Beyond the Bolar Exception: Madras HC Tightens Scrutiny on API Exports

In a significant ruling for the pharmaceutical industry, the High Court of Judicature at Madras has underscored the stringent requirements for invoking the "Bolar exception" under Section 107A of the Patents Act, 1970 . Justice Senthilkumar Ramamoorthy established that a defendant claiming this exemption to manufacture and export patented active pharmaceutical ingredients (APIs) bears a heavy burden of proving that such activities are strictly for regulatory requirements.

The Diabetic Drug Dispute

The conflict centered on VILDAGLIPTIN, a vital API used to treat Type 2 Diabetes. Novartis AG , the patentee of IN 212815, sought relief against Venkata Narayana Active Ingredients Pvt. Ltd. , alleging that the defendant had engaged in the unauthorized manufacture and large-scale export of the API to Egypt.

This legal battle was long-standing; the parties previously appeared before the Court in 2015, where the defendant had provided an undertaking to cease manufacturing or exporting the patented product. The plaintiffs argued that the defendant had violated this undertaking by exporting massive quantities of the API in 2016-17, purportedly for research and development.

Arguments of the Parties

The Plaintiffs contended that the defendant’s actions were purely commercial and did not fall under the statutory immunities provided by Section 107A . They argued that the importers in Egypt were already marketing formulations of VILDAGLIPTIN, rendering the claim of "research and development" dubious. Further, they emphasized that the defendant had failed to exercise any due diligence to ensure the API was used solely for regulatory approval processes.

The Defendant countered that its exports were covered under the Bolar exception ( Section 107A ), which allows for the making and selling of patented inventions for the purpose of submitting information to regulatory authorities. They maintained that all shipments were labeled "for research and development purpose only" and that the quantity exported was consistent with the requirements for pilot batches and bioequivalence testing.

Legal Analysis: Unpacking the Bolar Provision

Justice Senthilkumar Ramamoorthy drew a clear line between academic research and commercial exploitation. The Court observed that Section 107A is an "exception" to the exclusive rights granted under Section 48 , and consequently, the burden of proof rests entirely on the party invoking it.

Relying on the international precedents and the Italian Court of Cassation ’s ruling in Sicor/Teva Pharmaceutical , the Madras High Court held that a bare claim of "research and development" on an invoice is insufficient. To genuinely invoke Section 107A , an exporter must present concrete documentation, including:

* Clear evidence of a regulatory approval process in the destination country.

* Correspondence from regulators requesting specific clinical or pre-clinical data.

* A direct "commissioning" relationship between the generator of the regulatory data and the API manufacturer.

Key Observations

The Court offered sharp guidance on the expectations for companies seeking to rely on Section 107A :

> "The onus, consequently, lies on the defendant asserting that its use falls within the exception."

> "Evidence that the impugned use of the patented product is reasonably related to the request for regulatory approval [is required]."

> "If the person requesting regulatory approval is not the manufacturer... evidence of request for supply from the person seeking regulatory approval to the manufacturer or seller along with supporting documents... [must be provided]."

A Call for Regulatory Rigor

The Court found that the defendant’s evidence was "at best, speculative" and failed to demonstrate that the export was inherently linked to the specific regulatory needs of the Egyptian importers. Consequently, the manufacture and export were deemed an infringement.

The Court has ordered the defendant to provide a rendition of accounts to determine the profits unlawfully derived from these exports, marking a definitive victory for the patentee. This judgment serves as a stern warning: the Bolar exception is not a "get-out-of-jail-free card" for generic manufacturers to flood overseas markets with patented APIs without rigorous, documented regulatory justification.

As Justice Ramamoorthy poetically noted, the Central Government should consider framing rules to govern the evidence required under Section 107A to prevent the provision from being "abused to circumvent" the exclusivity rights of patent holders. For now, the takeaway for the pharmaceutical sector is clear: documentation is everything.