Module 28: Patent Rights- Limited Exceptions

Introduction

The topic will cover the exceptions to patent rights where a third party can
exercise rights without infringing the patent rights of the patent holder. This session
shall NOT cover compulsory licences and use without authorization which is covered
under a separate topic as part of this course.

1. Patents Rights – Limited Exceptions

The rights of a patent holder i.e. both for the process patent as well as the
product patent are enshrined in Section 48 of the Patents Act 1970. However this
section is subject to exceptions, these exceptions being the preceding section 47
which is titled “Grant of Patent to be subject to certain conditions”, the succeeding
section 49 which is titled ”Patent rights not infringed when used on foreign vessels
temporarily or accidentally in India”, the two sub-sections of Section 107A, by the
operation of proviso 3 of Section 11A, and Section 100 which establishes the power
of Government to use inventions for own purposes read along with Sections 101 and
102 which deal with rights of third parties in respect of use of invention for purposes
of Government and acquisition of invention and patents by Government respectively.

The raison d’être of a patent regime is to secure an invention against

unauthorized use by granting a patent to the owner of the invention while at the same
time ensuring promotion of technological innovation, dissemination of knowledge,
and promotion of public health. This is enshrined in Section 83 of the Patents Act
1970 which declares general principles applicable to the working of a patent 1. Section
83 with its 7 sub-sections establishes the principles that govern the grant of patent in
India and categorically states that the exclusivity granted to the patent holder shall not
impede the working of a patent by Government for public non-commercial use.

1
* Founder & CEO of SKS Law Associates, Advocate & Patent Agent; email : sunita@[Link]
See S. 83 [Link]
 Points to Remember

Thus the exceptions to the patent regime may be broadly classified

under the following heads:
Experimental or scientific use exception
Foreign vessels exception
Public Non-commercial Use Exception
Regulatory use exception
Prior use exception
Exhaustion of patent rights exception

2. The Experimental or Scientific Use Exception

Under this exception enshrined in Section 47(3) of the Patents Act any person
may use the patented product or process for the purpose ‘merely of experiment or
research including imparting of instructions to pupils 2’. As per the 2014 amendment
to the Patent Rules, the term ‘any person’ would include natural persons, small
entities as well as large entities. The term ‘merely’ of experiment or research creates
a dilemma in distinguishing the nature of a limited exception carved out for research.
For e.g. could a downstream research institute which needs access to an upstream
invention as an input avail such an exception considering that the market for upstream
invention is a research institute that needs its invention for conducting further
research? Hence there could be a distinction made between ‘on’ or ‘with’ the
invention. The research exemption will likely be invoked where the situation involves
working ‘on’ the invention as an input and not working ‘with’. The later act, which
could be in conflict with normal exploitation of the right of the patentee, could be
addressed through the provisions concerning licensing or related rights under section
91 of the Patents Act, 1970, which is aimed to facilitate a clearing mechanism for
blocking patents.

3. Foreign Vessels Exception

2
See S.47 of Patents Act 1970

2
 The section 493 of the Patents Act states that patent rights are not infringed
when the patented invention is used on foreign vessel or aircraft that is temporarily or
accidentally within the Indian jurisdiction including Indian airspace or Indian
territorial waters. The said vessel or aircraft or land vehicle (hereinafter referred to as
‘vessel’) must have been registered in a foreign country or owned by a person who
ordinarily resides in the foreign country. The patented invention must be used on
board the vessel or in the construction or working of the foreign vessel or accessories
thereof.

The term "temporarily" used in Section 49 includes intentional and regular

going into a port, provided that the vessel, does not remain permanently in Indian
jurisdiction, thereby being facilitative of smooth travel along international routes.

Sub-section (2) of Section 49 categorically states that this exception is a

reciprocal arrangement and will not be extended to foreign vessels belonging to
countries that do not confer corresponding rights to Indian vessels.

This exception also finds a reflection in Article 5 of the Paris Convention,

which states that the ‘rights conferred by a patent shall not extend to the use of the
patented invention on board of vessels when such vessels temporarily or accidentally
enter the waters, provided that the invention is used exclusively for the needs of the
vessel’.

4. PUBLIC NON-COMMERCIAL USE EXCEPTION

There are 3 sub-sections in the Section 47, namely subsections (1), (2) and (4)
which covers public non-commercial use as a condition to grant of patent rights
enshrined in Section 48. These 3 subsections read as follows:
● Section 47(1) states that the Government may import or make any patented
invention for its own use. The Government may authorize any person to
import or make on behalf of the Government.

3
See S. 49 of the Patents Act 1970
[Link]

3
 ● Section 47(2) states that any process in respect of which the patent is granted
may be used by or on behalf of the Government for the purpose merely of its
own use
● Section 47(4) states that the Government may import any patented medicine or
drug for its own use or for distribution in government establishments including
hospitals, dispensaries or any medical institution. The establishment must be
either maintained by the Government or run on behalf of the Government or
has been so notified by the Government in the official Gazette.

5. REGULATORY USE EXCEPTION

Section 107A declares certain acts not to be declared as infringement.

Incorporated into the Patents Act 1970 vide the Patents (Amendment) Act of 2002,
the subsection (a) of Section 107A states that
‘any act of making, constructing, using, selling or importing a patented
invention solely for uses reasonably related to the development and
submission of information required under any law for the time being in force,
in India, or in a country other than India, that regulates the manufacture,
construction, use, sale or import of any product’
does not amount to an infringement of patent right of the patent owner.

Points to Remember

This exemption is also referred as Bolar Provision named after the US

case Roche vs. Bolar. This provision provides a statutory right to
manufacturer to use the patented invention to develop and submit
information required for obtaining regulatory approvals anywhere in
the world including India without the consent of the patentee. This is
especially useful for generic drug manufacturers, manufacturers of
pesticides, fertilizers, medical devices etc. which require regulatory
approvals for marketing the products.

4
 The Bolar provision allows generic producers to market and manufacture
their goods as soon as the patent term expires, but does not allow for the use of
patented drug to distribute the generic drug before the expiry of the term of patent.
A judgment delivered recently in the case of Bayer Corporation v. Union of
India & ORS4 and Bayer Intellectual Property GMBH & Anr v. Alembic
Pharmaceuticals Ltd.5 deals with the exception covered under Section 107 A (a) of
the Patents Act. The issue surrounded the scope of the language of Section 107A (a)
and whether it allowed a patented invention to be exported from India for the purpose
solely of development and submission of information or whether doing so would
constitute infringement.

The court, while holding that such an act would not constitute infringement,
made the following observations:
● Though Section 107A prescribes the ―acts which are not to be considered
as infringement of patent rights but there is no provision in the Patents
Act prescribing as to what infringement of patent rights is or what acts
constitute infringement of patent rights.
● Presence of word ‘import' and absence of the word ‘export' in Section
107A does not lead to any inference of the word ‘selling' therein being
exclusive of in the course of export.
● Language of Section 107A of Patents Act permits exports from India of a
patented invention solely for uses reasonably related to the development
and submission of information required under any law for the time being
in force, in India, or in a country other than India, that regulates the
manufacture, construction, use, sale or import of any product. No suit
prohibiting export per se of a patented invention can lie.

Readers must bear in mind that Section 48 which deals with the rights of the
patentee does not provide exportation as right to the patentee. In this context, it
remains to be seen how the court’s interpretation of exception under Section 107A (a)
to impute export functions without a corresponding right to export.

4
W.P.(C) 1971/2014
5
CS(COMM) No.1592/2016

5
 6. PRIOR USE EXCEPTION

The proviso to Section 11A subsection (7) is an unusual provision introduced

in the patent law by the Patents (Amendment) Act of 2005. The said section 11A(7) 6
states that on the date of publication of the patent application, the patent applicant
shall have like privileges and rights as if a patent has been granted. This means that
when the patent is granted, the patent applicant can sue and claim damages from the
date the patent application was published.

The section 11A(7) has three provisos the second and third provisos of which
are very interesting and hark back on the unique transitional arrangement India had
for 10 years under the TRIPS Agreement, until India became TRIPS compliant on 1 st
of January 2005. The second proviso states that
“Provided further that the rights of a patentee in respect of applications made
under sub-section (2) of section 5 before the 1st day of January, 2005 shall
accrue from the date of grant of the patent:”

The third proviso states that:

“Provided also that after a patent is granted in respect of applications made
under sub-section (2) of section 5, the patent-holder shall only be entitled to
receive reasonable royalty from such enterprises which have made significant
investment and were producing and marketing the concerned product prior to
the 1st day of January, 2005 and which continue to manufacture the product
covered by the patent on the date of grant of the patent and no infringement
proceedings shall be instituted against such enterprises.”

Thus the patent right on a mail-box application shall accrue from the date of
grant of patent instead of the date of filing a patent. This means that if a person was
working the subject matter of the patented invention prior to 1 st of January 2005, he
may continue to do so, on payment of a royalty and without fearing charges of
infringement.

6
See S.11A(7); [Link]

6
 7. EXHAUSTION OF PATENT RIGHTS EXCEPTION

Section 107A(b) was introduced into the Patents Act 1970 by way of the
Patent (Amendment) Act of 2003. It was later further amended by the Patent
(Amendment) Act of 2005 to replace the term “duly authorized by the patentee” to
read as “duly authorized under the law”. Presently, Section 107A(b) states that the
“importation of patented products by any person from a person who is duly
authorised under the law to produce and sell or distribute the product",” shall not be
considered as an infringement of patent rights.

This Section 107A(b) statutorily enshrines what is otherwise known in equity

as Doctrine of Exhaustion or the First Sale Doctrine which refers to the exhaustion of
the exclusive rights of the patent holder once the patented item or object is sold
without any restriction. Thus the first unrestricted sale of a patented item is deemed to
have exhausted the patentee's right and control of use over that particular item or
object on sale. The rationale behind the Doctrine of Exhaustion is that the Patent
holder has already reaped the benefits conferred by the patent by exercising his
exclusive right to prevent others from making, using, selling, offering for sale in the
territory of patent grant or importing an invention into the territory. Exhaustion of
patent rights has been comprehensively dealt with in the module on IP exhaustion.

8. THE PRIVATE AND NON-COMMERCIAL USE EXCEPTION

The non-commercial use exception that covers the grant of compulsory licence
has been covered in another module. The provisions governing private and non-
commercial use exception have been provided under Section 84 (Compulsory
licenses), Section 85 (Revocation of patents by the Controller for non-working) and
Section 92 (Special provision for compulsory licences on notifications by Central
Government) of Patents Act, 1970. This exception also enshrines the Para 6 of the
Doha Declaration7 in Section 92A which grants compulsory licence to any third party
for manufacture and export of patented pharmaceutical products ‘to any country
having insufficient or no manufacturing capacity in the pharmaceutical sector for the
7
Implementation of Para 6 of the Doha Declaration on the TRIPS Agreement and Public Health
[Link]

7
concerned product to address public health problems, provided compulsory licence
has been granted by such country or such country has, by notification or otherwise,
allowed importation of the patented pharmaceutical products from India’.

9. RESONANCE IN THE INTERNATIONAL TREATIES

The exceptions in the Indian Patent Law are well represented in the
International treaties.

TRIPS Agreement
The signatories to the World Trade Organization’s Agreement on Trade-
Related Aspects of Intellectual Property Rights (TRIPS Agreement) adopted
exceptions to patent rights and other related rights to use IPRs as a tool for their
sustainable development which are reflected in the Article 30 titled 'Exceptions to
Rights Conferred' which provides that
'Member Countries may provide limited exceptions to the exclusive rights
conferred by a patent, provided that such exceptions do not unreasonably
conflict with a normal exploitation of the patent and do not unreasonably
prejudice the legitimate interests of the patent owner, taking account of the
legitimate interests of third parties.'

Article 30 of TRIPS allows for limited exceptions to the exclusive rights

conferred by a patent. The exceptions must not unfairly prejudice the legitimate
interests of the patent owner.

Paris Convention
Article 5 of the Paris Convention, allows for free movement of vehicles, ships
and planes across international borders without fear of suit for infringement. The
Article 5 states that the ‘rights conferred by a patent shall not extend to the use of the
patented invention on board of vessels when such vessels temporarily or accidentally
enter the waters, provided that the invention is used exclusively for the needs of the
vessel’.

8
SUMMARY
Patents granted in a jurisdiction bestow rights on the patent holder which are
enshrined in the Section 48 of the Patents Act. These rights do not apply in certain
circumstances and the patent owner can neither sue for infringement, nor insist on a
licence be obtained from him. These circumstances are enshrined in Sections 47, 49
and 107A. Indeed the statutory rights of the patent holder under the Patents Act are
underlined by the exceptions listed in Section 47. These exceptions may be
summarized broadly as exception by way of use of patent by government for private
and non-commercial use, exceptions by way of experimental or scientific use
including use for teaching. The Section 107A also provides an exception by way of
use for submission to regulatory authorities and by way of exhaustion of rights in case
of parallel imports. Another statutory exception states that patent rights are not
infringed when the patented invention is used exclusively for the needs of foreign
vessels, aircraft or land vehicles that are temporarily or accidentally within the Indian
territorial jurisdiction.

9
 Points to Remember
The rights of a patent holder are enshrined in
Section 48 of the Patents Act 1970 which is
subject to certain exceptions.
Section 83 with its 7 sub-sections establishes
the principles that govern the grant of patent in
India and categorically states that the exclusivity
granted to the patent holder shall not impede the
working of a patent by Government for public
non-commercial use.
The exceptions to the patent regime may be
broadly classified under six heads.
The Experimental or Scientific Use Exception
allows any person to use the patented product or
process for the purpose ‘merely of experiment or
research including imparting of instructions to
pupils.
The Foreign Vessels Exception states that
patent rights are not infringed when the patented
invention is used on foreign vessel or aircraft that
is temporarily or accidentally within the Indian
jurisdiction including Indian airspace or Indian
territorial waters.
Subsections (1), (2) and (4) of Section 47 cover
public non-commercial use as a condition to grant
of patent rights enshrined in Section 48.
The Bolar provision allows generic producers to
market and manufacture their goods as soon as
the patent term expires, but does not allow for
the use of patented drug to distribute the generic
drug before the expiry of the term of patent.
The prior use exception states that the patent
right on a mail-box application shall accrue from
the date of grant of patent instead of the date of
filing a patent, allowing a person working the
subject matter of the patented invention prior to
1st of January 2005, to continue to do so, on
payment of a royalty without charges of
infringement.
The exception covered by the Doctrine of
Exhaustion or the First Sale Doctrine refers to the
exhaustion of the exclusive rights of the patent
holder once the patented item or object is sold
without any restriction.
The non-commercial use exception covers the

10