Madras High Court Holds Chennai API Maker's Export Of Diabetes Drug Vildagliptin To Egypt Infringed Novartis Patent

The Madras High Court has held that Chennai-based API manufacturer Venkata Narayana Active Ingredients Pvt. Ltd. infringed Novartis AG's Indian patent by manufacturing and exporting large quantities of the diabetes drug Vildagliptin to companies in Egypt between 2016 and 2018.

Ruling in favour of Novartis, the Court found that Venkata Narayana Active Ingredients had failed to show that the exports were covered by the statutory Bolar exception.

Justice Senthilkumar Ramamoorthy pronounced the judgment on June 3, 2026, in a suit that had been pending for eight years.

"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.

Venkata Narayana Active Ingredients had claimed protection under Section 107A of the Patents Act, 1970. The provision incorporates India's version of the Bolar exception and permits use of a patented invention for purposes reasonably related to obtaining regulatory approval without amounting to infringement.

Rejecting the defense, the court directed Venkata Narayana Active Ingredients to render accounts of profits, following which a decree for profits would be passed. The company was also directed to pay costs.

Novartis AG holds a patent for Vildagliptin, a drug used for the treatment of Type 2 Diabetes Mellitus. The drug is marketed in India through its subsidiary Novartis Healthcare Pvt. Ltd. under the trademarks GALVUS and GALVUS MET.

The suit was filed in 2018 after Novartis learned through investigators that Venkata Narayana Active Ingredients had manufactured and exported large quantities of Vildagliptin API to Egyptian companies, including Inspire Pharmaceutical Company, Mash Premiere and Eva Pharma.

Novartis argued that these companies were already commercially marketing Vildagliptin formulations in Egypt.

It argued that the Egyptian companies were already selling Vildagliptin-based products in that market. According to the company, that undermined Venkata Narayana Active Ingredients' claim that the supplies were meant only for research and regulatory approval purposes.

Venkata Narayana Active Ingredients, in response, raised two key defences. It first argued that the patent had expired in December 2018, calculated from its priority date of December 10, 1998, and therefore the suit no longer survived. The company also maintained that the exports were intended solely for research and development activities by the Egyptian importers and were protected under the Bolar exception contained in Section 107A of the Patents Act.

The court disagreed with the Delhi High Court's view in Bayer Corporation v. Union of India (2019) that Section 107A is an independent special provision. Holding that the provision should be construed as an exception, the Court said the burden lies on the party invoking it to prove that its conduct falls within Section 107A.

Justice Ramamoorthy held that since Section 107A incorporates a Bolar provision and a failure to satisfy its requirements would result in infringement, "the provision should, in my view, be construed as an exception. The onus, consequently, lies on the defendant asserting that its use falls within the exception."

Examining the evidence led by Venkata Narayana Active Ingredients, the Court found it insufficient to establish the Section 107A defence. Purchase orders from the Egyptian importers contained no indication that the goods were required for regulatory purposes.

When the company's Quality Assurance Manager was asked what steps it took to ensure compliance with Section 107A, the answer was candid: "Some customers inform that they want Vildagliptin for trial purpose. But we do not make any due diligence as such."

The court also took note of evidence indicating that exports to Egypt had commenced even before Venkata Narayana Active Ingredients 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.

Since the exact quantum of profits could not be determined from the material on record, the Court ordered rendition of accounts rather than fixing damages or profits at a lump-sum figure. The Taxing Officer was directed to determine costs on the basis of actual costs and expenses incurred.

The court also recommended that the Central Government 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 provision is used legitimately and not abused to circumvent patent rights.