On 26 April 2020 (world IP day), the China National Intellectual Property Administration (CNIPA) released details of 10 exemplary patent administrative enforcement cases from 2019. One selected case concerned a patent infringement dispute relating to the anti-tumour drug sorafenib, which has been selected for its significance in respect of the application of the Bolar exemption.
Bayer is a leading multinational pharmaceutical and life sciences company that markets Nexavar (the first targeted drug to treat advanced liver cancer) and owns the patent for sorafenib, Nexavar's active pharmaceutical ingredient.
Bayer found that a company in Shanghai had been promoting sorafenib on its website and on exhibition boards and in brochures at CPhI Shanghai. In January 2019 Bayer filed a complaint with the Shanghai IP Office, alleging that the Shanghai company had infringed its patent by offering to sell the above product and requesting cessation of the infringement.
In May 2019 the Shanghai IP Office granted Bayer's petition. The decision is now in force.
Establishment of offer to sell
The respondent argued that:
- its promotional activities aimed to find potential clients;
- it had clearly indicated that the product was still in the research and development and drug master file stage and that it was therefore incapable of selling the patented product; and
- it also included on the exhibition boards and in brochures a disclaimer stating that "[p]roducts under patent are not offered for sales until patent expiration in the relevant country".
The Shanghai IP Office found that:
The respondent, by stating the status of the accused product, has made it clear that the compound structure of the accused product as the API has been fixed, and the accused product incorporating such structure as a product in the sense of the Patent Law is available. The procurer of API, noticing the aforesaid status, will not presume that the exhibitor is incapable to sell the patented product so as to preclude the respondent's declaration of the intention to sell the accused product. This finding of promotion intent is corroborated by the recorded statement made by a representative of the respondent at its exhibition stand that the accused product 'can be done'.
The Shanghai IP Office also found that:
[t]he disclaimer does not suffice to exclude the purpose of promoting the accused product. 'Sell' and 'Offer to sell' are two different acts in the Patent Law, and this disclaimer has no bearing on the establishment of offering to sell, thus cannot be used as a defence to disprove its offering to sell.
The finding is in line with the legislative aim of offering to sell and aligns with recent judicial precedents.
Article 11 of the Patent Law provides that:
[t]he patent right is granted for an invention or a utility model, unless otherwise provided for in this Law, no unit or individual may exploit the patent without permission of the patentee, i.e., it or he may not, for production or business purposes, manufacture, use, offer to sell, sell, or import the patented products, use the patented method, or use, offer to sell, sell or import the products that are developed directly through the use of the patented method.
Offering to sell together with the manufacture, use, sale and import of patented products are the five acts for exploiting patent rights as prescribed in the Patent Law. The establishment of an offer to sell is not premised on the simultaneous finding of manufacturing or selling patent products. A declaration of intent to sell can be established without the presence of the alleged infringing product.
Article 24 of the Several Provisions of the Supreme People's Court on Issues concerning the Application of Law in the Trial of Cases on Patent Disputes provides that:
the phrase 'offer to sell', as mentioned in Article 11… of the Patent Law, refers to a declaration of an intention to sell a product by means of advertising it, displaying it in shop windows or at an exhibition fair.
The respondent's promotion of the infringing product on its website and at an exhibition fell within the scope of an offer to sell as defined by judicial interpretation. The indication of the product status and the disclaimer have no bearing on the ascertaining of an offer to sell and the indication of the product status, on the contrary, insinuates that the respondent has acquired the relevant product and is capable of selling it.
By listing offers to sell as a patent infringement, the Patent Law enables patentees to proactively stop the unauthorised selling of patented products. If offering to sell was not deemed to be patent infringement (unless it is committed in conjunction with the manufacture or sale of patent products), patentees would be deprived of the chance to cost-efficiently stop the infringement.
In practice, it is not unusual that generic drug manufacturers knowingly promote and sell the generic versions of patented drugs before the expiry of a patent via the Internet and major industry exhibitions. In order to circumvent the risk of infringement, a disclaimer and an indication of products in research and development status is often used to disguise the intention of selling and offering to sell such products. Therefore, it cannot be used as a valid defence to preclude a generic drug manufacturer's aims when promoting its products.
Application of Bolar exemption
Article 69.5 of the Patent Law provides that the following will not be deemed a patent infringement (ie, the Bolar exemption):
Where for the purpose of providing information needed for the regulatory examination and approval, any person manufactures, uses, or imports a patented medicine or a patented medical apparatus, or that manufactures, imports the patented medicine or the patented medical apparatus specifically for such person.
In the case under review, the respondent argued that the following exemptions applied under the Bolar exemption:
- a generic drug manufacturer attempts to obtain the information required for administrative approval; and
- a third party supports the generic drug manufacturer to obtain information required for administrative approval.
Where a generic drug manufacturer looking to obtain the information required for administrative approval cannot manufacture or import patented medicines, a competent third-party vendor, being exempted from patent infringement, may specifically manufacture and import patented medicines for such manufacturer and provide reasonable and appropriate promotion for this specific purpose.
The Shanghai IP Office found that the phrase "manufactures or imports the patented medicine specifically for such person" should be limited to manufactures or imports for the researchers and experimenters rather than offering to sell any other organisations or individuals apart from the former. The respondent targeted unspecified people during its promotional campaign, who do not fall into the category of manufacturing, use or import as prescribed in the Bolar exemption.
The respondent's reasoning was obviously a misreading of the law. The legislature introduced the Bolar exemption to the Patent Law to facilitate early clinical trials and data approval of generic drug manufacturers prior to the expiration of a patent, so that a generic version of patented drugs can be marketed after the expiration of such a patent. The Bolar exemption provides an infringement exemption only for acts that are necessitated for fulfilling the regulatory approval of drugs, which does not include an offer to sell.
In practice, the Bolar exemption is rigorously applied so as not to harm the legitimate interests of patentees. The Shanghai IP Office clarified that the Bolar exemption does not apply to offering to sell a patented drug, which is expected to deter some opportunistic generic drug manufacturers seeking to monetise patented drugs before their expiration.
