Oh, a life-saving drug on its way to Africa? Return to sender. 

Seven years ago, stringent EU customs regulations began interfering with the smooth passage of generic medicines through European ports en route to developing countries. Several regulatory changes and one WTO dispute settlement later, things have only gotten worse.

Between 2008 and 2010, generic medicines were seized in transit at various EU ports en route from India to destinations in Latin America and Africa.[1] The legal basis of these seizures was EC Border Measures Regulation 1383/2003 (BMR) which permits customs action against goods suspected of infringing intellectual property (IP) rights. The BMR goes above and beyond the level of protection mandated by the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).[2] TRIPS only requires customs officials to take action with regard to “counterfeit trademark or pirated copyright goods”[3] whereas the BMR also authorizes action on patented goods.[4] This allows generic medicines to be seized by countries through which they are merely passing – on the basis of unsubstantiated fears that their transit through EU ports may lead to their diversion onto EU markets where patents still exist for those particular products. Furthermore, the BMR mandates border measures against goods in transit,[5] whereas TRIPS only requires action to be taken against imports,[6] and specifically excludes goods in-transit from the realm of mandatory action.[7]

The TRIPS-plus character of the BMR has led to the seizure of numerous generic medicines en route through Europe. In December 2008, Dutch customs authorities detained a Brazil-bound consignment of hypertension medication, losartan potassium, which had been manufactured as a generic in India but was patented in the EU by DuPont and Merck Sharp & Dohme.[8] Due to allegations of patent infringement, the 500-kilogram consignment was detained by Dutch authorities for 36 days and then returned to India.[9] The medicines never reached Brazil, where they would have been used to treat 300,000 patients suffering from hypertension for a full month.[10]

In February 2009, a UNITAID-funded shipment of 49 kilograms of abacavir sulfate tablets was confiscated at Schiphol Airport by Dutch customs authorities under the claim that it contained counterfeit goods.[11] The medicines, manufactured by Indian company Aurobindo, are used in second-line treatment of HIV/AIDS in Nigeria for a program implemented by the Clinton Foundation on behalf of UNITAID. UNITAID expressed grave concern for the patients waiting for these medicines as the interruption of HIV therapy can create resistance to medication. The drugs were later released but the incident highlighted the tension between overzealous customs enforcement and legitimate public health measures authorized by TRIPS. Other generic medicines – clopidogrel (antiplatelet), abacavir (antiretroviral), olanzapine (antipsychotic), and rivastigmine (dementia) – received similar treatment at the hands of EU authorities, with some medicines detained for more than eight months.[12]

Source: Wikipedia

Source: Wikipedia

Frustrated by the frequent seizure of generic medicines, India and Brazil initiated WTO dispute settlement proceedings against the EU and the Netherlands in 2010.[13] India argued, inter alia, that the seizure of generics was inconsistent with Article V of GATT 1994 (freedom of transit), the 2001 Doha Declaration and Articles 41 and 42 of TRIPS (barriers to legitimate trade, abuse of patent-owner rights).[14] The EU agreed to issue new guidelines on customs enforcement and a new regulation to replace the BMR. 

The guidelines, released in 2012, acknowledge that “customs enforcement of [intellectual property rights] should not result in restricting legitimate international trade in medicines in the course of genuine transit through the EU.”[15] It confirmed that “the mere fact that medicines are in transit through the EU territory, and there is a patent right 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.”[16] However, where “there is adequate evidence that satisfies the customs authorities that there is a substantial likelihood of diversion of such medicines onto the EU market, [this] may constitute enough grounds for customs authorities to suspect that the medicines at stake infringe patent rights.”[17]

A year later, the BMR was repealed and replaced with Regulation 608/2013 which came into force on 1 January 2014. The new regulation falls far short of expectations. Rather than confine the definition of “intellectual property rights” to protect generic medicines from unjustified detention, it expands the definition to include trade names and signs that are confusingly similar to trademarks.[18] Generic medicines may be accused not only of patent infringement but of trademark infringement as a result of bearing labels or packaging that resemble pharmaceutical trademarks identifying the same active ingredient.[19]

Brook Baker argues that the new regulation fails to resolve the risk of interception of medicines lawfully manufactured for non-EU consumption. He claims that several weaknesses within the new regulation continue to pose a threat to the safe passage of generics:

1.    Continued coverage of patents and supplementary protection certificates which can give rise to fictional patent claims;

2.    Inappropriate application of the law of the in-transit country rather than the law of the importing country when assessing an infringement claim;

3.    Directives to “consider” the risk of diversion to EU markets with no prohibition against seizing in-transit medicines in the absence of such proof and without any requirement for clear and convincing evidence of an imminent diversion by an identified party;

4.    Insufficient opportunities for declarants and holders of goods to be heard; and

5.    Insufficient remedies for declarants and holders of goods and for purchasers and consumers who are harmed by unsuccessful border applications.[20]

The application of the law of the in-transit country to a good which is neither manufactured nor imported in that country, but simply passing through,[21] represents an extra-territorial application of domestic law in violation of Article 52 of the TRIPS Agreement which requires the application of the “laws of the country of importation” instead.[22] Furthermore, although customs officials “should” consider whether there is a substantial risk of diversion of the in-transit goods into the EU market before seizing and detaining them,[23] in reality, customs officials can detain goods merely “suspected” of infringing an intellectual property right.[24] Moreover, under certain conditions, goods suspected of infringing an intellectual property right may be destroyed by customs without any determination as to whether an intellectual property right has been infringed under the law of the Member State where the goods are found.[25] The failure of Regulation 608/2013 to make proof of a risk of diversion to EU markets a precondition for the seizure or detention of goods in-transit renders it ineffective in securing the safe passage of generic medicines through EU ports.

The bigger picture? © Katrina Geddes

To worsen matters, the European Commission is proposing changes to EU trademark law which would add another layer of restraint on access to generic medicines.[26] The proposed amendments to Regulation (EC) No 207/2009 would confer the following additional right on the owner of a European trademark:

The proprietor of a European trade mark shall also be entitled to prevent all third parties from bringing goods, in the context of commercial activity, into the customs territory of the Union without being released for free circulation there, where such goods, including packaging, come from third countries and bear without authorization a trade mark which is identical to the European trade mark registered in respect of such goods, or which cannot be distinguished in its essential aspects from that trade mark.[27]

Granting such a broad right to cover all forms of trademark infringement including packaging on goods in-transit could be particularly problematic for generic goods which often bear similar or identical names to pharmaceutical trademarks as a result of the same active ingredient.

The inadequacies of Regulation 608/2013 combined with the proposed changes to EU trademark law represent a significant threat to the delivery of generic medicines to patients in need. Europe’s geographic position and transportation strength make it a natural transit hub for a significant percentage of the international medicines trade.[28] Furthermore, many health-focused NGOs are headquartered in Europe, meaning that products sent to the field must pass through European customs territory. If generic medicines face a regular risk of interception on the basis of alleged IP infringement, the international generics trade may be severely hampered, placing thousands of lives at risk. In 2013, medicines accounted for 10.1% of goods detained by EU customs authorities, representing a combined retail value of €11,974,020. A staggering 22.78% of detained medical products originated from India.[29] In 2014, Médecins Sans Frontières declared that it was aware of at least 20 seizures of legitimate generic medicines in transit through Europe that were on their way to patients in developing countries.[30]

The interception of generic medicines lawfully manufactured in countries where the relevant patent does not exist represents a feeble attempt by pharmaceutical companies to defy the territorial nature of patent rights and expand the scope of their monopoly power. The generic medicines seized by EU authorities between 2008 and 2010 conformed fully with international patent law and infringed no patent existing in either the country of origin or the country of import. The existence of a patent in a port of transit should have no bearing whatsoever on the safe passage of that medicine to its final destination.

Protecting profits instead of people © Katrina Geddes

India was not required by the TRIPS Agreement to provide pharmaceutical product patent protection until January 1, 2005, and many pharmaceutical products patented in Europe are not patented in India.[31] As a result of India’s decision to take full advantage of the transition period, a significant part of the developing world relies on India for the supply of low-cost generic medicines. The seizure of generic medicines manufactured in India for some of the world’s poorest patients represents a repudiation of the 2001 Doha Declaration and its rhetorical support for developing countries’ right to implement measures to protect public health.

Médecins Sans Frontières, Oxfam and other NGOs have urged EU Member States to stand strong against both the European Parliament and the Commission in upcoming negotiations, to exclude any in-transit provisions under the trademark proposal to ensure the safe passage of generic medicines through Europe.[32] Every seizure of generic medicines bound for developing countries reduces a patient’s chance at a better life, or a life at all.

 

Written by Katrina Geddes. Published 11 March 2015. 

 

References: 

[1] Acquah, D. “Balancing or Lobbying? On Access to Medicines, Border Measures and the European Parliament’s Amendments to the Proposed EU Trademark Rules”, Journal of Intellectual Property Rights, Vol 19, November 2014, pp 404-412.

[2] Ruse-Khan, H. “A Trade Agreement Creating Barriers to International Trade? ACTA Border Measures and Goods In Transit”, American University International Law Review, 2011, available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1706567

[3] Article 51 of TRIPS

[4] Article 2(1)(c) of COUNCIL REGULATION (EC) No 1383/2003, 22 July 2003, available at: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2003:196:0007:0014:EN:PDF

[5] Ruse-Khan, H. “A Trade Agreement Creating Barriers to International Trade? ACTA Border Measures and Goods In Transit”, American University International Law Review, 2011, available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1706567

[6] Article 51 of TRIPS

[7] Footnote 13 of TRIPS

[8] Ruse-Khan, H. “A Trade Agreement Creating Barriers to International Trade? ACTA Border Measures and Goods In Transit”, American University International Law Review, 2011, available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1706567

[9] Knowledge Ecology International, “Intervention by Brazil at WTO General Council on seizure of 500 kilos of generic medicines by Dutch customs authorities”, 2009, available at: http://keionline.org/blogs/2009/02/03/intervention-by-brazil-at-wto-general-council-on-seizure-of-500-kilos-of-generic-medicines-by-dutch-customs-aut

[10] Ruse-Khan, H. “A Trade Agreement Creating Barriers to International Trade? ACTA Border Measures and Goods In Transit”, American University International Law Review, 2011, available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1706567

[11] Ruse-Khan, H. “A Trade Agreement Creating Barriers to International Trade? ACTA Border Measures and Goods In Transit”, American University International Law Review, 2011, available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1706567

[12] Miller, J. & Anand, G. “India Prepares EU Trade Complaint”, Wall Street Journal, August 6, 2009, available at: http://www.wsj.com/articles/SB124949598103308449

[13] Ruse-Khan, H. “A Trade Agreement Creating Barriers to International Trade? ACTA Border Measures and Goods In Transit”, American University International Law Review, 2011, available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1706567

[14] Ruse-Khan, H. “A Trade Agreement Creating Barriers to International Trade? ACTA Border Measures and Goods In Transit”, American University International Law Review, 2011, available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1706567

[15] European Commision, “Guidelines of the European Commission concerning the enforcement by EU customs authorities of intellectual property rights with regard to goods, in particular medicines”, 1 February 2012, available at http://ec.europa.eu/taxation_customs/resources/documents/customs/customs_controls/counterfeit_piracy/legislation/guidelines_on_transit_en.pdf

[16] European Commision, “Guidelines of the European Commission concerning the enforcement by EU customs authorities of intellectual property rights with regard to goods, in particular medicines”, 1 February 2012, available at http://ec.europa.eu/taxation_customs/resources/documents/customs/customs_controls/counterfeit_piracy/legislation/guidelines_on_transit_en.pdf

[17] European Commision, “Guidelines of the European Commission concerning the enforcement by EU customs authorities of intellectual property rights with regard to goods, in particular medicines”, 1 February 2012, available at http://ec.europa.eu/taxation_customs/resources/documents/customs/customs_controls/counterfeit_piracy/legislation/guidelines_on_transit_en.pdf

[18] Cook, T. “Revision of the European Union Regime On Customs Enforcement of Intellectual Property Rights”, Journal of Intellectual Property Rights, 2013, Vol 18, pp 485-490.

[19] Acquah, D. “Balancing or Lobbying? On Access to Medicines, Border Measures and the European Parliament’s Amendments to the Proposed EU Trademark Rules”, Journal of Intellectual Property Rights, Vol 19, November 2014, pp 404-412.

[20] Baker, B. “Settlement of India/EU WTO Dispute re Seizures of In-Transit Medicines: Why the Proposed EU Border Regulation Isn't Good Enough”, Program on Information Justice and Intellectual Property Research Paper Series, 2012, Digital Commons @ American University Washington College of Law, available at: http://digitalcommons.wcl.american.edu/cgi/viewcontent.cgi?article=1026&context=research

[21] Article 2(7)(a) of Regulation (EC) No 608/2013 of the European Parliament and of the Council, 12 June 2013, available at: http://www.wipo.int/edocs/lexdocs/laws/en/eu/eu187en.pdf

[22] Baker, B. “Settlement of India/EU WTO Dispute re Seizures of In-Transit Medicines: Why the Proposed EU Border Regulation Isn't Good Enough”, Program on Information Justice and Intellectual Property Research Paper Series, 2012, Digital Commons @ American University Washington College of Law, available at: http://digitalcommons.wcl.american.edu/cgi/viewcontent.cgi?article=1026&context=research

[23] Recital 11 of Regulation (EC) No 608/2013

[24] Article 17 of Regulation (EC) No 608/2013

[25] Article 23 of Regulation (EC) No 608/2013

[26] Acquah, D. “Balancing or Lobbying? On Access to Medicines, Border Measures and the European Parliament’s Amendments to the Proposed EU Trademark Rules”, Journal of Intellectual Property Rights, Vol 19, November 2014, pp 404-412.

[27] Proposed new Article 9(5) of EC Regulation No 207/2009, available at http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52013PC0161&from=EN

[28] Acquah, D. “Balancing or Lobbying? On Access to Medicines, Border Measures and the European Parliament’s Amendments to the Proposed EU Trademark Rules”, Journal of Intellectual Property Rights, Vol 19, November 2014, pp 404-412.

[29] European Commission, “Report on EU Customs Enforcement of Intellectual Property Rights: Results at the EU Border 2013”, Publications Office of the European Union, 2014, Luxembourg, available at: http://ec.europa.eu/taxation_customs/resources/documents/customs/customs_controls/counterfeit_piracy/statistics/2014_ipr_statistics_en.pdf

[30] Médecins Sans Frontières, “MSF response to European Parliament proposals of EU enforcement of European trademarks on goods in transit”, 24 February 2014, available at: http://www.msfaccess.org/content/msf-response-european-parliament-proposals-eu-enforcement-european-trademarks-goods-transit

[31] Abbott, F. “Seizure of Generic Pharmaceuticals in Transit Based on Allegations of Patent Infringement: A Threat to International Trade, Development and Public Welfare”, W.I.P.O.J. No. 1, 2009, Thomson Reuters, available at: http://ssrn.com/abstract=1535521

[32] Médecins Sans Frontières, “MSF response to European Parliament proposals of EU enforcement of European trademarks on goods in transit”, 24 February 2014, available at: http://www.msfaccess.org/content/msf-response-european-parliament-proposals-eu-enforcement-european-trademarks-goods-transit