Patent

When Can One Raise the Defense “Under” Section 107A (b): Purposive Construction


The interpretation of the phraseology of Section 107A(b) of the Patents Act, 1970 was undertaken in the last three posts. In this post, I intend to attempt to answer questions on what is the purpose served by the provision, because I’d like to cover as many bases as possible on this provision.
More so, because a few comments to the first post (which the commentator appears to have retracted on his own) seemed to take the view that one is losing sight of the rationale behind the provision.
It must be understood that the central thrust of the last three posts was to negate the proposition that Section 107A(b) endorses the principle of international exhaustion. Please note that it is not my categorical assertion that nowhere does the Act envisage international exhaustion; I am merely on the limited point that Section 107A(b) is just not the provision which envisages or endorses international exhaustion.
What then is the purpose of the provision? To me, the provision is a defense against an allegation of infringement which provides for very limited/exceptional circumstances. These exceptional circumstances are when the demand for the patented product in India has to be catered to by importation at a price which may be cheaper than the price of manufacture of the patented product in India.
For precisely this purpose, the provision speaks of authorization under Indian law to produce, sell or distribute the patented product in India. Once such authorization is given, the provision permits the importation of the patented product directly from the person so authorized in order that he may manufacture the goods in a country of his choosing (typically, where he can manufacture the product at much lower costs than in India).
In effect, this provision carves a niche for the authorized person to cater to certain Indian exigencies/needs at cheaper costs to him and the consuming Indian public.

One such situation was the hypothetical I gave in the first post- a compulsory license is an authorization under Indian law to fulfil those aspects of the demand for the patented product which the patentee has failed to satisfy, such as reasonable affordability, or availability of the product.
In this scenario, typically a compulsory licensee is permitted to manufacture the product in Indian and subsequently distribute it. What Section 107A(b) does is to provide an additional means to the compulsory licensee i.e.  if the compulsory licensee has a cheaper manufacturing base outside India, either the compulsory licensee himself or someone else may directly import from him the patented product into India, without attracting infringement of the patent. 
This way he gets to supply to the Indian public, products which are less expensive because they dont bear the cost of manufacturing in India.This is the only concrete hypothetical that I could think of (If there are others which come to the readers’ minds, please share it with us).  
Fortunately, the underlying idea of this hypothetical received further credence after I got an email from Dr.Gopakumar Nair early last morning. Dr. Nair, for whom I have immense respect, was kind enough to permit me to share on the blog the correspondence for the benefit of our readers. I thank him profusely for the same.
Dr.Nair said:
While I appreciate the rational route travelled to reach the destination (conclusion), to me it appears like Columbus reaching America while embarking in search of India. This amendment made in the floor of the House prior (12th hour) to passing the 3rd Amendment clearly intended otherwise, as a safeguard measure against any blockade or embargo or acute non-availability of a specific brand or product in India.

My thoughts to Dr.Nair were as follows (the following is not verbatim reproduction):

“Dear Sir,
The interpretation I put forth lets you meet the blockade/non-availability. I have specifically given the compulsory license example in India to make that point. My contention is that since meeting emergencies is the “India”/objective of the provision, international exhaustion is the “America” reached by a few interpreters/commentators. Nowhere does my interpretation prevent one from addressing the situation you cite. If the (Indian) law permits someone to import the product from a person who has been duly authorized to produce and sell or distribute the product in India to address paucity of the product in India, how can anyone come to the conclusion that it is international exhaustion at play? Rather it is the authorization under the (Indian) law to manufacture/distribute, and consequent deeming exception for importation from infringement at play.”


In other words, what I meant to convey was that the provision deems the import of the product non-infringing, not because it recognizes the principle of international exhaustion, but because the person from whom the product has been imported is one who is duly authorized under Indian law to produce, sell and distribute the product in India.

The corollary of this interpretation is that even the products of the patentee (one who holds the Indian patent) which are manufactured or sold outside India cannot be imported into India unless the importation is from a person who has been duly authorized under Indian law to produce, sell and distribute the product in India.

Simply put:
1. If Sony has a patent in India and

2. Sony’s own product protected by the Indian patent is also available in any other country

3. the product, which is available in the foreign country, cannot be brought into India unless the product is imported from a person who has been duly authorized under Indian law to produce, sell and distribute the product in India.

Further, as stated in the last post, since the authorized person under Indian law includes the patentee himself, in the absence of authorization under any other Indian law to any other person to produce, sell and distribute the product in India, the goods must be sourced only from the patentee i.e. Sony.  

Of course, I must clarify that I am not referring to importation for personal use. I refer only to importation into India for commercial purposes.

Conclusion
With this, I think the essential aspects of Section 107A(b) have been dealt with to the extent that a blog permits. A paper authored by me on the same is already underway and upon completion, I shall share the same with those interested.   

One comment.

  1. AvatarRuchica Kumar

    Though Section 107A(b) of Indian Patent Act,1970 does not mention anything about production at a lower cost outside India, I guess it can be stipulated that why would anyone import at a high cost when low cost goods are available in domestic market. However, The point that this section nowhere implies principle of international exhaustion can be corroborated by the fact that under principle of international exhaustion, permission/authorization of patent owner is not required for import if first genuine sale of the product has taken place anywhere in the world. However under section 107A (b), import is only permitted from a authorized person outside India.

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