Tag Archives: patent decision india
Bolar exemption: Delhi high court upholds the exploitation of patented invention for research and development purposes
Once a patent is granted the patentee has complete rights over that particular invention in the jurisdiction the patent was granted. This grant restricts everyone else from manufacturing, selling or importing said invention for a specific term, typically 20 years from the date of filing. However, Section 107A of the Indian Patents Act, also known as “Bolar provision”, offers protection against patent infringement if the patented invention is exploited by the third-party for research and development. Particularly, in case of pharmaceutical patents, the third party entities require a considerable period for getting regulatory approval for commercializing the expired patent. This results in increased term of monopoly over the patent. The provision under Section 107A also prevents this extension in the term of patent, wherein the third-party entity can perform the patented invention for research and development activities for getting regulatory approvals.
The Section 107A of The Patents Act 1970, states that,
“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 authorized under the law to produce and sell or distribute the product], shall not be considered as an infringement of patent rights.”
Merck Sharp and Dohme Corp. & Anr (hereafter called as ‘the plaintiff’) alleged that SMS Pharmaceuticals Limited (hereafter called as ‘the defendant’) had been exporting their patented invention, Sitagliptin, an anti-diabetic drug. The investigator working for the plaintiff learnt that the defendant had and is willing to provide Sitagliptin an Active Pharmaceutical Ingredient (API) for sale in the domestic market. Considering this along with other arguments presented by the plaintiff, on 21st October 2020, the court granted an ex-parte ad-interim injunction against the defendant in terms of prayer. Consequent to issuance of summons, the defendant responded with a written statement. The written statement asserted the fact that the defendant is a Research and Development based API manufacturing group and participates in research to obtain pharmaceutical products at an affordable cost. The statement further asserted that M/s Chemo AG Lugano and the defendant executed a joint venture after obtaining due permissions from Governmental and Drug Control Authorities to conduct research and development of generic drugs. In July 2021, the defendant filed an application to take vacation/modification from the ex-parte ad-interim injunction dated 21st October 2020, passed by the court. The defendant argued that the drug was being used for the sole purpose of research and development. Also, a joint venture had been created between the defendant and M/s Cheo AG Lugano to research to launch the drug in the market after the patent terms expired. The defendant submitted that all the dealings of the defendant were conducted after receiving due permission from the Governmental and Drug Control Authorities and within the scope of patent laws. The defendant relied on judgement of the court in Bayer Corporation v. U.O.I and referred to the section 107A of the Patent Act, to contend that the defendant engaged in sale and export of the drug for the purposes of research and development and activities of the defendant were permissible. The court assessed the situation and arguments and decided to grant permission to the defendant to continue exporting said drug to M/s Cheo AG Lugano and Verben, Sitagliptin under some conditions.
Analysis and conclusion
The judgement granted by the court towards the proceedings is considered appropriate. The plaintiff was unable to prove that drugs being sold by the defendant were being used for commercial purposes. The court opined that the defendant was producing and distributing the drug solely for research purposes. The judgement was passed with some conditions that the defendant will need to satisfy any dealings with the drug in future. The court made it mandatory for the defendant to collect undertaking from the foreign buyers that the drug is being procured for research and development purposes alone and submit along with an affidavit before this court setting out quantities of the drug being exported. Additionally, the defendant will need to submit any information related to the sale of the drug to Government and Drug Control Authorities of India. In our opinion the decision granted by the court clears air for many other companies which might be interested in investing in research and development of already patented products. Also, in the absence of section 107A, the plaintiff would have gained extended exclusivity over the granted patent and denied availability of the cheaper generic drugs in the market soon after the expiry of the patent term.
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Enforcement of Standard Essential Patents in India
Ericsson has been going all out to enforce its Standard Essentials Patents (SEP) against several mobile phone companies, such as Micromax, Intex and Lava, among others, who are primarily selling mobile phones in India. The outcome of these law suits will no doubt play a significant role in defining the future of licensing and enforcement of SEP in India.
The latest in these law suits is an interim judgement by The High Court of Delhi in the matter between TELEFONKTIEBOLAGET LM ERICSSON (Ericsson) and LAVA INTERNATIONAL LTD (Lava). The interim judgement is in favour of Ericsson. More importantly, the judgement deals with various aspects of licensing and enforcement of SEP.
The judgement held that, as is the well-established practice, demonstrating or establishing compliance of a device or a process with concerned standard is sufficient to confirm that the device/process is infringing an SEP.
As a step-wise approach, to allege infringement of an SEP, the following may be done:
- Set out the relevant standards;
- Map the standards with the claims;
- Wherever implementation is optional, testing shall be done;
- Wherever implementation is compulsory, an expert affidavit shall be furnished.
The judgement favours passing injunction order once an SEP patent prima facie is held to be infringed and no credible defence is established. In case any party is reluctant or unwilling and deliberately and intentionally avoids entering into license agreement on flimsy grounds, the injunction order is to be passed.
The judgement also appears to suggest that once the owner of SEP has entered into several FRAND agreements, the balance of convenience lies in favour of the owner, necessitating an interim order to be passed. The reasoning provided is that, in case the interim order is not passed or the defendant is not ready to enter into FRAND agreement, other licensees would also take the same stand which is being taken by the defendant. Hence, under such circumstances, the owner of the SEP would suffer irrecoverable loss and also injury.
The operative parts of the interim order (w.e.f. June 21, 2016) include the following:
- Lava shall not import mobiles under the patents and technology, which are subject of the suit patents, and not to sell the same in the market, directly or indirectly through agent, shopkeepers, dealers, distributors or any other person on its behalf.
- Lava shall also not export the impugned goods.
- All Custom Authorities in India are directed not to release the impugned mobile phones if received from overseas countries under technology of suit patents of Ericsson to the Lava or any person on its behalf.
The operation of the interim order shall remain stayed till the final disposal, if the following conditions are met by Lava.
- Deposit a sum of INR 50 crores (approx. USD 7.7 million) with the Registrar General of the Court by way of FDR as security amount on or before 20th June, 2016;
- File statement of accounts for the period of 2011 to 31st May, 2016 before the Court by 10th July, 2016; and
- Continue to file statement of accounts every quarterly till the final judgment is delivered in the main suit.
The judgement is clearly in favour of Ericsson at this juncture. We will continue to monitor and analyse the suits involving Ericsson concerning their SEP in India, since the judgements will have far reaching implications on the subject of licencing in general, and licensing of SEP in particular.
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