Can manufacture for export cause patent infringement?

30 April 2020

Can manufacture for export cause patent infringement? Image credits: IndiaMART

On November 18, 2019, the Delhi High Court in the case of Merck Sharp & Dohme Corp & Anr v. Sanjeev Gupta & Ors passed an interim injunction against the defendants barring them from manufacturing and exporting the drug Sitagliptin. The injunction was granted by refuting the claims of the defendants who contended that the manufacture for the purpose of export of a patented product does not amount to patent infringement.

 

Facts and core issues

The patented drug in question, Sitagliptin (bearing Indian Patent No. 209816), is primarily used to treat Type 2 diabetes. The Merck Sharp & Dohme Corp holds the patent for the drug as well as its pharmaceutically acceptable salts in 102 countries.

The defendants, in alliance, were found to be in the practice of manufacturing the drug under the name of Swizglipt and exporting it to be sold outside India. It was also discovered that no sale was being made within Delhi. This highlights the main contention of the plaintiffs that the manufacture of the product, even for the purposes of export, is in violation of the rights of the patentee, as protected by Section 48 of the Patents Act, 1970.

 

Section 48 rights of patentees

Subject to the other provisions contained in this Act and the conditions specified in Section 47, a patent granted under this Act shall confer upon the patentee-

(a) where the subject matter of the patent is a product, the exclusive right to prevent third parties, who do not have his consent, from the act of making, using, offering for sale, selling or importing for those purposes that product in India;

(b) where the subject matter of the patent is a process, the exclusive right to prevent third parties, who do not have his consent, from the act of using that process, and from the act of using, offering for sale, selling or importing for those purposes the product obtained directly by that process in India: [***]]

A bare reading of this section reveals that a patentee’s rights are affected when a third party makes, uses, offers for sale, sells or imports the patented process or product in India, without the consent of the patentee.

To this, the defendants countered that:

 

  1. The court has no jurisdiction to entertain the suit since no sale was being made within Delhi.
  2. The Drug Controller had granted a manufacturing license to the defendants for the purpose of export under the Drugs and Cosmetics Act, 1940.
  3. Section 48 of the act does not cover manufacture which is undertaken solely for the purposes of export.

 

The court’s verdict

The court addressed all the arguments categorically.

First of all, it was found that the plaintiff is indeed the rightful patentee and that their exclusive rights have been infringed.

Through evidence supplied by the plaintiffs, it was found that the export of impugned product took place via Delhi. Moreover, it was listed for sale on www.indiamart.com, which is an online marketplace based in Delhi. Thus, the territorial jurisdiction of the court stood justified.

Next, the defendants couldn’t furnish any evidence indicating that the Drug Controller conducted a thorough inquiry into the existence of a patent of the impugned product before granting a license. Besides, it said a mere grant of license under the Drugs and Cosmetics Act, 1940 for manufacture for export does not offer patent protection to the defendants.

Finally, the court dismissed the argument against Section 48 citing that the phrase “importing for those purposes” refers to import of the patented product for the enumerated purposes, e.g. using, offering for sale, or selling in India. The construction advanced by the defendants was found to be untenable. It was held that even if the acts of manufacturing and selling do not take place within India, it would still result in a patent infringement. The protection enjoyed as a result of grant of a patent could not be reduced to cover only domestic manufacture and sale.

As of now, the suit is pending before the court.

 

Key takeaways

The Delhi High Court justly protected the rights of a patentee by giving a wider interpretation to the text of Section 48 of the Act.

The decision to restrict the defendants in relation to the manufacture for the purpose of export of the patented product serves as a reassurance to patentees whose rights get infringed due to subjective interpretations of the law. Additionally, the failure of the Drug Controller in conducting an inquiry into the existence of the patented product before granting the license to manufacture was also questioned.

The court also hinted at the distinction between a manufacturing license granted under the Drugs & Cosmetics Act and a patented product under the Indian Patents Act. It said that both the acts are independent of each other. It can also be inferred that a patent holds more importance over a license to manufacture.

Hence, Section 48 of the Indian Patents Act can be interpreted to provide protection to a patented product from manufacturing for the purpose of export.

About the author

 Simran Bhullar

Simran Bhullar

Simran Bhullar is a research associate at LexOrbis. She is an advocate registered with the Bar Council of India. She holds experience in legal content research and writing and regularly collaborates with attorneys across verticals to publish content on latest developments in the field of intellectual property law.

Manisha Singh

Manisha is a leading lawyer in the IP arena in India. Starting her career at the time when Indian IP laws and practices were undergoing substantial changes pursuant to India’s obligations to comply with the TRIPS agreement, Manisha played an important and crucial role in advising and apprising Indian policy and law makers on global standards associated with IP administrative and enforcement systems.

Manisha is a true strategist and has acted on several milestone cases. She leads most of the firm’s large and complex cases. Manisha is known and respected for her deep expertise on prosecution and enforcement of all forms of IP rights and for strategizing and managing global patents, trademarks and designs portfolios of large global and domestic companies. She is also known for her sharp litigation and negotiation skills for both IP and non-IP litigations and dispute resolution. She represents the Reserve Bank of India, India’s central banking institution before the High Court of Delhi and the Supreme Court of India in cases related to banking and non-banking financial companies.

 

Awards & recognitions
2020 Asian Legal Business: Manisha Singh has been recognized among “Top Disputes Lawyers”
2020 IAM Strategy 300- Manisha Singh has been recognized as leading IP strategist
2020- IAM 1000- Manisha Singh is recognized as “Recommended Individual”
2020 Managing IP- Manisha Singh recognized as as “IP Star” 2020 for Patent litigation, Patent strategy & counselling.

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