Section 107A(b): Does It Really Endorse International Exhaustion?- II

In the last post, I had attempted to make sense of Section 107A(b) from a legal standpoint without being coloured by any politico-economic arguments. This does not necessarily mean that one is blind to the concept of purposive construction; that said, the written word of the law must be given “due” respect before we decide to make arguments based on what we think the law ought to be.
I say this because I noticed in the comments to the last post, a certain propensity to discard (or is it disregard?) fundamental and cardinal canons of legal interpretation to support what appears to be the “right” point of view  to a few from a policy perspective. 
No matter how strenuously we disagree with a certain policy argument, an interpretation of a provision which is not absurd and which does not militate against common sense is a plausible legal interpretation. As for what is an absurd interpretation, an interpretation which finds no support from the language of the provision itself is absurd, notwithstanding the quantum of literature on policy arguments.

Therefore, it would help if the starting point of the discussion on the interpretation of Section 107A(b) is the phraseology of the provision itself, and not what some may construe as the correct policy argument. One cannot and should not start with a premise that the provision deals with international exhaustion and then force fit an untenable “legal interpretation” of the provision to suit that premise.

Also, I must clarify that it is not my contention that the interpretation I put forth in my last post is the only sensible way of construing it. My sole contention is no matter what the true position of the law is, a proponent cannot adopt a blinkered approach with a one-point agenda of proving international exhaustion as flowing from the provision, at the expense of time-honoured principles of statutory interpretation.

With this pontificatory prelude, let me proceed to address certain hypotheticals discussed by one of our commentators in the last post. The gist of my last post is as follows:
1. “Duly authorized under the law” in Section 107A(b) is with reference to express authorization under Indian law to produce and sell/ distribute in India a product which is patented in India.

2. This authorization under Indian law is to a person from whom the patented product may be  imported by any  person.

3. Such importation into India of the good which is patented in India from the person so authorized under Indian law (to produce, sell/distribute in India) by any other person is deemed as a non-infringing act under Section 107A(b)

To support this, I had given the following illustration:

1. X has a patent on A in India

2. Notwithstanding X’s patent on A, Y has been duly authorized under an Indian legislation to produce and sell/distribute the patented product A in India (This could happen even under the Patents Act, if Y is granted a compulsory license on X’s patent on A under Section 84 in India.)

3. Y also has a manufacturing base in Bangladesh, which manufactures A (the product is patented only in India) in Bangladesh

4. Z may import the patented product A from Y from Bangladesh into India, and such importation would not be deemed as infringing X’s patent on A.

Now let me deal with the hypothetical cited in the comment to the last post.

Hypothetical A of the Commentator

Just to add for a bit more clarification on the issue– in the case (hypothetical) illustrated by Sai in his post, Z may purchase A from Y in Bangladesh and can import it in India without any further authorization from Y, as Y has exhausted its rights by selling the goods once, even though in Bangladesh. That’s one of the common situations and I think everyone agrese on this point.

I don’t think this hypothetical is in line with the logic of my post because, in my view, section 107 A(b) does not permit  Z (any person) to purchase A (the product which is patented only in India) from Y (person duly authorized under Indian law) in Bangladesh and import it into India. Why do I say so?

First, because there can be no exhaustion where there is no patent right. Since there was no patent on A in Bangladesh in my hypothetical in the first place, there can be no exhaustion of rights after first sale.  Second, because Section 107A(b) says thus:

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 above-underlined portion of the provision says “by any person from a person”; in other words, the provision does not refer to blanket importation of the good which is patented in India from Bangladesh (or any other country). It refers to import on the good from the person who is duly authorized under Indian law to produce and sell/distribute the product.

If a person Z is allowed to purchase the good from Y in Bangladesh and import it into India, it is not the same as importing it from Y directly because:

1. If only Y has been authorized under Indian law to produce and sell/ distribute the patented product (apart from the patentee of course), no third party (other than the patentee himself of course) can do these acts without explicit authorization under Indian law and

2. Since the import is not from Y directly, it is not entitled to the safe harbour provided for in Section 107A(b).

In other words, if the import of the product which is patented in India is not directly from the person who has been duly authorized under Indian law to produce, sell/distribute the product in India, it would constitute infringement of the Indian patent.

In the next post, I shall summarize the conclusions and discuss a few other ways of interpreting Section 107A(b). 

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