Clarification on Section 107A(b)

In my posts on Section 107A(b), I had given the example of compulsory license under Section 84 of the Patents Act to further my interpretation of the provision. Subsequent to Prashant’s  brilliant question, I realized my example was not entirely accurate, although that doesn’t take away from the logic of the interpretation I seek to explore. That said, the posts containing the example have not been modified, so that the train of logic followed and the example are there for the readers to see. 


  1. Prashant Reddy

    Hi Sai,

    Sorry for the delayed response. I was travelling.

    You’re too harsh on yourself and too kind to me sometimes. 😉

    Is it possible to find any other provisions which will qualify for the phrase ‘duly authorized’? If we can’t find any other provision to fill this phrase then your interpretation of S. 107A(b) may render it dead letter?

    Warm Regards,

  2. J.Sai Deepak

    Lol nice try, nope dude, it wont render it dead letter because it says “duly authorized under the law” which means it allows enough room for future legislations to fill in. It need not necessarily restrict itself to the Patents Act. Even otherwise, there’s still no way to interpret “duly authorized under the law” to mean international exhaustion 🙂


  3. Prashant Reddy

    Not so sure about that Sai…..

    The golden rule of statutory interpretation requires a literal interpretation of the provision as it exists on the day and not on the basis of a possible future interpretation.

    If the golden rule renders S. 107A(b) dead letter then in that case you are required to indulge in a purposive interpretation to read in international exhaustion.


  4. J.Sai Deepak

    And how do you propose to read in international exhaustion into the provision? I’d like to know how would you drive support from the language to support the purpose.


  5. J.Sai Deepak

    Also, I did raise the example of a licensee or an exclusive licensee instead of a compulsory licensee in response to your last comment in the other post. Are you discounting the possibility of the applicability of the interpretation to such a situation?


  6. J.Sai Deepak

    Also, why are we proceeding on the presumption that the provision was intended to bring in international exhaustion? There is another established principle of interpretation which says that “Courts are always forewarned against usurping legislative function under the guise of interpretation and that they must avoid the danger of determination of the meaning of a provision based on their pre-conceived notions of ideological structure or scheme into which the provision is somehow fitted”. This is settled law too. So the question why is it that we seem to overwhemingly advance the cause of international exhaustion before we give the language its due? How many other existing legislations have we considered, other than the Patents Act, to rule out the interpretation of the provision that I argue? When the context/purpose of a provision is being probed, the cardinal rule is to not restrict oneself to the statute in which it is used, but to also look at the existing state of the law, which means all other legislations. Why are we so eager to conclude that the provision must necessarily envisage international exhaustion?


  7. J.Sai Deepak

    If title can serve as a legitimate internal aid of interpretation, the title of Section 107A(b) reads “Certain acts not to be considered as infringement”, so why aren’t we considering the possibility that it is meant to serve as a limited defense and nothing more? The golden rule of purposive construction is to applied sparingly, its application must be desisted from when principles of literal construction yield a single plausible result. I think the dice is already loaded when we start with the premise that the provision is all about international exhaustion and end with the same conclusion. It renders useless the need for application of any rule of interpretation.


  8. Prashant Reddy

    Hey Sai,

    1. On the ‘exclusive licence’ example, I do not think you are giving S. 107A(b)a literal interpretation. The term ‘duly authorized’ under the law to sell/ distribute requires a statutory provision to authorize the same. In the case of your example it is the contract/licence between the patentee and the licencee that is operating and not a statutory provision of law. Thus I don’t think this example can stand and if we fail to find another provision to support this interpretation it is necessary to not pursue it since it would render the provision a dead letter. It must always be presumed that Parliament had an intention that the provision have some relevance at the time of enactment.

    2. The reason behind the presumption of ‘international exhaustion’ in S. 107A(b) is the fact that the Minister who was introducing the bill in the house explicitly stated that the provision was aimed at bringing in parallel imports. I was browsing through Shamnad’s and Mrinalini’s article and footnote 27 of this article contains the relevant quote from the Minister. Such a statement can be used as an aid to interpretation. Further footnote 31 and 32 of the article also refers to the statements of objects and reason and the clauses on the notes, both of which again can be used as aids to statutory interpretation.


  9. J.Sai Deepak

    Hi Prashant,

    1. I think your basis for negating the example of an exclusive licensee is that the provision refers to duly authorized under the law, and not a contract/licence. If that be the case, shouldn’t it be even more difficult for us to read in international exhaustion in the provision? Also, I had given two kinds of possibilities in my comments. If the patentee in India has a unit outside India, by virtue of his patent he is the one authorized to produce and sell in India. Is it not possible for the licensee to import the goods from the patentee’s unit which is based out of India?

    2. True, the Legislature must have an intention at the time of the enactment, and the provision must be deemed to provide a remedy to an existing situation. But this rule has been interpreted to mean that the intention need not necessarily flow only from the statute in which the provision finds mention. Since law includes the existing state of law, one has to look into other Indian legislations as well. You still haven’t told me, which other legislation have you referred to before zeroing in on international exhaustion as the only result of the provision?

    As regards possibilities in the future, the rule doesnt say that the legislature cannot cater to a situation in the future through a provision enacted in the present. So long as the construction of the provision for future situations is not knotty, it is perfectly justified to contend such an interpretation.

    3. Is it not possible for India to take a limited stand in “Parallel Imports” i.e. import for limited purposes? Why does it necessarily have to mean international exhaustion? Import by a third party despite the existence of the patent is parallel import- is it really that difficult to define it in a slightly more restrictive manner?

    The thing about the application of the golden rule is this- when there appears to flow two plausible interpretations, each of which is supported by the language, the deciding factor is the purpose as deciphered from the circumstances/literature surrounding the interpretation of the provision. This means, even for purposive construction, a certain amount of support is drawn from the language. Golden rule is not to be understood as replacing the written word in entirety. In our case, since you still haven’t shown how international exhaustion finds support from the language, it is not open to contend that international exhaustion is one of the plausible interpretations of the provision.

    Therefore, the use of the golden rule to prove international exhaustion is not grounded in any rule of interpretation; in fact, it is contrary to the rule governing the application of the golden rule.


  10. J.Sai Deepak

    I was just thinking about your statement that a contract/licence does not fall under “duly authorized under the law”; Could you explain why do say that? The requirement under the provision is an express authorization, why is a contract of license not an express authorization under the law?


  11. Prashant Reddy

    Hey Sai,

    1. I’m slightly confused when you use the words ‘golden rule’ and ‘purposive interpretation’ interchangeably. Aren’t they opposing rules i.e. the golden rule is the literal rule of interpretation. Have I read your comment wrong?

    2. In regards your point on having to zero in on other legislation which can qualify for ‘duly authorized’, I haven’t been able to find a single legislation which would support you interpretation of that phrase. Have you found anything else?

    3. In regards your example of licensee qualifying to import the patented goods from his manufacturing base outside the country, I just cannot figure out the policy requirement for reading the provision in this manner. For example if the licencee is importing with the permission of the patentee then in that case S. 107A(b) is not required and is redundant. If in case the licencee is importing without the permission of the patentee then in that case the patentee is free to terminate the contract allowing the licencee to produce even within India and after termination sue the importer for patent infringement. Given the ease with which your interpretation of the provision can be subverted by the patentee it is unlikely that Parliament would have meant for such an interpretation. It makes little sense to provide for a statutory defence to infringement when the very existence of that defence depends on a prior agreement which is at the mercy of the plaintiff patentee.

    4. In any case it would be a fallacy to state that the provision is pro-patentee since it is meant to be invoked against only the patentee.

    5. The interpretation that I would give to the provision is as follows:

    It uses the word ‘duly authorized under the law’
    in the context of ‘importation’ and hence you determine the authorization in context of the law of the country from which the product is being imported.

  12. Sneha

    Hey Prashant,

    I was thinking about your interpretation of the provision… I am slightly slow on the uptake, hence request your patience while I struggle to understand…

    You said that the provision “uses the word ‘duly authorized under the law’ in the context of ‘importation’ and hence you determine the authorization in context of the law of the country from which the product is being imported

    If we accept your argument, then according to you, the provision which states that ‘importation of patented products by any person from a person who is duly authorised under to law to produce and sell or distribute the product’ does not constitute infringement, actually means that ‘importation of patented products duly authorised under the law by any person from a person who produces and sells or distributes the product’ does not constitute infringement.

    Just to clarify my query, I am not suggesting an amendment to the provision. I am simply shifting the placing of the words ‘duly authorised under the law’ in the provision so that it is qualified by ‘importation’ rather than ‘person’.

    Have I understood you correctly? According to you, it is importation which shall qualify ‘duly authorised under the law’ and not person and therefore, it is the law of the country from which the product is being imported that determines the authorisation.

    Apologies if I appear repetitive.


  13. J.Sai Deepak

    Hi Prashant,
    A. I’ll first deal with the central issue.

    I think your interpretation of reading “authorized under the law” in the context of importation is not plausible because neither before the amendment nor after the amendment did or does the provision speak of “due authorization” with respect to importation.

    Un-amended provision:
    (b) importation of patented products by any person from a person “who is duly authorised by the patentee to sell or distribute the product”
    Shall not be considered as infringement of patent rights.

    Amended provision:
    (b) importation of patented products by any person from a person “who is duly authorised under the law to produce, sell or distribute the product”
    Shall not be considered as infringement of patent rights

    Please demonstrate from the above how you intend to marry “duly authorized under the law” with “importation”.

    The reason why your interpretation must fail is because the un-amended provision envisaged a situation where it was deemed legitimate to import the patented product from a person who had been duly authorised by the patentee to sell or distribute the product in India.

    In other words, although the right of import may not have been granted to the person so-authorized by the patentee to only sell or distribute the product, the law deemed importation of the product from such an authorized person as a non-infringing act.

    The only difference between the un-amended and amended provisions is that the authorization to produce, sell or distribute may now be given under a specific statute (under the law), besides the patentee himself.

    The essence of the provision is that the right to import, which may not have been granted under an authorization to produce, sell or distribute, is available to “any person” so long as the import is from the person who has been authorized “under the law” to produce, sell or distribute the patented product is India.

    It would take some implausible and impermissible interpretational acrobatics to read “duly authorized under the law” as being used in the context of importation.

    Assuming for the sake of an argument that such is the case, it is another impermissible leap from “duly authorized under the law” to international exhaustion.


  14. J.Sai Deepak

    Let’s look at it from another angle; if the substratum of the provision has remained the same after the amendment, with the only changes being “duly authorized under the law” and “produce”, how are we jumping to the conclusion of authorization of imports? If this was not the position prior to the amendment and this specific portion has not been amended, are we not going against the intention of the legislature by coupling “duly authorized under the law” with “importation”?

    Further, we go back to square one if your argument is that every product validly made under a foreign law is entitled to be treated as a valid import into India- which again is no plausible interpretation by any stretch of imagination.

    Neither does the rule of literal interpretation come to your aid nor does the rule of purposive construction because both (at best) refer to parallel imports “under” limited circumstances, and not international exhaustion.

    The approach that proponents of international exhaustion seem to take is something like this- let’s all put up a finger in the air and let’s randomly opt for international exhaustion as the underlying purpose behind the provision (and why are we doing this? Oh because, we think so). If no other interpretation is satisfactory, then this random choice of international exhaustion becomes your only plausible interpretation. How is this even justified? In short, what you are saying is, if every other interpretation falls through, we have to conclude that it is international exhaustion, when in fact you have not made a satisfactory case for international exhaustion on its own merits.

    I am even going to the extent of saying that even if all the hypotheticals I give fall flat, it is merely the hypotheticals which are wrong, not the logic that I submit. And, you still have not made a case for international exhaustion. What surprises me is that we seem to push for an interpretation, not by proving it on its merits, but by implausibly negating other plausible interpretations. Clearly, this is not interpretation at work.

    B. I did not say the provision is pro-patentee, I said the interpretation that I give, despite the provision being a defense to an allegation of infringement, could appear pro-patentee in the light of the argument of international exhaustion that you further, might I add implausibly.


  15. Prashant Reddy

    Hi Sai,

    I am aware that the interpretation that I’ve tried to support is not exactly a literal interpretation of the provision. It is a purposive interpretation because of the fact that a literal interpretation (the golden rule), as proposed by you, renders the provision redundant. If the literal interpretation renders the provision redundant the principles of statutory interpretation allow me to fall back on the statement by the Minister in the House. In this case the statement justifies the provision on the ground of ‘parallel imports’. Your statement regarding parallel imports under ‘limited circumstances’ is intriguing. I was under the impression that ‘parallel imports’ had to necessarily be based on international exhaustion. I could be wrong, if so, you are free to correct me by pointing out examples of parallel imports in ‘limited circumstances’.

    (i) If you want to claim that ‘duly authorized by law’ means ‘Indian law’ then in that case the onus is on you to establish which provisions of Indian law are applicable here. It will simply not suffice to say that this provision is to deal with some imaginary future legislation which is yet to be enacted. Such an interpretation is alien to law and logic. If you are able to identify such a provision I maybe willing to concede ground to your interpretation. However if you are not unable to do so then you will have to agree that interpreting ‘duly authorized by law’ as ‘Indian law’ renders the provision absolutely redundant.

    In such a case I think it is absolutely justified to assume that ‘duly authorized under the law’ refers to the law of the country from where the product is being imported. This is the only interpretation which renders some meaning to this provision.

    Further, the distinction you provide between the old S.107(A)(b) and the amended provision adequately destroys your earlier examples of the provision aimed at allowing a person with a licence from the patentee as being authorized to import the same from his manufacturing plants abroad.The fact that ‘authorized by the patentee’ was replaced by ‘authorized by the law’ makes it clear that Parliament was looking for the importation to be authorized by a statutory provision and not a licence by the patentee.


  16. Shamnad Basheer

    Very interesting debate, Sai and Prashant.

    particularly on rules of interpretation and golden, silver, platinum rules etc etc…

    a quick question:

    are we sure that “duly authorised” necessarily means duly authorised under the laws of india? shouldn’t we open up this starting presumption a bit first?

    For, if there is some doubt about this (and i honestly think there is some doubt…as this could even mean the law of a foreign country), we cannot simply apply the literal rule and proceed….

    To me, most statutory enactments carry words pregnant with multiple layers and interpretation. I’m therefore not a great fan of judges who simply apply the literal rule to provisions susceptible to multiple interpretations. I’m also not really sure where judges find their literal meaning from? Dictionaries?

  17. Sneha

    Hey Prashant,

    Forget what I said earlier. Let me try and explain my point in a different manner.

    If I understand you correctly, your stand is that –
    1.It is the act of importation which is to be authorised under the law.
    2.This authorisation of importation is to be under the law of the country from which the product is being imported.

    In my opinion, your second point actually negates your first one. You are saying that it is the law of say, Bangladesh, which has to authorise imports into India by say Mr. X of the patented product. Can Bangladesh actually do so? From my understanding, the most they can do is authorise exports of the patented product out of Bangladesh. Authorising exports out of Bangladesh does not immediately translate into authorising imports into India. There are two parties involved in an import-export transaction. Since Mr. X, our importer, has to be based in India, Bangladesh law cannot decide whether Mr. X should or should not be granted import licences for import into India. Only Indian law can do that.

    In my opinion,
    1. The authorisation that is required under the law is not for the act of importation (as you suggest) but for the acts of “producing and selling or distributing”.
    2. This authorisation to “produce and sell or distribute” is to be under the Indian law for production and sale/distribution on Indian Territory.

    So the situation envisaged by S.107A(b) is this – Mr. A has a patent for product PP. Mr. Y has been duly authorised under the Indian law to produce and sell/distribute PP in India (this authorisation can, inter alia, either be in the form of compulsory licence or exclusive/non-exclusive licence by the patentee himself). Mr. Y also has a manufacturing unit abroad for manufacturing PP. Imports by any person (including Mr. Y, unless he is a compulsory licensee whereby S.90(2)/(3) will operate) of PP from Mr. Y’s manufacturing unit abroad are not considered infringement of Mr. A’s patent under S.107A(b).

    Shamnad – I hope my explanation above answers your question.


  18. Prashant Reddy

    Hi Sneha,

    Thanks for rephrasing your comment.

    You’re interpretation for my interpretation is wrong.

    My argument is as follows:
    S. 107(A)(b) allows for importation of all those products from Bangladesh which have been manufactured in due accordance with Bangladeshi laws i.e. if the product is not covered by a Bangladeshi patent then it can be presumed to be manufactured with the due authorization of Bangladeshi law.

    Therefore the due authorization does not mean authorizing exports. Instead due authorization should be read in the context of the laws of the country from which the product is being imported.


  19. Sneha

    Prashant… I’m a little lost here…

    In your earlier comment, you said that – “The interpretation that I would give to the provision is as follows: It uses the word ‘duly authorized under the law’
    in the context of ‘importation’
    and hence you determine the authorization in context of the law of the country from which the product is being imported

    If you are saying that “duly authorised under the law” has to be read in context of importation, doesn’t this mean that it is the act of importation which requires authorisation under Bangladeshi law and not the act of production and sale/distribution? Unless you are saying that “duly authorised under the law” has to be read in the context of production and sale/importation, in which case, the act requiring authorisation under the Bangladeshi law will be the act of production and sale/distribution.

    So at the expense of being repetitive – Which act are you seeking to be authorised under the Bangladeshi Law – the act of importation or the act of production and sale/distribution?

  20. Prashant Reddy


    ‘Duly authorized under the law’ refers to the laws which authorize the production and sale/distribution of the product in the country from which the product is being imported.
    Hence I used the words ‘in the context of importation’.

    I hope that clarifies your doubts.

  21. Sneha

    Hey Prashant…

    I was just wondering… this whole debate seems to be totally polarised… it actually reminds me of the debate on the amended S.79 of the IT Act on which my view was completely different from Shamnad’s and I think my insistent comments favouring one interpretation and one interpretation only may have irked him, coming from a pesky amateur like me! I think, in the end, Shamnad, being the open-minded discussant that he is, the debate on S.79 was closed on the note that we agree to disagree!

    Tell me something… is your argument that Sai’s interpretation has no merit at all or are you open to the idea of it being a plausible interpretation? The reason I am asking this is because I believe that once the extent and content of your disagreement with the interpretation is known (whether you think it cannot hold ground at all or whether you may be willing concede that its a plausible interpretation but you are not satisfied with it), this debate can be tackled in a more channelised and fruitful manner.

    Please forgive me if I sound condescending / patronising for asking such an impudent question. I just dont see the point in persisting with this “discussion” without knowing the “metes and bounds” of your argument!

    Cheers, Sneha

  22. J.Sai Deepak

    Hi Prashant,

    Have been travelling, hence the delayed response.

    You raised the issue of redundancy even in the comments to the last post, to which I did point out that Sections 48 and 107A(b) serve two different purposes. As for examples to support this, Sneha pointed out that my example could remain valid despite the presence of Section 90, because Section 90 prevents import only by the compulsory licensee, but does not prevent import by a third party from the compulsory licensee. Would this hypothetical suffice?

    As for your point that my comparison of the un-amended and amended versions of the provision destroys all my earlier examples, I’ll explain it further just so that we are clear about our respective positions.

    There is a difference between “permitted by law”, “permitted by the law”, “authorised by the law” and “authorised under the law”.
    “Authorized by the law” requires and restricts itself to authorization by a particular statute, whereas “authorization under the law” does not exclude the patentee’s right to authorize production and sale or distribution, it merely anoints him as just of the authorities entitles to authorize production and sale or distribution. So the patentee may still contractually authorize production and sale or distribution.

    On parallel imports, since the scope of parallel importation is left for individual nations to circumscribe, how would absence of a similar precedent take away from the plausibility of India choosing to define it in a limited manner?


  23. J.Sai Deepak

    Pardon the typos. I meant:

    “Authorized by the law” requires and restricts itself to authorization by a particular statute and therefore cannot include the patentee; whereas “authorization under the law” does not exclude the patentee’s right to authorize production and sale or distribution, it merely anoints him as just one of the authorities entitled to authorize production and sale or distribution.

  24. J.Sai Deepak

    Dear Sir,
    I see your point; but I think the point where we depart is on the issue of multiple interpretations because not every interpretation is a plausible one.

    At this juncture, I should state that I did read your article to understand where you are coming from and while we are on the issue of opening up presumptions, there are a few conclusions in your article which I would like to open up here for discussion.

    If in the process, we end up concluding that international exhaustion is indeed the sole right conclusion, I don’t think I am dead set against it. After all, at the end of the day, I am a consumer too.

    Let’s start with internal page 79 of your article where you discuss “Indianising The Law”; you have stated as follows:

    “In other words, was one to interpret “law” as Indian law, one is faced with an absurd question: Under Indian law, can Beximco produce and distribute the drug in Bangladesh? Therefore, any reasonable construction of section 107A(b) would suggest that “law” as used in the section has to mean Bangladeshi law.”

    We are on the same page until the point where we agree that Indian law cannot authorize production and sale or distribution in Bangladesh. But from there on is where the departure begins.

    Since you interpret the law to mean “Bangladeshi law”, you have had to propose an alternative interpretation to the use of “patented product”. What I mean is, according to you, if “under the law” has to be imputed the meaning “under the Bangladeshi law” or “under the foreign law” , “patented product” has to be interpreted as “product patented in both countries” so as to ensure that India does not violate its obligations under TRIPS.

    Now the problem with interpreting “patented product” as a “product which is patented in both the exporting and importing countries” is that there already exists a definition for “patented article” and “patented process”, both of which refer to product/process protected by a patent granted under the Indian Act.

    In addition to that, as was evidenced in Strix v. Maharaja, it is well-nigh plausible that two unrelated entities/individuals could hold patents in their respective jurisdictions on the same product/process.

    If this be the case, exhaustion of rights of the foreign patentee on first sale in such foreign country does not lead to international exhaustion because there is no exhaustion of the Indian patentee’s foreign patent rights.

    Therefore, what flows from the above is that, to support international exhaustion, which your article emphasizes is the underlying purpose of the provision, (1) we end up going against an express definition and (2) we have not factored the possibility of the patents over the invention being held by 2 different entities in 2 jurisdictions.

    Also, since both these points are to be considered as having been within the knowledge of the legislature and therefore as having been taken account of by the legislature when amending Section 107A(b), it appears to be a stretch of an argument when we contend that international exhaustion is the prevailing sentiment of the provision when such a contention ignores both these points.


  25. J.Sai Deepak

    Further, the other presumption in your article is the interpretation of “produce and sell or distribute” to mean “produce and sell” or “distribute”.

    The article expressly excludes the possibility of it being interpreted as “produce and sell” or “produce and distribute”. Your reason for doing so is again the assumption that the amendment envisages application of international exhaustion.

    Let’s look at the amended provision again to understand the problem with the above interpretation. Punctuation has a vital place in the principles governing interpretation of statutes. Such being the case, the absence of a comma separating “produce and sell” from “distribute” is no drafting error. If the provision had read “duly authorized under the law to produce and sell, or distribute”, it would have been difficult to contest your interpretation.

    But that is not the case; there is no pause between “produce and sell or distribute” which means that the provision is to be interpreted as “produce and sell” or “produce and distribute”. How does this affect the interpretation? It affects critically because the purpose of the provision is not to endorse the right to sell after first sale. In other words, I think the provision states that the one who is authorized to sell can only sell what he produces. Similarly, the one who is authorized to distribute can only distribute what he produces. Simply stated, this does not support international exhaustion. (Here I must add that this was brought to my notice by a reader of the blog, so I can’t take credit for this additional argument)

    So, in the light of these points, it appears that the arguments for international exhaustion do away with essential canons of interpretation by beginning with a policy assumption.

    In contrast, if an alternative interpretation does not require amendment to existing definitions, is consistent with established principles of construction, and more importantly yields a plausible conclusion, I would think a Court would be more open to such an interpretation.



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