Section 48 of the Patents Act, 1970, provides patentees the right to exclude others from making, using, selling, offering for sale, or importing the patented product or process without the patentee’s authorization. This right, however, is not absolute.

Section 107A, commonly referred to as the Bolar Exemption, serves as a statutory balance between patentees’ rights and public interest. It carves out two statutory exceptions to what would otherwise constitute infringement:

“(a) any act of making, constructing, using, selling or importing a patented invention solely for uses reasonably related to the development and submission of information required under any law for the time being in force, in India, or in a country other than India, that regulates the manufacture, construction, use, sale or import of any product;

(b) importation of patented products by any person from a person who is duly authorised under the law to produce and sell or distribute the product, shall not be considered as an infringement of patent rights.”

Primarily, it permits the use of a patented invention for research and development purposes, as well as for submitting data to regulatory bodies for product approval, without authorization from the patent holder. This allows biosimilar manufacturers to begin preparing for regulatory approvals during the patent term.

But can a third party manufacture the patented product in excess, stockpile it in anticipation of launch, engage in marketing and launch preparations under the guise of Section 107A? 

In a landmark decision in E.R. Squibb and Sons LLC & Ors. vs Zydus Lifesciences Ltd. [CS(COMM) 376/2024; 2025:DHC:5802] the Delhi High Court decisively addressed this question and clarified the scope of Section 107A in the context of stockpiling patented biologics. The Court held that “any infringing products manufactured, offered for sale or sold, etc., during the life/term of the patent, do not gain credibility. Thus, manufacture of infringing goods and stockpiling them during the said period, so as to release it/flood the market, would also amount to infringement. Hence, any use and sale of any products manufactured during the said period, in violation of a patent, is also liable to be restrained.”.

The infringement suit was instituted by Squibb as a quia timet action to restrain the anticipated commercial launch of Zydus’s biosimilar version of the suit patent before the expiry of the patent term. The suit patent, IN 340060 (entitled “Human Monoclonal Antibodies to Programmed Death 1 (PD-1) for use in treating Cancer”), remains valid till May 2, 2026. It covers the monoclonal anti-PD-1 antibody (biologic) named “5C4”, having International Non-Proprietary Name (INN) Nivolumab, marketed internationally as Opdivo^® and in India as Opdyta^®. The invention encompasses both the use of anti-PD-1 antibody as well as the use of combination immunotherapy, including the combination of anti-PD-1 and anti-CTLA-4 antibodies, to treat cancer. Such combinations can enhance the effectiveness of treatment and potentially reduce the negative side effects that might occur if each antibody were used alone.

As per the Similar Biologics Guidelines a similar biologic product is that which is similar in terms of quality, safety and efficacy to an approved reference biological product based on comparability. Notably, biosimilars are biological drugs that closely resemble an innovator biological drug, unlike generic versions of chemical drugs, biosimilars are not identical copies of the original product. This difference arises because biological drugs are made from living organisms and have large, complex molecular structures. Their manufacturing processes are also highly intricate and sensitive. Because of this complexity, it’s not possible to reproduce a biological drug in exactly the same way as the original innovator product. In biosimilar drugs, the efficacy and amino acid sequencing are also similar, however, chemically, the said drugs are different.

Biosimilarity is a concept that entitles subsequent companies to apply for an abridged and shortened regulatory approval process based on demonstration of similarity in the comparative assessment.

Squibb alleged that Zydus had gathered the requisites for manufacturing both the drug substance and the drug product, i.e., the Active Pharmaceutical Ingredient (“API”) and finished formulation of Nivolumab. Zydus had also applied for regulatory approval from the Central Drugs Standard Control Organization (CDSCO) for marketing their biosimilar (ZRC-3276). In April/May 2024, Squibb received third-party information indicating Zydus’s imminent commercial launch, which prompted the institution of the instant suit.

Zydus argued that the suit was barred by delay. They contended that Squibb was aware of their activities since April 2022, when Zydus applied for clinical trial approval, to which Squibb had responded with a cease-and-desist notice. Zydus invoked the Bolar exemption in reply. They further pointed out that Squibb knew of the CTRI registration of ZRC-3276 and the CDSCO’s approval in September 2022 for manufacture and import for clinical trials. Despite this knowledge, Squibb filed the suit only in April 2024. According to Zydus, such inaction disentitled Squibb to equitable relief.

The Court rejected this plea, holding that while Squibb may have been aware of Zydus’s clinical trial activities, the cause of action for infringement arose only in April 2024, when information regarding the proposed commercial launch first came to Squibb’s attention.

Zydus further contested the infringement claim and also challenged the validity of the suit patent.

Validity of the Suit Patent

Zydus challenged the validity of the patent on the grounds of lack of novelty [Section 64(1)(e)], lack of inventive step [Section 64(1)(f)], and non-patentability [Section 64(1)(k)]. Following are the key arguments and the observations made by the Court therein:

• Lack of inventive step:

Relying on prior art documents D1–D3, particularly D3 (Squibb’s own corresponding patent), Zydus argued that the process of developing Nivolumab (the use of transgenic mice to generate monoclonal antibodies against human PD-1) was already known.

The Court examined the scope of the invention and held that the suit patent “5C4 antibody” was invented by changing the sequencing of amino acids: three changes in the heavy chain variable and three changes in the light chain variable. While the prior art documents disclosed methods of producing anti-PD-1 antibodies, they did not disclose the specific sequences of the 5C4 antibody (Nivolumab). The Court drew a clear distinction between process patents (the subject of D1-D3) and the product patent (the subject of the suit patent). Although D3 disclosed the use of anti-PD-1 antibodies for cancer treatment (i.e. the target), the suit patent disclosed the specific monoclonal antibody Nivolumab (i.e., the product).

The Court also noted that the Controller, while rejecting pre-grant oppositions, had expressly held that the patent satisfied the requirement of inventive step. Zydus’s challenge was therefore rejected.

• Opposition Board Recommendation (OBR):

The suit patent was granted after disposal of four pre-grant oppositions. A post-grant opposition filed by Zydus’s sister concern remained pending during the interim injunction proceedings. Although the Opposition Board recommended revocation of the suit patent, the OBR was quashed by the Madras High Court in W.P. No. 8451 of 2023. On appeal, the Division Bench in W.A. No. 1697 of 2024 remanded the matter to the Single Judge, where it remained pending during the injunction proceedings.

Zydus nevertheless argued that since the OBR was issued by an expert body under the Act, its finding of invalidity should weigh against interim relief.

The Court held that Zydus’ reliance on the OBR did not amount to a credible challenge to the validity of the suit patent. In rejecting this line of argument, the Court noted that:

• the post-grant opposition proceedings were still pending;
• the proceedings concerning the OBR were sub judice;
• the OBR, in any event, has only persuasive value and is not binding in nature; and
• the prior art relied upon in the OBR had already been considered and rejected in pre-grant opposition proceedings.

The Court further emphasised that patents corresponding to IN’060 had been granted in over fifty jurisdictions and the same had not been revoked or invalidated. In fact, in the European Patent Office, the corresponding patent was granted after several oppositions. The Court also noted that Nivolumab received approvals from health regulatory authorities worldwide.

The Court also concurred with Squibb’s submission that the monoclonal antibody of Nivolumab is a man-made antibody and is not merely a discovery, thereby rejecting the argument of non-patentability under Section 64(1)(k).

The Court concluded that Zydus had failed to establish a credible challenge based on scientific material and held that the suit patent was prima facie valid.

Defence of Non-Infringement

Zydus next contended that although their product was a biosimilar to Nivolumab INN, it did not amount to infringement of the suit patent. Specifically, Zydus argued that:

• In cases of product patents, infringement must be established through claim-to-product mapping. Since Zydus’s product (ZRC-3276) had not yet been launched, Squibb’s attempt to map the Sequence Identifier ID of the suit patent with Nivolumab INN was incorrect.
• As per WHO description for Nivolumab, even non-isolated antibodies that do not bind specifically to PD-1 can be termed as “Nivolumab”, provided they possess the sequences set out in the WHO drug information document. Since the scope of the suit patent was limited to antibodies binding specifically to PD-1, with no binding or statistically insignificant binding with other receptors in the CD-28 family, Zydus argued that Nivolumab INN fell outside the scope of the suit patent.
• ZRC-3276 demonstrated binding affinity not only to PD-1 but also to other CD28 members, and thus fell outside the scope of Claim 1 of the suit patent.

The Court rejected these contentions and accepted Squibb’s product-to-claim mapping using Nivolumab INN and the claims of the suit patent. It found that Zydus had used Nivolumab INN as the reference biologic in all the studies for regulatory approvals for biosimilar ZRC-3276, and that Squibb’s claim-mapping showed identical amino-acid sequencing between the 5C4 antibody claimed in the suit patent and the Nivolumab INN. Squibb’s test reports and their CTRI filings indicated that ZRC-3276 demonstrated high binding affinity to PD-1 with high affinity, without substantial cross-reactivity with CD-28 family receptors (CD28, CTLA-4, ICOS). Minor differences in measured binding affinity were treated as standard, known variations in the art and did not exclude ZRC-3276 from the scope of Claim 1.

The Court considered the ordinary and general meaning of the claims and emphasised that Claim 1 of the suit patent referred to “an isolated monoclonal antibody or an antigen-binding portion thereof, that binds specifically to PD-1”. The Court concurred with Squibb’s submission that the term “specifically” does not mean “exclusively” or “only”. Placing reliance on the specification of the suit patent, the Court concluded that there was a clear mention that there was no substantial binding to CD-28 receptors, which cannot be construed to mean that there was no binding with the CD-28 receptors. The Court reiterated that examples do not limit the scope of the claims. The Court also underscored that the test results of Zydus itself did not establish that Nivolumab (5C4 antibody) lacked all binding to CD-28 receptors.

Accordingly, on the basis of Squibb’s claim mapping and the above discussion, the Court heldthat, prima facie, ZRC-3276 fell within the claims of the suit patent.

The Court further observed that if a biosimilar makes use of any element of the reference biologic covered by a valid patent, infringement occurs. It was thus held that the commercial launch of ZRC-3276 would, prima facie, amount to infringement of the suit patent.

Applying the doctrine of equivalents, the Court clarified that even non-literal infringement, where the infringing product performs substantially the same function in substantially the same way to achieve substantially the same result, amounts to infringement.  

On the issue of balance of convenience, the Court noted that Zydus had failed to “clear the way” despite being aware of the suit patent. The post-grant opposition filed by Zydus’s sister concern was still pending, and merely initiating such a challenge was insufficient. The Court also noted that Zydus had received cease-and-desist notices and was well aware that litigation would ensue if they proceeded with the launch of ZRC-3276.

The Court opined that Zydus’s act of applying for approvals reflected careful planning, intent and investment, pointing towards imminent infringement. The Court stressed that Section 107A only permits manufacturing for clinical trials and not commercial sales. The Court further explained that in quia timet action, where there is a reasonable apprehension of imminent infringement likely to cause irreparable harm, interim relief may be granted even before the infringement materialises, provided a strong prima facie case is made. The Court held that infringing products manufactured, stockpiled, or offered for sale during the patent term are ‘tainted’ and may be restrained even post-expiry to prevent stockpiling.

The Court further held that public interest cannot justify patent infringement, especially with the patent nearing expiry in May 2026.

Accordingly, Zydus was restrained from manufacturing, using, selling, offering for sale, importing, exporting, advertising or dealing in any biosimilar/similar biologic of Nivolumab, during the pendency of the present suit. Zydus was also directed to disclose the quantity of ZRC-3276 already produced, thereby reinforcing Squibb’s rights.

This judgment was challenged by way of an appeal [FAO (OS) COMM 120 of 2025] before the Division Bench of the Delhi High Court. However, upon mutual consent of the parties, no stay was granted against the interim injunction.