[Ip-health] Re: Can India, Brazil take on EU over regulation?

[Daya Shanker]

Dear Sangeeta
This note is in reference to the seizure or
detention of Losarton by the Dutch Customs at the instance of DuPont and Me=
rck.
Article 51 of the TRIPS Agreement dealing with
the Suspension of release by customs authorities says
Members, shall, in conformity with the provisions
set out below, adopt procedures to enable a right
holder, who has valid grounds for suspecting that
the importation of counterfeit trademark or
pirated copyright goods may take place, to lodge
an application in writing with competent
authorities, administrative or judicial, for the
suspension by the customs authorities of the
release into free circulation of such goods.
Members may enable such an application to be made
in respect of goods which involve other
infringements of intellectual property rights,
provided that the requirements of this Section
are met. Member may also provide for
corresponding procedures concerning the
suspension by the customs authorities of the
release of infringing goods destined for exportation from their territories=
.
There is a corresponding note in the TRIPS
Agreement which says "It is understood that there
shall be no obligation to apply such procedures
to imports of goods put on the market in another
country by or with the consent of the right
holder, or goods in transit.=94 (note 13).

The first part of Article 51 of the TRIPS
Agreement deals with issues of restricting import
of counterfeit trademark goods and pirated
copyright products and the second part apparently
gives the members of the WTO the opportunity to
restrict import of product covered by other
intellectual property rights such as patents
leading to free circulation of such goods in
their territory.  However, note 13 specifically
mention that there shall be no obligation to
apply such provision to the goods in transit. The
use of the term =93shall be=94 does not leave any
doubt that the provision of Section 51 is not to
be applied to the case of goods in transit. Read
with note 13, it is clear that the last sentence
of Article 51 of the TRIPS Agreement shall not be
applicable in the case of losarton which was in transit in Amsterdam.
An examination of the European Council Regulation
Number 3295/94 of December 22, 1994, apparently
in anticipation of the coming into force of the
TRIPS Agreement on 1st January 1995 would help in
interpretation of Article 51 of the TRIPS
Agreement and the interpretation of Council
Regulation (EC) No. 1383/2003 of 22 July 2003 and
corresponding rules issued in 2007.
The 3295/94 regulation lays down =93measures to
prohibit the release for free circulation,
export, reexport or entry for a suspension
procedure of counterfeit and pirated goods=94
=94taking into account the terms of the GATT
agreement on trade related intellectual property
issues, including a trade in counterfeiting
goods=85=94 It had a specific stipulation that action
by customs authorities to re-export was to take
place only where the suspected counterfeit or
pirated goods are discovered during a check=94 i.e.
not as per the complaint of some agents
purportedly affected by such import or production.
Article 1(1) of this regulation says
This regulation shall lay down:
(1) the conditions under which the customs
authorities shall take action where goods
suspected of being counterfeit or pirated are:
- entered for free circulation, export or re-export,
-found when checks are made on goods placed under
a suspensive procedure within the meaning of
Article 84(1)(a) of Council Regulation (EEC) No
2913/92 of 12th October 1992 establishing the
Community Customs Code (5), or re-exported subject to notification; and
(b) the measures which shall be taken by the
competent authorities with regard to those goods
where it has been established that they are indeed counterfeit or pirated.
The relevant part of Council Regulation (EC) No
1383/2003 of 22 July 2003) which rplaced Council
Regulation (EC) No 3295/94 of Dec. 22, 1994 as is
the case in other regulations with the European
Community, the office and the staff of which are
totally controlled by multinational corporations
and local industries, was amended to read as
(1) to improve the working of the system
concerning the entry into the Community and the
export and re-export from the Community of goods
infringing certain intellectual property rights
introduced by Council Regulation (EC) No 3295/94
of 22 December 1994 laying down measures to
prohibit the release for free circulation,
export, re-export or entry for suspensive
procedure of counterfeit and pirated goods. =85
(2) The marketing of counterfeit and pirated
goods, and indeed all goods infringing
intellectual property rights, does considerable
damage to law-abiding manufacturers and traders
and or right-holders, as well as deceiving and in
some cases endangering the health and safety of
consumers. Such goods should, in so far as is
possible, be kept off the market and measure
adopted to deal effectively with this unlawful
activity without impeding the freedom of
legitimate trade. This objective is consistent
with efforts under way at international level.
(3) In cases where counterfeit goods, pirated
goods and more generally, goods infringing an
intellectual property right originate in or come
from third countries,  their introduction into
the Community customs territory, including their
transshipment, release for free circulation in
the Community, placing under a suspensive
procedure and placing in a free zone or
warehouse, should be prohibited and a procedure
set up to enable the customs authorities to
enforce this prohibition as effectively as possible.=94

The changes are mischievous and their application
was deliberate. A simple reading of the amendment
of  3295/94 leading to 1383 of 2003 has been the
extension of customs regulation dealing with
counterfeit and pirated goods to =93indeed all
goods infringing intellectual property rights=94
which can be justified by the later part of
Article 51 of the TRIPS Agreement. But the
introduction of =93including their transshipment=94
is in direct violation of the TRIPS Agreement.
The European Community has tried to justify these
modifications in terms of the objective
=93consistent with efforts under way at
international level=94 mentioned in paragraph 3 of
the Council Regulation 1383(2003). The
transshipment through Community customs territory
also brings in the issue whether ports and ships
can be considered customs territory. Normally
customs territory is the land mass of a country
along with contiguous sea and the airspace above
with the exception of goods on the ships and in
the part area. The patent acts are not applicable
to the goods in transit i.e. the goods which have
temporarily entered into the customs area. This
issue has been discussed in detail in Brown v
Duchesne ( 235 US 641 (1913)) by the US Supreme
Court and confirmed in a series of later
decisions as this judgment raised intellectual
property rights to the level of property where a
ship had entered into the US port, parts of which
had been patented. The US supreme Court observed
But these acts of Congress do not, and were not
intended to, operate beyond the limits of the
United States: and as the patentee=92s rights of
property and exclusive use are derived from them,
they cannot extend beyond the limits to which the
law itself is confined. And the use of it outside
of the jurisdiction of the United States is not
an infringement of his rights and he has no claim
to any compensation of the profit or advantage he may derive from it.
Basically a product must hurt the commercial
interests of the patent holder in the territory
of the patent and any goods in transit do not
hurt the commercial interest of the patent holder
in any way in the territory of the patent. I have
discussed these aspects in the case of Paragraph
6 amendment of the TRIPS Agreement in my articles
The Paragraph 6 solution of the Doha Public
Health Declaration and Export under the TRIPS
Agreement (Journal of World Intellectual Property
Rights, 2004, 7(3) pp. 365-400) and Access to
Medicines, Paragraph 6 of the Doha Declaration on
Public Health, and Developing Countries in
International Treaty Negotiations (The Indian
Journal of Law and Technology, 2006, 2, 8-64).

I do not know what international efforts are
under consideration as claimed by the European
Community unless the secret agreement on
counterfeit products is the example of international efforts under way.
The seizure of losarton in transit is a case of
direct and deliberate mischief by the European
Union at the behest of DuPont and Merck and
Brazil and India would fail in their duties by
not taking the matter to the WTO dispute
Settlement Organization. Pending the action at
the WTO DSO, to withdraw transshipment facility
to all the goods originating the European
community and going to European community. The
audacious reply of the Ambassador Eckart Guth of
the European Community does not leave any choice
to countries such as Brazil and India. Such
obdurate talk always takes care of the after
retirement job. Mr. Eckarat Guth appears to be
from the Netherlands itself. Let the European
Community approach the WTO for redress of its
grievances. Such mischief must be dealt with
instantly and thoroughly. Possibly I am expecting
too much from these countries which on the sly
went and signed the TRIPS Amendment on 30th
August 2003 and are even ratifying it knowing
fully well that each and every word in that amendment is a fraud.
Daya Shanker

At 09:29 PM 4/02/2009, Sangeeta wrote:
>India, Brazil to take on EU over regulation
>The two countries have taken a strong stand against EU act of seizing Dr
>Reddy=E2=80=99s in-transit shipment
>Radhieka Pandeya
>http://www.livemint.com/2009/01/30002200/India-Brazil-to-take-on-EU-ov.htm=
l?
>d=3D1
>
>New Delhi: A ship loaded with medicine from India drops anchor at a Europe=
an
>port from where it will sail for Brazil. European officials seize the carg=
o
>and later send it back to India. They say the drug is a generic version th=
at
>violates a patent protected in Europe. A generic drug is cheaper than the
>patented version.
>
>The seizure has led to a full-blown war of words in three corners of the
>world=97and put the spotlight back on contentious issues such as intellect=
ual
>property (IP) laws, access to affordable medicines and the use of non-tari=
ff
>barriers against exports from developing countries.
>
>Patent tussle: India=E2=80=99s ministry of commerce and industry is workin=
g out a
>legal strategy to convince the European Union to drop the provision under
>which the shipment from Dr Reddy=E2=80=99s Laboratories was seized. Bharat=
h Sai /
>Mint
>
>The governments of India and Brazil have taken a strong stand against the
>European Union (EU) for seizing an in-transit shipment of a drug
>manufactured by Dr Reddy=E2=80=99s Laboratories Ltd (DRL). Brazil=E2=80=99=
s ministry of
>external affairs has threatened to take the issue up with the World Trade
>Organization (WTO) that settles trade disputes between countries. And
>Brazil, with strong support from India and Bangladesh, at a recent executi=
ve
>board session of the World Health Organization (WHO) in Geneva, also
>succeeded in blocking a controversial resolution backed by the European
>Commission (EC) and WHO-funded International Medical Product
>Anti-Counterfeiting Taskforce, or IMPACT. The resolution had been widely
>criticized for mixing up issues of public health and private IP rights in
>the context of defining =E2=80=9Ccounterfeit=E2=80=9D drugs.
>
>The Indian ministry of commerce and industry is working out a legal strate=
gy
>to convince the EU to drop the provision under which the DRL shipment was
>seized. =E2=80=9CWe plan to approach the WTO if the EU fails to take suita=
ble
>action,=E2=80=9D said G.K. Pillai, secretary, department of commerce.
>
>On 15 January, Mint had reported that a DRL shipment of the generic versio=
n
>of losartan was seized in transit in the Netherlands. This shipment, on it=
s
>way to Brazil, was held by the customs authority at Rotterdam, which said =
it
>infringed the patent of the original drug=97Cozaar. Losartan is not patent=
ed
>in India or Brazil. The patent for Cozaar in the Netherlands is held by
>DuPont, while US-based pharma multinational Merck and Co. holds the
>marketing rights.
>
>=E2=80=9CWe have taken up the issue with a national-level industry body. B=
ut we hope
>the Indian government will take it up at the government-to-government
>level...as it is an industry-wide problem,=E2=80=9D said DRL chief executi=
ve G.V.
>Prasad.
>
>Referring to the EC regulation, a DRL spokesperson told Mint in an email
>response, =E2=80=9C...These provisions may have a significant impact on In=
dian
>companies, most of which use the EU route to transport pharmaceutical
>products to markets where the patent is not recognized or the product is o=
ff
>patent. By forcing (them) to opt for a different route...the cost of
>transport may significantly add to the cost of producing...thus adversely
>impacting the India=E2=80=99s ability to remain
>competitive.=E2=80=9D He added, =E2=80=9CThis will,
>obviously, also impact the availability of much needed medicines in
>developing countries, to which India exports...=E2=80=9D
>
>On its part, the Indian government will provide legal support to the
>industry. =E2=80=9CIndian companies like DRL and IndSwift whose goods were=
 seized in
>transit will get legal and financial help from us to file cases in the EU
>court of justice. They have shown interest in our offer,=E2=80=9D said Pil=
lai. (Mint
>first reported about Indswift on 12 December.)
>
>According to the EC regulation, the EU customs are empowered to detain goo=
ds
>in transit on suspicion of an infringement of IPR. =E2=80=9CTherefore, cus=
toms have
>a right to stop goods of which they suspect that an intellectual property
>right (in this case a patent) is infringed,=E2=80=9D Maria Assimakopoulou,
>spokesperson, taxation and customs union, EC, told Mint in an earlier emai=
l.
>The spokesperson has not responded to the newspaper=E2=80=99s email about =
India and
>Brazil=E2=80=99s opposition.
>
>=E2=80=9CThe shipment was seized on grounds that it infringed... the paten=
t...
>However, it is made in India with full respect to international legislatio=
n
>concerning (IP) rights. In Brazil and in India, the product is not protect=
ed
>by a patent and can be imported freely,=E2=80=9D said an official of the B=
razilian
>ministry of external affairs in an email.
>
>The fear of more such episodes has been expressed earlier. =E2=80=9CAfter =
the EU
>regulation was introduced, MSF (Medecins Sans Frontieres, an international
>medical and humanitarian aid organization) expressed concern about its
>potential to hamper the transit of perfectly legitimate medicines for use =
in
>developing countries. This concern remains,=E2=80=9D said Michelle Childs,=
 policy
>director of the non-profit, MSF Campaign for Access to Essential Medicines=
.
>Patent lawyers suggest a larger battle lies ahead. Rajeshwari Hariharan,
>partner, patents division of the law firm K&S Partners, said, =E2=80=9C...=
if it is
>in transit...it is deemed to be in storage, and storage is one of the acts
>that fall under IPR... I would agree though that it is a non-tariff
>barrier... (I)t would still remain (an) infringement but the countries can
>take it up with WTO and ask for=E2=80=8Aamendment in the law.=E2=80=9D
>
>=E2=80=9CThe seizure of in-transit consignments not meant for the EU marke=
ts
>operates as a non-tariff barrier and is antithetical to the very spirit of
>free trade envisaged under the WTO. But the current wording of TRIPS leave=
s
>much to be desired and may provide enough flexibility to the EU to justify
>such seizures. It may be far more fruitful for India and Brazil to engage =
in
>a diplomatic dialogue with the EU to resolve this issue and amend the text
>of TRIPS to prohibit such seizures in the guise of IP enforcement,=E2=80=
=9D said
>Shamnad Basheer, a professor in IP law at the National University of
>Juridical Sciences, Kolkata.
>
>TRIPS, or the agreement on aspects of intellectual property rights related
>to trade, provides for basic protection that each government has to give t=
o
>the IP of fellow WTO members, while balancing the long-term benefits and
>possible short-term costs to society. Governments have certain flexibiliti=
es
>to be able to tackle, for instance, public health problems.
>
>This gives an option, argue others. Sangeeta Shashikant, a lawyer with the
>Third World Network, an international non-profit, says India and Brazil ca=
n
>and should explore legal options including approaching the WTO Dispute
>Resolution Body. =E2=80=9CThe TRIPS agreement clearly states that any IP e=
nforcement
>measures should be applied in such a manner as to avoid the creation of
>barriers to legitimate trade,=E2=80=9D she said.
>
>Asked how Brazil would now deal with issues such as seizure of generic
>shipments in transit, the official said in an email, =E2=80=9C...(A) motio=
n to
>accept recommendations by IMPACT that could lead to confusions (between
>counterfeit and generic drugs) was stopped by countries such as Brazil and
>India. Other options, including (going) to the WTO, are still being
>considered.=E2=80=9D
>
>India, Brazil and other countries from the South-East Asia region, been
>campaigning against the IMPACT resolution for its attempt to redefine
>counterfeit drugs to include generics. The losartan case led Brazil to tak=
e
>an aggressive and successful stance this time.
>
>But the battle between affordable generics and costly patented drugs is fa=
r
>from over. =E2=80=9CThere is the Acta (anti counterfeiting trade agreement=
) being
>negotiated between certain countries as well as the SECURE (standards to b=
e
>employed by customs for uniform rights enforcement) which promotes strict =
IP
>enforcement being developed by the World Customs Organization,=E2=80=9D sa=
id Dilip
>G. Shah, secretary general of the Indian Pharmaceutical Alliance.
>Meanwhile, the EC regulation continues to provide ample scope for abuse, a=
s
>customs authorities are unlikely to be able to gauge what constitutes IP
>violation. As Hariharan said, =E2=80=9CThe customs officials aren=E2=80=99=
t aware of
>patents. The patent owner traces the entire shipment and is aware of the
>route of the product and knows exactly which port they can seize the
>shipment at. Then they notify the customs authority of that port, and the
>product is seized.=E2=80=9D
>
>radhieka.p@livemint.com
>
>
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