Tag Archives: nexavar

Research Exemption in Indian Patent Law

The research or experimental use exemption permits researchers and product manufacturers to make certain use of a patented invention. The general idea behind this exemption is that it sets boundaries to patent holder rights such that the patent holder cannot prevent third parties from undertaking certain activities with respect to the patented invention. In pharmaceutical context, the experimental use exemption is referred to as “Bolar exemption”. The Bolar exemption provides an exception from patent infringement to the generic manufacturers from using patented drugs for research and development, for the sole purpose of submission of information for regulatory approvals of generic versions of patented products before the concerned patents expire.

            Section 107A of the Indian Patent Act, 1970 is generally referred to as India’s “Bolar exemption”. In the competitive generic market of India, it is important to balance the individual interest i.e. patentee’s rights and societal interest i.e. need for better and cheaper access of products to the society.

Section 107A of the Indian Patent Act, 1970 recites:

107A. Certain acts not to be considered as infringement – 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, sale or import] of any product;

(b) importation of patented products by any person from a person 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.”

Delhi High Court Interprets Scope of Section 107A of the Indian Patent Act:

            On November 2014, in Bayer Corporation Vs. Natco Pharma Limited, the High Court of Delhi examined the scope of India’s Bolar exemption. Specifically, the issue to be decided in this case was whether the exportation of an active pharmaceutical ingredient (API) constituted a defense to infringement under Section 107A of the Patents Act.

            Petitioner (Bayer Corporation) was granted a patent (IN215758) for a pharmaceutical product titled “Nexavar” (compound being Sorafenib Tosylate) which is used for the treatment of patients with advanced stages of kidney and liver cancer. Natco (respondent no. 5) applied for and was granted a “compulsory license” to manufacture pharmaceutical products which were covered under the Bayer’s patent on the ground that reasonable requirement of the public with respect to the aforesaid product was not met and it was not made available at reasonable and affordable price. Specifically, the “compulsory license” was “solely for the purpose of making, using, offering for sale and selling the drug covered by the patent for the purpose of treating HCC and RCC in humans within the territory of India”. Subsequently, Natco started manufacturing the product under the brand name ‘Sorafenat’ but was not permitted to export the same.

            Bayer allegedly received information that Natco was exporting the API, Sorafenib Tosylate outside India in violation of the terms of the compulsory license. Consequently, Bayer filed a writ petition with the Court requesting that the product covered under the compulsory license be confiscated and any consignment for export be seized. On March 26, 2014, the Court passed an interim order directing Natco to ensure that no consignment containing Sorafenib Tosylate covered by the compulsory license was exported.

            In the mean time, an application was filed by Natco before the court inter alia praying for permission to export 1 kg of Sorafenib Tosylate (API) to a Chinese pharmaceutical company for the purpose of conducting development/clinical studies and trials. Natco produced a certificate from the Chinese company stating that the company required 1 kg of Sorafenib for the purpose of “formulation R&D purpose and the same was not intended for any commercial purpose”.

            Natco argued that the 1 kg of Sorafenib was required for conducting regulatory studies in China and despite the compulsory license, export of the API was exempt by virtue of Section 107A of the Patents Act, 1970. Bayer argued that the regulatory approvals in China were being sought by the Chinese Pharma company and not by Natco, and hence Section 107A would not apply. Bayer further argued that exportation of Sorafenib was not permitted by the terms of the compulsory license and would not fall within the scope of Section 107A. Bayer stressed that the use of Sorafenib by a third party for development purposes did not entitle Natco to infringe Bayer’s patent. Additionally, Bayer argued that because Natco was not conducting any development studies, exportation of Sorafenib to China could not be construed to be solely for uses related to the development and submission of information required by any regulatory authority. Finally, Bayer noted that Section 107A did not permit export of Bayer’s product because the word “export” was missing from the section 107A.

            After a review of the facts, the Court accepted that the product Natco sought to export was not for commercial purposes since the amount was only sufficient to make 1000 to 2000 tablets (which was approximately the single trial batch size required by the Chinese Regulatory Authorities). Thus, according to the Court, the only question that had to be addressed was whether Section 107A covered export of a patented product for use by an overseas importer to conduct studies and generate data for the purpose of seeking regulatory approval in that country.

            Bayer relied heavily on the history of Bolar exemption in US (which allows sale only in the United States) and the Polish decision ‘Polpharma’ to contend that the applicability of Section 107A of the Act must be restricted to only self-use.

            The Court rejecting the reliance placed by Bayer on ‘Polpharma’, held that a sale which is related to submission of information as required by any law in India or outside India would be permissible by virtue of Section 107A. The Court further stated that the exclusion to a patentee’s right as provided under Section 107A is wider than the exceptions provided by the laws of the U.S.

Specifically, the Court stated:

“India is one of the largest producers of generic versions of drugs around the world. Given the economic realities of our country, providing cheaper medicines is a necessity. The parliament in its wisdom has, thus couched the exclusion to a patent, as provided under Section 107A, in wide terms. The sweep of the plain language of Section 107A, thus, cannot be restricted in the manner as canvassed on behalf of Bayer.

…Plainly, Section 107A of the Act takes within its fold any sale of a patented invention which is required for development and submission of information under any law in a country other than India that regulates the manufacture or sale of any product. Indisputably, under the Chinese Law, submission of studies and data related to bio-equivalence and bio-availability of API in a generic version, is required as discussed earlier and the sale of 1 kg. of Sorafenib to Chinese company can be reasonably stated to be related to the studies that are required to be conducted by Chinese company for obtained the regulatory approvals.

…[t]he language of Section 107A of the Act is determinative of the question whether export as sought for by Natco is permissible within the exemption of Section 107A of the Act. The use of the expression ‘reasonably related to’ as used in Section 107A of the Act would plainly mean a reasonably nexus. Thus, the only question that needs to be answered is whether there is any reasonable nexus between the sale of Sorafenib by Natco to Chinese company and submission of information under the law in force in China. In my view, the answer to this question is clearly in the affirmative.

…It is also important to note that the language of Section 107A of the Act is materially different from the law as applicable in U.S. Whilst, the US Law restricts the safe harbour to a sale within United States and solely for purposes related to information under a Federal Law, Section 107A of the Act is circumscribed by no such conditions. Thus, a sale even outside India would fall within the sweep of Section 107A, provided it is reasonably related to development and submission of information as required under a law in force in India or outside India.”

            The Court also rejected Bayer’s arguments that the language of Section 107A excluded “exports” because this term was not specifically recited. However, the Court stated:

“I am not inclined to accept this contention for the reason that the expression ‘selling’ is wide enough to even include cross border sales (i.e. exports). If the Parliament intended to restrict the exception to only sales within India, the same would have been expressly stated as was done by the US Congress under 35 US Code 271(e)(1).”

            The court stated that the sweep of the plain language of Section 107A, thus, cannot be restricted in the manner as canvassed on behalf of Bayer. Eventually, the court allowed the application filed by Natco on the ground that the sale of 1 kg of Sorafenib Tosylate to the Chinese pharmaceutical company, in China could be reasonably stated to be related to the studies that are required to be conducted for obtaining the regulatory approvals. The Delhi High Court interpreted Section 107A expansively to conclude that Section 107A is applicable when a party exports a patented product to a third party outside India as long as the purpose of export is the facilitation of research.

About the Author: Antony David, Senior Patent Associate at Khurana & Khurana, Advocates and IP Attorneys and can be reached at: antony@khuranaandkhurana.com


First Compulsory License Grant in India to Natco

The Controller General of India passed an order of compulsory license (CL) against Bayer’s patent on drug Nexavar on March 09, 2012, which is India’s first compulsory license and is resulting from India’s first CL application filed by Natco last year which was reported and discussed by us here. The complete CL order is available at the Indian Patent Office website here.

The grant permits Nacto to manufacture and market a generic version of Nexavar for Rs. 8800 for 120 tablets per month treatment (against Rs 284,428 per month by Bayer) in return for paying 6% royalty on sales to Bayer. The order also makes it obligatory for Natco to supply the drug free of cost to at least 600 needy patients per year.

The CL was granted in accordance with the grounds described under section 84 of the Indian Patent Act.

Section 84(1) of the Indian Patent’s Act allows any interested person to make an application to the Controller for grant of compulsory license after the expiry of three years from the date of grant of patent on any of the following grounds:

a. that the reasonable requirements of public with respect to the patented invention have not been satisfied

b. that the patented invention is not available to the public at reasonably affordable price,

c. that the patented invention is not worked in India.

The Controller gave his reasoning and conclusion separately on each of the above three grounds and found that all the grounds are satisfied in granting the CL against Bayer. His brief reasonings are as below:

1.      Reasonable Requirements of public are satisfied [84 (1) (a)]

Controller found that the drug is available to only 2% of the eligible patients and thus reasonable requirements of the public are not satisfied. He noted: “…there is requirement of at least 8842 patients. Even after the lapse of three years, the Patentee has imported and made available only an insignificant proportion of the reasonable requirement of the patented product in india.”  He did not take into consideration the sales of the generic version of the same drug in India by Cipla at lesser prices which was one of the reasons given by Bayer for lesser sales of the patented drug by Bayer in India. The Controller has also taken into consideration the Form 27 (Working of invention statement) filed by Bayer in 2009 and 2010 which show only an insignificant quantum of sales (only Rs. 2 crore for 2009) for the eligible patients.

2.      Non-availability at reasonably affordable price [84 (1) (b)]

Controller concluded that sales by Bayer at a price of about Rs. 2,80,000/- (for a month) constitutes a fraction of the requirement of the public and the only reason for not buying by them is due to no reasonable affordability.  He concludes, “Hence, I conclude beyond that the patented invention was not available to public at a reasonably affordably price…Consequently a compulsory license be issued to the Applicant…”

3.      Non-working in India [84 (1) (c)]

Controller after reading together the international agreements on intellectual property including TRIPS, Paris convention and the Indian Patent statutes including 83, 90, 84(6), came to the conclusion that the “worked in the territory of India” means “manufactured to a reasonable extent in India”. And Bayer failed to manufacture the drug in India even after four years from the patent grant date and further failed to grant voluntary licence for manufacturing in India and thus CL is to be issued to the Applicant.

 What can be the possible implications of the grant? :

  • Encouraging  for generic industry: More CLs to follow

Just the other day, even before CL decision came out, one of the top five Indian pharma companies (name undisclosed) discussed with us regarding their interest in filing six CL applications against six patented drugs separately owned by three different big players of the world.

This decision definitely could encourage more generic companies resorting to this route. As we have seen in majority of the generic – innovator patent battles in India, the pricing and public health issues always arise which seems to always go in favour of generic drugs over the patented ones. Further majority of the patented drugs are imported into India and in accordance with this decision, not complying with the “working in the territory of India” condition  which would further the chances of more CL application filings.

  • Bayer’s possible appeal to the court

It is strongly speculated that Bayer would appeal the Controller’s decision and try best to protect its IP rights.

  • MNCs may consider Differential Pricing structure

This decision may make the MNCs to consider the differential pricing structure for selling drugs for different sections/classes of the public in India. Even the Controller himself in his order brought this point as to why Bayer did not consider differential pricing.

  • Very positive for patients in India

This decision definitely would be having positive impacts on the patients suffering from kidney and liver cancers in India, who were not able to afford the such a high cost treatment.

  • Other countries may get motivated

This decision may motivate other low and medium income countries to adopt the same provision in their Patent Laws.

  • Precedent for the following cases

This is the first decision on Compulsory Licence Application in India and would act as precedent for all possible future cases.

About the Author: The Author of this article is Meenakshi Khurana, Patent Specialist at Khurana & Khurana, IP Attorneys and reachable at meenakshi@khuranaandkhurana.com


Natco Pharma has filed India’s first Compulsory Licensing (CL) Application (in accordance with Section 84(1) of the Indian Patents Act) against one of the Bayer’s patented drug Sorafenib, marketed by Bayer as Nexavar for treating Kidney and Liver Cancer. Patent on Sorafenib is granted in India on 03.03.2008 having number IN 215758. This will be a landmark development of such licensing in India and being a test case would set a precedent for the forthcoming similar cases. The CL Application is published in the Official Journal of the Indian Patent Office and can be seen here.

Section 84(1) of the Indian Patent’s Act allows any interested person to make an application to the Controller for grant of compulsory license after the expiry of three years from the date of grant of patent on any of the following grounds:

a. that the reasonable requirements of public with respect to the patented invention have not been satisfied

b. that the patented invention is not available to the public at reasonably affordable price,

c. that the patented invention is not worked in India.

As documentary evidence, Natco has presented a number of facts in support of a prima facie case of reasonable requirements of public not being satisfied.

Natco has stated in its CL Application that Sorafenib is not manufactured in India but is being imported and sold by Bayer at an exorbitant price in India. The average price of the treatment with Sorafenib per month per patient is Rs. 2, 80, 428/- and almost out of reach of the public. Round Natco has stressed that they will be able to sell the drug for Rs. 8,880/- per month! Natco has showed that at least 30,000 patients are diagnosed of Liver or Kidney cancer every year in India and out of these 99% of patients are unable to afford the drug and die every year.

Further Natco stated that there is a limited availability of the drug and is available only in metros cities, for example, Delhi, Mumbai, Chennai and Kolkata with an exclusion of second tier and smaller cities. Also the distributors of Sorafenib are only in Delhi, UP, Punjab, Gujarat, West Bengal, Bihar, Kerala and Tamil Nadu. Natco points that it has the distribution network in all almost every city and district of India.

Natco earlier requested Bayer to receive Voluntary License to manufacture and sell the drug in India by writing to them on 06.12.2010. The letter which was submitted along with the Application as an annexure is not available for its analysis. However, it would interesting to note whom the letter was addressed to and by whom was the same replied as the concerned stakeholder to whom a request Voluntary License (VL) was sent could play a role in deciding the reasonable efforts taken by the Applicant to obtain the VL. We believe that the person being contacted should be a person having due authority to take decisions on such matters, be it in the business development team or the Sr. Management team. Contacting any person not having the necessary authority would not add value and would not be construed as making appropriate efforts to obtain a license from the patentee. This however is a general issue and not pertaining to the case in context. Also, as a practice, the request for VL should disclose the proposed terms and conditions by the party trying to obtain the CL, in absence of which, the offer would not be held explicit.

Further, Natco stated in its Application that Bayer refused on 27.12.2010 without any further discussion whatsoever. According to S. 84(6) (iv) which says that one of the factors which Controller will take into account while considering a CL Application is whether the applicant has made efforts to obtain a license from the patentee on reasonable terms and conditions and such efforts have not been successful within six months. Natco’s CL Application was filed on 28th July 2011.

Another important factor which the Controller will take into account while considering a CL Application is the ability and capability of Natco to manufacture and cater to the needs of the entire public. Nacto has stated in the Application that it can manufacture 20,00,000 tablets  a day when there is need of 4,80,000 tablets a month. Natco has asserted that it can manufacture the drug by employing existing facilities without requirement of any additional investment/plant etc. as Natco has been already manufacturing other anti-cancer products for the last 20 years.

Earlier this year, Natco has also sought for a voluntary license from Pfizer to manufacture and sell Pfizer’s HIV drug maraviroc (marketed as Celsentri), the application is still pending. It is much expected that Pfizer will decline to give such license owing to high R&D investments incurred and it is quite likely that another CL Application might be coming from Natco soon.

This application by Natco has already started motivating the pharma companies in India in preparing to file CL Applications against patented drugs by Foreign players in manufacturing and selling their generic versions in India. A few of these drugs might not yet even have been marketed and might be in the clinical phase, wherein  S. 84 (a) (iii) could be a ground of filing CL in those cases namely the non-working of the patent in India. However, how strong such an application would be on grounds of S. 84 (a) (iii) is debatable as the drug itself is in the clinical phase and cannot anyways be worked upon by any company till the time it is registered with the regulatory authority.

A key point being stressed here is that the first CL Application has not even been granted by the Controller as yet and there is a feeling of urgency that is being felt right away in the Indian Pharma community to file multiple CL’s as possible. I wonder how Natco’c victory in this case could motivate the Indian generic industry to go ahead with the compulsory licensing. However, it is foreseen that the outcome and the ultimate result of this CL will be long awaited owing to the expected court battle between the two as the losing party is likely to challenge the decision. One thing is for sure, grant of the CL to Natco will motivate a large number of Indian pharma players to apply for the same against costly patented drugs (being sold by big Foreign players) mainly on price affordability ground as the Government in many of Indian pharma patent battles has already seemed to be inclined in favor of the generic companies selling cheaper drugs in public interest.

About the Author: Ms. Meenakshi Khurana, Patent Specialist at Khurana & Khurana and can be reached at: meenakshi@khuranaandkhurana.com