“Even as India considers the European Union (EU) directive that allows seizure of goods-in-transit by its member countries as violative of the World Trade Organization’s TRIPS (trade-related aspects of intellectual property rights) agreement, legal experts caution against the central government’s plans to approach the dispute settlement body of WTO.
What has triggered the change of mind among Indian experts is a recent decision of the UK High Court to refuse Nokia’s plea to seize counterfeit cell phones (bearing Noika name) that had reached London’s Heathrow airport from Hong Kong en route to Colombia.
Nokia wanted UK customs authorities to seize the goods under the EC Customs Regulation (Council Regulation No 1383/2003 of 22 July 2003), the rule which was invoked by EU members such as the Netherlands to seize over 15 consignments of Indian medicines that were on transit to African and South American destinations.
However, unlike Dutch customs authorities, the UK customs officials were not inclined to seize the goods in transit as their interpretation of the rule did not necessitate such an administrative action. Experts feel that any allegation of EU directive being anti-TRIPS can be countered easily by pointing the differing decisions taken by EU members.”
I’ve been quoted as stating:
“The Nokia ruling from the UK suggests that EC border control measures have to draw their substantive content from the laws of the specific EC member country in question. Therefore, while the Dutch authorities may interpret their law to seize Indian ‘in transit’ generics, the UK authorities may not do so. To this extent, the assumption that EC border control measures violate WTO norms “as such” may be misplaced. This is not to suggest that the WTO action will fail, but only to caution that it may not be as foolproof as we originally assumed it to be,” said Shamnad Basheer, an IP expert with the National University of Judicial Sciences, Kolkata.”
WTO Action: EC vs Netherlands
Let me use this space to try and build on this sentiment that I articulated to Joe. In the light of the UK (Nokia) decision, I personally think that any WTO case claiming an “as such” violation by the EU is bound to be a weak one. The very fact that the UK itself prohibited transit seizures through a well reasoned judgment by Mr Justice Kitchin would, at some level, indicate that the EC regulation does not mandate such seizures.
The Dutch however, through the Sisvel decision, interpreted the very same EC regulation to mandate seizures. This indicates that, at best, there is some ambiguity in the EC regulation. And in times of ambiguity, a WTO panel is normally prone to presuming “good faith” etc in favour of the defendant. Besides, under EC jurisprudence itself, I’m given to believe that in case of ambiguity whilst interpreting legal provisions, EC courts tend to interpret in a way consistent with TRIPS/WTO obligations. So if a transit seizure is likely to violate Article V of GATT and Article 41.1 of TRIPS, an EC court will likely find that the regulation in question cannot be interpreted to cover the seizure of transit goods. The upshot of all of this is that any action that targets the EC regulation alone is bound to fail.
Does this mean that India should not file a WTO action at all? Of course not. We have to bear in mind that while the EC represents the interests of its constituent members and is a WTO member, all of the EC members are also, in their independent capacity, members of the WTO. Given that the seizures tool place specifically in the Netherlands, Germany and Spain, India must prepare a case against these individual countries. This will of course take more work than a much easier to file “as such” complaint against the EC. But given that the “as such” claim against the EC is weak, India ought not to risk filing such a case. It must now begin carefully collecting evidence that will individually pinpoint liability on each of the specific European countries that have seized Indian goods. However, it must also continue exerting diplomatic pressure to work out a settlement guaranteeing that transit goods will not be seized.