Abstract

The Bolar exception was introduced as a narrow regulatory safeguard to ensure that generic manufacturers could prepare for timely market entry without extending protection beyond the patent term. However, India’s approach to the doctrine has moved far beyond this limited objective. Through an increasingly expansive interpretation of Section 107A, Indian courts have widened the scope of permissible regulatory use to include conduct with significant commercial consequences during the patent term. This blog traces that doctrinal shift and examines how the line between legitimate regulatory preparation and pre-expiry commercial exploitation has become increasingly blurred in Indian patent jurisprudence.

Introduction

Imagine a pharmaceutical patent expires in 2026, but a generic manufacturer can begin regulatory testing and approval processes only after that expiry. Since manufacturing, bioequivalence studies and approvals can easily take a year or more, the generic drug would realistically enter the market only in 2027 or 2028 and the patentee would enjoy market exclusivity beyond the patent term. To prevent this de-facto extension of monopoly, Bolar exceptions were introduced to permit pre-expiry use for regulatory approvals.

The doctrine traces back to the WTO Panel’s approval of Canada’s regulatory review exception u/a-30 TRIPS, which allowed pre-expiry use for regulatory purposes during the patent term. India adopted this flexibility through Section 107A of the Patents Act. But unlike many jurisdictions that treat the exception narrowly, Indian courts have interpreted the provision broadly extending it to exports and large-scale regulatory preparation.

Understanding Section 107A

Section 107A(a) exempts from infringement any act of making, using, selling, or importing a patented invention, so long as it is done solely for purposes reasonably related to generating and submitting information required under Indian or foreign regulatory laws governing the manufacture, use, or sale of a product. The provision is sector‑agnostic and is not merely confined to pharmaceuticals.

The ambiguity in S-107A stems from the phrase “reasonably related”. The phrase has been interpreted broadly by the courts, allowing a wide range of preparatory activities to fall within the exception especially for foreign regulatory requirements. Since different jurisdictions demand varying quantities of data, testing, and samples, courts have often adopted a flexible interpretation of what qualifies as regulatory use. This elasticity has given judges significant room to convert Section 107A into an expansive safe harbour.

Bayer and the Expansion of the Bolar Defence

The decisive doctrinal pivot came with the Bayer litigation over sorafenib (Natco) and rivaroxaban (Alembic). Bayer’s core argument was that Section 107A permits information‑sharing abroad, but not the sale or export of patented product itself, especially in quantities capable of commercial use.

In 2019, the Division Bench affirmed the Single Judge’s decision and held that selling” in Section 107A is not geographically limited to India and can include export, provided the underlying purpose is regulatory. It treated Section 107A as a valid exercise of TRIPS Article 30 flexibility. The Bench held that export for foreign regulatory approvals falls squarely within the protection of Section 107A and courts should not deny this merely because foreign misuse might be hard to monitor.

The Court recognised that such exports could dilute a patentee’s exclusivity during the patent term, so, it laid down safeguards requiring courts to examine factors such as export quantities, foreign counterparties, regulatory requirements, and supporting documentation. The Bench also distinguished genuine regulatory use from transactions carrying a primarily commercial undertone, placing the latter outside Section 107A.

In effect, Bayer significantly expanded the geographic and commercial scope of the Bolar defence, while attempting to retain limits through purpose, quantity, and commercial intent.

Merck Sharp & Dohme and the Problem of Commercial Spillover

The tension between regulatory use and commercial spillover became acute in Merck sharpe & Dohme vs SMS pharmaceuticals. Merck alleged that SMS’s large-scale export of sitagliptin API to European entities was, in reality, pre‑expiry commercial exploitation camouflaged as regulatory use.

Relying on the Bayer judgement, the Court reiterated that section 107A extends to foreign regulators. But in doing so, it significantly diluted Bayer’s safeguards. First, the court treated commercial gain as irrelevant so long as the “ultimate use” of the product could be described as research and development. This doctrinal shift led to the collapse of the bright line of commercial animus to a loose inquiry of asserted purpose.

Second, the court downplayed the evidentiary significance of export quantities. Merck argued that 800 kilograms of exports to European counterparties could not be tied to merely regulatory needs. Yet the Court refused to treat volume as suspicious unless Merck could specifically prove commercial use.

Third, the court adopted a remarkably light verification protocol. It accepted a single assurance from a foreign buyer that the products would not be commercially exploited, without seriously examining how such use could actually be monitored abroad.  

Most importantly, the Court shifted the burden of proof onto the patentee. Once SMS asserted a regulatory purpose and produced minimal documentation, Merck was expected to prove foreign commercial misuse, something which is practically impossible given the lack of visibility into overseas operations.

Therefore, large-scale exports during the patent term now appear presumptively protected under Section 107A unless patentees can produce concrete evidence of commercial misuse abroad.

The Structural Problem with Section 107A

These developments reveal a deeper problem within Section 107A itself. In modern pharmaceutical regulation, “purely” regulatory use is rarely separate from commercial preparation. Stability batches, validation runs, contract manufacturing, and regulatory data generation all require activities that look very close to pre-launch commercial production. Regulatory preparation also requires export to foreign labs and once those products leave India, courts have little practical ability to monitor whether they remain within regulatory channels or enter commercial markets.

This problem is only amplified by the broad language of Section 107A. The provision is not limited to any sector, applies to information required under any foreign law, and sets no quantitative limits. When this is combined with judicial trends that treat commercial gain as compatible with the exception, downplay export volumes, and require minimal verification from defendants, Section 107A begins to do more than facilitate post-expiry competition. It starts weakening meaningful patent exclusivity during the patent term itself.

Conclusion

What began as a narrow regulatory exception to prevent delayed generic entry has evolved into something far broader. Through judicial expansion, Section 107A now protects not only limited regulatory use, but also exports and commercially significant preparatory conduct during the patent term itself. The difficulty is that modern pharmaceutical regulation and commercial preparation are no longer easily separable. In stretching the Bolar defence to accommodate this reality, Indian courts have moved beyond preserving post-expiry competition and into a situation where meaningful patent exclusivity itself begins to weaken before the patent has even expired.

References

Eashan Ghosh & Afzal B. Khan, Unilaterally Altering the Bargain: TRIPS, Section 107A, and the Regulatory Review Exception under Indian Patent Law, 14 INDIAN J. INT’L ECON. L. 152 (2023).

Sandeep K. Rathod, Priyam Lizmary Cherian & Ketki P. Jha, Recent Court Orders in Patent Suits on Limits of Bolar Exemption: Shrinking Space for Pharmaceutical Generic Companies in India?18 J. GENERIC MEDS. 154 (2022).

Merck Sharp & Dohme v. SMS Pharms., 2021 SCC OnLine Del 3747.

Bayer Corp. v. Union of India, 2019 SCC OnLine Del 8209.

Timothy Bazzle, Pharmacy of the Developing World: Reconciling Intellectual Property Rights in India with the Right to Health: TRIPS, India’s Patent System and Essential Medicines, 42 GEO. J. INT’L L. 785 (2011).

Canada — Patent Protection of Pharmaceutical Products, WT/DS114/R (2000).