ltd. v Additional Commissioner, Sales Tax and Anr. (1978) 1 SCC 636 , it was held: 11. ... If the language of a statute is clear and explicit, effect must be given to it, for in such a case the words best declare the intention of the law-giver. It would not be right to refuse to place on the language of the statute the plain and natural meaning which it must bear on the ground that it produces a consequence which could not have been intended by the legislature. It is only from the language of the statute that the intention of the Legislature must be gathered, for the legislature means no more and no less than what it says. It is not permissible to the Court to speculate as to what the Legislature must have intended and then to twist or bend the language of the statute to make it accord with the presumed intention of the legislature. ... 80. Central Bank of India v State of Kerala and Ors. (2009) 4 SCC 94 , a three-Judge Bench judgment, quoted Professor H.A. Smith (as quoted in Justice G.P. Singh s Principles of Statutory Interpretation) to the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferent parts of the same section or statute, there is a presumption that the word is used in the same sense throughout (ibid, p. 263). More correct statement of the rule is, as held by the House of Lords in Farrell v. Alexander All ER at p. 736b, where the draftsman uses the same word or phrase in similar contexts, he must be presumed to intend it in each place to bear the same meaning . The court having accepted invitation to embark upon interpretative expedition shall identify on its radar the contextual use of the word or expression and then determine its direction avoiding collision with icebergs of inconsistency and repugnancy. 82. It is, therefore, clear that whilst there is one rule generally speaking, use of a term or expression in a statute, carries upon it to be interpreted in the same manner in all provisions of that statute, the rule is neither inflexible admitting no exception nor of universal application. The object of the concerned provision is one of the important factors which weigh in while interpreting whether the same meaning has to be attributed to all parts of the statute. Given these circumstances, this Court is of the opinion that exports is us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exports from the term sale is that patent rights are territorial in nature, specific allusion was made to Section 48 in this regard. Elaborating, it was contended that the grant of a patent constitutes a negative right to prevent third parties from making, using, forwarding for sale, selling or importing the patented product in India. Secondly, it was urged that the research exception, can be accepted, and needs to be carried out in India if the benefit of that provision is to be secured. 85. It was submitted that Section 107A(a) really constitutes an exception and its effect has to be strictly confined to the extent the terms of the expression spelt out and no more. Reliance was placed upon Mohan Kumar Singhania v UOI AIR 1992 SC 1 . There are a line of judgments which state that a particular provision of an enactment cannot be said to nullify or set at nought the main or substantive provision. In Dwarka Prasad v Dwarka Das Saraf 1976 (1) SCC 128 , it was stated as follows: 18. We may mention in fairness to Counsel that the following, among other decisions, were cited at the Bar bearing on the uses of provisos in statutes: CIT v. Indo-Mercantile Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the proviso would be within the purview of the enactment. In other words, a proviso cannot be torn apart from the main enactment nor can it be used to nullify or set at naught the real object of the main enactment. (Emphasis supplied) 87. Likewise, in J.K. Industries Ltd. v Chief Inspector of Factories and Boilers 1996 (6) SCC 665 , it was held as follows: 33. A proviso to a provision in a statute has several functions and while interpreting a provision of the statute, the court is required to carefully scrutinise and find out the real object of the proviso appended to that provision. It is not a proper Rule of interpretation of a proviso that the enacting part or the main part of the Section be construed first without reference to the proviso and if the same is found to be ambiguous only then recourse may be had to examine the proviso as has been canvassed before us. On the other hand an accepted Rule of interpretation is that a Section and the proviso thereto must be construed as a whole, each portion throwing light, if need be, on the rest. A proviso is normally used to remove special cases from the general enactment and provide for them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Central Government, person or persons nominated to manage the affairs of the factory by the State Government, Central Government etc. . Prior to the amendment, the occupier did not include the specific designated officials or employees of the company or firms. The Supreme Court held that the requirement of third proviso could really constitute a separate provision, and had to be read as such. The Supreme Court held as follows: 20. Apart from the main part of Section 2(n), the first proviso also indicates that the Legislature intended that the person having ultimate control over the affairs of the factory has to be regarded as occupier of the factory. The proviso to the Section is not in the nature of an exception. In order to avoid any ambiguity, to plug loopholes and to seal the escape routes a deeming provision has been made in a mandatory form. In the case of a firm obviously the partners of the firm have ultimate control over the affairs of the partnership. In case of other type of association the members thereof will have such control. In the case of a company the directors have the ultimate control, as the power to manage the affairs of the company vests ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for any offence for which the occupier of the factory was punishable. The firm or association was given an option to nominate one of its members as the occupier of the factory and if such an option was exercised by giving a notice to the Inspector then he alone was to be deemed to be the occupier of the factory for the said purpose. Under Sub-section (2) if the occupier of the factory was a company then any one of the directors thereof could be prosecuted and punished. A similar option was available to the company, as in the case of a firm and an association of individuals. It is significant to note that it was by way of a proviso to Sub-section (2) which dealt with case of a company that the provision was made for deciding who should be deemed to be the occupier of a factory in case it belonged to the Central Government or any State Government or any local authority and a similar option is made available to them. The said proviso though enacted as an exception to the main part of Sub-section (2) is truly by way of a separate provision made in the case of a factory belonging to the Central Government or any State Government or any local Authority. While making the amendment in 198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of another country i.e the export for reasonably complying with the laws of another country in relation to the kind of research and experimentation needed is something that cannot be dictated by interpretation of Indian law alone. It is plausible- even reasonable- that many nations may require experimentation or research to be carried on in their soil nationally so as to be able to supervise the process and then oversee the outcome. It is, therefore, not possible to dictate the behaviour and legal requirements of other nations by confining the research exception within the territory of India. 92. The natural interpretation of the expression use is in all its senses. In this context, it would be necessary to recognize that in regard to various products, especially those concerning the pharmaceutical, medicinal preparations, surgical and diagnostic purposes and those relating to the agriculture or bio-chemical sector, it may be critical for a database of populations, drugs and co-relation, with disease and its relationship with characteristics that are predominantly local. National regimes might well insist that such research and experimentation in regard to those aspect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry purposes of the research and development in India. Here again, the court is of the opinion that the broad nature of the provision which enables development and research of the product and information related thereto, on fulfilling the regulatory or other legal requirements of India, and other countries- cannot be construed narrowly as to permit development and research of the product only in India, even though the backup research is conducted elsewhere. The object and underlying purpose of Drugs and Cosmetics Act is entirely different from those of the Patent Act. The former deals with the range of regulatory provisions necessary for various classes of drugs to receive licensing, marketing approvals etc. On the other hand, the patent regime is premised solely upon the regulation of the intellectual property right relating to patents. The court is also of the opinion that Natco s status as compulsory licensee did not place it under any additional statutory bar from exporting the product, as long as the underlying condition in Section 107A was satisfied, as held by the learned Single Judge. 95. It is therefore, clear that the submissions with respect to impermissibility of expor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed active ingredients related to the development and submission of information required by law. It would be common commercial practice for the supply contract with the manufacturer to specify the purposes for which the chemicals were being manufactured and to provide an appropriate indemnity against infringement liability. While the matter had not been decided in the courts, the effect of the exception of Section 55.2(2) for the fine chemical producer would appear to be that a third party could acquire intermediate products, or inputs , such as the bulk fine chemical constituting the active ingredient of a generic drug, for manufacturer and storage during the last six months of the patent term. In other words, both the third party and manufacturer would appear to be covered by the exception. 98. It was submitted that the DSP in its findings stated that selling in the provision was under challenge. Para 7.4 of the award was also relied on; it states that: The structure of the generic pharmaceutical industry illustrates the actual operation of the regulatory review exception. Production of generic pharmaceuticals often involves a two-tier production arrangeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmaceutical industry, the operation of the exception with regard to new pharmaceuticals was explained in some detail by the parties. Information supplied by Canada in the proceedings before the Panel on the process of regulatory approval in Canada for patented and generic drugs can be found in paragraphs 2.2 to 2.7 above and Annexes 3 and 4 to this Report. The information has not been contested by the European Communities. Since patent applications are generally filed as quickly as possible after the invention has been made, actual marketing of the patented product is frequently delayed for a certain period of time because time is required for development of the product in commercial form, after which additional time is required to complete the testing required for government approval. According to the information supplied by Canada, the process of development of the drug and regulatory approval for new patented pharmaceuticals normally takes approximately eight to 12 years. The long development and approval process means that, for most patented pharmaceuticals, the 20-year patent term results in an actual period of market exclusivity of only some 12 to eight years. After a pharmac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gulatory review process the fine chemical producer in developing, making and selling the necessary amounts of the active ingredient to the generic producer, and the generic producer in combining the various elements to make the final product and then demonstrating its safety, stability and effectiveness by appropriate tests. The regulatory review exception applies to these activities of both producers. 7.5 To qualify for exemption under Section 55.2(1), such activities by either fine chemical producers or generic producers must be solely for uses reasonably related to the development and submission of information required by any law, Canadian or nonCanadian, that regulates the manufacture, construction, use or sale of any product . In answer to a question from the Panel, Canada stated that, although Canadian marketing regulations for generic producers did not require production runs to demonstrate the applicant's ability to maintain quality production in commercial volumes373, the statute would allow either fine chemical manufacturers or generic producers to undertake such production runs if they were required by regulations in other countries. 102. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, the Panel also considered Canada's additional arguments that both the negotiating history of Article 30 of the TRIPS Agreement and the subsequent practices of certain WTO Member governments supported the view that Article 30 was understood to permit regulatory review exceptions similar to Section 55.2(1). The Panel did not accord any weight to either of those arguments, however, because there was no documented evidence of the claimed negotiating understanding, and because the subsequent acts by individual countries did not constitute practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation within the meaning of Article 31.3(b) of the Vienna Convention. 7.48 A final objection to the Panel's general conclusion remains to be addressed. Although the point was raised only briefly in the parties' legal arguments, the Panel was compelled to acknowledge that the economic impact of the regulatory review exception could be considerable. According to information supplied by Canada itself, in the case of patented pharmaceutical products approximately three to six-and-a-half years are required for generic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 In the Panel's view, however, Canada's regulatory review exception is a limited exception within the meaning of TRIPS Article 30. It is limited because of the narrow scope of its curtailment of Article 28.1 rights. As long as the exception is confined to conduct needed to comply with the requirements of the regulatory approval process, the extent of the acts unauthorized by the right holder that are permitted by it will be small and narrowly bounded. Even though regulatory approval processes may require substantial amounts of test production to demonstrate reliable manufacturing, the patent owner's rights themselves are not impaired any further by the size of such production runs, as long as they are solely for regulatory purposes and no commercial use is made of resulting final products. 7.46 The Panel found no basis for believing that activities seeking product approvals under foreign regulatory procedures would be any less subject to these limitations. There is no a priori basis to assume that the requirements of foreign regulatory procedures will require activities unrelated to legitimate objectives of product quality and safety, nor has the EC prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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. 108. The Canada dispute case (supra) is a clear authority which instructs that the volume of use, sale, construction, etc of a patented invention or the quantum is itself inconclusive on the issue. Some guidance is, however, available in this regard by the UK Intellectual Property Office (UKIPO) and Medicines and Healthcare products Regulatory Agency (MHRA). The guidelines issued in this regard are extracted below: The carrying out of chemical and biological synthetic processes suitable for the making, disposal or keeping of the active substance(s) including the manufacture or the import of batches in quantities sufficient to provide material for preparing investigative batches of the medicinal product and to validate the processes to the satisfaction of the competent authorities. The development, testing and use of the associated analytical techniques for the above. The development of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circuited by approaching and seeking relief under Article 226 of the Constitution. Bayer s claim that the court should have directed the authorities to seize or prohibit quantities of articles which Natco, or someone else sought to export, is not based on any obligation cast upon Customs authorities, in law. Further, even for the court to issue blanket directions of the kind, sought by Bayer, in its writ petition, is not feasible, because whether such seizure or prohibition or labelling ought to be mandatory, are aspects to be worked out, at the policy level, by the executive government, and not upon the court s understanding. If Bayer s claim were to succeed on this score, not only would the court become a proactive institution in framing policy and evolving normative standards in respect of spheres that have public repercussions, but would be exposed to the criticism that it would do so at the interests of private parties; moreover the episodic nature of writ jurisdiction is such that at the behest of a patent proprietor, sometimes even on its apprehension, the court would be in effect legislating policy in the guise of interpretation of law. Equally, the direction give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company or entity undergoes amalgamation or transfer, suitable undertaking from the successor organization; (9) If necessary, verification through the Indian mission (and its trade division) abroad regarding the authentication of the third party and/ or its facilities abroad. (10) If it is held by the court that the exporter is not involved in sale or export of any patented product, but a generic article, unprotected by patent law, when denying relief, suitable restitutionary relief should be awarded to the defendants in monetary terms, to preclude litigation that prevents trade or competition. The above aspects are only indicative of the matters that need examination, they are in no way exhaustive and the court may consider any other matter relevant to the subject. Postscript 112. The TRIPS Agreement (1994) mentions in Article 7, as an objective, the need to balance IP rights: The protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, [...] in a manner conducive to a balance of rights and obligations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PS recognised the need for Bolar like research provisions, enabling research and development in numerous ways which relieve those involved in such activities, of the charge of patent infringement. Therefore, a constricted and narrow textual interpretation of such provisions is not called for. 116. This court notes, furthermore, that as early as in 1946, the Constitution of the World Health organization (WHO) recognized that the the enjoyment of the highest attainable standard of health is one of the fundamental rights of every human being without distinction of race, religion, political belief, economic or social condition. Later, the International Covenant on Economic, Social and Cultural Rights, by Article 12 stated that: 1. The States Parties to the present Covenant recognize the right of everyone to the enjoyment of the highest attainable standard of physical and mental health. 2. The steps to be taken by the States Parties to the present Covenant to achieve the full realization of this right shall include those necessary for: (a) The provision for the reduction of the still birth rate and of infant mortality and for the healthy devel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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. 119. In the light of the above discussion and findings, it is held and directed as follows: (a) 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. (b) A dispute about the sale, i.e. whether it is legitimately related to the reasonable end use or purpose of research etc. for submission of information is properly the subject matter of a civil suit in which the full range of reliefs available in law can be granted having regard to th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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