Summary
In the case of Novartis AG v. Venkata Narayana Active Ingredients Pvt. Ltd., the Madras High Court considered whether the defendant’s manufacture and export of Vildagliptin API to Egyptian importers fell within Section 107A of the Patents Act, 1970, or amounted to patent infringement. The court held that merely writing “for research and development purpose only” on invoices was not enough to claim the benefit of Section 107A, and that the defendant had to prove that the exports were solely and reasonably related to regulatory approval. The court also held that the term of the suit patent, being a PCT national phase patent, had to be counted from the international filing date, and not from the priority date.
Background
Patent Infringement and Section 107A Defence
Novartis AG was the proprietor of Indian Patent No. 212815 for Vildagliptin, a drug used in the treatment of Type 2 Diabetes Mellitus. Novartis Healthcare Pvt. Ltd. marketed the patented product in India. The plaintiffs filed the suit alleging that the defendant had manufactured and exported Vildagliptin API from India to importers in Egypt while the patent was still in force.
An earlier suit between the parties had ended in a consent decree in 2015. In that suit, the defendant had acknowledged the first plaintiff’s rights in the patent and had undertaken not to manufacture, sell, supply, export, import, or otherwise deal in Vildagliptin in a manner amounting to infringement. The present dispute arose after the plaintiffs received information that the defendant had exported large quantities of Vildagliptin API to Egyptian entities during 2016 and 2017.
The defendant did not deny the supplies. Its principal defence was that the API had been supplied only for research and development purposes, and that the manufacture and export were protected under Section 107A of the Patents Act. The defendant also contended that the patent had expired in December 2018, while the plaintiffs stated that it expired in December 2019.
Questions Before the Court
The main questions before the court on the selected issues were:
- Whether the suit patent expired on 9 December 2018 or 9 December 2019.
- Whether the defendant’s manufacture and export of Vildagliptin API to Egyptian importers fell within Section 107A of the Patents Act.
- Whether large quantity exports of patented API could be treated as protected regulatory use merely because invoices stated that the goods were for research and development purposes.
- What evidence a defendant must produce to prove that its acts were solely for uses reasonably related to development and submission of regulatory information.
Arguments Presented By the Parties
The plaintiffs argued that:
- The patent term had to be calculated from the international filing date of the PCT application, namely 9 December 1999, and therefore the patent continued until 9 December 2019.
- The defendant had manufactured and exported Vildagliptin API during the life of the patent.
- The exports were made in large quantities to Egyptian entities that were already commercially dealing in Vildagliptin products.
- The invoices stating “for research and development purpose only” did not prove that the supplies were for regulatory approval purposes.
- The defendant had not produced regulatory filings, requests from Egyptian importers, regulator communications, or other evidence showing that the API was required for obtaining marketing approval.
The defendant argued that:
- The patent term had to be counted from the priority date, and therefore the patent expired in December 2018.
- The supplies were made only for research and development purposes.
- In the pharmaceutical industry, companies require substantial quantities of API for bioequivalence studies, stability studies, validation batches, and other regulatory related work.
- Section 107A permits manufacture and sale of patented products for development and submission of information required under law in India or in a foreign country.
- Indian law does not require an exporter to ensure that the overseas purchaser uses the API only for regulatory purposes.
Court’s Analysis of Patent Term
The court first considered the term of the patent. It referred to Section 53 of the Patents Act and the Explanation to that provision, which states that in the case of international applications filed under the Patent Cooperation Treaty designating India, the patent term is twenty years from the international filing date accorded under the PCT.
The court noted that the PCT filing date of the suit patent was 9 December 1999. It rejected the defendant’s argument that the term should be counted from the priority date. According to the court, the defendant had proceeded on a misconception by treating the priority date as the relevant date for calculating patent term.
On that basis, the court held that the suit patent expired on 9 December 2019, and not on 9 December 2018. Since the alleged exports were made during 2016 and 2017, they took place while the patent was in force. The court also held that the claim for damages or rendition of accounts survived the expiry of the patent.
Court’s Analysis of Section 107A and Export of API
The court then turned to the heart of the dispute, namely Section 107A. It traced the provision to the Bolar exception, which permits certain acts involving patented inventions when those acts are solely for uses reasonably related to development and submission of information required under law for regulatory approval.
The court noted that Section 107A was meant to enable generic entry immediately or soon after patent expiry. In the court’s view, the provision was a regulatory approval provision. It was not a general permission to use patented products for academic research, commercial stockpiling, or ordinary business transactions during the patent term.
The court identified two requirements under Section 107A. First, regulatory requirements must be the sole purpose of making, constructing, using, selling, or importing the patented product. Second, the use of the patented product must be reasonably related to those regulatory requirements. The court accepted that sale to persons outside India may fall within Section 107A if the sale is connected to regulatory approval in India or in another country.
The court also stated that, from the perspective of infringement under Section 48, one infringing act must occur in India. In this case, that requirement was satisfied because the defendant manufactured Vildagliptin API in India and the sale to Egyptian importers originated from India.
Court’s Analysis of the Evidence Required Under Section 107A
The court treated Section 107A as an exception in the context of an infringement action. Therefore, according to the court, the burden lay on the defendant to plead and prove that its acts fell within the provision.
The defendant did not plead that it manufactured and exported Vildagliptin API to Egyptian importers for obtaining regulatory approval on its own behalf. It also did not say that the export was connected to any application filed by the defendant for regulatory approval in India. Its case was that it supplied the API to Egyptian importers for research and development purposes.
The court said that, in such a situation, the defendant had to show that the importers required Vildagliptin API for regulatory purposes in Egypt. In the court’s view, if that were true, the supply would ordinarily have been preceded by a request from the Egyptian importers for supply for regulatory purposes, such as for obtaining marketing approval. The court also stated that credible evidence should have included documents showing that the Egyptian regulatory authorities requested information, such as pre clinical or clinical trial data, requiring importation and use of Vildagliptin.
The court considered the purchase orders and invoices. Some invoices stated that the sale was for research and development purpose only. However, the purchase orders from the Egyptian importers did not indicate that the quantities were required for research and development, regulatory approval, clinical trials, bioequivalence studies, or any similar statutory purpose. The court also considered certificates produced from some importers, but found that they were not supported by documents from the Egyptian regulatory authority and did not inspire confidence.
The court also took note of the Advocate Commissioner’s report, in which the defendant’s representative stated that some customers informed them that they wanted Vildagliptin for trial purpose, but the defendant did not conduct due diligence as such. The court considered this important because the defendant had to establish that its use fell within Section 107A and could not rely merely on invoice descriptions.
The court then set out four categories of documents that should ordinarily be provided by a person relying on Section 107A. These were: evidence that regulatory approval was sought in relation to the patented product in India or outside India; evidence that the regulator requested product related data such as pre clinical or clinical trial data; where the person seeking regulatory approval was not the manufacturer, evidence of a request for supply from that person to the manufacturer or seller along with supporting documents; and evidence that the impugned use of the patented product was reasonably related to the request for regulatory approval.
This part of the judgment is important because the court moved the discussion beyond labels and quantities. The court did not say that quantity alone would decide whether Section 107A applied. It said that the purpose, documents, end use, regulatory connection, and conduct of the defendant would matter. On the evidence before it, the court was not satisfied that the defendant’s manufacture and export were solely for research and development or reasonably related to regulatory requirements in Egypt.
Findings
The findings of the Court are as follows:
- The suit patent expired on 9 December 2019, and not on 9 December 2018.
- The defendant’s contention that the patent term had to be calculated from the priority date was rejected.
- The alleged exports of Vildagliptin API during 2016 and 2017 took place while the patent was in force.
- The claim for damages or rendition of accounts survived the expiry of the patent.
- Section 107A permits sale or export of a patented product to a person outside India if the transaction is solely and reasonably related to regulatory approval in India or in another country.
- The defendant bore the burden of proving that its acts fell within Section 107A.
- Merely stating “for research and development purpose only” on invoices did not prove that the supplies were for regulatory purposes.
- The purchase orders and supporting documents did not establish that the Egyptian importers required Vildagliptin API for obtaining regulatory approval.
- The defendant did not discharge the burden of proving that the manufacture and export were protected by Section 107A.
- The defendant’s manufacture and export of Vildagliptin infringed the suit patent.
- The plaintiffs were entitled to rendition of accounts followed by a decree of profits.
- The plaintiffs were also entitled to costs, to be determined in accordance with the applicable procedure.
Relevant Paras
Paragraph 30
“As is evident from the Explanation, the term of patent in case of international applications filed under the Patent Cooperation Treaty designating India shall be twenty years from the international filing date accorded thereunder. The PCT filing date is December 09, 1999 as reflected in the Form-3 accompanying the patent application of the first plaintiff (Ex.D1).”
Paragraph 31
“The allegation of infringement in the suit is on the basis of exports made by the defendant to importers in Egypt between 2016 and 2017 while the suit patent was in force. Therefore, the claim for relief, including by way of damages, survives the expiry of the patent.”
Paragraph 62
“The explanation of the Joint Parliamentary Committee on clause 51 (renumbered clause 43) of the Bill, the Notes on Clauses and the Statement of Objects and Reasons, all of which are extracted supra, throw ample light on the object and purpose of this provision, i.e. to enable persons, other than the patentee, to take necessary measures to obtain regulatory approval so as to be in a position to bring a generic product to market immediately or soon after the patent expires. Thus, it is a regulatory approval provision and not a provision permitting the use of a patented product or process for academic experiments, research and teaching.”
Paragraph 63
“From the text of Section 107A, it follows that there are the following two pre-requisites to avail of Section 107A(1): (a) regulatory requirements should be the sole purpose of making, constructing, using, selling or importing the patented product; and (b) the use of the patented product should be reasonably related to such regulatory requirements. The expression “selling” without any qualification limiting it to sale in India and, significantly, the phrase “or in a country other than India” in sub-section (1) lead to the inference that the patented product may be sold to persons outside India provided such sale is in relation to obtaining regulatory approval in India or outside India.”
Paragraph 68
“Given that Section 107A incorporates a Bolar provision, which, if not satisfied, would constitute infringing use, the provision should, in my view, be construed as an exception. The onus, consequently, lies on the defendant asserting that its use falls within the exception.”
Paragraph 69
“Considering that the defendant was not seeking regulatory approval in Egypt, the defendant should have adduced evidence that the importers required VILDAGLIPTIN API for regulatory purposes in Egypt. Logically, in that event, the supply by the defendant would have been preceded by a request from the Egyptian importers to supply for regulatory purposes, such as for obtaining marketing approval. In order to qualify as credible evidence, this should have been backed by documents indicating that the Egyptian regulatory authorities requested for information, such as pre-clinical or clinical trial data requiring the importation and use of VILDAGLIPTIN.”
Paragraph 72
“The commercial invoice dated March 31, 2017 (Ex.P21) for the sale of 200 kilogrammes of VILDAGLIPTIN records that the sale is for research and development purpose only. The supply under this invoice appears to be pursuant to purchase order dated February 08, 2017 from Inspire Pharma (Ex.P22). Said purchase order, including the attachment thereto, contains no indication that 200 kilogrammes are required for research and development purposes or are required to satisfy regulatory requirements.”
Paragraph 76
“What steps does your company normally take to ensure that any patented compounds manufactured, sold and/or exported under Section 107A of the Patents Act, 1970 comply with the requirements of that provision?
Answer: Some customers inform that they want Vildagliptin for trial purpose. But we do not make any due diligence as such.”
Paragraph 80
“Recognising that the evidence necessary to discharge such burden would depend on the facts and without intending to be exhaustive, at a minimum, the following four categories of documents should be provided by a person relying on 107A:
(a) Evidence that regulatory approval was sought for in relation to the patented product in India or outside India.
(b) Evidence that the regulator requested for product-related data such as pre-clinical or clinical trial data relating to the patented product in response to the request for approval.
(c) If the person requesting regulatory approval is not the manufacturer of the API or formulation, evidence of request for supply from the person seeking regulatory approval to the manufacturer or seller along with supporting documents as per (a) and (b) above.
(d) Evidence that the impugned use of the patented product is reasonably related to the request for regulatory approval.”
Paragraph 83
“On the basis of evidence adduced by the defendant in this case, I am unable to conclude that the manufacture and supply of VILDAGLIPTIN by the defendant was solely for research and development purposes or that the use of the patented product was reasonably related to the fulfilment of regulatory requirements in Egypt. Therefore, I conclude that the defendant’s manufacture and export of VILDAGLIPTIN infringes the suit patent.”
Case Citation
Novartis AG v. Venkata Narayana Active Ingredients Pvt. Ltd., High Court of Judicature at Madras, C.S. No. 282 of 2018 and A. Nos. 3319 and 3320 of 2025, judgment pronounced on 3 June 2026, neutral citation 2026:MHC:1874.
Indian Kanoon link: http://indiankanoon.org/doc/175483444/
Disclaimer
This case blog is based on the author’s understanding of the judgment. Understandings and opinions of others may differ. An AI application was used to generate parts of this case blog based on user inputs and prompts.