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‘SEIZING’ PHARMACEUTICALS IN TRANSIT: ANALYSING THE WTO DISPUTE THAT WASN'T

Published online by Cambridge University Press:  06 June 2012

Bryan Mercurio
Bryan Mercurio
Affiliation:
Professor of Law and Associate Dean (Research), The Chinese University of Hong Kong. E-mail: b.mercurio@cuhk.edu.hk.
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Abstract

Several recent detentions of generic pharmaceutical products transiting through the European Union (EU) for suspected infringements of intellectual property rights raised serious concerns for public health advocates and threatened to expose systemic problems existing in the World Trade Organization's (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The detentions not only garnered international attention, but India and Brazil formally began WTO dispute settlement proceedings against the EU. The parties recently reached a mutually agreed solution to the matter and the proceedings have been halted, leaving unanswered the complex legal and technical questions raised by the detentions of pharmaceuticals in transit. Despite a solution being reached in this dispute, the matter will undoubtedly resurface in the near future for a number of reasons. For instance, the EU is attempting to export its laws to its trading partners through the negotiation of free trade agreements and in other forums such as the recently concluded Anti-Counterfeiting Trade Agreement which increases the likelihood that similar detentions will occur at some point in the future. Moreover, recent trends in international intellectual property law indicate a move towards increased protection and enforcement in at least the short and medium term. The issue therefore offers the opportunity for rich legal analysis into an underexplored, yet increasingly important, aspect of WTO law.

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Article
Information
International & Comparative Law Quarterly , Volume 61 , Issue 2 , April 2012 , pp. 389 - 426
Copyright
Copyright © British Institute of International and Comparative Law 2012

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References

1 The Dutch patent for losartan is held by US-based DuPont under the branded name of ‘Cozaar’. Merck Sharp & Dohme possess the Dutch marketing rights for the drug. The generic drug at issue is manufactured by Dr. Reddy's and is imported into Brazil by EMS.

2 India, Brazil and the EC made interventions at the WTO General Council Meeting held on 3 February 2009 under agenda item ‘Other Business’. For the complete statements, see <http://indiainthewto.wordpress.com/2009/03/11/text-of-indian-statement-on-generics-seizure-before-trips-council/> (India); <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> (Brazil); and <http://keionline.org/blogs/2009/02/05/ec-intervention-at-wto> (EC). Interventions were also made at the WTO TRIPS Council Meeting held on 3 March 2009 under agenda item M ‘Other Business’. For their complete statements, see <http://keionline.org/node/309> (India); <http://keionline.org/blogs/2009/03/04/brazilian-intervention-at-trips-council> (Brazil); and <http://lists.essential.org/pipermail/a2k/2009-March/003983.html> (EC). See also Bridges Weekly Trade News, ‘Dutch Seizure of Generic Drugs Sparks Controversy’ (Intellectual Property Programme 13(3), 28 January 2009) <http://ictsd.net/i/news/bridgesweekly/38841/>.

3 The EU contest the terminology ‘seizures’ and instead uses the term ‘temporal detentions’. Regulation 1383/2003 likewise uses the terms ‘detention’ and ‘suspension’ as opposed to ‘seizure’. See Council Regulation (EC) No 1383/2003 of 22 July 2003, concerning customs action against goods suspected of infringing certain intellectual property rights and the measures to be taken against goods found to have infringed such rights, OJ (2003) L 196/7, third recital and arts 4, 9.1 and 11.

4 For instance, activist Brook Baker expressed ‘outrage’ at the detentions and Indian Commerce Secretary GK Pillai stated that the detentions were ‘an act of piracy … This is a dangerous thing happening, which is totally uncalled for. It is part of the strategy by these countries to target generic drugs from India.’ Brook Baker, ‘Pointing the finger at Big Pharma – Dutch seizure of generic medicines’ (12 February 2009) European Aids Treatment Group <http://www.eatg.org/eatg/Global-HIV-News/EU-Policy/Pointing-the-finger-at-Big-Pharma-Dutch-seizure-of-generic-medicines>; Radhieka Pandeya, ‘Dr Reddy's consignment of drugs to Brazil seized’ (Live Mint, 15 January 2009) <http://www.livemint.com/2009/01/14220926/dr-reddy8217s-consignment-o.html>. See also Bridges (n 2). In a more levelled response, Médecins Sans Frontières (MSF) expressed concern that the Regulation could be used to impede access to essential medicines and even affect its own procurement activities. ‘MSF letter to EC over Dutch generics seizure’ (18 February 2009) <http://www.msfaccess.org/>.

5 On the initial settlement, see Kaitlin Mara, ‘Minister: India Anticipates European Fix to Law Delaying Generics Shipments’ (Intellectual Property Watch, 20 October 2010) <http://www.ip-watch.org/weblog/2010/10/20/ambassador-india-anticipates-european-fix-to-law-delaying-generics-shipments/>.

6 On the final settlement, see India's Ministry of Commerce and Industry, ‘India EU Reach an Understanding on Issue of Seizure of Indian Generic Drugs in Transit’ (Press Release, 28 July 2011) <http://pib.nic.in/newsite/erelease.aspx?relid=73554>.

7 In providing for minimum standards of IP protection and enforcement in a manner which some would see as trade restrictive the TRIPS Agreement is unlike any other WTO covered agreement, which liberalizes and encourages reductions of trade barriers. Historically, proponents of patent protection were protectionists whereas opponents of patents were free traders. See Fritz Machlup and Edith Penrose, ‘The Patent Controversy in the Nineteenth Century’ (1950) 10 Journal of Economic History 1. It must be recognized, however, that the ability to produce and export ‘illegitimate’ goods is much greater now than when the historical debate took place.

8 See, eg EU–Colombia-Peru FTA, art 241 (concluded in 2010 and initialled in March 2011 but not yet ratified and in force); EU–CARIFORUM Economic Partnership Agreement, art 163. See also, European Commission, Directorate General for Trade, ‘Strategy for the Enforcement of Intellectual Property Rights in Third Countries’ (2004) <http://trade.ec.europa.eu/doclib/html/122636.htm>.

9 See European Union, ‘Joint statement on the Anti-Counterfeiting Trade Agreement (ACTA) from all the negotiating partners of the agreement’ Reference: IP/10/1504 (15 November 2010) <http://europa.eu/rapid/pressReleasesAction.do?reference=IP/10/1504&format=HTML&aged=0&language=EN&guiLanguage=en>.

10 Joe C Mathew, ‘Dutch customs seize Indian drugs in transit, industry frets’ (Business Standard, 23 January 2012) <http://www.business-standard.com/india/news/dutch-customs-seize-indian-drugs-in-transit-industry-frets-/462590/>.

11 WTO, Doha Declaration on the TRIPS Agreement Public Health’ WT/MIN(01)/DEC/2 (20 November 2001).

12 WTO General Council, ‘Implementation of paragraph 6 of the Doha Declaration on the TRIPS Agreement and public health, Decision of the General Council of 30 August 2003’ WT/L/540 and Corr.1 (1 September 2003).

13 The article will therefore not discuss the procedural and administrative nuances of the EU Regulation. It should be noted, however, that both complainants claimed violations of several provisions in the TRIPS Agreement relating to the procedural timing and application of the EU law (so called ‘as applied’ inconsistencies with the TRIPS Agreement). See, for instance, Brazil's claims regarding arts 50 (provisional visions), 55 (duration of suspension) and 59 (remedies) of the TRIPS Agreement.

14 Agreement on Trade-Related Aspects of Intellectual Property Rights, 15 December 1993, Marrakesh Agreement Establishing the World Trade Organization, Annex 1C, Legal Instruments – Results of the Uruguay Round vol 31, 33 ILM 81 (1994).

15 See GATT Ministerial Declaration on the Uruguay Round of Multilateral Trade Negotiations, 20 September 1986, 25 ILM 1623 (1986); United States Proposal for Negotiations on Trade Related Aspects of Intellectual Property Rights, GATT Doc MTN. GNG/NG11/W/14 (20 October 1987); Guidelines Proposed by the European Community for the Negotiations on Trade-Related Aspects of Intellectual Property Rights, GATT Doc. MTN.GNG/NG11/W/16 (20 November 1987). See generally, Sell, Susan K, Private Power, Public Law: The Globalisation of Intellectual Property Rights (CUP, 2003)CrossRefGoogle Scholar; Dinwoodie, Graeme B and Dreyfuss, Rochelle C, ‘TRIPS and the Dynamics of Intellectual Property Lawmaking’, (2004) 36 CaseWResJIntlL 95Google Scholar; Helfer, Laurence R., ‘Mediating Interactions in an Expanding International Intellectual Property Regime’ (2004) 36 CaseWResJIntlL 123Google Scholar; Helfer, Laurence R, ‘Regime Shifting: The TRIPS Agreement and New Dynamics of International Intellectual Property Lawmaking (2004) 29 YaleJIntlL 21Google Scholar.

16 The benefits of the concessions are still debated. See, for instance, Matthews, Duncan and Munoz-Tellez, Viviana, ‘Bilateral Technical Assistance and TRIPS: the United States, Japan and the European Communities in Comparative Perspective’ (2006) 9 Journal of World Intellectual Property 629CrossRefGoogle Scholar; Trainer, Timothy P, ‘Intellectual Property Enforcement: A Reality Gap (Insufficient Assistance, Ineffective Implementation)?’ (2008) 8 John Marshall Review of Intellectual Property Law 47Google Scholar.

17 For a succinct history of the origins of the TRIPS Agreement and its negotiating process, see Matthews, Duncan, Globalising Intellectual Property Rights: The TRIPS Agreement (Routledge, 2002)CrossRefGoogle Scholar, ch 1 (origins) and 2 (negotiations). For more detailed background on the TRIPS Agreement, see Sell, Susan K, Power and Ideas: North-South Politics of Intellectual Property and Antitrust (State University of New York Press, 1998)Google Scholar.

18 TRIPS also requires Members to provide for the protection of plant varieties, either by patent or an effective sui generis system such as the plant breeder's rights established in the International Union for the Protection of New Varieties of Plants Convention.

19 Petersmann, Ernst-Ulrich, ‘Constitutionalism and International Organisations’ (1996–1997) 17 Northwestern Journal of International Law & Business 442Google Scholar.

20 Although the WIPO administered Paris and Berne Conventions contemplated dispute settlement recourse to the ICJ, such recourse required the consent of both parties and was never utilized. See Wegner, Harold C, ‘Injunctive Relief: A Charming Betsy Boomerang’ (2006) 4 Northwestern Journal of Technology & Intellectual Property 170Google Scholar (‘The enforceability of the TRIPS Agreement through the WTO DSB has breathed new vitality into the old WIPO conventions, including the Paris Convention.’). For more on WTO dispute settlement, see Lester, Simon and Mercurio, Bryan, World Trade Law: Text, Commentary and Materials (Hart Publishing, 2008)Google Scholar ch 5; Zimmermann, Thomas, Negotiating the Review of the WTO Dispute Settlement Understanding (Cameron May, 2006)Google Scholar.

21 For identification and analysis of additional flexibilities, see Mercurio, Bryan, ‘Reconceptualising the Debate on Intellectual Property Rights and Economic Development’ (2010) 3 The Law and Development Review 65CrossRefGoogle Scholar.

22 See Sarah Boseley, ‘At the Mercy of Drug Giants: Millions Struggle with Disease as Pharmaceutical Firms Go to Court to Protect Profits’ The Guardian (12 February 2001) (reporting that approximately 40 pharmaceutical companies were challenging art 15c of South Africa's 1997 Medicines Act) <http://www.guardian.co.uk/society/2001/feb/12/aids.wto>.

23 See Brazil – Measures Affecting Patent Protection, Request for the Establishment of a Panel by the United States, WT/DS199/3 (9 January 2001); art 68 of Brazil's industrial property law (Law No. 9,279 of 14 May 1996; effective May 1997); art 27.1 of the TRIPS Agreement.

24 See Karen DeYoung, ‘Makers of AIDS Drugs Drop S. Africa Suit’ Washington Post (19 April 2001) A13 (reporting that the pharmaceutical companies were dropping their suit against the South African government due to the ‘public relations nightmare’).

25 See Office of the United States Trade Representative, ‘United States and Brazil Agree to Use Newly Created Consultative Mechanism to Promote Cooperation on HIV/AIDS and Address WTO Patent Dispute’ Press Release (25 June 2001) (reporting that the US and Brazil mutually agreed to transfer the dispute to a consultative forum and stating that the US would continue its policy of not raising objections to compulsory licensing provisions in developing countries’ laws if aimed at addressing HIV/AIDS) <http://www.ustr.gov/releases/2001/06/01-46.htm>. For analysis of the underlying issue of ‘working requirements’, see Mercurio, Bryan and Tyagi, Mitali, ‘Treaty Interpretation in WTO Dispute Settlement: The Outstanding Question of the Legality of Local Working Requirements’ (2010) 19 Minnesota Journal of International Law 275Google Scholar.

26 At the same time, Canada briefly issued a compulsory licence for Cipro. For a compilation of newspaper stories and other information pertaining to this issue see <http://www.cptech.org/ip/health/cl/cipro/>.

27 WTO Ministerial Conference, Declaration on the TRIPS Agreement and Public Health, WT/MIN(01)/DEC/2 (20 November 2001). For analysis, see Abbott, Frederick M., ‘The Doha Declaration on the TRIPS Agreement and Public Health: Lighting a Dark Corner at the WTO’ (2002) 5 JIEL 469CrossRefGoogle Scholar.

28 See Implementation Decision (n 12). For discussion, analysis and criticism, see Vandoren, Paul and Van Eeckhaute, Jean Charles, ‘The WTO Decision on Paragraph 6 of the Doha Declaration on the Trips Agreement and Public Health: Making it Work’ (2003) 6 Journal of World Intellectual Property 779CrossRefGoogle Scholar; Matthews, Duncan, ‘WTO Decision on Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health: A Solution to the Access to Essential Medicines Problem?’ (2004) 7 JIEL 73CrossRefGoogle Scholar.

29 See WTO General Council, ‘Amendment of the TRIPS Agreement, Decision of 6 December 2005’ WT/L/641, 8 December 2005; WTO General Council, ‘Chairperson's statement, December 2005’ (6 December 2005) <http://www.wto.org/english/news_e/news05_e/trips_319_e.htm>. This will take effect when two-thirds of the membership formally accepts the amendment.

30 See, eg Reichman, Jerome H, ‘Securing Compliance with the TRIPS Agreement after U.S. v India’ (1998) 1 JIEL 586CrossRefGoogle Scholar (stating that TRIPS represents ‘the standards of protection on which the industrial countries could agree among themselves’). For economic analysis, see McCalman, Phillip, ‘Who Enjoys TRIPS Abroad: An Empirical Analysis of Intellectual Property Rights in the Uruguay Round’ (2005) 38 Canadian Journal of Economics 574CrossRefGoogle Scholar. See also World Bank, World Development Report 1998/99: Knowledge for Development, suggesting developed countries would benefit more from TRIPS, with the US receiving the biggest gains ($19 bn and Korea incurring the biggest losses ($15 bn).

31 This realization was not readily apparent during or immediately following the implementation of the TRIPS Agreement. See, eg Sell, Susan K, ‘The Origins of a Trade-Based Approach to Intellectual Property Protection: the Role of Industry Associations’ (1995) 17 Science Communication 163CrossRefGoogle Scholar (arguing that industry interests succeeded in getting most if not all of what they desired included into the TRIPS Agreement).

32 See Drahos, Peter, ‘BITs and BIPs: Bilateralism in Intellectual Property’ (2001) 4 Journal of World Intellectual Property 791CrossRefGoogle Scholar; Helfer, Laurence R, ‘Regime Shifting: The TRIPS Agreement and New Dynamics of International Intellectual Property Lawmaking’ 29 YaleJIntlL 1 (2004)Google Scholar.

33 See ‘Joint statement on the ACTA’ (n 9).

34 See, eg the website <http://freeknowledge.eu/acta-a-global-threat-to-freedoms-open-letter>; and <http://www.publicknowledge.org/anti-counterfeiting-trade-agreement>. For a compilation of articles and comments on the ACTA, see <http://www.michaelgeist.ca/tags/anti-counterfeiting+trade+agreement>.

35 For instance, the TRIPS Agreement and WIPO administered Patent Law Treaty allow Members and signatories wide scope in defining such terms as novelty, inventive step and non-obviousness, industrial applicability and utility. The SPLT would remove the flexibilities. For commentary, see Reichman, Jerome H and Dreyfuss, Rochelle Cooper, ‘Harmonization Without Consensus: Critical Reflections on Drafting a Substantive Patent Law Treaty’ (2007) 57 DukeLJ 85Google Scholar.

36 India's request for consultations specifically mentions only five ‘seizures’ of drugs originating from India: (1) a consignment of clopidogrel destined for Colombia (October 2008); (2) a consignment of abacavir, purchased on behalf of UNITAID and destined for Nigeria (November 2008); (3) a consignment of olanzapine destined for Peru (November 2008); (4) a consignment of rivastigmine destined for Peru (November 2008); and (5) a consignment of losartan destined for Brazil (December 2008). European Union and a Member State – Seizure of Generic Drugs in Transit, Request for Consultations by India, WT/DS408/1 (19 May 2010). Other detentions effecting multiple Indian manufacturers are reported to have occurred. See Rupali Mukherjee, ‘Generics face patent barrier’ The Times of India (11 February 2009) <http://articles.timesofindia.indiatimes.com/2009-02-11/india-business/28009863_1_generic-versions-eu-customs-customs-action>; Pandeya (n 4); Lison Joseph, ‘Shipments seizure: India's drug makers may avoid EU route’ (Live Mint, 12 December 2008).

37 See (n 3). See also Marius Schneider and Olivier Vrins, ‘Regulation (EC) 1383/2003’ in Marius Schneider and Olivier Vrins (eds), Enforcement of Intellectual Property Rights Through Border Measures, (OUP, 2006) 95, 3.116; Netherlands, Report Q208, Border Measures and other means of custom Intervention against Infringers, in the name of the Dutch Group of the AIPPI by Gertjan Kuipers (Chariman), Manon Rieger-Jansen, Bas Pinckaers, Fisal Van Vesel, Jef Vandeckerckhove (2009) <www.aippi.nl/uploads///Q208%20NL%201.PDF>.

38 Request for Consultations by India, (n 36) 1–2. For this reason, the Indian industry feared for the long-term viability of European transit points. See Pandeya (n 4) (quoting DG Shah, Secretary General of the Indian Pharmaceutical Alliance (IPA), an industry lobbyist group: ‘We are concerned that all our exports of generic medicines to South America and Africa passing through Europe will come to standstill unless the government were to challenge the EU Council Regulation of 22 July 2003 and seek its amendment.’).

39 According to the EU, nearly 60 per cent of suspect goods intercepted by customs were in transit or simply being warehoused in the EU. European Commission, Taxation and Customs Union, ‘Report of EU Customs Enforcement of Intellectual Property Rights: Results at the European Border – 2008’ (2009) 20 <http://ec.europa.eu/taxation_customs/resources/documents/customs/customs_controls/counterfeit_piracy/statistics/2009_statistics_for_2008_full_report_en.pdf>.

40 See Pandeya (n 4) (quoting Leena Menghaney, India project manager for the Campaign for Access to Essential Medicines, an initiative of Médecins Sans Frontières, as stating: ‘The EC regulations that have led to the seizure of Indian generic drugs in transit to Brazil have created barriers to the export of affordable, quality, low-cost generic drugs from India to other developing countries … The fallout will be on patients’ lives in the developing world who will not be able to access affordable life-saving drugs from India.’). Activist Brook Baker insinuates that this was the very purpose of the measure when stating that the Regulation is the result of ‘backroom, closed door lobbying by Big Pharma’. Baker (n 4).

41 WTO General Council Meeting (India, 3 February 2009) (n 2). For instance, India stated that the EU measures will impair efforts of MSF, Clinton Foundation, Bill and Melinda Gates Foundation in providing medicines to the developing world. ibid.

42 See, eg text fn 10. For instance, the EU pushed the issue of detentions for in transit counterfeit goods so strongly in the ACTA that the negotiations almost collapsed. Moreover, at the EU's insistence leaked early-drafts of the ACTA negotiating text provided for the possibility of mandatory injunctions for IPR infringements of in transit goods. The final text makes such injunctions optional. See draft text leaked in July 2010 <http://publicintelligence.net/anti-counterfeiting-trade-agreement-acta-july-2010-draft/>; ‘De Gucht Lashes Out at US over ACTA, Geographical Indications’ 28(28) Inside U.S. Trade (16 July 2010).

43 See WTO General Council Meeting (Statement of Brazil) (n 2) para 9.

44 Both complainants have consistently decried the EU and others (including the WHO) for conflating generic pharmaceuticals with the issue of counterfeit pharmaceuticals. See, eg (n 2).

45 See Joseph (n 36) (claiming that Indian manufacturers were investigating alternatives such as transporting their goods to storage facilities in non-European countries and quoting NR Munjal, vice-chairman of the generic manufacturer Ind-Swift, as stating: ‘We are already pursuing possibilities of sending consignments through routes where it doesn't touch European ports while in transit. Another alternative we are looking at is having a storage facility in a non-European country, from where we can serve our markets.’).

46 WTO General Council Meeting (Statement of the EC) (n 2).

47 Sixteen developing country Members supported the statements. See Bridges Weekly Trade News, ‘Brazil Slams EU for Seizure of Generic Drugs’ Intellectual Property Programme 13(4) (4 February 2009) <http://ictsd.org/i/news/bridgesweekly/39772/>.

48 WTO General Council Meeting (Statement of India) (n 2). See also WTO General Council Meeting (Statement of Brazil) (n 2) para 6.

49 WTO General Council Meeting (Statement of Brazil) (n 2) paras 4, 11.

50 See Bridges (‘Dutch Seizure of Generic Drugs Sparks Controversy’) (n 2).

51 Even scholars and practitioners in India initially sided with the EU on the legality of the detentions. For instance, Professor Shamnad Basheer of the National University of Juridical Sciences, stated: ‘If the consignment does infringe a patent, then you cannot question the EU for seizing it under their patent laws,’ and Rajeshwari Hariharan, a partner at law firm K&S Partners, concluded: ‘There are cases where a product is in transit and is seized at a transit point. If this [drug] product was in transit via the Netherlands, and was seized there due to patent infringement, it is a valid argument for the EU … In fact, India takes the same stance.’ Radhieka Pandeya, ‘Dr Reddy's consignment of drugs to Brazil seized’ (Live Mint, 15 January 2009). Basheer subsequently amended his views; for several blog postings see <http://spicyipindia.blogspot.com/>.

52 WTO General Council Meeting (Statement of the EC) (n 2). Likewise, European Parliament Resolution of 12 July 2007 on the TRIPS Agreement and Access to Medicines (paras 1 and 2) ‘[s]tresses that access to affordable pharmaceutical products in poor developing countries and LDCs is essential to attain the proposed EU development goals and would contribute to poverty reduction, increase human security, and promote human rights and sustainable development’; and ‘[b]elieves that EU policy should aim at maximizing the availability of pharmaceutical products at affordable prices in the developing world’.

53 In addition to EC Regulation 1383/2003, India identified the following laws, rules, regulations, guidelines and administrative practices of the EU and of the Netherlands relevant to the dispute: Commission Regulation (EC) No. 1891/2004 of 21 October 2004; Council Regulation (EEC) No 2913/92 of 12 October 1992; Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004; Regulation (EC) No 816/2006 of the European Parliament and of the Council of 17 May 2006; Relevant provisions of the Patents Act of the Kingdom of the Netherlands, 1995 (Rijksoctrooiwet 1995) (the ‘Patents Act’), as amended, including, without limitation, the provisions of Chapter IV thereof, especially arts 53 and 79, and relevant rules, regulations, guidelines and administrative practices; Relevant provisions of the General Customs Act of the Netherlands (de Algemene douanewet (Adw)) (the ‘Customs Act’), as amended, including, without limitation, arts 5 and 11 and relevant rules, regulations, guidelines and administrative practices; Customs Manual VGEM (30.05.00 Intellectual Property Rights, Version 3.1) (Douane Handboek VGEM, 30.05.00 Intellectuele eigendomsrechten, 6 April 2009, Versie 3.1) including, without limitation, the provisions of ch 6 and of other relevant chapters; The Public Prosecutor's Office Guide to Intellectual Property Fraud 20005A022 of 1 February 2006 (Aanwijzing intellectueleeignendomsfraude 2005A022) and the Public Prosecutor's Office Directive (2005R013); Relevant provisions of the Criminal Code of the Netherlands (Het Nederlandse Wetboek van Strafrecht) including, without limitation, the provisions of art 337, and relevant rules, regulations, guidelines and administrative practices; and Relevant provisions of the Criminal Procedure Code of the Netherlands and relevant rules, regulations, guidelines and administrative practices. Request for Consultations by India, (n 36) 2–3.

54 European Union and a Member State – Seizure of Generic Drugs in Transit, Request for Consultations by Brazil, WT/DS409/1, IP/D/29, G/L/922 (19 May 2010). Canada, China, Ecuador, India, Japan and Turkey joined the consultations as third parties.

55 Panel Report, European Communities – Protection of Trademarks and Geographical Indications for Agricultural Products and Foodstuffs, WT/DS290/R (15 March 20) para 7.87. Interestingly, the panel offered no explanation or justification for its determination.

56 See contra, Paris Convention, art 19, stating that a subsequent agreement between parties cannot contravene the Convention.

57 Moreover, the World Health Assembly cautioned Member states to ‘take into account, where appropriate, the impact on public health when considering adopting or implementing more extensive intellectual property protection than is required by the Agreement on Trade-Related Aspects of Intellectual Property Rights’ World Health Assembly, Global Strategy and Plan of Action on Public Health, Innovation and Intellectual Property, WHA61.21 (24 May 2008).

58 See also arts 41(1)–(4); 42 sentence 2; 43(2); 46 sentence 3; 47; 48(1); 50(3), (4) and (6) of the TRIPS Agreement.

59 In its Request for Consultations, Brazil specifically claimed violations of art 41.1 and 41.2 while India made the more general claim of a violation of art 41

60 The panel in Canada–Pharmaceuticals discussed the meaning of ‘legitimate’ within the context of art 30 of the TRIPS Agreement, stating: [‘Legitimate’] must be defined in the way that it is often used in legal discourse—as a normative claim calling for protection of interests that are ‘justifiable’ in the sense that they are supported by relevant public policies or other social norms. Panel Report, Canada – Patent Protection of Pharmaceutical Products, WT/DS114/R (7 April 2000) para 7.69.

61 EFPIA, ‘EFPIA Statement: Customs seizures of in-transit medicines’ (13 March 2009) <http://www.efpia.eu/content/default.asp?PageID=559&DocID=6574>.

62 Oddly, India did not claim a violation of art 51 or 52 in its request for consultations. Brazil claimed a violation of both articles.

63 The first sentence of art 51 reads: ‘(Members must adopt procedures) 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 are also allowed to provide for similar procedures relating to goods destined to be exported.

64 Emphasis added. The reference to ‘this Section’ refers to ‘Section 4: special requirements related to border measures’ of the TRIPS Agreement. The reason that patents are not included in the first sentence of art 51 is likely due to the difficulties associated with determining whether a product infringes a patent, which sometimes require lengthy procedures and complex testing.

65 For such an argument, see Xavier Seuba, ‘Free Trade in Pharmaceutical Products: The Limits of Intellectual Property Enforcement at the Border’ (March 2010) ICTSD Issue Paper No 27, 14.

66 For recent jurisprudence, see Panel Report, China – Measures Affecting the Protection and Enforcement of Intellectual Property Rights, WT/DS362/R (20 March 2009) paras 7.223–7.224.

67 Article 2.1(c)(i) of Regulation 1383/2003 requires customs to take action if goods ‘in the Member State in which application for customs action is made, infringe: (i) a patent under that Member State's law.’ See also, art 10 (‘The law in force in the Member State within the territory of which the goods are placed in one of the situations referred to in Article 1(1) shall apply when deciding whether an intellectual property right has been infringed under national law.’).

68 The EU could also attempt to argue that the reference to ‘country of importation’ in art 52 only refers to the mandatory requirements of art 51; that is the suspension of imported counterfeit and pirated goods. Under such an interpretation, art 52 is inapplicable to other situations, including exportation and transiting goods. This argument would have been unlikely to succeed for a host of reasons, and it does not seem likely that the EU would have made such an argument. For analysis, see Seuba (n 65) 12–13 and more generally 16–21.

69 See <http://www.merriam-webster.com/dictionary/import>.

70 WTO General Council Meeting (Statement of India) (n 2); also, WTO General Council Meeting (Statement of Brazil) (n 2) para 7: ‘Brazil is gravely concerned with the setting of a precedent for extraterritorial enforcement of IP rights. Attempts to extend the rights granted by patents beyond national borders have critical systemic implications. They affront fundamental canons of the multilateral trade system, in particular the well-established principle of territoriality, a fundamental pillar of the international intellectual property regime.’

71 See Seuba (n 65) 12. Article 28(1) states that patent shall confer on its owner the following exclusive rights: (a) where the subject matter of a patent is a product, to prevent third parties not having the owner's consent from the acts of: making, using, offering for sale, selling, or importing for these purposes that product; (b) where the subject matter of a patent is a process, to prevent third parties not having the owner's consent from the act of using the process, and from the acts of: using, offering for sale, selling, or importing for these purposes at least the product obtained directly by that process.

72 Request for Consultations by India (n 36) para 3.

73 See Appellate Body Report, United States – Standards for Reformulated and Conventional Gasoline, WT/DS2/AB/R, 29 April 1996, 17: ‘[Article 31 of the VCLT] has attained the status of a rule of customary or general international law.’ Appellate Body Report, Japan – Taxes on Alcoholic Beverages, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R (4 October 1996) 10: ‘[Article 32 of the VCLT], dealing with the role of supplementary means of interpretation, has also attained the same status [of customary or general international law].’ See also, Appellate Body Report, United States – Continued Existence and Application of Zeroing Methodology, WT/DS350/AB/R (4 February 2009) paras 267–8.

74 See ibid (Appellate Body Report, Japan–Alcohol) 17 (‘[T]he words actually used in the Article provide the basis for an interpretation that must give meaning and effect to all its terms. The proper interpretation of the Article is, first of all, a textual interpretation’). See also Summary Records of the 876th Meeting, (1966) 1 Yearbook of the International Law Commission 219, U.N. Doc. A/CN.4/SER.A/1966; Sinclair, Ian, The Vienna Convention on the Law of Treaties, 130–5 (2nd edn, Manchester University Press, 1984)Google Scholar; Fitzmaurice, Gerald, ‘The Law and Procedure of the International Court of Justice: Treaty Interpretation and Certain Other Treaty Points’ (1951) 28 British Yearbook of International Law 1Google Scholar.

75 Appellate Body Report, US – Zeroing Methodology (n 73) paras 268–73.

76 Panel Report, Canada–Pharmaceutical Products (n 60) para 7.14. The Appellate Body has subsequently held that ‘a treaty interpreter is required to have recourse to context and object and purpose to elucidate the relevant meaning of the word or term.’ Appellate Body Report, US – Zeroing Methodology (n 73) para 268 (emphasis added). This is compatible with the use of the word ‘shall’ in art 31(1) and (2) of the VCLT.

77 Some Members, notably the US, believe that the Declaration has no legal authority as it is a merely a ‘diplomatic step’. USTR Fact Sheet Summarising Results from WTO Doha Meeting, 15 November 2001 <http://www.usembassy.it/file2001_11/alia/a1111516.htm>. Academic commentary is divided, with some arguing the Doha Declaration has little definitive legal value. See, ie Sykes, Alan O, ‘TRIPS, Pharmaceuticals, Developing Countries and the Doha “Solution”’ (2002) 3 ChiJIntlL 54Google ScholarPubMed : ‘It should be noted that ministerial declarations within the WTO are not legally binding in the dispute resolution process, and in the event of a dispute the language of the treaties as approved by national governments would prevail over any contradictory declaration by the ministers. But the Doha Declaration is primarily interpretive of imprecise obligations in TRIPS, and does not appear to contradict any textual provision. As such, it is likely to be persuasive authority in the interpretation of TRIPS in the event of a dispute.’

78 See contra, Mitchell, Andrew D and Voon, Tania, ‘Patents and Public Health in the WTO, FTAs and Beyond: Tension and Conflict in International Law’ (2009) 43 JWT 573Google Scholar.

79 For further discussion, see Correa, Carlos, Implications of the Doha Declaration on the Trips Agreement and Public Health (World Health Organization, 2002)Google Scholar: ‘given the content and mode of approval of the Doha Declaration, it can be argued that it has the same effects as an authoritative interpretation. In particular, in providing an agreed understanding on certain aspects of the TRIPS Agreement in paragraph 5, Members have created a binding precedent for future panels and Appellate Body reports.’ See also, Ehlermann, Claus-Dieter and Ehring, Lothar, ‘The Authoritative Interpretation Under art IX:2 of the Agreement Establishing the World Trade Organization: Current Law, Practice and Possible Improvements’ 8 JIEL 803CrossRefGoogle Scholar. Ehlermann and Ehring point out that ‘an authoritative interpretation would not have been suitable, given that this Declaration contained statements of a political nature, confirmed (or even merely referred to) existing provisions, and gave a mandate for legislative action.’ However, for an argument supporting the position that the Declaration is an interpretation under art IX(2), see Hestermeyer, Holger, Human Rights and the WTO: The Case of Patents and Access to Medicines (OUP, 2007) 279–82Google Scholar. For more detailed discussion on the legal status of the Doha Declaration, see Gathii, James, ‘The Legal Status of the Doha Declaration on TRIPS and Public Health under the Vienna Convention on the Law of Treaties’ (2002) 15 Harvard Journal of Law & Technology 291Google Scholar. To date, no panel or Appellate Body has had the opportunity to discuss the status of the Doha Declaration; however, previous panels and the Appellate Body have confirmed the exclusive ability of the Ministerial Conference and the General Council to adopt interpretations. See Appellate Body Report, Japan–Alcohol (n 73) 13; Appellate Body Report, United States – Measure Affecting Imports Of Woven Wool Shirts And Blouses From India, WT/DS33/AB/R (25 April 1997) 19–20.

80 WTO General Council Meeting (Statement of India) (n 2) (stressed ‘balance between public health concerns and protection and enforcement of IPRs. The decisions on Public Heath are a valuable part of the WTO acquis and need to be adhered to in letter and spirit.’).

81 WTO General Council Meeting (Statement of Brazil) (n 2) para 8.

82 Appellate Body Report, US – Zeroing Methodology (n 73) para 268: ‘[A] treaty interpreter is required to have recourse to context and object and purpose to elucidate the relevant meaning of the word or term.’

83 Appellate Body Report European Communities – Customs Classification of Frozen Boneless Chicken Cuts, WT/DS269/AB/R, WT/DS286/AB/R (12 September 2005) para 239.

84 It should also be noted that India claimed violations of arts 7 and 8 in their own right.

85 WTO General Council Meeting (Statement of Brazil) (n 2) para 8.

86 Abbott, Frederick M, ‘Seizure of generic pharmaceuticals in transit based on allegations of patent infringement: a threat to international trade, development and public welfare’ (2009) 1 WIPO Journal 47Google Scholar.

87 AIR 1984 SC 66. This decision overruled the decision in The Central India Spinning and Weaving and Manufacturing Company, Limited, The Empress Mills, Nagpur v The Municipal Committee, Wardha [1958] 1SCR 1102, see in particular para 47.

88 ibid para 39. Emphasis added.

89 ibid para 29. Emphasis added.

90 Montex Holdings Ltd. v Diesel SpA57 (C-281/05). See also Class International BV v Beecham Group PLC (C-405/03) (holding that a rights owner can oppose the offering for sale of goods even when the goods are under the external transit procedure if there is a risk of diversion of the goods to the EU market). Such decisions expand upon the reasoning in Polo v Lauren (C-383/1998) (holding the predecessor to the current regulation is ‘expressly designed to apply to goods passing through Community territory from a non-member country destined for another non-member country’ and that ‘the external transit of non-Community goods is not completely devoid of effect on the internal market […] as there is a risk that counterfeit goods placed under the external transit procedure may be fraudulently brought on to the Community market’).

91 The decision is at <http://www.ippt.eu/files/2006/IPPT20061109_ECJ_Montex_v_Diesel.pdf>. See contra, Re Montres Rolex SA (C-60/02), which held that Regulation 1383/2003 required Member States to prohibit the processing of goods transiting through the EU.

92 Montex Holdings Ltd. v Diesel SpA57 (C-281/05) para 26.

93 ‘[2009] EWHC 1903 (Ch)’. Other jurisdictions, such as South Africa, also prohibit border measures extending to transiting goods. See A M Moolla Group Ltd. v The GAP, Inc., Supreme Court of Appeal of South Africa, 543/03, 2004.

94 In fact, the laws of several EU Member States deem in transit counterfeit goods as a trademark infringement. See, eg art 337 of the Dutch Criminal Code; art 4(1) of the Finnish Trade Marks Act; and art L.716–9 of the French Intellectual Property Code.

95 Nokia Corporation v Her Majesty's Commissioners of Revenue & Customs and the International Trade Mark Association (as proposed intervener), Manufacturing Fiction/Referral to the Court of Justice, Court of Appeal England and Wales, London, UK, 9 November 2009 <http://www.eplawpatentblog.com/2010/January/Court%20of%20Appeal%20Order%20Nokia.pdf>.

96 District Court The Hague, 18 July 2008. See also, Cybergun S.A. v Koninklijke Luchtvaart Maatschappij N.V, and Wargaim LLC, January 20 2010 (decision stayed pending ECJ determination of Nokia and Phillips). See also The Polo Lauren Company v PT Dwidua Langgeng Pratama International Freight Forwarders, (C-383/98), stating para 34: ‘After all, the external transit of non-Community goods is not completely devoid of effect on the internal market. It is, in fact, based on a legal fiction. Goods placed under this procedure are subject neither to the corresponding import duties nor to the other measures of commercial policy; it is as if they had not entered Community territory. In reality, they are imported from a non-member country and pass through one or more Member States before being exported to another non-member country. This operation is all the more liable to have direct effect on the internal market as there is a risk that counterfeit goods placed under the external transit procedure may be fraudulently brought on to the Community market, as several Governments pointed out in their written observations and at the hearing.’

97 Opinion of Advocate General Cruz Villalón, delivered on 3 February 2011 in the joined cases of C-446/09 and C-495/09, paras 17–22.

98 Nokia Corporation v Her Majesty's Commissioners of Revenue and Customs (C-495/09); Koninklijke Philips Electronics NV v Lucheung Meijing Industrial Company Ltd (C-446/09).

99 The opinion of the Advocate General (AG) of the ECJ, issued in February 2011, similarly found that EU IPRs could not be used to automatically detain and consider as ‘counterfeit’ goods in transit or temporary storage ‘without sufficient grounds for suspecting’ that the goods are to be put on the EU market. Opinion of Advocate General Cruz Villalón (n 97) para 112. While the AG did not approve of the use of a legal ‘production fiction’ to goods in transit, he did concede that ‘suspicions’ that the goods will be placed on the EU market based on circumstantial evidence and a lack of detail in customs declarations may be sufficient to allow detention and seizure. Ibid paras 54–79, 97, 101–12. For a useful summary of the issues and the AG's opinion, see David Wilson and Rachel Montagnon, ‘AG's Opinion: “sufficient grounds for suspecting” danger of fraudulent entry of goods into the EU required for seizure by Customs of goods in transit’ Herbert Smith IP News Flash (8 February 2011) <http://www.herbertsmith.com/NR/rdonlyres/0B4A4F6D-374C-440C-A41A-2FEBA3CC00A5/0/20110207AGsOpinionDavidWilsonandRachelMontagnon.html>.

100 Judgment in Joined Cases C-446/09 Koninklijke Philips Electronics NV v Lucheng Meijing Industrial Company Ltd and others and C-495/09 Nokia Corporation v Her Majesty's Commissioners of Revenue and Customs <http://www.eulaws.eu/?p=1165>. For a useful summary of the EU measures/events and proposed amendments, see Vrins, Olivier, “The European Commission's proposal for a regulation concerning customs enforcement of IP rights” (2011) 6 Journal of Intellectual Property and Practice 774CrossRefGoogle Scholar.

101 WTO General Council Meeting (Statement of India) (n 2).

102 The complainants also claimed violations of subparagraphs 4, 5 and 7. Cumulatively, the complaints allege the EU ‘measures at issue, inter alia, are unreasonable, discriminatory and interfere with, and impose unnecessary delays and restrictions on, the freedom of transit of generic drugs lawfully manufactured within, and exported from, India by the routes most convenient for international transit.’ Request for Consultations by India (n 36).

103 Colombia – Indicative Prices and Restrictions on Ports of Entry, WT/DS366/R (20 May 2009). The panel found that the definition of ‘traffic in transit’ provided in art V:1 ‘seems sufficiently clear on its face.’ ibid para 7.396.

104 ibid para 7.401.

105 ibid para 4.402.

106 WTO General Council Meeting (Statement of Brazil) (n 2) para 3.

107 In the case of abacavir, the shipment was seized on 12 November 2008 and released on 12 March 2009, to which the Dutch government admitted ‘[t]he customs authorities did not respect the time limits for detention and disposal of this case’. See ‘Formal response Dutch government on seizures and border measures in FTAs (to parliamentary questions), posted by Health Action International on its list-serv and <http://lists.essential.org/pipermail/ip-health/2009-April/013674.html>.

108 As noted (n 13), this article will not fully analyse the procedural and administrative nuances of the EC Regulation or its application.

109 Appellate Body Report, US–Gasoline (n 73) 22. The Appellate Body has on several occasions declined to authoritatively decide whether art XX of the GATT is available to other covered agreements, but noting that the chapeau to art XX states that ‘nothing in this Agreement’ shall prevent measures for the non-trade purposes set out therein’ the weight of the evidence suggests that the article is only applicable to the GATT. See China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, WT/DS363/AB/R (19 January 2010) paras 7.743–7.745, 7.914. See also Piérola, Fernando, ‘The Availability of a GATT Article XX Defence with Respect to a Non-GATT Claim: Changing the Rules of the Game?’ (2010) 5 Global Trade and Customs Journal 172Google Scholar.

110 On burden of proof, see Appellate Body Report, Korea – Measures Affecting Imports of Fresh, Chilled and Frozen Beef, DS161/AB/R (10 January 2001) para 157; Appellate Body Report, United States – Measures Affecting Imports of Woven Shirts and Blouses, WT/DS33/AB/R (23 March 1997) 14.

111 See Appellate Body Report, Korea–Beef ibid para 157.

112 For illustration, see Panel Report, United States – Measures Relating to Shrimp from Thailand, WT/DS343/R/, paras 7.174–7.183. It is worth noting that the Appellate Body in Mexico–Soft Drinks held that ‘a measure can be said to be designed “to secure compliance” even if the measure cannot be guaranteed to achieve its result with absolute certainty’. Appellate Body Report, Mexico – Tax Measures on Soft Drinks and Other Beverages, WT/DS308/AB/R (24 March 2006) para 74.

113 For illustration, see ibid paras 7.184–7.191.

114 See EC–Asbestos, WT/DS135/AB/R (5 April 2001) para 172.

115 Appellate Body Report, Korea–Beef (n 110) para 161.

116 See also Panel Report, US – Shrimp from Thailand (n 112) paras 7.187–7.189.

117 Appellate Body Report, Korea–Beef (n 110) para 166.

118 See Seuba (n 65) 28–9.