Why the big fuss over the Dutch seizing Dr. Reddy’s patent infringing drugs during transit? India has done the same in the past


The Mint recently reported that a consignment of generic drugs, manufactured by Dr. Reddy and headed for Brazil, has been seized during transit at a Dutch port, on the grounds of patent infringement. The consignment in question was of losartan, a drug, used to lower blood pressure. The patent for this drug in Netherlands is owned by Dupont. This is not the first instance where a consignment of Indian generic drugs has been seized in Europe during transit to a South American country. Last year the Pharmaceuticals Export Promotion Council (Pharmexcil), a governmental body, reported that European authorities had started cracking the whip on Indian manufactured generic drugs in transit to South American companies, making it a point to target small and medium scale manufacturers. The Mint had carried a detailed story on this in December.
Predictably the ‘IP – pharmaceutical’ cocktail has led to the usual rhetoric from various quarters. While on one hand we have the Secretary to the Commerce Ministry threatening to move the WTO against what he terms as an act of ‘piracy’, on the other hand we have ‘civil society’ activists predicting doomsday for patients in need of losartan – a BP lowering drug. To be fair to the Secretary of Commerce some of the earlier actions of the E.U. do qualify as piracy because of the lack of international consensus as the definition of ‘counterfeit drugs’. We had blogged on this earlier. However the current case is a clear-cut case of patent infringement.
In the present case the drug in question losartan violates a valid patent held in Netherlands and the Dutch authorities were only enforcing the law of the land when they impounded the consignment. I fail to understand how this qualifies as an act of piracy? In fact the irony is that India itself has been impounding shipments destined for Nepal whenever those transit shipments infringe Indian intellectual property laws. In the 1984 Supreme Court case of Gramophone Company of India v. Birendra Bahadur Pandey Indian custom authorities had impounded a shipment of pirated cassettes that were being sent through India to Nepal by a Singapore based company. The case eventually reached the Supreme Court and in an excellent judgment by Justice Chinappa Reddy the Court held that the term ‘import’ used in the Copyright Act covered the activity of transit. In para 39 of the judgment the Supreme Court held that
39. We have, therefore, no hesitation in coming to the conclusion that the word ‘import’ in Sections 51 and 53 of the Copyright Act means ‘bringing into India from outside India’, that it is not limited to importation for commerce only but includes importation for transit across the country. Our interpretation, far from being inconsistent with any principle of International law, is entirely in accord with International Conventions and the Treaties between India and Nepal.

(Co-incidentally Shamnad and me have discussed this case for its constitutional/international law aspects in our second article on the Novartis dispute in the Madras High Court. This article, published in the National Law School of India Review deals exclusively with the constitutional law aspects of the judgment and can be downloaded from the SSRN network over here.)
Given the fact that India itself has defined ‘import’ as covering even those goods which are under ‘transit’ it is rather hypocritical of India to expect the E.U. to follow a different set of rules.
If Indian drug manufacturers want to play safe they just have to make sure that their goods do not transit E.U. territories. In the meantime the Government must tone down the talk of dragging this issue to the WTO.

Prashant Reddy

Prashant Reddy

T. Prashant Reddy graduated from the National Law School of India University, Bangalore, with a B.A.LLB (Hons.) degree in 2008. He later graduated with a LLM degree (Law, Science & Technology) from the Stanford Law School in 2013. Prashant has worked with law firms in Delhi and in academia in India and Singapore. He is also co-author of the book Create, Copy, Disrupt: India's Intellectual Property Dilemmas (OUP). He has recently been appointed as an Assistant Professor at NALSAR, Hyderabad, starting September 1, 2017.

8 comments.

  1. Anonymous

    PR,

    On a tangential note, can we equate ‘pirated’ music products to legally sound [at least both in the importing and exporting country]?

    My question, in a round about sense – what would you say, if the music products [CD/ cass or whatever] were legally produced/ licensed in the producing country?

    Frequently Anon.

    Reply
  2. Harry

    Dear Prashant Reddy,

    I’m not sure the term “hypocritical” should enter the equation. It is possible that India, as implied by you, has clear laws linking transit of goods to patent infringement. In EU law, some ambiguity exists, and as far as I am aware is subject to judicial interpretation on a case by case basis. One such case is discussed by Jenkins IP:

    http://www.jenkins.eu/mym-spring-2007/keep-on-trucking.asp

    Kind regards
    Harry Thangaraj
    IP Research Manager
    Pharma-Planta
    St. George’s University London

    Reply
  3. Anonymous

    I do not agree with your analogy for patent infringement in copyright issues. Regarding the patent infringement, there is a clear cut section (Section 49) “Patent Rights Not infringed when used on foreign vessels etc., temporarily or accidentally in India”. That certainly would come as a savior for those in transit from Indian territorial waters and infringing Indian patents (not general IPRs). So did you check for any similar provision in the Netherland’s patent act? Because, if India provides such an exemption, there may be some reciprocity from European countries. Bringing in and comparing it with copyright cases is not at all justified.

    Reply
  4. Prashant Reddy

    @FA – I think my answer remains the same.

    @Harry – Thank you for that link. I stick to the usage of the word ‘hypocritical’ especially when a senior bureucrat goes about accusing a foreign government of ‘piracy’.

    @Anon, 3:05 – You’re reading of Section 49 is completely wrong. Section 49 protects only the use of the invention in the body of the vessel or aboard the vessel, for only the actual needs of the vessel i.e if the invention is a part of the working machinery of the vessel, only then will it be protected by the Section 49.
    On a lighter note the only way we can apply Section 49 in this case is if the entire crew of the ship carrying the consignment was suffering from a BP problem and therefore argue that the drug is absolutely necessary to keep the crew alive in order to run the ship.

    Reply
  5. Anonymous

    PR,

    a) You are bang on target on s.49 being not of use here;
    b) I had purposely kept the European Union mention out… I had known about EU allowing for transport of sealed containers… but Harry check mated it for me..
    c) I, personally, would like to take the EU approach. I have a feeling that if a sealed container is at BOM port, then it would be difficult to bring it within the literal words of ‘patent infringement’.
    Also, I don’t think the Customs IPR doctrine would help.

    Frequently Anon.

    Reply
  6. Harry

    Dear P. Reddy

    Glad you stick to your guns 🙂

    Yes I think I agree that senior officials should be more guarded in their language. But I still do not think that the stoppage of a shipment at an EU port for goods destined for Brazil is justifiable based on what I have heard and evaluated so far. Unless there is a real danger of the goods diverted to, and sold in, Europe.

    Harry

    Reply
  7. Seema Sapra

    Prashant, I disagree wth you on the relevance of the gramphone decision.

    Why do I think this old decision does not help the Netherlands case?

    Well, first the Gramophone decision itself states in para 27 that “import” can mean different things in different places and takes color from the context where it occurs and that the sense of the statute is important. The Supreme Court expressly relied upon international opinion that protects copyright (para 29)as established by both international copyright and transit trade conventions. The Court ruled (para 29) “If this much is borne in mind, it becomes clear that the word “import” … cannot bear the narrow interpretation sought to be placed upon it to limit it to import for commerce. It must be interpreted in a sense which will fit the Copyright Act into the setting of the international conventions.”

    This is the context in which the Supreme Court ruled that import would include importation for transit in addition to importation for commerce. The gramophone case dealt with copyright violation on which international opinion was clearly against such violations.

    The present case is of patent infringement or alleged counterfeiting of generics. The policy context as well as international opinion as manifested by international law and treaties is completely different here. I think the Supreme Court (if this issue were ever to come before it) would take the different context into account and rule differently.

    Both the export of generics by India and their import by Brazil are legal and supported by the flexibility provided under the TRIPS agreement in balancing public health and IP rights.

    Second, and I will not discuss this here, the Gramophone decision is not in my opinion well-reasoned at all. It is dated and on many issues might not stand the test of time. Most obviously, it cannot be applied without modification to the TRIPS era and to the new IP regulation in India.

    Are there any later Indian Supreme Court decisions after 1984? You write that “India itself has been impounding shipments destined for Nepal” but then only cite this case from 1984.

    I also have a question for everyone: Was the Dutch action based upon alleged patent infringement or on alleged counterfeiting?

    Seema Sapra from http://indiainthewto.wordpress.com/

    Reply
  8. Prashant Reddy

    Dear Seema,

    Thanks for that exhaustive comment. I’ve not stated anywhere in my post that the Gramophone decision is going to help anybody in Netherlands. I had only cited the decision to place in context the statement of the Commerce Ministry that the Dutch were indulging in ‘piracy’.
    On the question of violation of TRIPs I am in no position to comment right now because I’ve hardly researched into the matter but I have received some really interesting comments from some of your commentators which I will discuss at a later time.

    Cheers,
    Prashant

    Reply

Leave a Reply

Your email address will not be published.