Among the most practically significant yet doctrinally complex provisions of the Patents Act, 1970 is Section 107A, inserted into the Act by the Patents (Amendment) Act, 2002. In the two decades since its insertion, Section 107A has become one of the most contested and commercially consequential provisions in Indian pharmaceutical patent law, engaging questions that go to the heart of the relationship between patent rights, international trade, public access to medicines and the boundaries of the monopoly that a patent confers. The provision addresses two distinct but related concepts the Bolar exemption, which permits certain acts that would otherwise constitute patent infringement where they are undertaken for the purpose of regulatory approval and the principle of international exhaustion of patent rights, which determines whether a patent holder can use its patent to prevent the importation into India of genuine patented goods that have already been placed on the market in another country with the patent holder’s authorisation. Together, these two concepts define critical limitations on the scope of patent rights in India and their correct understanding is indispensable for pharmaceutical companies, generic manufacturers, importers and practitioners engaged with the Indian patent system.
The context in which Section 107A operates is shaped by India’s position as both a major generic pharmaceutical manufacturer and an increasingly significant destination for originator pharmaceutical investment. Generic manufacturers require the ability to conduct research and development on patented compounds before the expiry of the relevant patents to develop generic formulations, conduct bioequivalence studies and file regulatory dossiers with the Central Drugs Standard Control Organisation so that they are ready to enter the market the moment patent protection expires. Without the Bolar exemption, these activities would constitute patent infringement, effectively extending the patentee’s monopoly beyond the statutory term by the period required for regulatory approval. On the parallel imports side, the question of whether Indian patent law permits the importation of genuine patented goods placed on the market abroad by the patent holder or with its consent is a question of fundamental importance for access to medicines, particularly where patented drugs are sold at significantly lower prices in some foreign markets than in India or vice versa.
The Structure of Section 107A
Section 107A of the Patents Act, 1970 provides that certain acts shall not be considered as infringement of patent rights. It contains two distinct clauses that address the two concepts described above. Section 107A(a) provides that 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 infringement of patent rights. Section 107A(b) provides that importation of patented products by any person from a person who is duly authorised under the law to produce and sell or distribute the product shall not be considered as infringement of patent rights.
These two clauses are the statutory expression of the Bolar exemption and the international exhaustion doctrine respectively and each requires detailed analysis both in its textual dimensions and in its application by the Patent Office, the courts and the broader regulatory system.
The Bolar Exemption – Section 107A(a)
The Bolar exemption takes its name from the United States case of Roche Products Inc. v. Bolar Pharmaceutical Co., 733 F.2d 858 (Fed. Cir. 1984), in which the Federal Circuit Court held that the experimental use exception to patent infringement did not cover the activities of a generic pharmaceutical manufacturer that was using a patented compound to conduct bioequivalence studies needed for regulatory approval before the patent expired. The decision was widely criticised as effectively extending the patentee’s monopoly beyond its statutory term and prompted the United States Congress to enact the Drug Price Competition and Patent Term Restoration Act of 1984 the Hatch-Waxman Act which codified what has since come to be known as the Bolar exemption in US law. India, in inserting Section 107A(a) into the Patents Act through the 2002 amendment, adopted a version of the Bolar exemption that is in some respects broader than its American counterpart, reflecting India’s specific interest in facilitating the development of its generic pharmaceutical industry.
Section 107A(a) permits 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 that regulates the manufacture, construction, use, sale or import of any product. The scope of the exemption is defined by two requirements: first, the act must be solely for uses reasonably related to the development and submission of regulatory information; and second, the regulatory law in question may be either Indian law or the law of another country. This second feature the extension of the exemption to cover activities related to the regulatory approval of foreign jurisdictions is a particularly significant aspect of India’s Bolar provision, since it allows Indian generic manufacturers to conduct research and development aimed at securing regulatory approval in foreign markets, including developed country markets, without infringing Indian patents in the process.
The activities protected by Section 107A(a) include the synthesis and formulation of patented compounds for bioequivalence testing, clinical studies conducted for the purpose of regulatory submission, stability testing and analytical method development and the preparation of regulatory dossiers. The exemption does not, however, cover commercial manufacture or sale of the patented product it is confined to acts that are solely for the purpose of generating data for regulatory submission. Where a generic manufacturer uses a patented compound for both regulatory development purposes and for commercial stockpiling before patent expiry, the exemption will not protect the stockpiling component of the activity and the manufacturer will be exposed to infringement liability for that component.
The word “solely” in Section 107A(a) is the critical limitation on the exemption’s scope. It requires that the infringing act be exclusively connected with regulatory development that there be no commercial purpose or benefit from the act beyond the generation of regulatory data. This limitation has been the subject of considerable litigation and debate, with originator companies arguing that acts with any commercial dimension fall outside the exemption and generic manufacturers arguing that the necessary connection with commercial launch which is the ultimate purpose of regulatory approval does not take the act outside the scope of the provision.
Judicial Interpretation of Section 107A(a) – The Roche v. Cipla Dimension
The Indian courts have had occasion to consider the scope of the Bolar exemption in the context of pharmaceutical patent litigation and their treatment of the provision has progressively refined its boundaries. In F. Hoffmann-La Roche Ltd. v. Cipla Ltd., the Delhi High Court’s analysis of the infringement claim raised by Roche against Cipla’s manufacture of generic Erlotinib touched on the Bolar exemption in the context of Cipla’s defence that its activities were protected by Section 107A(a). While the Court’s primary analysis in that case turned on the balance of convenience and public interest considerations that led it to refuse the interim injunction, the proceedings raised important questions about the scope of the exemption that have informed subsequent practice.
In Bayer Corporation v. Union of India & Ors., the question of the Bolar exemption arose in the context of Bayer’s challenge to the grant of a compulsory licence to Natco Pharma. While the central issues in that case concerned Section 84’s compulsory licensing grounds, the relationship between the Bolar exemption and the compulsory licensing framework was relevant to the broader question of the access strategies available to generic manufacturers under Indian law.
The most direct judicial engagement with Section 107A(a) in recent Indian patent litigation has been in the context of originator companies seeking injunctions against generic manufacturers who were manufacturing or importing patented compounds for regulatory submission purposes. The courts have consistently recognised that activities genuinely confined to regulatory development are protected by the exemption, while scrutinising the evidence to determine whether the manufacturer’s activities were truly solely for regulatory purposes or whether they extended to commercial activities that the exemption does not cover.
The International Exhaustion Doctrine – Section 107A(b)
Section 107A(b) addresses a fundamentally different but equally significant question: whether the importation into India of a patented product that has been lawfully placed on the market in another country by or with the consent of the patent holder constitutes infringement of the Indian patent. This is the question of exhaustion of patent rights specifically, the question of whether India adopts a principle of international exhaustion, under which the patent holder’s rights are exhausted globally upon the first authorised sale anywhere in the world or a principle of national exhaustion, under which the patent holder’s rights are exhausted only upon the first authorised sale in India, so that parallel imports imports of genuine patented goods from abroad can be prevented by the patent holder invoking its Indian patent.
Section 107A(b) provides that importation of patented products by any person from a person who is duly authorised under the law to produce and sell or distribute the product shall not be considered as infringement of patent rights. The provision adopts, at least on its face, a principle of international exhaustion it permits importation from any person who is duly authorised to produce and sell the product under the law applicable in the country of export, without confining the exemption to goods first sold in India or to imports authorised by the Indian patent holder specifically.
This reading of Section 107A(b) has significant implications for the pharmaceutical sector and for international trade more broadly. If India genuinely adopts international exhaustion, then a parallel importer who sources a patented drug from a country where it is lawfully sold whether by the patent holder directly, by a licensed manufacturer or by any other person authorised under the law of that country to produce and distribute the product can import that drug into India without infringing the Indian patent. This would allow importers to exploit price differentials between markets sourcing patented drugs from low-price markets and importing them into higher-price markets in a manner that the patent holder cannot prevent through assertion of its Indian patent rights.
The Controversy Over Section 107A(b) – Scope and Limits
The interpretation of Section 107A(b) has been one of the most debated questions in Indian pharmaceutical patent law since the provision’s enactment. The pharmaceutical industry has argued that the provision should be read narrowly that “duly authorised under the law” means authorised by the patent holder specifically, so that only goods placed on the foreign market by or with the direct consent of the Indian patent holder qualify for the exemption. On this reading, goods manufactured by a compulsory licensee abroad or by a generic manufacturer authorised under a foreign statutory licence, would not fall within Section 107A(b) because the authorisation comes from the foreign law rather than from the patent holder’s consent.
Generic manufacturers, public health advocates and access to medicines groups have argued for a broader reading that “duly authorised under the law” means authorised by the applicable law of the exporting country, regardless of whether that authorisation derives from the patent holder’s consent or from a statutory provision such as a compulsory licence. On this broader reading, goods manufactured under a foreign compulsory licence and imported into India would be protected from infringement claims under Section 107A(b), significantly expanding the access strategies available under Indian law.
The courts have not yet produced a definitive resolution of this interpretive debate and the ambiguity in Section 107A(b)’s text has left the scope of the international exhaustion principle under Indian law uncertain. The practical consequence of this uncertainty is that parallel import strategies in the pharmaceutical sector carry legal risk importers cannot be fully confident that their importation will be held to fall within Section 107A(b) until the courts have conclusively determined the provision’s scope.
Parallel Imports in the Pharmaceutical Context – Policy Dimensions
The policy debate around parallel imports and the exhaustion doctrine is particularly acute in the pharmaceutical sector, where significant price differentials between national markets are the norm rather than the exception. Originator pharmaceutical companies typically engage in differential pricing charging higher prices in wealthy markets and lower prices in developing country markets as a commercial strategy that maximises global revenue while maintaining some degree of access in price-sensitive markets. Parallel importation threatens this strategy by enabling arbitrage the purchase of drugs in low-price markets and their resale in high-price markets at prices below the originator’s price in the destination market.
From a public health perspective, the consequences of permitting or restricting parallel imports are context-dependent and sometimes counterintuitive. In markets where the patented drug is priced higher than in the source market of the parallel imports, permitting parallel imports reduces prices and improves access. But in markets where the patented drug is priced lower as is often the case in India, where originator companies sometimes offer lower prices than in wealthier markets permitting parallel imports could paradoxically result in Indian supplies being diverted to higher-price markets, reducing availability and increasing prices for Indian patients. This complexity has made the policy case for international exhaustion in the pharmaceutical context more nuanced than it might initially appear.
The TRIPS Framework and Exhaustion
The TRIPS Agreement expressly declines to prescribe any particular rule of exhaustion for its member states. Article 6 of TRIPS provides that nothing in the Agreement shall be used to address the issue of the exhaustion of intellectual property rights, subject only to the non-discrimination requirements of Articles 3 and 4. This provision was a deliberate compromise in the TRIPS negotiations developing countries sought the freedom to adopt international exhaustion as a means of facilitating access to medicines and other patented goods at the lowest available global price, while developed countries sought to preserve the ability of their patent holders to maintain differential pricing strategies through national or regional exhaustion rules.
India’s adoption of international exhaustion through Section 107A(b) to the extent that the provision is read to adopt that principle is consistent with TRIPS Article 6’s grant of freedom to member states to determine their own exhaustion rules. The Doha Declaration on the TRIPS Agreement and Public Health, adopted in 2001, confirmed that each member has the right to determine its own exhaustion regime and that this right extends to pharmaceuticals. India’s exhaustion framework, interpreted as permitting parallel imports of genuine patented goods lawfully placed on any market in the world, is among the most access-friendly exhaustion regimes of any major patent jurisdiction.
Section 107A in the Context of the Broader Exceptions Framework
Section 107A does not operate in isolation it must be understood in the context of the broader framework of exceptions and limitations on patent rights that the Patents Act, 1970 provides. Section 47 of the Act provides that a patent does not prevent the making or using of a patented invention for experimental purposes. Section 100 and Section 102 provide for government use and acquisition. Section 84 and Section 91 provide for compulsory licensing. Together, these provisions constitute a comprehensive set of public interest exceptions to patent exclusivity that reflect India’s consistent legislative philosophy of granting patents as conditional monopolies subject to defined public interest limitations.
Section 107A sits within this framework as the provision specifically addressed to regulatory development activities and international trade and its interpretation should be informed by the same public interest philosophy that animates the broader exceptions framework. A narrow interpretation of Section 107A that restricts its scope to the minimum necessary to comply with TRIPS obligations is inconsistent with the legislative purpose that the provision was enacted to serve. A broad interpretation that gives full effect to the Bolar exemption and the international exhaustion principle within the textual limits of the provision is more consistent with the Act’s overall design and with India’s stated commitment to using TRIPS flexibilities to promote access to medicines and technology transfer.
Conclusion
Section 107A of the Patents Act, 1970 represents India’s legislative engagement with two of the most commercially and doctrinally significant limitations on patent rights in the modern pharmaceutical and technology landscape. The Bolar exemption in Section 107A(a) ensures that the effective term of pharmaceutical patents is not artificially extended by the time required for generic regulatory approval, preserving the competitive dynamics that patent expiry is designed to create and supporting India’s position as a major global supplier of affordable generic medicines. The international exhaustion principle in Section 107A(b) defines the boundaries of the patent holder’s ability to control the importation of genuine patented goods into India, with significant implications for access to medicines, differential pricing strategies and international pharmaceutical trade.
The interpretive uncertainties that remain in both provisions the precise scope of “solely” in Section 107A(a) and the meaning of “duly authorised under the law” in Section 107A(b) are not merely academic questions. They are live commercial and legal issues that affect the strategies of every pharmaceutical company operating in India, every generic manufacturer conducting regulatory development and every parallel importer seeking to exploit international price differentials. As Indian patent jurisprudence continues to develop through litigation and legislative refinement, the resolution of these uncertainties will shape the contours of pharmaceutical patent protection in India for decades to come and will determine the balance that the Indian patent system strikes between the rights of patent holders and the public’s interest in access to affordable medicines.
References
- The Patents Act, 1970 https://ipindia.gov.in
- The Patents (Amendment) Act, 2002 https://ipindia.gov.in
- Bayer Corporation v. Natco Pharma Ltd., Controller of Patents, 2012; IPAB, 2013 https://ipindia.gov.in
- F. Hoffmann-La Roche Ltd. v. Cipla Ltd., (2012) 49 PTC 356 (Del) https://delhihighcourt.nic.in
- TRIPS Agreement, WTO https://www.wto.org/english/docs_e/legal_e/27-trips.pdf
- Doha Declaration on the TRIPS Agreement and Public Health, 2001 https://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_trips_e.htm
- Manual of Patent Office Practice and Procedure https://ipindia.gov.in
- National IPR Policy, 2016, DPIIT https://dpiit.gov.in
- WHO TRIPS Flexibilities and Access to Medicines https://www.who.int/health-topics/medicines
- WIPO Patent Related Flexibilities in the Multilateral Legal Framework https://www.wipo.int/patent-law/en
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