Old Habits Die Hard: EU Detaining Generic Drugs in Transit Again?

Readers may recall that we’ve discussed the issue of the EU customs authorities detaining generic pharmaceuticals, while in transit between developing countries, at European ports of transit. As I’ve argued elsewhere, such practice and indeed the law which it is based on, EC Reg. 1383/03, appear to be inconsistent with international law, specifically the GATT and the TRIPS Agreement.

In July last year, the Indian government indicated that it reached an “understanding” with the EU, whereby the EU assured India that generic drugs originating in India and destined for other developing countries would not be detained while in transit through Europe. I was quite skeptical about this “understanding”, and it seems my fears were not completely unfounded. Recent reports suggest that the EU is returning back to its old ways. According to a report published on January 23, 29 cartons of drugs sent from India were detained by European customs authorities for nearly two weeks. The final destination for the consignment was “South America”. This incident reinforces my arguments on the systemic nature of the problem. Let’s see what ramifications, if any, this has, and how the situation develops further.

 

India-EU generic drug seizures row resolved?

A recent press release issued by the Ministry of Commerce and Industry of the Government of India on 28 July 2011 suggests that a dispute between India and the EU over border enforcement of intellectual property (IP) rights may have been resolved.

[To recap, by 2010, the EU customs authorities (particularly the Dutch) had gotten into a habit of detaining generic drugs in transit between India and other nations. These drugs were generic both in the country of origin and the final destination, and were merely transiting through the EU - without any risk that they would have entered circulation in the EU market. Following these seizures, India (and Brazil) filed a complaint at the WTO alleging violation of GATT Art.V, and several provisions of the TRIPS Agreement. Following this, EU and India and entered into consultation for resolving the dispute. For a while, the EU gave several assurances that it would remedy the situation to not seize generic drugs, but did little to effectuate such a change in the law (two concurrent developments are to be noted: this issue of IP right enforcement against goods in transit is also currently pending before the ECJ (Case no. C-495/09. For details, see here), and; India and the EU are also in the process of negotiating a FTA). Following the EU's assurances, India refrained from requesting the establishment of a WTO panel to hear the dispute]

According to the Press Release of July 28, India and EU have reached and finalized an “Understanding to to guide border enforcement of intellectual property in the EU.” According to the Press Release, a core element of the Understanding is that “the mere fact that medicines are in transit through EU territory, and that there is a patent title applicable to such medicines in the EU territory, does not in itself constitute enough grounds for customs authorities in any Member State to suspect that the medicines at stake infringe patent rights.” Based on this Understanding, India has assured the EU that it will not pursue the WTO dispute so long as the core element is respected.

The Press Release is available here. The text of the Understanding has not yet been made public.

Having had worked on this issue for some time now, and without access to the full text of the Understanding, a few concerns crop up in my mind:

  1. It will be interesting to see if the Understanding talks only about generic medicines in transit through the EU, or goods in transit generally. Apart from seizure of generic drugs on allegations of patent infringement, EU customs have commonly detained other goods in transit over alleged violations of other IP rights (the incidence of detention of goods in transit and transshipment has been greatest in cases of suspected violation of copyright and related rights, followed by trademarks, patents and design rights in the transit country, respectively. See EU Enforcement Report at p.29 here). Thus, in case the Understanding effectuates greater caution on part of EU customs only in cases of generic drugs in transit, it would fail to solve the larger, and more important, issue of extraterritorial and unilateral enforcement of IP rights against goods in transit. In this sense, if the Understanding relates only to generic drugs, it would only provide symptomatic relief, rather than a cure.
  2. Apart from this issue, there is a larger systemic concern about the entrenchment of a norm of enforcement against in transit goods within the international IP law regime. The US and EU have consistently negotiated agreements and treaties with other states that require these states to enforce IP rights against goods in transit (in essence what the EU was doing before the Understanding. See, amongst others, US-Bahrain FTA, art.14.10; DR-CAFTA, art.15.11, available here; US-Chile FTA, art.17.11, here, and; US-Peru TPA, art.16.11, here ). An Understanding between India and EU would have little effect on the obligations of these states under their respective bilateral agreements. Indeed, even if the Understanding does apply to all cases of IP rights infringement and not just generic drugs, it could not possibly apply to agreements concluded between third states. As such, to me, as a matter of international IP law, the issue of enforcement of IP rights against goods in transit under still seems quite nebulous.