CJEU rules against in-transit seizures by Custom officials


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Readers may recall the in-transit seizures which caused a furor about a couple of years ago. A brief recap: Several consignments of generic medicines had been detained while they were in transit from India to other developing / least developed countries by the EU customs under EC Regulation 1383/2003. The 1383 regulation amended border protection mechanisms, so that member states could take certain customs action against goods suspected of infringing intellectual property rights, and also laid down the measures to be taken if the goods were found to be infringing. The main issue with this regulation was that it did not matter if the goods were merely passing through European customs in-transit from one place to another, even if the goods were legitimate and non-infringing in both these other jurisdictions.
This regulation was then used to make several questionable seizures of consignments of generic medicines, thus also having several public health consequences. Instances included seizing a consignment under a generic International Non-proprietary Name for trademark infringement and a seizing a consignment of UNITAID which had already been qualified by WHO, amongst others. India had taken the matter up to the WTO in 2010 however earlier this year, India and EU apparently came to an agreement with EU agreeing to adopt a set of guidelines which addressed India’s concerns until a new Resolution was passed to replace EC Regulation 1383/2003. 
Last week, the Court of Justice of the European Union (known as the ECJ until 2009) on the issues referred to them in the Nokia and Phillips cases, finally released a much awaited (joined) decision determining how EC regulation 3295/94 (the older anti-piracy regulation) as amended by EC regulation 241/1999 and 1383/2003 (the newer anti-piracy regulation) is to be interpreted. 
The question of how it is to be interpreted partially came up due to the somewhat bizarre ‘manufacturing fiction’ that a Dutch court came up with in Sosecal v. Sisvel. This essentially stated that goods in transit through a country were assumed to have been manufactured in that country and this allowed local laws to apply to these goods. In UK however, in the Nokia v. UK Customs case, the High Court of England and Wales held that goods in transit could be seized only when it could be shown there was an actual risk of diversion of these goods into the market of the country of transit.
The CJEU having sat over the Advocate General’s opinion for nearly a year now, finally came out with a decision that should make generic companies in India, as well as their consumers in other developing countries very happy. Good sense and respect for the territorial nature of IPRs prevailed with the CJEU very clearly stating that goods which are in transit cannot be considered to be infringing on IPRs within the EU. The only way they can be considered as such is if there is evidence that these goods are meant for diversion into the EU market. Goods which are suspected of fraudulently being diverted into the EU market do not require commercial proof, but can be acted upon if other indications as to the intentions are present. On its own, just using the word ‘intentions’ could’ve been very vague and open handed, however the Court also laid down examples of what it meant by this – which included lack of a destination, non-cooperation with customs officials, lack of information about manufacturer, amongst other things. 
Thankfully, the CJEU’s decision on the interpretation of this troublesome EC customs regulation is binding on all member states and should assuage any doubts about the legality of further transiting generics. While I don’t think I’ve heard of any seizure issues after India and Brazil took matters to the WTO, this is certainly more reassuring than the EU simply assuring India that it would follow a set of guidelines till a new customs regulation is made and unless some future bilateral / multilateral treaty has anything to say about it – this should be the end of the matter! 

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