A patent is a negative, exclusive, transferable right granted to the inventor or to a party to whom an invention has been assigned by the inventor, essentially by excluding others from making, using, importing, and selling the underlying invention for a limited period of time, said time is generally 20- years across the jurisdictions. This right is exclusively awarded to the inventors for encouraging them to contribute to the innovation pool, and general progress of the system, only after a tedious examination process with optional opposition before the respective authority or prescribed proceedings before the courts of law in the respective jurisdiction. Despite rewarding the exclusive right of a patentee on the invention, it was understood that there might be some cases where certain humane obligations are to be addressed, which is why certain exceptions are allowed under the Act that would otherwise be considered patent infringement, “Bolar Provision” aka “Bolar Exception” aka “Regulatory Exception” is one of these exceptions. With globalization, since the 90s, most countries became a signatory to various agreements under World Trade Organization (WTO), one such agreement is Trade-Related Aspects of Intellectual Property Rights (TRIPS) comprising an overall obligation for members of the WTO to grant patents for inventions that meet the criteria of patent-eligibility, however, with greater freedom to suo motu introduce exceptions to the rights of patent holders in their legal systems, so long as these abide by certain conditions. Under Article 30 of the TRIPS Agreement, the member states can impose reasonable exemptions on the patent taking into consideration the interest of the patent holder. Generally, the bolar provision or more specifically bolar exemption may be considered to be a specific type of experimental use exception, for private, non-commercial use, or to promote research or experimentation.
The concept of bolar exemption originated back in 1984 in a court case between Roche Products INC. v/s Bolar Pharmaceutical Co. before the Federal Circuit, USA. Bolar used a patented chemical of Roche for the experimental purpose to determine the bioequivalence of their product, aimed at preparing a generic version of the patent product. This experimental use was not recognized by the Federal Circuit due to a clear business purpose. However, the US Congress passed a law permitting the use of patented products in experiments to obtain FDA approval, in the Hatch Waxman Act in the 35 U.S.C. § 271(e)(1), perusing that for utilization sensibly identified with the improvement and accommodation of data under a Federal Law directing assembling, use, or clearance of medications or veterinary organic items, it would not be a demonstration of encroachment to make, use inside the USA or import into the USA a protected creation... This provision started to be followed in other jurisdictions as the Bolar provision or Bolar exemption.
Thus, the principal reason why the bolar provision or bolar exception is in the Act is to allow certain developmental research, mostly the downstream based on a patented product, which is of most importance for the pharmaceutical and/ or biotechnology domain wherein launching a product from lab to land takes long duration, and the filing of a patent, may be as a result of years of research, is merely the stepping stone that must be followed by at least three stages of clinical trials, getting regulatory approvals after submission of required data. Therefore, atleast to launch the developed product in the market right after the expiry of a patent, there is a need to allow certain patented products solely for research without leveraging any direct commercial interest.
The corresponding laws of the European countries vary in this regard regarding the broadness or narrowness of the provision. The UK for example has a narrower exemption whereas, countries like Germany and France, offer a broader bolar exemption. At the end of 2012, the UKIPO consulted stakeholders on whether the Act should be changed to include an exemption from patent infringement for activities involved in preparing or running clinical or field trials which use innovative drugs. The amended guidelines included obtaining or varying an authorization to sell or supply, or offer to sell or supply a medicinal product whether in ULK or elsewhere, and complying with any regulatory requirement imposed whether in the UK or elsewhere about such an authorization enabling the government or public authority whether in UK or elsewhere or a person from UK or elsewhere with the functions of providing health care on behalf of such government or public authority or providing advice to such a government or public authority, thus, making the exemption broader than before. The USA also has this exemption, however, only for R&D purposes in the Medical domain that too governed at the state level in a federal structure. India, on the contrary, is having a very broad concept of bolar exemption including export, allowing countries to import the patented product for research purposes without any consent from the patent holder. In this regard, before exclusively focusing on India, the fundamental reason why this provision is in place must be enquired into.
India, since liberalization, started to serve as the medical hub of the World, as the largest producer and exporter of medicines, mostly generic medicines, as well as one of the prominent healthcare providers, especially for people from nations of a similar standard of living. The generic pharma industry generally survives upon secondary or tertiary or quaternary development of products based on patented products, said products may serve the interest of a huge patient population from not only all across India but also abroad. Thus, as a developing nation, corresponding to Article 30 of the TRIPS Agreement, Section 107-A of the Patents Amendment Act, 2002 was introduced as a defense under the Indian Patents act, 1970, allowing a newly invented drug or any invention for further development or research purpose, may be even sold by a third party without any adverse legal consequences. In simple words, it may be understood that the exemption enables generic drug manufacturers to use an inventor's pharmaceutical drug before the patent expires, which not only supports the early launch of generic versions of the drug once the patent term of the original drug ends but also promotes further R&D.
In the matter between Strix Limited v/s Maharaja Appliances, the defendant imported a patented article, specifically a kettle, from a supplier in China, and argued that the exemption under Section 107-A(b) allows the same as the Chinese product is protected by a Chinese patent. In absence of any proof of such a Chinese patent, the Court granted an injunction in favor of the plaintiff, however, the possible consequence in case the existence of the Chinese patent could be proved, is unknown.
Further, in the matter of Merck Sharp & Dohme & Anr v. Sanjeev Gupta & Ors., the Delhi High Court while addressing the issue regarding whether selling or manufacturing of patented product for export amounts to infringement, observed that Section 48 of the Indian Patents Act, 1970 protects the rights of the patent holder from restricting the use of the such patent by the third party without the consent of the patent holder, either for the sale, use or any other purpose, therefore, the court held that Sec. 48 includes protection of patent from being manufactured for export.
Therefore, by case law, it has been made clear that Sec. 48 includes broader protection for export, however, clarity was still required regarding whether said export may include the export of patented products to be used only for research purposes. In the matter of Bayer Corporation v. Union of India & Ors., and Bayer Intellectual Property GMBH & Anr v. Natco & Alembic Pharmaceutical Ltd., the judgment was based on two appeals filed by Bayer against the decision of the single judge in the writ petitions filed by Bayer against Natco and Alembic Chemicals to injunct the respondents from making, selling, distributing, advertising, exporting and offering for sale any product that infringed Bayer’s patents concerning the drugs Sorafenib and Rivaroxaban respectively. Sorafenib was the drug in question, a drug that was under debate when Natco secured India’s first and only compulsory license from Bayer. Natco applied to Bayer for permission to export 1 kilogram of the active pharmaceutical ingredient Sorafenib to China to conduct a clinical trial and research the development of the drug for regulatory purposes. Bayer rejected the application and filed a writ petition, arguing that the grant of such permission to Natco would be contrary to the provisions of Section 107A, as the transaction would be tantamount to commercial activity and hence infringes Bayer’s rights. The Delhi High Court rejected Bayer’s plea and held that Section 107-A is in line with the TRIPS Agreement, International guidelines as well as Articles 47 and 21 of the Indian constitution, therefore, decided that the Indian Constitution upholds export as a valid part of the bolar exemption, therefore, exporting for research and clinical trials come under the scope of Section 107-A as the bolar exemption and there will be no impairment of the patentee’s right, and “The Bolar exemption is the global community’s thought out design to ensure that the enclosure of intellectual property rights, granted to inventions, does not last beyond the term assured and that the general public is afforded with the end of the bargain which every society guarantees while sealing a patent i.e. access to the technology or invention for generations to come. 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”. Therefore, by judgment, it is quite clear that the patented drug or products could be exported abroad for research or a trial under Sec.107-A of the Indian Patents Act, 1970.
Thus, accepting the possibility of probable requirements in many nations, the court held that patented inventions can be sold to conduct research that fulfills the regulatory requirements of India, there cannot be any bar or any interpretation narrowing the scope of such sale. It is therefore not possible to dictate the behavior and legal requirements of other nations by confining a research exception within the territory of India. However, addressing the concern of probable misuse, the court suggested ensuring necessary safeguards to check unregulated export activity.
Therefore, in sum, the generic manufacturers may use any drugs, invented in India to carry out R&D or experiments, or clinical studies. Thus, this provision or exemption is for the benefit of society, said benefit must not include manufacturing of the patented products for profit and money-making, something the enforcement agencies must take care of.