This article is written by Anandi Chaturvedi of Chanakya Law College, Rudrapur,Uttrakhand [BA.LLB.-5th year] during her internship at LeDroit India
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Scope of Article
This article examines the scope and significance of the Bolar Exemption under Section 107A of the Indian Patents Act, 1970. It analyses the legal framework governing the use of patented inventions for research and regulatory purposes, with particular emphasis on the pharmaceutical sector. The article explores the evolution of the exemption, its judicial interpretation through key Indian and international cases, and its role in balancing patent rights with public access to affordable medicines. It also discusses the challenges, policy implications, and future prospects of the Bolar exemption in the context of India’s role as a global pharmaceutical hub
Abstract
The Bolar Exemption, codified under Section 107A of the Indian Patents Act, 1970, represents a pivotal legislative instrument that balances the exclusive rights of patent holders with the imperative of public access to affordable healthcare. It serves as a crucial safeguard balancing patent monopolies with public interest, particularly in the pharmaceutical sector. It permits the use of patented inventions for research, experimentation, and regulatory submission without constituting infringement. This provision ensures timely market entry of generic medicines immediately after patent expiry, fostering affordability and accessibility of life-saving drugs.
By preventing a “de facto” extension of the patent term, Section 107A ensures that affordable generic medicines can enter the market on the very day a patent expires. This article delves into the historical genesis of the exemption from the landmark US case Roche v. Bolar, its subsequent adoption in India through the 2002 amendment, and its judicial expansion by the Delhi High Court in the Bayer v. Union of India (2019) ruling. It specifically addresses the permissibility of exporting patented drugs for research and regulatory purposes, highlighting how this exemption facilitates the timely availability of generic medicines post-patent expiry.
The discussion also touches upon the inherent tension between protecting patentee rights and ensuring affordable access to essential medicines, a critical aspect in India’s robust generic drug market. The article concludes by examining the challenges and the future trajectory of the Bolar exemption in India’s dynamic patent landscape
- Introduction: The Delicate Balance of Patent Policy
The patent system is fundamentally a social contract it grants an inventor exclusive rights over their invention for a specified period, typically 20 years from the filing date. This exclusivity, governed by Section 48 of the Indian Patents Act, 1970, aims to incentivize innovation by allowing inventors to recoup their research and development investments. During the patent term, the patent holder has the sole right to prevent others from making, using, selling, or importing the patented invention within the jurisdiction where the patent is granted. This monopoly, however, is not absolute and is subject to certain exceptions designed to serve broader public interests. The pharmaceutical industry operates at the intersection of innovation, public health, and economic policy and in the pharmaceutical sector, this monopoly is often threatened by the “dead-weight loss” that occurs at the end of the patent term. However, excessive exclusivity can hinder public access to affordable medicines, especially in developing countries like India. To address this imbalance, the concept of the Bolar Exemption was introduced.
The Bolar Exemption allows manufacturers to use patented inventions for research and development purposes, particularly for obtaining regulatory approvals, without infringing the patent. This provision ensures that generic manufacturers can enter the market immediately after patent expiry, thereby preventing unnecessary delays that would otherwise extend monopoly rights beyond their statutory term.
In a developing nation like India, where the “Right to Health” is interpreted as a derivative of the Right to Life under Article 21 of the Constitution, such an extension is socially and economically untenable. Section 107A of the Indian Patents Act, 1970, acts as the corrective mechanism. It ensures that the transition from a patented regime to a generic regime is seamless, fostering competition and significantly lowering drug prices.. The provision plays a pivotal role in safeguarding public interest while maintaining compliance with international intellectual property obligations under the TRIPS Agreement.
2. The Genesis: From Judicial Restriction to Statutory Liberty
2.1 The Case of Roche Products, Inc. v. Bolar Pharmaceutical Co. (1984)
The term “Bolar Exemption” originates from the landmark American litigation, Roche Products, Inc. v. Bolar Pharmaceutical Co. (733 F.2d 858). Roche held a patent for the active ingredient in the sleeping pill “Dalmane.” As the patent neared expiration, Bolar Pharmaceutical began using the patented ingredient to conduct tests necessary to obtain FDA approval for a generic version.
Roche sued for infringement. The US Court of Appeals for the Federal Circuit ruled in favor of Roche, holding that the “experimental use” exception was intended for scientific curiosity and not for activities with a clear “commercial intent.” This ruling created a massive barrier for generic entry.
2.2 The Hatch-Waxman Act Response
The US Congress recognized that the Roche v. Bolar decision would keep drug prices high. Consequently, they enacted the Drug Price Competition and Patent Term Restoration Act of 1984, popularly known as the Hatch-Waxman Act. This act introduced 35 U.S.C. § 271(e)(1), which explicitly permitted the use of patented inventions for uses “reasonably related to the development and submission of information” to the FDA. This statutory “safe harbor” became the global blueprint for what we now call the Bolar Exemption.
India adopted a similar approach through Section 107A, recognizing that waiting for patent expiry before initiating regulatory procedures would cause unjustified delays in access to affordable medicines.
3. The Indian Context: Transition and Section 107A
3.1 The 2002 Amendment
India’s patent regime underwent a seismic shift between 1995 and 2005 to comply with the WTO TRIPS Agreement. The Patents (Amendment) Act, 2002 introduced Section 107A. This was crucial because, unlike many other nations, India’s generic pharmaceutical industry is a global powerhouse, and the legislature needed a broad provision to protect its manufacturing and export interests.
3.2 Statutory Anatomy of Section 107A
Section 107A(a) provides:
“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, sale or import of any product, shall not be considered as an infringement of patent rights.”
Key Elements:
- The Scope of Acts: It covers “making, constructing, using, selling or importing.” This is remarkably broad compared to other jurisdictions.
- The Intent Requirement: The use must be “solely” for purposes “reasonably related” to regulatory submission.
- The Regulatory Scope: It applies to laws in India or in a country other than India. This phrase is the foundation for India’s generic export industry.
3.3 Legislative Intent Behind Section 107A:
The legislative intent behind Section 107A is twofold:
- Ensuring Public Access to Medicines: By allowing early research and regulatory preparation, generic medicines can enter the market immediately after patent expiry.
- Compliance with TRIPS: Article 30 of the TRIPS Agreement permits limited exceptions to patent rights, provided they do not unreasonably conflict with normal exploitation of the patent.
India’s incorporation of Section 107A reflects a balanced approach between innovation incentives and public health priorities.
- Judicial Interpretation of Section 107A
The most transformative moment for Section 107A came in the litigation between Bayer Corporation and Union of India & Ors (2019).
- The Conflict: Bayer held a patent for Sorafenib Tosylate (brand name Nexavar), a drug used for kidney and liver cancer. Natco Pharma and Alembic Pharmaceuticals were exporting quantities of this drug to countries like China and the US. Bayer argued that Section 107A was a “research exception” and did not permit the commercial “export” of patented products under the guise of selling. Bayer contended that “selling” in Section 107A should be restricted to domestic sales within India for Indian regulatory purposes.
- The Single Bench vs. Division Bench: The Single Judge initially held that “export” could be permitted but required a case-by-case analysis by the court to ensure the quantity was reasonable. However, the Division Bench of the Delhi High Court took a much broader, more pro-generic stance.
- The Court’s Findings:
- Non-Infringement, Not an Exception: The court clarified that Section 107A does not list “exceptions” to infringement; rather, it defines certain acts as “not being infringement” at all. This distinction is vital for the burden of proof.
- Export is Sale: The court held that “selling” includes “export.” Since the statute explicitly mentions regulatory laws of “a country other than India,” it logically follows that the product must be exported to that country to fulfill those regulatory requirements.
- Quantity and Reasonable Relationship: The court emphasized that as long as the quantity exported is “reasonably related” to the information needed for regulatory approval in the foreign country, it is protected. There is no “one size fits all” limit on quantity; it depends on the requirements of the specific foreign regulator (e.g., FDA or EMA).
4.2 Merck Sharp and Dohme Corp. & Anr. v. SMS Pharmaceuticals Limited:
In this case, Merck alleged that SMS Pharmaceuticals was exporting its patented anti-diabetic drug, Sitagliptin, for research and development purposes. The court considered whether such dealings, particularly those involving joint ventures for market launch post-patent expiry, fell under the Bolar exemption. The argument that exports must be between sister concerns was rejected, underscoring that Section 107A does not mandate any specific relationship between the exporter and the foreign buyer.
Although primarily a patent infringement case, the court acknowledged the importance of balancing patent rights with public health considerations. The decision indirectly strengthened the foundation for interpreting Section 107A liberally.
4.4 Natco Pharma Ltd. v. Bayer Corporation (2013)
While this case is more commonly associated with compulsory licensing, it reinforced the principle that patent rights are not absolute and must align with public interest objectives.
- The “Reasonably Related” Standard: Guidelines for Application
How do we distinguish between a legitimate Bolar use and a disguised commercial sale? The Indian courts and the Intellectual Property Appellate Board (IPAB) have looked at several factors:
5.1 The Quantity Factor
If a regulatory authority requires data from three batches of a drug for bio-equivalence studies, and the manufacturer produces 3,000 batches, the “reasonably related” test is failed. The quantity must be proportionate to the testing requirements.
5.2 The End-User
The recipient of the patented product must be an entity involved in the regulatory process (e.g., a Clinical Research Organization (CRO) or a foreign drug regulator). If the product is being sold to a retail distributor, Section 107A protection is lost.
5.3 Illustration of Section 107A
Example: Company A holds a patent for “Drug X,” expiring in 2026. Company B, a generic manufacturer, wants to launch “Generic X” the day after the patent expires. Under Section 107A, Company B can import the active pharmaceutical ingredient (API), manufacture the tablets, and conduct human clinical trials in 2024. They can then sell these trial results to a regulator in Germany. None of these acts constitute infringement.
- Bolar Exemption and its Application to Exports
A significant aspect of India’s Bolar exemption is its application to exports. Judicial pronouncements have established that exporting a patented invention for research and regulatory submission purposes is permissible under Section 107A. The rationale is that to obtain regulatory approval in a foreign country, the drug may need to be manufactured, sold, or imported into that country for testing and data submission. The Delhi High Court’s expansive interpretation in the Bayer case affirmed that the “selling” contemplated by Section 107A includes “export,” as long as the purpose is to facilitate research and comply with foreign regulatory laws.
- Balancing Patent Holder Rights with Public Interest
The Bolar exemption represents a delicate balancing act between the exclusive rights of patent holders and the societal need for access to affordable medicines. India’s strong stance on this exemption is particularly relevant given its position as a global hub for generic drug manufacturing. The exemption ensures that generic drug manufacturers can conduct the necessary R&D and obtain regulatory approvals without undue delay, thereby promoting competition and making medicines more accessible to the public once patents expire. However, it is crucial that this provision is not misused for profiteering, as the primary intent is to facilitate research and development, not commercial exploitation during the patent term.
- Bolar Exemption in the Context of Pharmaceutical Research and Development
For pharmaceutical products, the Bolar exemption is indispensable. The lengthy process of drug discovery, clinical trials, and regulatory approvals necessitates that research and development activities can commence well before a patent’s expiration. Section 107A empowers generic manufacturers to undertake these essential steps, which include manufacturing and testing patented drugs for submission to regulatory bodies like the Drug Controller General of India (DCGI) or international equivalents. This anticipation is critical for a swift market launch of generic alternatives immediately after the patent term ends.
- Comparison with International Bolar Exemptions
While the concept of the Bolar exemption is global, India’s provision is considered more liberal than in some other jurisdictions, such as the United States. Unlike the US “Safe Harbor” rule, which may be limited to domestic activities, India’s Section 107A explicitly covers uses related to submission of information required under laws in India or in a country other than India. This international reach is crucial for Indian generic manufacturers aiming for global markets.
- Policy Implications: The “Pharmacy of the World”
The Bolar provision is the engine room of India’s pharmaceutical success. By allowing companies like Cipla, Sun Pharma, and Dr. Reddy’s to prepare their dossiers years in advance, India has become the primary provider of affordable HIV, Cancer, and Hepatitis-C medications to Africa and Southeast Asia.
- Cost Reduction: Research shows that generic entry typically reduces drug prices by 80% to 90%. Section 107A ensures this price drop happens on Day 21 (after 20 years), rather than Day 25 or 26.
- Innovation Incentives: Critics argue that Bolar exemptions weaken innovation. However, proponents argue that it encourages “incremental innovation” as generic firms find more efficient ways to manufacture existing molecules during their research phase.
11. Challenges and the Road Ahead
- Data Exclusivity vs. Section 107A:
A major challenge to the Bolar provision is the demand for “Data Exclusivity” in Free Trade Agreements (FTAs). If India were to grant data exclusivity, the DCGI would be barred from relying on the innovator’s clinical data to approve a generic drug for a fixed period (usually 5-8 years). This would effectively render Section 107A useless, as the “information submission” allowed by 107A would not result in a marketing approval.
- The Rise of Biologics:
As the world moves from small-molecule drugs to complex “Biologics,” the application of Section 107A becomes more complex. Developing “Biosimilars” requires significantly more “use” of the patented biological cell line. Courts will soon have to decide how much “making and using” is “reasonably related” in the context of complex biotechnology.
Conclusion
Section 107A of the Indian Patents Act is not a loophole; it is a meticulously crafted legislative policy made for a careful balancing of proprietary rights and societal welfare. It honors the letter of the TRIPS Agreement while fiercely protecting the spirit of public health. By enabling early research and regulatory preparation, it ensures that patent monopolies do not extend beyond their statutory term. Through the landmark interpretations in the Bayer cases, the Indian judiciary has sent a clear message: the private rights of a patentee do not extend to preventing the preparation for competition.
As India navigates future IP challenges, the Bolar Exemption will remain the cornerstone of its drug policy. It ensures that the “sun never sets” on the accessibility of medicine, ensuring that when a patent ends, the life-saving remedy begins for millions who were previously priced out of the market. The Bolar provision stands as a testament to India’s commitment to balancing the “IP for Innovation” with “IP for Access.”
