Proposed EU Customs Regulation May Not Dispel Fear Of Wrongful Drug Seizures

The European Commission has issued a new draft customs regulation that it says addresses past concerns over wrongful seizures of generic drug shipments transiting through European ports. But the new regulation does not substantively change existing rules, it said, and civil society groups say it does not go far enough. The EU regulation is the subject of a World Trade Organization dispute settlement case.

“Concern was expressed by certain Members of the WTO, Members of the European Parliament and NGOs about the impact of such detentions on the trade in legitimate medicines,” the Commission said in a fact sheet. “The proposal does respond to these concerns, by clarifying that the customs Regulation is of a procedural nature, and does not change or add to the rules defining what an IPR infringement is. Detention and destruction procedures are also made clearer, thereby increasing legal certainty for legitimate traders.”

In 2008, shipments of legitimate generic medicines transiting through Europe were detained by customs authorities on allegation of IP rights infringement. This triggered the filing of disputes at the WTO. On 11 May 2010, India requested consultations at the WTO with the European Union and the Netherlands about the seizures on patent infringement grounds of generic drugs coming from India, transiting through ports and airports in the Netherlands to third country destinations.

India said those seizures were inconsistent with the obligations of the EU and the Netherlands of various provisions of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) (IPW, WTO/TRIPS, 12 May 2010). The dispute is ongoing and remains at the consultation phase.

Brazil followed the same path and requested consultations with the European Union and the Netherlands on 12 May 2010.

Officials from India and Brazil could not comment by press time.

In December, the European Commission said it had reached an agreement on the WTO case with India by promising to make improvements to its law. Indian officials took a “wait-and-see” attitude.

According to the European Commission, the proposed new regulation, meant to replace regulation 1383/2003, addresses the concerns of India and Brazil, in particular by providing clarification and increasing legal certainty.

The proposal for “a regulation of the European Parliament and of the Council concerning customs enforcement of intellectual property rights,” was issued on 24 May, as part of the overall IP strategy of the EU (IPW, Enforcement, 24 May 2011).

The decision to review regulation 1383/2003 was taken in September 2008, according to the Commission proposal [pdf]. A public consultation was carried out to “ensure all stakeholders were given ample opportunity to contribute to the review,” it said.

The proposal has now been sent to the European Council and the European Parliament for their comments. According to the procedure, the act will be adopted if both the Council and the Parliament agree on the text.

Civil Society Still Concerned

On 25 May, Public Citizen, said in a letter [pdf] to the Commission that the proposal implicates “several important interests,” but still leaves concerns about the scope of the regulation. [Correction: the letter was from May 2010 and criticised the 1383/2003 regulation]

In particular, it said, limitations on the scope of the regulation should apply equally to goods entering or exiting the European market and goods in transit, and the provisions applied to goods in transit should be limited to wilful trademark counterfeiting and copyright piracy on a commercial scale.

“Commercial rights held in EU member states should not impede the free movement of legitimate goods that are not destined for the EU market,” the letter said.

Peter Maybarduk, an intellectual property lawyer at Public Citizen, told Intellectual Property Watch that “it is a scandal that the proposed revisions would evidently still allow the seizure of generic medicines in transit.”

He said the proposed revisions “do include some hard-won procedural protections, that should help limit abuse and could mitigate some of the regulation’s potential negative effects on competition.”

Nevertheless, Maybarduk added, “the European Commission has failed to repair the regulation’s most fundamental flaws. The EC should go back to the drawing board and limit the regulation’s irrationally broad scope to the criminal offenses under TRIPS – willful trademark counterfeiting and copyright piracy on a commercial scale – while clearly excluding generic medicines from its reach.”

According to Brook Baker, policy analyst for the Health Global Access Project and professor at Northeastern University in Boston, the proposed regulation does not appropriately address the problem of the faulty interception of lawful generic medicines.

According to Baker, under the proposed regulation, the law of individual EU member states will continue to apply concerning alleged infringed goods. If a country makes fictitious patent violations, “then an in-transit medicine could still be seized, adjudicated as an infringement, and thus destroyed, even if it was lawfully produced in the country of manufacture and destined for legal use in the final country of import,” he said on the ip-health listserv of Knowledge Ecology International.