Madras High Court Rules Chennai API Maker's Vildagliptin Exports to Egypt Infringed Novartis Patent
Key Insights
The Madras High Court ruled that Venkata Narayana Active Ingredients infringed Novartis AG's Indian patent by exporting large quantities of the diabetes drug Vildagliptin to Egyptian companies between 2016 and 2018.
The court rejected the company's Bolar exception defense under Section 107A of the Patents Act, finding insufficient evidence that exports were solely for research and regulatory purposes.
Justice Senthilkumar Ramamoorthy held that the burden of proof lies on the party invoking Section 107A, construing it as an exception rather than an independent special provision.
The Madras High Court has ruled that Chennai-based active pharmaceutical ingredient (API) manufacturer Venkata Narayana Active Ingredients Pvt. Ltd. (search) infringed Novartis AG's Indian patent by manufacturing and exporting large quantities of the Type 2 diabetes drug Vildagliptin to companies in Egypt between 2016 and 2018. Justice Senthilkumar Ramamoorthy pronounced the judgment on June 3, 2026, bringing to a close a patent infringement suit that had been pending for eight years.
The court found that Venkata Narayana Active Ingredients had failed to demonstrate that the exports fell within the statutory Bolar exception under Section 107A of the Patents Act, 1970, which permits use of a patented invention for purposes reasonably related to obtaining regulatory approval without constituting infringement.
Court Rejects Bolar Exception Defense
In a key legal determination, the court disagreed with the Delhi High Court's view in Bayer Corporation v. Union of India (2019) that Section 107A constitutes an independent special provision. Justice Ramamoorthy held that the provision should instead be construed as an exception, placing the burden of proof squarely on the party invoking it.
"On the basis of evidence adduced by the defendant in this case, I am unable to conclude that the manufacture and supply of VILDAGLIPTIN by the defendant was solely for research and development purposes or that the use of the patented product was reasonably related to the fulfilment of regulatory requirements in Egypt. Therefore, I conclude that the defendant's manufacture and export of VILDAGLIPTIN infringes the suit patent," the Court observed.
The evidence presented by Venkata Narayana Active Ingredients was found to be insufficient. Purchase orders from the Egyptian importers contained no indication that the goods were required for regulatory purposes. Furthermore, when the company's Quality Assurance Manager was questioned about compliance steps, the response was notably candid: "Some customers inform that they want Vildagliptin for trial purpose. But we do not make any due diligence as such."
Background of the Dispute
Novartis AG holds the patent for Vildagliptin, which is marketed in India through its subsidiary Novartis Healthcare Pvt. Ltd. (search) under the trademarks GALVUS and GALVUS MET. The suit was initiated in 2018 after Novartis, through investigators, discovered that Venkata Narayana Active Ingredients had manufactured and exported large quantities of Vildagliptin API to Egyptian companies including Inspire Pharmaceutical Company (search), Mash Premiere (search), and Eva Pharma.
Novartis argued that these Egyptian companies were already commercially marketing Vildagliptin formulations in that market, undermining the defendant's claim that the supplies were intended solely for research and regulatory approval purposes.
Venkata Narayana Active Ingredients raised two primary defenses: first, that the patent had expired in December 2018 based on its priority date of December 10, 1998, rendering the suit moot; and second, that the exports were protected under the Bolar exception in Section 107A.
The court also noted that exports to Egypt had commenced even before the company furnished an undertaking to the High Court in an earlier suit concerning the same patent. "Without disclosing the manufacture and export of VILDAGLIPTIN, the defendant undertook to this Court that it will not manufacture, sell or export VILDAGLIPTIN," the court observed.
Remedies and Policy Recommendations
Since the exact quantum of profits could not be determined from the available record, the Court ordered rendition of accounts rather than fixing damages or profits at a lump-sum figure. Venkata Narayana Active Ingredients was directed to render accounts of profits, after which a decree for profits would be passed. The company was also ordered to pay costs, with the Taxing Officer directed to determine costs based on actual expenses incurred.
In a significant policy recommendation, the court urged the Central Government to exercise its rule-making power under Section 159(1) of the Patents Act to prescribe documentary requirements for parties seeking to invoke Section 107A. According to the court, such rules would help ensure that the Bolar provision is used legitimately and not abused to circumvent patent rights.