Merck Sharpe and Dohme Corp. and Ors. v. SMS Pharmaceuticals Limited

IMPORTANT ISSUE

Whether the export of the patented product Sitagliptin to companies carrying out research activities was protected under Section 107A of the Patents Act, 1970?

FACTUAL MATRIX

1. Merck Sharpe filed for a permanent injunction against SMS Pharmaceuticals to prevent infringement of their Patent IN 209816 (’IN 816) relating to Sitagliptin, an anti-diabetic drug. The said patent expires on 5th July, 2022.
2. The Plaintiff contested that SMS Pharmaceuticals was commercially exploiting Sitagliptin and the same was evidenced by the fact that it was listed by the latter as an Active Pharmaceutical Ingredient (API) and that SMS has filed documents with the Ministry of Environment, Forest and Climate Change and the Andhra Pradesh Pollution Control Board wherein it is stated that the projected production capacity for Sitagliptin is 10 tonnes per month. SMS was also offering Sitagliptin for sale, via its pages on LinkedIn and IndiaMart.
3. Since a prima facie case was made by the Plaintiff, the Court had ordered that an interim injunction be issued against SMS Pharmaceuticals.
4. By the present application preferred under Order XXXIX Rule 4 of the CPC, the defendant has sought modification/vacation of the exparte interim order dated 21st October, 2020 (supra), citing in their favour Section 107A of the Patents Act.

Submissions by the Plaintiff

• The Plaintiff contested that when the Defendant exports Sitagliptin to foreign organisations, there remains no way to verify whether the substance is used for research or commercial purposes and thus, it leaves IN ‘ 816 susceptible to infringement by entities outside India. Thus, it would be prudent in the eyes of the Plaintiff if the chance of infringement was cut out by prohibiting such trade.
• The Defendant has been exporting Sitagliptin since 2016, and in vast quantities; 800 kgs so far, to be precise. Such a magnitude of sale shows that it was being exported for more than just research purposes.
• There have been various instances where this Court has granted permission to the defendant to export the drug for research and development, under Section 107A of the Patents Act, and the permission has been misused. In such event, it is well settled that damages are not adequate as a remedy for the loss and prejudice that results to the plaintiffs.
• No material has been placed on record to support the stand of the defendant that it has entered into any kind of joint venture with Chemo or Verben, as pleaded by them to show that they are not engaging in unlawful sale.

SUBMISSIONS BY DEFENDANT

• The Defendant asserted that it was a 30 year old Research and Development based API Manufacturing Group, involved in persistent research aimed at making pharmaceutical products affordable and accessible to the common man. In this vein , the alleged unlawful export of Sitagliptin is in fact made for research and hence in complete compliance with the laws of the land.
• The Defendant’s main argument was that their exports were permissible and protected under Section 107A of the Patents Act, along with the judgment of this Court in Bayer Corporation v. U.O.I. [2019 (78) PTC 521(DB)], to contend that the activities of the defendant were permissible, as the defendant was only engaged in sale and export of Sitagliptin Hydrochloride for the purposes of research and development
• The Defendant called on the Bayer judgement to help fortify their case. They emphasized that Section 107A of the Patents Act does not require the defendant to be engaged in research and development activities on its own, and that the provision also permits sale of the patent in API to other entities engaged in research and development activities or for research and development purposes. It was further explained that the defendant was in fact operating in a joint venture with Chemo Iberica SA and Verben AG (“Chemo” and “Verben”, in short) for conducting research and development for generic drugs. Chemo and Verben, it is further submitted, are group companies of the defendant.
• Importantly, it was also pointed out that the quantum of exports was well within the limits permitted by the Drug Control authorities of India.

HELD

• Jurisprudentially, a statutory right cannot be denied by a Court, except under circumstance and for reasons enumerated within the statute, or relevant precedents thereof. It is not permissible for a Court to withhold, from a litigant, the magnanimity which a statute extends, merely on the ground of an apprehension of possible misuse, unless such apprehension is manifestly credible and real.
• The Court, confronted with a request by an applicant for being extended the benefit of Section 107A, has, nonetheless, to keep the apprehensions of the patent holder in mind, and examine whether the concerns expressed by it constitute legitimate ground to deny the prayer.
• The position that emerges from the aforesaid decision in Bayer Corporation, of the learned Single Judge and the Division Bench, is that there can be no restraint of export of a patented invention, provided such export is for research and development purposes.
• In like circumstances, the Court is expected to adopt a like stance. Consistency is the very foundation of any robust legal system, as it fosters certainty in the law. A judge may err in law, but he shall not err in consistency. Passing contrary orders in cases involving similar issues and similar circumstances is bound to erode the faith of the public in the legal system. The fact that the order in the case of HLL was passed on a concession by the plaintiff, whereas no such concession is being extended in the present case, cannot justify withholding, from the present defendant, the benefit which was made available to HLL, as the order in the case of HLL becomes enforceable, not because of the concession extended by the plaintiff, but because of the imprimatur of the Court, lent to such concession, by placing its approving judicial seal thereon.
• For all these reasons, I am of the opinion that the defendant’s prayer seeking extension` the benefit of Section 107A of the Patents Act, deserves to be allowed. The defendant is permitted, therefore, to export the API Sitagliptin to Chemo and Verben, as prayed. For this purpose, the defendant shall, however, file, before such export, an affidavit, before this Court, setting out the quantities of Sitagliptin/Sitagliptin Hydrochloride being cleared and exported by the defendant.

Citation: 2021 SCC OnLine Del 3747

Copy of the judgement