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2. Facts in the appeal arising out of the judgment in the writ petition (i.e. in LPA No359/2107) are that Bayer filed a suit [CS(OS) No.1090/2011] for injunction against Natco from making, importing, selling, offering for sale „Sorafenib‟, ‗Sorafenib Tosylate' ("Bayer drugs") or any generic version or any other drug or product thereof which was a subject matter of Bayer‟s Patent No.215758. When the suit was pending, Natco applied to the Patent Office for grant of compulsory licence against that patent. This application was granted, on 09.03.2012, by the Patent Controller, under Section 84 of the Patents Act 1970 (hereafter "the Act"). The compulsory licence granted was solely for the purposes of making, using, offering to sell and selling the drug covered by the patent within the territory of India. However, inter alia, apart from producing the drug for the Indian market, Natco manufactured the product covered by the compulsory licence for export outside India. Bayer filed a writ petition seeking a direction to the Customs Authorities to seize the consignments for export containing products covered by compulsory Licence including ‗Sorafenat' ("Natco" drugs hereafter) manufactured by Natco. Notice of writ petition was issued by a learned single judge of this court; the customs authorities were directed to ensure that no consignment from India containing ‗Sorafenat' covered by compulsory licence was exported. At the same time, Natco was given the liberty to apply to the court for permission to export the drug. Later, on 23.05.2014, Natco pointed out that in fact it has already been granted a drug license and it was permitted to export the drug Sorafenib Tosylate not exceeding 15 gm for development/ clinical studies and trials.

3. Natco next applied for permission to export 1 Kg of Active Pharmaceutical Ingredient (hereafter "API") Sorafenib to China to conduct clinical studies and trials for development of drug for regulatory purposes.

That application was rejected by Bayer, which argued in its writ petition, that if permission were granted to Natco, it would be contrary to Section 107A and that such a transaction would be a commercial sale and hence, a patent infringement. According to Bayer, Section 107A was not applicable, because Natco was not conducting research. The sale of API, therefore, amounted to infringement of its patent. Bayer‟s interpretation of Section107A was that the provision mentions the word "sale" and also "import", but the legislature consciously excluded the term "export". Bayer relied on a German decision Polpharma as well as the US history of the Bolar Exemption (that allows sale only within the United States) and canvassed a restricted - as opposed to a liberal interpretation- of Section107A.

5. The suit, CS(COMM) No. 1592/2016 was filed by Bayer to injunct Alembic from making, selling, distributing, advertising, exporting, offering for sale and in any manner directly or indirectly dealing in Rivaroxaban and any product that infringed its (Bayer‟s) patent IN 211300 and for ancillary reliefs pleading: (i) that the subject patent is registered in the name of Bayer and is titled ―Oxazolidinones and their Use; ii) that Alembic is manufacturing and exporting Rivaroxaban to the European Union; and that Alembic has made multiple Drug Master File submissions to the United States Food and Drug Administration in the United States of America for the drug Rivaroxaban; iv) that a drug Master File is a submission to the United States Food and Drug Administration that is used to provide confidential detailed information about the facilities, processes and articles used in the manufacturing, processing, packaging and storing of one or more human drugs; v) that Alembic has also filed a patent application for grant of a process patent for Rivaroxaban which specifically referred to Bayer‟s patent and said that Rivaroxaban is disclosed by Bayer„s patent; thus, clearly showing that Alembic infringed Bayer‟s patent.

Contentions of Natco

28. The learned senior counsel, Mr. Anand Grover submitted that Natco disputed Bayer‟s factual assertion and contends that it had nothing to do with the alleged exports of the formulations. It is urged that anybody can buy the formulated drug in the market and send it out of the country. It is submitted that Bayer proposes selling the API (bulk drug) of Sorafenib Tosylate to M/s Hisun Pharmaceutical Co. Ltd ("Hisun" hereafter) in China, solely for generating data in China through Hisun to submit it to Chinese drug regulatory authorities. In any event, the issue of export under Section 107A applies both to API and formulations. Pertinently, on 13.05.2011, i.e. before the issuance of the compulsory license, the Drugs Control Administration of Govt. of Andhra Pradesh granted a license to Natco to manufacture Sorafenib Tosylate API for domestic and export purposes. This raw material/bulk form is not covered by the compulsory license issued to Bayer. It is urged that Chinese law does not permit any non-Chinese entity to submit regulatory dossiers based on data and information generated in a country other than China. Similar laws exist in other countries. The studies are required to be conducted in China by a Chinese entity to the satisfaction of Chinese regulatory authorities. Reference is made to the SFDA Order No. 28-Provisions for Drug Registration-Article 10-Provisions of Drug Registration.