A patent gives exclusive rights to the patentee to prevent other from making, using, selling, offering for sale and importing the patented product into the country where the patent is granted. Any violation to these rights without the permission from the patentee would generally cause patent infringement. However, there are certain exceptional Acts where the use of patented invention without consent of the patentee doesn’t constitute infringement. Section 107 of Indian Patents Act details such exceptions.
In certain countries including India, the generic drug makers are allowed to use the patented invention without the consent of the patentee for development and submission of information required under law. This provision is called Bolar-like provision or Regulatory provision. This provision came into existence from the case of Roche Products v. Bolar Pharmaceuticals. Roche is a discovery based pharmaceutical whereas Bolar is a generic drug maker. Roche holds a patent over the drug Valium. Bolar intended to submit an Abbreviated New Drug Application (ANDA) to the FDA for a similar drug containing the same active ingredient as to Valium. Hence Bolar used the patented chemical in its experiments, before its patent expiry in order to determine if the generic version is bioequivalent to Valium. Roche responded to this by filing a suit for patent infringement. The District Court of Eastern District of New York declined Roche’s appeal saying that no infringement had taken place owing to the experimental nature of Bolar’s work. The Court of Appeal for the Federal Circuit however disagreed with Bolar’s argument as it intended to sell its generic product in competition with Roche’s Valium, soon after its patent expiry and stated that the exemption does not apply to experiments which have commercial objective. Bolar argued that such violation of exemption would extend the monopoly of Roche over Valium even after its patent expiry. Thus in 1984, in response to Roche v Bolar judgement, and in an attempt to promote competition by simplifying authorisation for generics while maintaining appropriate protection for the interests of research-based pharmaceutical manufacturers, the US Congress passed the Drug Price Competition and Patent term Act (known as Hatch-Waxman Act). This law permits the use of patented products in experiments for the purpose of obtaining FDA approval and it established the modern system for FDA approval of generic drugs.
Another instance where an exception made for infringement is in the case of Parallel import. A parallel import is said to occur when a product sold by a patent holder in one country is exported by a buyer to another country with the price for the same patented product being higher. The purpose of the parallel import is to check the abuse of patent rights and to control the price of the patented product. Pharmaceutical companies follow the practice of differential pricing of drugs according to the purchasing capacity of the prospective consumer in a target country. As a result, the same drug may be expensive in a developed country and relatively cheap in developing countries. This principle of differential pricing forms the basis of parallel trade. It enables countries in which drugs are expensive to import them from cheaper markets.
On March 23, 1995, a decision regarding parallel imports was delivered by the Tokyo High Court. BBS Kraftfahrzeug Technik A.G. (“BBS”) of Germany held both German and Japanese patents for certain aluminum automobile hubcaps. The hubcaps were legitimately purchased in Germany by a Japanese company which was engaged in the export of the relevant goods to Japan where an affiliated Japanese company was engaged in the sale of the goods. These two companies were virtually under the same management when the goods were imported into Japan for sale at a price lower than that charged by BBS dealerships in Japan. Subsequently, BBS filed suit for patent infringement in Tokyo District Court in June of 1994. The district court found that the two companies had infringed the BBS Japanese patent. However, on appeal the judgment in favor of BBS was reversed. In reversing the district court, the High Court held that the patentee’s right to enforce its Japanese patent against the imported goods had been exhausted since the patentee had legally transferred title to a rightful purchaser of the patented product.
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