In what is hopefully the beginning of the end of the controversial EU regulation 1383/2003, under which seizures have been taking place at borders of EU countries for drugs in transit from and to developing countries, last week India and Brazil launched a trade dispute against EU by requesting for consultation proceedings. SpicyIP has been following this dispute in a series of posts since its development.
As per the WTO dispute settlement proceedings, now there are two possible outcomes. The EU has 10 days within which to respond to the request and 30 days within which to enter into consultations. If it does not do either of these, then India and Brazil can request the establishment of a panel, which would then proceed with the matter and make rulings on the dispute.
Alternatively, if the consultations do not materialize in a settlement, then after 60 days from the receipt request for consultations, India and Brazil can request the establishment of a panel. Members are also to give special consideration to the needs and problems of developing countries – significant here considering that not only are India and Brazil’s interest being affected, but so are all the developing and LDCs that the drugs were being exported to.
The total procedure, if it goes into a panel report will take about a year, plus another 3 months if there is an appeal. However, the results of the consultation period will also be affected by the EU-India FTA going on in the background, with both parties probably wanting a settlement, rather than going into a panel decision.
India (and the other developing countries) certainly are in a stronger position in this dispute due to the likely TRIPS compliancy issues that the EC regulation has. As Shamnad has pointed out in a previous post, Articles 41, 51 and 52 of the TRIPS Agreement will probably be the provisions being interpreted – with a likely outcome of it being read so as to mean that drugs legit in the importing and exporting countries cannot be held in transit by a 3rd country. This argument will be strengthened in the backdrop of the Doha Declaration (reaffirming members rights to use TRIPS flexibilities to protect public health and access to medicines) and Article 7 & 8 of the Agreement (Objectives and Purpose – showing that the Agreement is to be read so as to protect public health and protect the intellectual property regime against abuse of IP rights and from trade distortions).
I also don’t see how it would be possible to take an alternate reading – allowing goods in transit to be seized on the basis of patent infringement in that country – since that would render compulsory licenses (more specifically, the importation of goods under a compulsory license under amended Article 31) useless. However, the strongest argument probably comes outside the TRIPS Agreement, and under GATT Art V which provides for freedom of transit for goods.
I also hope that the conflation of the issues of substandard drugs and infringement of IP rights gets addressed. For instance, ‘counterfeiting’ is being used to refer to both trademark as well as patent infringement, as well as to substandard products. One of the justifications that the EC gives for their law, is that they are ensuring that public safety by carrying out these seizures. Luc Devigne, from the EU delegation had even stated that countries should be grateful to the EU for saving lives as not everyone had the capacity to search for dangerous drugs. It seems to have been forgotten somewhere that only the drug regulatory authority in the country where the goods will be entering the market actually have the jurisdiction / authority to determine what goods ought to be allowed, and what not. The interchanging of terminology however, continues and is potentially, if not already so, dangerous for its ability to confuse governments and organizations over policy measures to be taken with respect to pharmaceutical products in transit, intellectual property rights and border measures.
In any case, now that the proceedings have started, a result shouldn’t be too far away. Spicy IP will keep you updated with the proceedings.
Nicely summarized. I hope the matter gets resolved outside WTO by mutual talks. EU without rights is doing seizures.
Saumya
The most interesting aspect for me is that TRIPS is used as a benchmark for constraining additional IP protection: According to news reports, India and Brazil both argue along the lines of Art.41 TRIPS, the Doha Declaration and the ‘paragraph six mechanism’ which allows to export drugs produced under a CL to countries in need.
If the dispute goes to Panel stage, it certainly remains to be seen which of these TRIPS issues actually contains a ‘ceiling’ or maximum standard on additional IP protection. But it is striking that TRIPS works not only to impose minimum standards of IP protection, but may also contain limits (e.g. to safeguard free trade and prevent the abuse of IPRs) to TRIPS-plus.
Hi Swaraj – I’ve been trying to locate the complaint on the website of the WTO: http://www.wto.org/english/tratop_E/dispu_e/dispu_e.htm
I haven’t had any luck though. The WTO website is usually very up to date. Have you been able to access the text of the complaint anywhere?
Thanks Saumya.
Hi Anon, apparently its due up on the WTO site soon. When it is put up, it should also be available on
http://www.wto.org/english/tratop_e/dispu_e/dispu_status_e.htm
[according to MIP] I don’t know when ‘soon’ is, but as you mentioned, it’s usually quite up to date, so it shouldn’t take too long.
http://www.google.com/hostednews/afp/article/ALeqM5jsLx9xtQIbddEQeMKbOj582IfmDQ
Dr Henning,
You’re absolutely right, although I still have some doubts as to whether it will reach the panel stage or not.
I’d also like to share with other readers of your paper on ceilings “enough is enough” at SSRN (link below) which provides a good look at the ceilings question. I found the potential drawbacks of ceilings especially interesting, in particular – that they might reverse function and serve as limits on flexibilities instead.
I don’t have anything but a gut feeling to back it up, but it still seems as though despite its drawbacks, when balanced against the upward spiraling protectionist attitude, (considering EU-India FTA, ACTA, etc), that some sort of ceiling system, even if flawed is better than none. Having said that, a gut feeling is not a valid reason to stand by such a statement – it would be interesting to look more into this. Thanks for bringing it up.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1326429