If I had to identify one provision of the law which has been a constant fixation with me, and on which I have written and discussed a lot, it would have to be Section 107A(b) of the Patents act, 1970. In all I must have written over 9 posts on this blog and elsewhere.
The provision reads thus:
107A. Certain acts not to be considered as infringement- For the purposes of this Act-
(b) 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,
Shall not be considered as an infringement of patent rights.
It would be extremely repetitive to reiterate all that I have said in those 9-and-odd posts on the interpretation of this provision, but it is important that I briefly state the line of interpretation I have been inclined to take in those posts. In a line, my take on the provision is that contrary to popular assumed conclusion, Section 107A(b) does not seem to talking about, leave alone endorse, international exhaustion remotely.
Section 107A(b) requires due authorization, not for importation, but to produce and sell or distribute the patented product.
In other words, so long as the patented product is imported from a person who’s been “duly authorized under the law” to produce and sell or distribute, importation from such a person would not amount to infringement of the patent. Since the provision uses “duly authorized under the law”, I took the view that the provision probably does not refer to authorization under foreign law to produce and sell or distribute the product, because that would eviscerate the patentee’s rights under the Indian Act; the authorization to produce and sell or distribute must be under Indian law.
Stated otherwise, lawful production of the product outside India does not necessarily legitimize its import into India. Also, “duly authorized under the law” must be taken to mean specific authorization, as opposed to implied consent by way of international exhaustion. Not just that, the provision may not even be referring to international exhaustion because nowhere does it allude to first sale or exhaustion of rights post the first sale.
In the course of a research for another related issue a few days ago, a friend passed on a document to me to examine the document’s take on patents. The document happened to be India’s communication dated July 10, 1989 on standards and principles concerning the availability, scope and use of trade-related intellectual property rights. (Please search for MTN.GNG/NG11/W/37 at this link)
This communication was sent by the Indian Government during the Uruguay round of Multi-trade negotiations within the framework of GATT. Paras 5-29 of this letter spell out the Indian Government’s position with respect to patents.
Paragraph 28 of the communication caught my attention because it seemed to literally restate Section 107A(b). In the process, it makes the intention of the legislature so very clear that it leaves very little doubt about the actual purpose of exemption of infringement under Section 107A(b).
I reproduce Paragraph 28 for ease of reference:
28. As explained earlier, the patent system of developing countries should strike a rational and reasonable balance between the private monopoly interests of the patent owner and the larger public interest of the society. Therefore, where the public interest, and in particular, national security, food production, poverty alleviation, nutrition, health care or the development of other vital sectors of the national economy so requires it, the host country government or any third person designated by it should be free to work and use the patented invention in the country, including the importation of the patented product if necessary, without the consent of the patent owner on such terms and conditions as the host country government may decide.
Please note the underlined portion. It says that the government or any third person designated should be free to work and use the patented invention. Not just that, critically it permits importation of the patented product if necessary, without the consent of the patent owner on such terms and conditions as the government may decide.
This supports the line of interpretation that I had explored, namely “duly authorized under the law” in Section 107A(b) means specific authorization from the government. Simply put, in the absence of any specific "designation or authorization under the law", parallel import of the patented invention would amount to infringement of the patent.
Could this paragraph be referring to compulsory licensing provisions? NO. Why? Because Paragraphs 11-13 of the communication clearly refer to compulsory licensing scheme, so there is no way it can be said that Para 28 refers to compulsory licensing provisions under the Act.
Could this paragraph be referring to the Government’s acquisition of patents under Section 102 of the Act? Again NO. Why? Because Paragraph 28 refers to use and import of the patented provision, but not to the acquisition of the patent from the patentee.
Also, in this communication, the Indian Government clearly states that with respect to trademarks, it follows international exhaustion, but it never says so in relation to patents. After all, this being an important issue, the position would have been clarified and not left to imagination.
Therefore, although I am not foreclosing any other interpretation, I find it a tad bit difficult to treat Section 107A(b) as referring to international exhaustion. In fact, it now appears India endorses territorial exhaustion....I am sure naysayers will still be shaking their heads, but I would like to know what would it take turn the shake to a nod.
Opinions and Corrections are welcome!