29 April 2019

Patents – Exemption under Section 107A available to exports for clinical studies

A Division Bench of the Delhi High Court has held that sale, use, construction of patented products by persons who do not hold patents or licenses from patentees, in terms of Section 107A of the Patents Act is correct provided it is reasonably related to research and development of information in compliance with laws of India (or the importing country).

The Court hence allowed the Bolar exemption to patented goods exported by the person who was not the holder of the patents for the product exported (though had compulsory licence), to conduct clinical studies and trials for development of information for regulatory purposes.

The Court in the case of Bayer Corporation v. Union of India was of the view that 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. It noticed that once it is held that patented inventions can be sold for carrying on research which fulfils the regulatory requirements of India, there cannot be any bar or an interpretation narrowing the scope of such sale.

It observed that if the purpose of the sale is to ultimately exploit the patented invention and either work upon it or “work around” or work it through research to be prepared to apply for the patent for approval to market it once the patent tenure ends, there can be no impairment of the patentee’s rights. It also rejected the contention that Section 107A constitutes an exception and must be read as subordinate to the main provision of Section 48.

The Court in this regard also observed that the course of the experimental exception- both before and after the TRIPS has shown the adoption, generally of a broad approach, to permit use of all kinds, and that the courts approach has been not to enjoin or prohibit purely experimental or scientific activity, as long as it does not have any primary commercial undertones.

Provisions as prevalent in USA, UK and Canada were relied upon while also tracing the legislative history of the Indian Section 107A.

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