Drug Regulation Others

Part II: Seizure of Medicines In Transit #EU Law, TRIPS, Doha Declaration & GATT


In Part I, we discussed a WHO Discussion Document, along with broad issues at play, regarding seizures of in-transit medicines. Over the course of this post, we will be covering the following:

I. The European Union (EU) Law on Seizure of Drugs In-Transit.
II. TRIPS, Doha Declaration and the GATT.

A thorough introduction to the issue can be found here.

The EU Law on Seizure of Drugs In-Transit

Understand the EU law is relevant as the majority of reported in-transit seizures have occurred in the EU’s jurisdiction and more specifically, the Netherlands. In order to understand the EU law, let us survey the relevant case law.

We will be discussing the following cases:

i. Montex v. Diesel (C-281/05)
ii. Nokia Corporation v. Her Majesty’s Commissioners of Revenue and Customs (C‑495/09)
iii. Koninklijke Philips Electronics case (C‑446/09)

All these cases referred to either of these regulations:

Regulation (EC) No 3295/94
Regulation (EC) No 1383/2003.

The relevant provisions have been reproduced below.

Montex Holdings v. Diesel

Approximately 5000 trousers were produced in Poland by Montex Holdings. Enroute to Ireland, they were confiscated by German customs officials on grounds of violating Diesel’s German registered trade mark. It is to be noted that the trousers infringed upon no trade mark in either Ireland, or Poland.

The matter was to be adjudicated upon in a German court, but the German court, prior to coming to a decision, referred a few questions over to the European Court of Justice (ECJ).

The questions were:

“(1) Does a registered trade mark grant its proprietor the right to prohibit the transit of goods with the sign?

(2) If the answer is in the affirmative: may a particular assessment be based on the fact that 
the sign enjoys no protection in the country of destination?

(3) If the answer to (1) is in the affirmative and irrespective of the answer to (2), is a distinction to be drawn according to whether the article whose destination is a Member State comes from a Member State, an associated State or a third country? Is it relevant in this regard whether the article has been produced in the country of origin lawfully or in infringement of a right to a sign existing there held by the trade-mark proprietor?”

The courts answer were as follows:

It answered the first two questions jointly.

It delved into the purpose of a trade mark. It held that since a trade mark seeks to inform customers of the manufacturer, an infringement cannot occur until the goods are marketed. In the current case, the good were not infringing upon any trade mark, as they weren’t marketed yet, and were merely in-transit.

Therefore, the court held that Diesel could only seize the goods in Germany, if it could prove a sufficient suspicion that the goods would enter the German market. Furthermore, the mere risk that the goods will be marketed in Germany cannot be enough to restrain in-transit goods. Either past actions of Montex should suggest that they would illicitly market the goods in Germany, or there should be other reasons pointing towards the same.

Article 1(2) of Regulation No 3295/94 provides:

For the purposes of this Regulation:

(a) “goods infringing an intellectual property right” means — “counterfeit goods”, namely: — goods, including the packaging thereof, bearing without authorisation a trade mark which is identical to the trade mark validly registered in respect of the same type of goods, or which cannot be distinguished in its essential aspects from such trade mark, and which thereby infringes the rights of the holder of the trade mark in question under Community law or the law of the Member State where the application for action by the customs authorities is made,”

After reviewing the relevant regulation, the court held that a wide interpretation of the provision cannot be accepted. Irrespective of the origin country and destination country, goods in transit can only be seized if the a third party acts in such a manner, so as to sufficiently raise the suspicion that the goods will enter the market of the transit country, where the intellectual property was infringed.

The judgment for the next two cases is a joint one.The Nokia case deals with Regulation 1383/2003.. But the analysis continues to remain the same.

Citing Montex, the ECJ held that transit ports cannot seize goods unless the patent owner who has applied for the suspension procedure can prove sufficient suspicion of goods getting reverted into the market.

Therefore, the European courts themselves have interpreted the regulation against the EU countries’ actions as transit countries. Nevertheless, there continues to exist ambiguities in the legal position in different contexts (technology patents, drug patent, trade marks, counterfeit goods, etc.)

TRIPS, GATT & Doha Declaration

In order to understand the interaction between International agreements and the domestic EU law, we need to consider the following:

i. Provisions of the TRIPS agreement.
ii. Doha Declaration on TRIPS and Public Health
iii. GATT Article V

Provisions of the TRIPS agreement

First, we let us look at the bare text of some of the provisions:

Article 51

“Members shall, in conformity with the provisions set out below, adopt procedures (fn 13) to enable a right holder, who has valid grounds for suspecting that the importation of counterfeit trademark or pirated copyright goods may take place, to lodge an application in writing with competent authorities, administrative or judicial, for the suspension by the customs authorities of the release into free circulation of such goods. Members may enable such an application to be made in respect of goods which involve other infringements of intellectual property rights, provided that the requirements of this Section are met. Members may also provide for corresponding procedures concerning the suspension by the customs authorities of the release of infringing goods destined for exportation from their territories.”
fn 13: “It is understood that there shall be no obligation to apply such procedures to imports of goods put on the market in another country by or with the consent of the right holder, or to goods in transit. 6

Article 52:

“Any right holder initiating the procedures under Article 51 shall be required to provide
adequate evidence to satisfy the competent authorities that, under the laws of the country of importation, there is prima facie an infringement of the right holder’s intellectual property
right and to supply a sufficiently detailed description of the goods to make them readily
recognizable by the customs authorities.”7

Article 41:

“1. Members shall ensure that enforcement procedures as specified in this Part are available under their law so as to permit effective action against any act of infringement of intellectual property rights covered by this Agreement, including expeditious remedies to prevent infringements and remedies which constitute a deterrent to further infringements. These procedures shall be applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse. 8

It is well known that the TRIPS agreement sets a minimum threshold of intellectual property enforcement that members need to comply with. But the question is, can it prevent over enforcement of intellectual property protection?

The higher ceiling seems to be mandated by Article 41 , which says that the provisions of the TRIPS agreement are to be enforced in a manner so as to not create barriers for legitimate trade. Trade between two countries where the drug is legal in both jurisdictions, seems to fall within the paradigm of “legitimate trade”.

Furthermore, article 51 suggests that members states could seize goods even if they are merely in “transit”, but article 52 requires that such goods infringe upon the laws of the country that is importing the goods. So, for the EU countries to confiscate the goods under Article 51, they will have to show that the goods violated the intellectual property regime of the destination country.

But does an interpretation, allowing for seizure of in-transit drugs, of regulation No. 1383/2003 run afoul of the TRIPS agreement?

It is difficult to arrive at a clear cut answer. Though a joint reading of Article 51 and Article 52 do not allow for seizure of goods that are merely in-transit when they do not violate the importing country’s laws, no interpretation prevents the EU to make laws for doing so. Therefore, the discussion comes back to whether the TRIPS mandates an upper limit on intellectual property enforcement.

Prof. Basheer has discussed the same here.

Doha Declaration on TRIPS and Public Health

Relevant portions of the declaration read as follows:

4. We agree that the TRIPS Agreement does not and should not prevent members from taking measures to protect public health. Accordingly, while reiterating our commitment to the TRIPS Agreement, we affirm that the Agreement can and should be interpreted and implemented in a  manner supportive of WTO members’ right to protect public health and, in particular, to promote access to medicines for all.”11

The public health argument finds a legal backing in this provision. The EUs actions are against both the text and values inherent in the declaration. Therefore, exporting countries could also argue that a wide interpretation (allowing seizure) of the European regulations referred above flies in the face of the Doha declaration, which was essentially made for assuaging the fears of the developing world regarding the interpretation of the TRIPS.

GATT Article V

The bare text reads as follows:

“3. Any contracting party may require that traffic in transit through its territory be entered at
the proper custom house, but, except in cases of failure to comply with applicable customs laws and regulations, such traffic coming from or going to the territory of other contracting parties shall not be subject to any unnecessary delays or restrictions and shall be exempt from customs duties and from all transit duties or other charges imposed in respect of transit, except charges for transportation or those commensurate with administrative expenses entailed by transit or with the cost of services rendered.

4. All charges and regulations imposed by contracting parties on traffic in transit to or from
the territories of other contracting parties shall be reasonable, having regard to the conditions of the traffic.”

GATT, the predecessor of the WTO, requires that members not impose unreasonable charges or regulations upon goods in transit. Again, an exporting country could utilize the GATT too for arguing against such seizures.

 

 

Prateek Surisetti

Alias: Suri Net Worth: 0$. NALSAR Batch of 2019. Characteristic Features: 1. Thinks he's funny. 2. Can't shut-up about having topped in Class II. 3. Takes deep personal offence when his cricketing talent is questioned. 4. Will definitely reference his status as World#1 @ Reflex Ball (A sport he invented), within 10 minutes of conversing with him. Notable Endeavours: 1. Founder Access Fitness (Movement at NALSAR that promotes utilization of public spaces for furtherance of sport and fitness) 2. Author "Good Morning Miss Hobby" 3. Travel Photographer (Antarctica, India) Details @ www.facebook.com/prateekss Contact: [email protected]

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