After a careful study of the TRIPS provisions in this regard and some of the literature, I have to admit that I might have been wrong in my estimate: the case seems stronger that I had initially thought.
I’m still researching the issue and will articulate my final analysis in the days to come, but am jotting down some issues for consideration in this post. And I hope to hear back from our readers, some of whom have exchanged personal emails with me and persuaded me (with very sound reasoning) to rethink my own position on this. Prashant Reddy has already blogged on this issue here.
Firstly, it ought not to be lost on our readers that this is an extremely interesting issue, because it completely flips our notion of “TRIPS obligations” and “TRIPS flexibilities”. Thus far, TRIPS has been seen as a “minimum standards” international instrument –i.e. all member states have to adhere to certain basic levels of IP protection. They are free to go above them, but they cannot go below.
To the extent that there are some inherent “flexibilites” in the language of TRIPS, member states can play around a bit with the words and still comply wtih the minimum base line protection mandated under TRIPS. Our dear departed Minister Murasoli Maran was often wont to state in this regard that TRIPS was “couched in the language of diplomatic compromise” and that it was “susceptible to being stretched all the way from India to Geneva”.
Contrast this with the present position where the EC Regulation in question (EC Regn 1383/2003, under which the “in transit” seizures were made by the Dutch authorities) is not below the minimal baseline protection that TRIPS mandates but in fact goes much higher than this baseline. The question is whether the sky is the limit for countries that wish to implement such higher IP protection norms or whether there is an upper cap in this regard under TRIPS? Henning Gross Ruse Khan, a researcher at the Max Planck Institute, who guest blogged with us earlier, has an excellent paper on this theme that has just been published at SSRN. He has co-authored this with Professor (Dr) Annette Kur, a very well respected expert in international IP issues. Henning was one of the colleagues who was instrumental in persuading me to rethink my earliest assumptions.
Anyway, let me get down to the nitty gritties of the various TRIPS articles to help explain as to why India and Brazil might have a better case than I intially thought.
1. Article 51 of TRIPS states as below:
“Members shall, in conformity with the provisions set out below, adopt procedures (fn 13) 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. Members 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.”
fn 13: “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 to goods in transit.“
One could quite persuasively argue that the above Article draws a clear distinction between “in transit” goods and “imported” goods. I have highlighted some parts in the above Article to help appreciate the contextual positioning of the terms “imports” and “transit”.
The obligatory part of Article 51 is only to implement border measures in relation to the imports of counterfeit and pirated goods. Member states “may” also impose these measures in relation to patents and other kinds of IP.
Member states “may” also impose these measures in relation to “transit” goods (note that I am reading footnote 13 which is worded negatively [“there shall be no obligation….”] to suggest something positive [“members may”). However, in case of such transit goods, Article 52 requires that there must still be the prospect of an illegal “importation”. In other words, transit goods may be seized only when such goods are destined for a member state (eg: Brazil), where the “importation” of such goods would be illegal i.e. Brazil would treat such goods as counterfeit trademark goods or pirated copyright goods. Article 52 states:
“Any right holder initiating the procedures under Article 51 shall be required to provide adequate evidence to satisfy the competent authorities that, under the laws of the country of importation, there is prima facie an infringement of the right holder’s intellectual property right and to supply a sufficiently detailed description of the goods to make them readily recognizable by the customs authorities.”
It is to be noted that a charitable reading of Article 51 would suggest that even in respect of patents and other IP, the option to catch “transit” goods (as outlined above) vests with member states. In other words, even if the transit good violates only a patent right (as in the case of the DRL drug consignment that was destined for Brazil but “transitting” through the Netherlands), the Dutch may seize it.
However, owing to Article 52, one might argue that the Dutch can do so only when the goods so seized are likely to violate Brazilian patent laws as well. In the case of Losartan, there is no patent in either India (exporting country) or Brazil (importing country). Consequently the Netherlands (country of transit) cannot seize these goods without violating Article 52 of TRIPS.
Such seizures by the Dutch would arguably also violate Article 41 of TRIPS which states in pertinent part that IPR enforcement measures (including border measures) “shall be applied in such a manner as to avoid the creation of barriers to legitimate trade”. The export of approved generic drugs that are not covered by patents in either the country of export or the country of import will easily qualify as “legitimate trade”. The seizure of such goods by Dutch authorities, when they are not meant for the Dutch or any of the EU markets could arguably constitute a “barrier” to such legitimate trade.
If the above interpretation holds good, then at least on the above points, India and Brazil have a stronger case against the EU “in transit” seizures that I intially thought. Lastly, in the light of recent EU judgments (including the latest Montex/Diesel case), which appear to have held against “in transit” seizures, India and Brazil ought to also explore whether or not they might mount a challenge before the EU courts itself.
Dear Shamnad,
thanks a lot for mentioning the ‘ceilings’ paper here. As you said, this is turning into a really interesting debate where TRIPS is playing a completely different role than usually: In essence we are discussing whether TRIPS puts a limitation or ‘ceiling’ to a specific form of TRIPS-plus IP protection – in this case the EC’s border measure which go beyond TRIPS in at least two ways (they extend to other IP infringements pirated copyright goods/counterfeit trademarks and also apply to goods in transit).
We are therefore looking at a so far new role of TRIPS where it is not about binding minimum standards or flexibilities and policy space (as for example what can China do that still falls under Art.61 ‘commercial scale’), but about TRIPS imposing a _binding maximum amount of IP protection_. Since there are some interesting new developments in this direction of International IP law imposing ceilings on the amount and scope of IP protection, Annette Kur and I have tried to analyse this notion of ceilings from various angles in a paper available here: http://ssrn.com/abstract=1326429
As to the case at hand here, I by and large agree with you Shamnad: the qualification in Art.51 TRIPS effectively allows Members to extend border measures “to other infringements of intellectual property rights, provided that the requirements of this Section are met”. As pointed out above, the key requirement here is the need to show IP infringements under the “laws of the country of importation” (Art.52, fn.14). We have discussed in length whether this includes the transit country and I am still not sure about the ‘correct’ answer (if there is only one). I personally think your reference to note 13 which explicitly distinguishes between imports and goods in transit is offering a very good argument for a contextual interpretation of ‘laws of the country of importation’ as only referring to the country of final destination (but see also my earlier post listing distinct uses and connotations of the term importation or imported goods). IN line with your arguments, one could further rely on the telos of the TRIPS preamble and Art.41:1 (the latter stating that IP enforcement procedures “shall be applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse.”) to support such a restrictive understanding of importation.
But I am also aware that Panels are probably rather careful in giving too much weight to teleological interpretations. If one looks at the lengthy discussion in China – IP Enforcement, one must expect a detailed technical analysis of the ordinary meaning and the context of the phrase at hand. On that account I am also rather sceptical about the relevance of national understandings of the term (even if a potential compliant – here India – had earlier and in a distinct context taken a more liberal approach). Only the Canada – Patents Panel did, to my knowledge, take into consideration national practices (in that case concerning the existence of a bolar type of exception in domestic patent laws) and attached some normative value to that.
For me this ‘novel’ function of TRIPS is really the most interesting aspect. Taking into account the general qualification of TRIPS plus ‘not contravening’ TRIPS provisions (see Art.1:1 2nd sentence), other potential (future) ‘ceilings’ in TRIPS could be any future (binding) obligation to require the disclosure of origin in patent applications as proposed in a draft Art.29bis by Brazil, India, et al: It obliges (shall-language) Members to implement such a requirement and foresees a (again binding) obligation to sanction non-adherence by patent revocation (if I remember correctly). Such ceilings can actually offer one way to integrate and reconcile other social, environmental or other interests into the WTO/TRIPS regime. Something which the concept of sustainable development and especially its dominant principle of integration has been calling for since the 1992 Rio Earth Summit (or even the 1987 Brundtland Report or the 1972 Stockholm Declaration). In WTO law, this is not merely a remote and vague concept of international law, but well recognised in the Preamble of the WTO Agreement…
But before I sound to idealistic, I am certainly aware about the downsides to this ‘ceilings’ notion such as the question of who has an (economic) interest in enforcing them in the WTO/DSU framework and that they also limit (TRIPS) flexibilities by imposing a maximum protection beyond which no country should go.
As this is really a new, distinct way way of operationalising TRIPS, any comments on the ‘ceilings’ paper (http://ssrn.com/abstract=1326429) would be highly appreciated.
All the best,
Henning
Hey Shamnad,
I wanted to ask you: Is locus standi an issue when it comes to TRIPs? I ask this because the IPR (Import) Enforcement Rules, 2007 have to be interpreted according to judicial pronoucements. As you must know Article 141 declares the judgments of the Supreme Court as law of the land. This means that the Gramophone Case is still binding on the Customs Department. In such a case can India move the E.U. for relief when it is not changing its own laws in this respect? It has to amend its laws through an Act of Parliament or else wait for a larger bench of the Supreme Court to over-rule it.
Cheers,
Prashant
Hey Prashant,
First, this may not be a locus standi issue, as much it is an equity based “come to the court with clean hands” kind of an issue.
Secondly and perhaps more importantly, you have to bear in mind that Gramophone decision was delivered in the pre-TRIPS era (around 1984 or so). Justice Chinnappa Reddy was quite clear that he was basing his decision and interpreting “import” in accordance with the context prevailing then (international conventions and their clear aim of wanting to wipe out piracy etc).
If a similar matter were to reach him today, I’m sure that he will qualify his own earlier decision, based on today’s changed context i.e. TRIPS. In other words, Article 51 and 52, read with Article 41 are likely to cause him to treat an issue similar to the present Losartan case differently than the earlier cassette piracy case. To that extent, I don’t think there would be any violation of Article 141, since a judge would be distinguishing the earlier ruling, given the current context of TRIPS.
Hey Shamnad,
I understand that a judge today may have decided differently but the question is does the Government of India consider itself bound by the 1984 judgment? Maybe the President should ask the Supreme Court for its opinion to clarify whether the 1984 decision is still binding on the Customs Department. I don’t think the WTO Panels are going to decide this question although it would be interesting to see whether the E.U. could even take up such a defence.
Prashant