Guest Post: ACTA – A Draft Trade Agreement with a Potential to Create Trade Barriers?

The Spicy IP team is delighted to bring to the readers a Guest Post by Dr. Henning Große Ruse–Khan, who has kindly agreed to share with us the following comment on the ACTA draft and its potential to mandate trade barriers:

After years of secrecy and forced by recent leaks (see here), the negotiating parties to an Anti-Counterfeiting Trade Agreement (ACTA), currently the EU, the US, Japan, Australia, South Korea, Singapore, Morocco, and Switzerland, now have released an ‘official’ draft text (see here).

In its press release, the EU Commission emphasizes that the overall objective of ACTA is to address large-scale infringements of intellectual property rights which have a significant economic impact. ACTA will by no means lead to a limitation of civil liberties or to “harassment” of consumers. The Commission also points out that ACTA “will not hamper access to generic medicines.”

Amongst the various concerns expressed by NGOs and academics about the impact of ACTA, its potential impact on the free transit of goods and hence on international trade is one issue. Allegations were that ACTA would oblige countries to introduce border measures against goods in transit along the lines of an existing EU regulation which had lead to the highly controversial seizures of generic drugs in transit from India to various developing countries (see here).

Now with an official draft text available, does ACTA indeed mandate seizures against goods in transit (and not only against imports, as Art.51 TRIPS provides)? And does it extend to goods allegedly infringing patents (instead of merely applying to pirated copyright- and counterfeit trademark goods, as the case with TRIPS)? The relevant ACTA provision states:

1. This section sets out the conditions for action by the competent authorities when goods are suspected of infringing intellectual property rights, within the meaning of this agreement, when they are imported, exported, in-transit or in other situations where the goods are under customs supervision.

2. For the purposes of this section, “goods infringing an intellectual property right” means goods infringing any of the intellectual property rights covered by TRIPS22. However, Parties may decide to exclude from the scope of this section, certain rights other than trade marks, copyrights and GIs when [not protected exclusively by copyright and trade mark systems and] [protected by [non-product- or sector-specific] [registration] sui generis systems.] (emphasis added).

ACTA hence obliges contracting parties to foresee border measures against goods in transit. And ‘goods infringing an intellectual property right’ generally cover all IP rights under TRIPS, including patents. Does it mean that ACTA would lead to more seizures of generic drugs or other goods merely on the basis of allegations of patent infringements in the transit country? If so, one might question its consistency with Art.V GATT (Freedom of Transit) and several TRIPS provisions such as Art.41:1 (which demands that IP enforcement procedures “shall be applied in such a manner as to avoid the creation of barriers to legitimate trade”).

The answer to these questions however does not seem so straightforward: An initial look leads to the following points and further questions:

– para.2 of the ACTA provision cited above allows to exclude certain types of IP infringements if the rights concerned are inter alia “[protected by [non-product- or sector-specific] [registration] sui generis systems.]” The still heavily bracketed text indicates certain (registration) rights may be excluded – does this cover patents?

– A bracketed Fn.21 to the border measure provision in the ACTA draft states: “No Party shall be obliged to apply this section to any goods that do not infringe an intellectual property right held within the territory of that Party.” Art.1.3:2 of the ACTA draft confirms this in form of a general rule. This seems to make the final fate of allegedly infringing goods in transit dependant upon the question whether the scope of IP protection in the transit country actually covers the mere transit as an infringing act. In other words, would the domestic IP law consider acts with a marginal territorial link to the transit country as infringements or does it demand a real and proven threat of trade diversion onto the market of transit country? In a similar UK case (Nokia vs. Commissioner of Customs), exactly this question has recently been posed to the European Court of Justice.

– Finally, the ACTA draft does not contain any ‘free trade’ safeguard provision like Art.41:1 TRIPS. But Art.1.1 states: “Nothing in this Agreement shall derogate from any international obligation of a Party with respect to any other Party under existing agreements to which both Parties are party.” Hence ACTA would have to interpreted in a manner consistent with GATT and TRIPS. Can this really be achieved – given that also a temporary detention of goods in transit (until courts have decided that such act does not infringe domestic IP rights) can interfere with free transit and create barriers to trade?

The Spicy IP Team thanks Dr. Henning Große Ruse–Khan for this insightful piece of work and invites comments on the same from the readers.

Shouvik Kumar Guha

Shouvik Kumar Guha

Shouvik is at present employed as a Research Associate and a Teaching Assistant at The W.B. National University of Juridical Sciences, Kolkata. He has obtained his B.A. LL.B. (Hons.) degree from NUJS itself and is also currently pursuing his LL.M. degree from the same university. From his very year at law school, he had been attracted towards the discipline of Intellectual Property and that interest has been kindled further in course of time. The interface between IP and other disciplines such as Economics, Anti-trust Law, Human Rights, World Trade Law and the technological developments relating thereto, has especially caught his attention since then. He’s authored several papers on issues relating to IP and other legal disciplines for journals, books, magazines and conferences in national as well as international levels. He is also currently co-heading an organization called Lexbiosis, which is an endeavor meant to facilitate the collaboration between the legal industry and academia.

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