The Parallel Import Debate in India: Some Concluding Thoughts

Section 107A(b) of the Indian Patents Act dealing with parallel imports has turned out to be one of the most contentious provisions on this blog. We had several posts covering this issue and one of them elicited more than 35 comments.

I thank readers for engaging in this fascinating discussion which helped deepen my own understanding of this section. Surprisingly, many of our commentators never revealed their identity, making it impossible for one to see where they were coming from and which interest group they represented (if at all they did..).

Based on our discussions in the comments section of this post, it seems to me that there is considerable ambiguity in the section. In this concluding post, I want to try and examine how such ambiguity might be resolved in a manner that hews as close as possible to the text of the section.

Section 107A(b) exempts from infringement an “importation of patented products by any person from a person who is duly authorized under the law to produce and sell or distribute the product”. The problem with the section is this:

A literal reading of the section suggests that the permission of the patentee need not be taken. Particularly in the light of the fact that the 2005 amendment expressly changed the earlier clause requiring the permission of the patentee (“duly authorised by the patentee”). Contrary to what some of our commentators assumed, the current version of section 107A(b) only speaks about “due authorisation under the law” and not “permission from the patentee” or “national exhaustion” or “international exhaustion”.

Now the issue is this : does “law” in section 107A(b) mean Bangladeshi law or Indian law? If it is read to mean Indian law, there is a clear logical inconsistency and we end up begging the question. i.e. what is “Indian law” on this point? Isn’t section 107A (b) itself Indian law on the point? We end up with some heavy duty circular reasoning.

It therefore has to mean the law of the exporting country. Unfortunately, if the exporting country is Bangladesh where there is no patent, then the import into India by a CIPLA or Ranbaxy pretty much hits at the essence of the exclusive right to import guaranteed under the Patents Act (section 48). And such an interpretation may even violate Article 28 of TRIPS (since it does not involve an exhaustion and is therefore not saved by Article 6).

Will an Indian court be concerned about this impact on a patentees right, if a Roche vs CIPLA kind of situation came up? I’m not too sure…we’ll have to wait and watch. In a land where there is too much rhetoric around pharma patents and where the injunction jurisprudence is heavily skewed against the patentee, it is safe to bet that there will be a judge or two who are not likely to sympathetic to lamentations that such a reading would destroy the exclusive rights of a patentee.

Most of us thought that CIPLA’s brazen strategy of openly infringing (and not opposing the patent through regular channels) was likely to prejudice its case in court. And look what happened.. In short, I don’t think any of us can conclusively state at this point as to which way an Indian court is likely to turn on section 107A(b).

How then does a judge (who is concerned with the rights of a patentee) interpret section 107A(b)? To recapitulate the section, it exempts from infringement an “importation of patented products by any person from a person who is duly authorized under the law to produce and sell or distribute the product”. What does the term “patented product” mean?

A clever judge (seeking to avoid controversy) could hold that generic goods produced by CIPLA in Bangladesh are automatically excluded from the purview of the section, as they are not “patented products” i.e. not “patented” in Bangladesh? In other words, if CIPLA manufactures in Bangladesh and exports to India, it cannot avail of the defence under Section 107A. And such an import would be a violation of the patentees exclusive right under section 48.

However, one may cast some doubt on the above interpretation by pointing to the definition of “patented article” in section 2. This section defines the term to mean an “article patented in India”. Therefore, the term “patented product” in section 107A(b) has to mean a product patented in India only. In other words, if one reads the term “patented product” to mean a product patented in Bangladesh, then this goes against the definitional section.

However, this deviation from the definitional section is quite minor, if a judge is of the view that the harm done to a patentees right (if section 107A is read to mean that Bangladeshi products can be brought in) is considerable. And certainly a better way to resolve this issue than to insist on the logical fallacy of interpreting “law” to mean “Indian law”.

To conclude, section 107A(b) is ambiguous and only time will tell how an Indian court will end up interpreting this provision.

This being so, I was rather puzzled reading a post by Varun Chonkar of Patent Circle, where he suggests that there is no ambiguity at all in section 107A(b). Rather, he interprets it to mean that the permission of the patentee has to be taken. Most readers will recall our earlier posts tracing out the history of this section, wherein an earlier provision specifically mandated that the “permission of the patentee” had to be taken for the import to be “legal”.

However, this provision was expressly changed in 2005 to dispense with such “authorisation” from the patentee. In other words, the clause “duly authorised by the patentee” was changed to “duly authorised under the law”. Any first year law student is likely to understand that this change meant something and that Parliament would not have undertaken such an amendment for nothing. Further, any interpretation where we go back to the earlier norm of having to specifically take the permission of the patentee might prove problematic even in cases of normal exhaustion–where the good may be sold and resold several times before being exported to India. In such a case, would an exporter/importer always have to contact the patentee to take permission, even when the first sale of the good has taken place by the patentee (or his/her agent) and the rights in that good have been “exhausted”.

In the light of this legislative history, I was taken back with his post that seemed to suggest that his interpretation (that completely ignored legislative history on this point) was conclusive and that we were all wasting our time debating this vexed issue. In particular, I was amused by his rather outlandish claim in the comments section that:

“Believe me there is no loophole in the provision, it stands as clear as mirror.”

I wish I could “mirror” his thoughts and save time trying to make sense of this provision. Had he bothered to study the issue more closely and looked at the legislative history and the present structure of the provision, he would have understood that the mirror is actually quite murky!

His post was interestingly titled “Mint Reported Irresponsibly” and targeted at a Mint Report that highlighted the ambiguity in section 107A. I’m not sure what motivated Varun to go after Mint in the way that he did. All that the Mint report did was highlight an ambiguity inherent in section 107A(b).

As our readers can appreciate, it is one thing to have a difference of opinion whilst interpreting a section. It is quite another to callously and arrogantly state that what one advances is the “conclusive” interpretation on the point. Worse still, is to castigate others (such as Mint) for taking a more nuanced look at the section and concluding that there is ambiguity. Mint reporters such as CH Unnikrishnan have set a new standard for patent reporting in the country and in some cases, their articles reveal a clearer appreciation for patent law than do some our patent experts.

Varun states that “It is always important that while reporting on critical issue such as section 107A (b) complete background research should be made.” And yet it is he who has not bothered to research this issue thoroughly. As made evident by critical flaws in his analysis. He states:

“This practice of parallel importation is legal if the country from which patented products is imported agree to international exhaustion. However, if the country from which patented products is imported do not agree to international exhaustion and instead follow national exhaustion then such importation of patented products by third party to other country will constitute infringement of patent.”

Contrary to what Varun asserts, in order to determine the legal of a parallel import, one has to look to the law of the importing country (i.e. India), and not the law of the exporting country or the country “from which patented products is imported” (i.e. Bangladesh). Mrinalini rightly points out this basic point to him in her response to his comment.

In other words, whether or not an import of a patented product into India is legal has to be determined in accordance with Indian law and not in accordance with Bangladeshi law, a proposition that is fairly clear (mirror like) and known to most patent students.

The intention behind SpicyIP carrying these posts (and responding to the 20 odd comments, despite them being from anonymous sources) was to generate more awareness and discussion around this section. We ended one of our posts with the query: “Perhaps some of our readers might have insights into how we ought to resolve this interpretative conundrum. ”

Like section 3(d) and many other provisions in the Patents Act, it is best that the legislature and policy makers be aware of the gaps inherent in section 107A(b). And take steps to plug these gaps, rather than wait for it to be sorted out through wasteful litigation, the results of which are subject to the whims of individual judges.

Fortunately, unlike section 3(d), this gap can be plugged relatively easily by the legislature. It is difficult to advance a principled objection to anyone desiring to block the possibility of section 107A(b) permitting imports that completely eviscerate the exclusive rights of a patentee. One is likely to get the “patent boosters” and the “patent busters” on the same side of the table here…

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15 thoughts on “The Parallel Import Debate in India: Some Concluding Thoughts”

  1. I would still like your views on one simple matter:
    Do you have an answer as to what happens when we use ‘Bangladesh law’ as the ruling law?

    As was said earlier in the original comments, using Bangladesh law means that the entire patent filing/ prosecution system becomes moot and there is no right/ property left to the patentee…

    “Smart” guys just manufacture every [Indian] patented commodity in Bangladesh and import it in here…

    Don’t you think that a law should NOT be given an interpretation that renders totally useless and meaningless to the people affected by that law?

    So, now revert only on impact on Indian patent law/ patent holders, if we, arguendo, take that the law of importing country is called into question!

  2. Dear Shamnad,

    Can you please remove all professional references [related to me] from the Post?

    I already have enough problems with Business Standard folks and I do NOT want my Company name appearing in electronic media, with out my Company’s express permission.

    Friend, I hope you understand and will remove the references, real quick.

    Please look at the situation in entirety and REMOVE company references.


  3. Dear Anonymous,

    It’s quite frustrating to keep responding to unknown entities. Particularly, when you haven’t bothered reading the post carefully. Go through the post again carefully–and you’ll find that the way out is to interpret “patented product” in teh way that we suggest i.e. “patented” in Bangladesh

  4. I am extremely sorry if this is annoying anyone!

    Hi Sir,

    A. You said:

    1. Section 107A (b) is ambiguous and only time will tell how an Indian court will end up interpreting this provision. – AGREED!

    2. Section 107A(b) exempts from infringement an “importation of patented products by any person from a person who is duly authorized under the law to produce and sell or distribute the product”

    3. A “person duly authorized under the law” could be – patentee/licensee/third party (may be other more specific “persons” or like “person entitled to any other interest in the patent” as u/S.69?)

    4. Since section 107A (b) only speaks about “due authorization under the law” – law cannot be Indian law because – Section 107A (b) itself is Indian law on the point

    5. So – section 107A (b) is the law on when would importation not be considered as an infringement.

    Now I need to understand:

    Isn’t that an isolated situation? Are there no other provisions in the Indian Act that would address issues involved in importation of a patented product?

    Are following provisions not ‘law’ on importation of a patented product (at least have an implication on the legality/‘duly authorized’)

    (in order of chronology; not impact/relevance)?

    – Section 2(o) – “patented article” – already discussed how this could affect – (Also interesting to see it being re-defined in S.82 – “patented article” includes any article made by a patented process.)
    – Section 47 – mentioned before in the comments
    – Section 48 – Rights of a patentee
    – S.50 – Right of co-owners
    – I like S.69(3) too (uses “person entitled to any other interest in the patent”)
    – S.84 [Hypo: Section 84(7)(e) pitched against S.107A(b) – a situation where there is import u/S.107A(b)]
    – S.90 (2) – “no license granted by the Controller shall authorize the licensee to import the patented article …from abroad where such importation would, but for such authorization, constitute an infringement of the rights of the patentee”
    – S.90(3) – (too long to type)
    – Section 91 – Licensing of related patents
    – Section 107 – Defenses, etc, in suits for infringement
    – Section 140 – Avoidance of certain restrictive conditions
    – Wouldn’t Exhaustion law of the country also decide whether import of a patented article is “duly authorized under law”?

    If they (at least some) are “law” on importation, would they not come back and affect the question whether importation is amounting to infringement or not in an infringement suit?

    B. You said: “the current version of section 107A (b) only speaks about “due authorization under the law” and not “permission from the patentee” or “national exhaustion” or “international exhaustion”.”

    So, am I wrong in assuming that “due authorization under law” is a broader term and hence, inclusive of “permission from patentee”; “permission from the Controller”; “exhaustion law” etc. etc.?

    If you feel I am incorrect in my understanding, I would reconsider my line of thought, cause then there is something fundamentally wrong with it.

    If it can be inclusive of all these, doesn’t the amended expression make the section “more effective” in relation to “certain activities not to be considered as infringement” – considering that now many more people that just those authorized by the patentee directly can lawfully import? How can it be effective if it allows over-riding a statutory right being protected by the Act?


  5. Dear Shamnad the first thing which comes to anybody’s (layman’s) mind after reading all your posts on section 107A (b) is why would patent act include a section which will finish the whole rationale of having a patents act at all. Another point to be noted is the section 107A (b) is not merely restricted to drugs it says “importation of patented products”. So what I infer from your concluding posts is one can import lets say an i-pod made by anybody in Bangladesh (or for the matter set up his own factory there for exports to India). This sounds something without logic. I have read posts at Patent Circle regarding “National and international exhaustion” of rights, I would recommend readers to visit them once again because that makes sense especially considering that section 107A (b) is meant for Parallel importation.

    I have collected some information from central excise act and Drugs and cosmetics act which assert that all these laws are being adapted to accommodate provisions of parallel importation of patented articles from outside India. Remember wherein the articles are manufactured by the Patentee or somebody who hold a license from the patentee to do so.


    G.S.R.333 (E). – In exercise of the powers conferred by section 11 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, for the purposes specified in clauses (n) and (u) of sub-section (2) of that section, hereby prohibits the import of the following goods, subject to following of conditions and procedures as specified in the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007, namely:

    (iv) the product made or produced beyond the limits of India and intended for sale for which a patent is in force under the Patents Act, 1970 (39 of 1970), except in cases where the consent from the patentee in India has been obtained provided that such prohibition is not applicable to the cases where such importation is allowed under the Patents Act, 1970(39 of 1970);
    (v) the product obtained directly by the process made or produced beyond the limits of India and intended for sale, where patent for such process is in force under the Patents Act 1970 (39 of 1970), except in cases where the consent from the patentee in India has been obtained provided that such prohibition is not applicable to the case where such importation is allowed under the Patents Act, 1970 (39 of 1970);

    Also in the Drugs and Cosmetics Act of 1940, SCHEDULE D (II)(See rule 21 (d) and rule 24 A)

    Information required to be submitted by the manufacturer or his authorised agent with the Application Form for the registration of a bulk drug/formulation/special product for its import into India. The format shall be properly filled in and the detailed information, secret in nature, may be furnished on a Computer Floppy.

    1. GENERAL

    1.1 Name of the drug/formulation/special product, a brief description and the therapeutic class to which it belongs.

    1.2 Regulatory status of the drug. Free Sale Certificate and/or Certificate of Pharmaceutical Products (CPP) issued by the Regulatory Authority of the country of origin. Free sale approval issued by the Regulatory Authorities of other major countries.

    1.3 Drugs Master File (DMF) for the drug to be registered (duly notarised).

    1.4 GMP Certificate in WHO formats or Certificate of Pharmaceutical Products (CPP) issued by National Regulatory Authority of the country of origin (duly notarised).

    1.5 List of countries where marketing authorisation or import permission for the said drug is granted with date (respective authorisation shall be enclosed).

    1.6 List of countries where marketing authorisation or import permission for the said drug is cancelled/withdrawn with date.

    1.7 List of countries where marketing authorisation or import permission for the said drug is pending since (date).

    1.8 Domestic price of the drug in the currency followed in the country of origin.

    1.9 List of countries where the said drug is patented.

    24-A. Form and manner of application for Registration Certificate –

    (1) An application for issue of a Registration Certificate shall be made to the licensing authority in Form 40, either by the manufacturer himself, having a valid whole sale licence for sale or distribution of drugs under these rules, or by his authorised agent in India, either having a valid licence -4- manufacture for sale of a drug or having a valid wholesale licence for sale or distribution of drugs under these rules and shall be accompanied by the fee specified in sub-rule (3) and the information and undertakings specified in Schedules D-1 and D-II duly signed by on behalf of the manufacturer.

    (2) The authorisation by a manufacturer to his agent in India shall be documented by a power of attorney executed and authenticated either in India before a First Class Magistrate, or in the country of origin before such an equivalent authority, the certificate of which is attested by the Indian Embassy of the said country, and the original of the same shall be furnished along with the application for Registration Certificate.

    So the purpose of 1.5, 1.6, 1.7 and 1.9 is to prevent importation of goods which may have patents in the country of import (India).

    I think that the connection of section 107 A (B) to Exhaustion of rights made by Mr. Chhonkar of patent circle is logical, otherwise we would have already seen Cipla, Videocon, Maruti already making Lipitor, plasmas TVs and BMW’s in Bangladesh.

  6. Well said by Layman…points raised by Mr. varun with regard to Exhaustion and Section 107A(b) are quite convincing.

  7. Contrary what SpicyIP said section 107A (b) is ambiguous, Mr. Varun of Patent Circle put forward his points which seems more convincing and logical. SpicyIP never pointed out what induced 2005 amendment to amend section 107A (b) to include authorized under the law. There has some reason behind the amendment. Mr. Varun made a logical explanation behind the amendment, which as I already said is convincing and reasonable.

  8. Mr. Shamnad rightly pointed out to Mr. Varun, any first year law student will able to interpret what SpicyIP suggested on 107A(b). Obviously experts like Mr. Varun will never say what SpicyIP had to say about 107A (b). When people like Mr. Shamnad failed to understand the issue, what else you can expect from first year law student.

  9. interesting analysis shamnad

    and i agree with you that there is some ambiguity in the parallel import provn. the “patneted product” intepretation is a sensible and creative way to resolve this. i think most people have missed this point of yours.

    @layman: you seem to have completely mised shamnads point. i dont think he is saying that section 107 has to be interpreted to permit bangladesh exports. rather, that that is what a plain reading suggests. in order to avoid this, we have to read “patented products” in the manner suggested by him.

    not sure if you are a lawyer–but you will realise that you cannot go to court with statements like “i think this is right” or “this is wrong”. you have to base your argumnt on the wordings of the statute. and within the wordngs of statute, the best way to address our problem is to define patnted product as patnted in bangladesh… and this take care of all our problems. it looks like all of us (including shamnad) are concerned with any interprtatipn that impacts the rights of a patentee. the question is: how do we go about addressing this within terms of statute? and i think his post has provided the most logicl way out…

    you’re using of the custms rules and Drug cntrl rules are nether here nor there. how does it help? cutoms rules says taht “where importation is allowed under patnts act”. and we go back to what ptnt act says and our entire discussions on how to intpt the provn!!

    as for your point about ipod nanufacture in bangla, don;’t you think the patntee wld have regustered rights in bangladesh, if they thought that bangla has enough tech skills to produce ipods?? only pharma prdts cannot be patented in bangla–others can be patented. Its not easy for LDCs to manfc tech goods–which is why they are ldc’s….so its not as simple as you assume and suggest….

  10. Interesting comments here. Somewhere along the line it seems to be getting into a argument over whether Mr Varun is right or Mr Shamnad is right and missing the whole point of why Shamnad initiated this discussion.

    I believe that the point that was sought to be established was that there is a possibility of Section 107A(b) presents circumstances which could be construed by indian generic manufacturers to import patented products from a person who is duly authorised under law to manufacture and sell such patented product without such import amounting to an infringement.

    I tend to agree more with shamnad’s view that such a possibility does exist as ‘duly authorised under law’ should be read in reference to the ‘person from whom such patented product is being imported’.

    therefore if the person from whom an Indian company seeks to import is a Bangladeshi entity and the patented product in question is a pharma product then the Bangladeshi entity for the purposes of S.107A(b) is duly authorised under law to manafacture and sell the patented product… in which case the Indian entity can import the patented product from the Bangladeshi entity..

    I don’t know how much of clarity this brings in but this is the way i would interpret this section under a plain and literal reading..

    the only obstacle to this as many readers pointed out is that there an exclusive right on the Patentee under S.48 of the Act to prevent third parties who do not have his consent from inter alia importing such products. How this could be resolved is anybody’s guess. For an harmonious construction, keeping in mind that section 107A(b) was amended so as to take away the requirement of patentee’s consent, it could be said that the Patentee’s consent is implied inasmuch as he has no right to give such a consent in a country like Bangladesh where pharma products do not enjoy any protection.

    Just one question to the commentors and the author… though section 107A(b) authorises a person to import a patented product it does not authorise him to sell such product… and hence wouldn’t section 48 hit him inasmuch as such an importer tries to sell the product..

  11. Lawman do refer discusstion posted at

    It looks u have not read articles posted at patent circle, that’s the reason you are still in dilemma like Shamnad about the interpretation of section 107A b.

    As a laweyer, I believe interpretation has to be rational enough to justify the essence of patent law, not to make a mockery.

  12. Pradeed thank you for pointing out the other blog which has already been advertised here sufficiently and which I have read…

    the view in that post seems to be (this is my understanding) that to invoke Section 107(b) an indian entity will have to import the patented product from a duly authorised person from that country.. i reproduce the exact wordings:
    “According to new provision, importation of patented products by any person from a person who is duly authorized under the law to produce and sell or distribute the product will not be considered as an infringement of patent rights.”

    I am totally in agreement with this view.. In fact I think this is what I attempted to say in my earlier post (do feel free to correct me if I am wrong)… in furtherance of this what has been said is that if Bangladesh does not allow patents for pharma products then any one is authorised under Bangladeshi law to produce and sell or distribute pharma products and accordingly if an Indian entity imports a pharma product (which is patent protected under indian law) from this Bangladeshi entity (who is deemed to be authorised under Bangladeshi law to manafacture such product as there is no protection given to the patentee of such product under bangladeshi law) it is perfectly permissible unser S.107A(b) of the Indian Patent Act. Which if allowed could be said to be in violation of the patentee’s right to prevent imports. So hence there is a problem with the provision, which was the rationale for imitating the discussion in this post and the comments thereto. (which makes me to think as to why you have asked me to read some other blog when you haven’t even read the post and the comments thereto where u have inserted your comment)

  13. “As a laweyer, I believe interpretation has to be rational enough to justify the essence of patent law, not to make a mockery.”

    I completely agree with you pradeep… but what has been said in this post and the comments hereto is not that this is the correct interpretation… that will be for a judge to decide.. what has been stated is that this is a possible interpretation that a judge ‘may’ adopt if this question is presented before a court of law….

  14. I am Vandana Sharma, an IP law practitioner at Mumbai High Court. I am regular reader of PATENT CIRCLE and there I read some spicy comments posted by Mr. Shamnad. That made me to inquire about the whole situation as a lawyer.

    I read the news which is the complete source of all hue and cry. The news article is titled “Cos rush to exploit patent law loophole”. Then it says,
    “The loophole is actually a provision—Section 107A(b) of the Indian patent law amended in 2005—that allows local companies to import copycat or generic drugs manufactured in least developed countries such as Bangladesh, Nepal and several African nations, without the authorization of the patent holder.’

    Further it says,
    “This means companies here can import drugs from a country where pharma patents are not in effect if the local law in that country authorizes the manufacture of those medicines. In the earlier version of the law, an authorization by the patent holder was a compulsory requirement. Indian drug makers have rushed to take advantage of this, and several of them have even started working on building manufacturing plants in these countries.

    The last line is important to take cognizance. These lines are enough to motivate someone to write as it is completely vague and not in agreement of the intent of legislature as well as jurisprudence of Patent Laws. But what motivated Mr. Shamnad to write a full fledged article on Mr. Varun Chhonkar of Patent Circle to criticize him and praising the reporter is not justified. He wrote some spicy lines on Mr. Sandeep Rathod also but later on he deleted.

    A lawyer duty is to simplify the law so that it shall serve the purpose to the fullest extent.

    But good part of all this discussion is at least Mr. Chhonkar has given us a clear insight to understand this provision. Although I do not know Mr. Varun personally but I know he is constantly helping number of professionals in India to understand patent law. Even it would not be wrong to state that many patent practitioners like us have learnt Patent through his posting at PATENT CIRCLE.

    It is regretful to see someone accusing and pointing fingers to Mr. Varun, who not only giving precious time but also unconditionally spreading patent awareness in India. Even I appreciate Mr. Varun to highlight Mint irresponsibility.

  15. this is crazy! ppl talk on everything except the relevant issues. why dont you choose some other forum to show your resentment towards individuals. let this place be!

    showing a disagreement to someones opinion does not mean criticism of the person. considering they are both experts in their own right ..we should refrain from such discussions.

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