TWN Info Service on WTO and Trade Issues (June09/11)
16 June 2009
Third World Network

Please find below a news report on the discussion that took place in last week's session of the TRIPS Council on the recent seizure of medicines in transit in Frankfurt and 17 other seizures of medicines by the Dutch authorities on alleged infringement of IPRs.

It was first published in SUNS and is reproduced here with permission.

Sangeeta Shashikant
Third World Network

Concerns voiced at TRIPS Council over seizure of drugs
Published in SUNS #6717 dated 11 June 2009

Geneva, 10 Jun (Sangeeta Shashikant*) -- The repeated practice of EC customs officials seizing shipments of medicines while in transit to developing countries on grounds of alleged IP violations in transit countries has once again come under sharp criticism in the WTO.

The criticism this time, with a range of developing countries protesting the EU customs actions, came over the recent seizure of the generic antibiotic Amoxicillin by customs officials while in transit in Frankfurt and destined for the Republic of Vanuatu in the Pacific.

The protest by the developing countries came at a formal session of the TRIPS Council on 8 June, where Brazil and India raised the issue under the agenda item of "Other Business." They were supported by several developing countries.

The concerns were over the seizure by customs officials on 5 May of a shipment of the generic Amoxicillin (manufactured in India) while in transit through the European Union, specifically in Frankfurt, and on its way to Vanuatu, a least developed country.

According to trade officials, the developing countries expressed concern over the European Union's commitment to the Doha Declaration on TRIPS and Public Health and the flexibilities inscribed in the TRIPS Agreement. They also said that the EU was confusing legitimate generic medicines with counterfeit fakes. Furthermore, the EU was also undermining poor countries' ability to obtain cheaper generic medicines.
Amoxicillin is an essential medicine used to treat a wide range of bacterial infections. The shipment that was seized comprised 3,047,000 tablets of Amoxicillin (250 mg), worth approximately 28,000 Euros. This is equivalent to 76,000 courses of treatment.
The batch was detained on grounds of alleged trademark violation, but was released after four weeks. The customs authorities had informed GlaxoSmithKline (GSK), the former patent holder for Amoxil, a brand name for amoxicillin, but subsequently GSK informed the German customs authorities that there was no trademark infringement.

(In a press release on 5 June, Health Action International (HAI), Oxfam International, BUKO Pharma, Medico International and Third World Network urged the German customs authorities to provide full and transparent information about this seizure. They called on the European Commission to take immediate steps to ensure that its regulations and laws do not deny developing countries timely access to essential medicines.

(Sune Sveningsen, Supply Chain Director of Missionpharma, the agency responsible for the Amoxicillin shipment, was quoted in the press release as saying: "These random seizures seriously impact our ability to service the healthcare needs of people living in developing countries in a timely manner, forcing us to consider re-designing our entire supply chain to avoid any transit through European territories.")

News of this latest seizure comes just as it was also revealed by a Freedom of Information Act request filed by Health Action International that the Dutch authorities in 2008 conducted 17 seizures of medicines bound for Brazil, Peru, Colombia, Ecuador, Mexico, Portugal, Spain and Nigeria.

The drugs were for diseases such as cardiac ailments, AIDS, dementia and schizophrenia. Of these, 16 consignments originated from India and one from China.

These seizures were taking place pursuant to the EC Council Regulation 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).

They have sparked anxiety among developing countries and civil society alike. It is anticipated that these seizures are likely to increase, particularly as developed countries continue their strong push for a so-called "anti-counterfeit agenda" in international forums such as the World Health Organisation (WHO) in the context of IMPACT (an anti-counterfeit task force), the World Customs Organisation (WCO), the World Intellectual Property Organisation (WIPO), as well as in plurilateral forums such as the Anti-Counterfeit Trade Agreement (ACTA).

In its statement at the TRIPS Council, Brazil said that it believes that the seizure of goods in transit on grounds that they might be violating IP rights conferred by a patent registered in the country of transit is a serious violation of WTO disciplines.

"The decision to impede the transit of cargoes of generic medicines violates the freedom of transit, a right enshrined in GATT Article V. Only very exceptional circumstances warrant restrictions on that freedom," said Brazil, adding that it is not aware of any such circumstances in the concrete cases that it has brought to the attention of the Council.

It said that its inquiries led to the identification of more than a dozen seizures of consignments of generic drugs in transit through Dutch territory in the last year. The medicines were directed to at least seven different developing countries in South America and Africa. "Now, we face a new seizure on German territory." It is clear that the losartan case, contrary to EC assertions, was not a "minor, exceptional and inconsequential" incident. In fact, "it seems like the tip of an iceberg," said Brazil.

It reiterated that trade in generic medicines is perfectly legal from the intellectual property point of view. Generic must not be mistaken with counterfeit or pirated products. Generic medicines are not substandard or illegal.

Recalling that at the last session, in their response to Brazil and India, the European Communities affirmed their commitment to "facilitating access to medicines for countries in need", Brazil said that unfortunately, that doesn't seem to be in line with the concrete actions. It noted that the dozen-plus consignments of generic drugs in transit through Dutch territory and the recent seizure at Frankfurt airport of a consignment of amoxicillin seem to move in the opposite direction to the objective of "facilitating access to medicines for countries in need".

The Communities claimed to be "one of the main promoters of the Doha Declaration and the TRIPS flexibilities". Rather than TRIPS flexibilities, however, the EC has actively promoted TRIPS-plus standards in non-specialized multilateral agencies such as the World Health Organization (through the IMPACT initiative) and the World Customs Organization, as well as in plurilateral fora such as ACTA or in bilateral and plurilateral agreements such as Economic Partnership Agreements, said Brazil.

On the EU claim that their customs actions have "saved lives in final destination countries - often developing countries", Brazil said that this is a blatant attempt to confound the issue. EC customs authorities' apprehensions have actually hampered the access of the developing world to affordable life-saving generic medicines.

Brazil also called into question EC statistics about seizures of fake medicines. The "losartan" and other episodes suggest that EC numbers may lack accuracy, as EC customs authorities may mistake legitimate generic medicines for fake products. It recalled that the mere seizure of goods in transit - any good; be it a medicine or not - on grounds that they may be violating IP rights registered in the country of transit is, in itself, a violation of GATT Article V and other GATT obligations.

"The TRIPS Agreement does not allow the detention of goods in transit. The seizure of goods in transit on grounds that they may be violating IP rights in the country of transit violates the principle of territoriality, a keystone of the international IP system."

Brazil also sought clarification on the following questions: (a) How the European authorities' actions can be reconciled with WTO disciplines; (b) Whether EC Council Regulation 1383/2003 requires or justifies such actions from the customs authorities of the Communities; and, above all, ( c) How will the Communities ensure that such actions will not happen again.

In its statement, India said that when both it and Brazil raised the issue of seizure of generic drug consignments at EC ports in the TRIPS Council meeting of 3 March, they did not foresee that they will need to raise the issue again in the 8 June meeting. "Going by EC's intervention at the last TRIPS Council meeting, confirming their commitment to the Doha Declaration on Public Health, we thought that the matter will get the attention it deserves and get resolved."

(At the last TRIPS Council meeting on 3 March, the Council discussed the issue of the seizure by Dutch authorities of the generic medicine Losartan on its way to Brazil.)

"Regrettably, this has not happened and we are compelled to raise the issue in this meeting," said India, adding that it has also not received a satisfactory response from the EC to its formal communication to the Commission in Brussels, nor has it seen any review of the relevant EC regulation or actions by customs authorities.

With respect to the seizure of Amoxicillin, India said that there seems no valid reason for detaining these medicines especially since the name "Amoxicillin" is an international non-proprietary name (INN).

India said that it has followed closely the different grounds mentioned by the EC for such seizures. The grounds stated by the EC include counterfeits, fake drugs, substandard, potentially dangerous products, patent violations and so on. The EC has also made allegations of drug trafficking after three months of seizure of a particular consignment. "These are serious allegations and we take serious exception to such unsubstantiated and wild allegations. The fact that the drugs were subsequently released are a proof that the allegations were baseless," India argued.

Seizures have continued to take place at EC ports. The multitude of allegations and the spread across several EC ports, imply an emerging pattern to disrupt and create barriers to legitimate trade of generic drugs and to challenge the Doha Declaration on Public Health. The basic principle of transparency of procedures has also been violated by the inability of the authorities to share and explain the specific cause of action under EU regulations.

According to India, the EC has sought to justify the action of customs authorities to control goods in transit suspected of infringing IPRs as a means to stop "traffic of potentially dangerous products, such as fake medicines, even when the shipments were destined for any country."

"It seems that it has been ingrained very deeply within the EC authorities that IP violative products are synonymous with potentially dangerous substances. This clearly is an untenable logic. We doubt such simplistic linkages," said India.

India reminded the EC that the concept of "territoriality" is a keystone in the edifice of the TRIPS Agreement and a widely understood and accepted principle. In India's view, sovereign functions of the country of destination should be exercised by the country itself and other countries may assist in enforcement of their law, if requested.

"It may be far-fetched to claim that the country of transit will have sound understanding of the IPR laws of country of destination or origin and will have the authority to enforce them during transit. It would also be incorrect to presume that the sovereign countries, to which pharmaceutical goods are consigned, are not responsible for ensuring health, safety and expectations of consumers in their countries."

In such situations, said India, an information sharing mechanism is what is needed and definitely not action under the laws of the country in transit. If there is a reason to doubt the quality of goods, enforcement action should follow from domestic regulations in importing country and not from WTO rules, which do not provide for the same, or from rules of a third country.

India also drew attention to the report of the Special Rapporteur on the right of everyone to the enjoyment of the highest attainable standard of physical and mental health submitted to the 11th Session of the Human Rights Council last week. The Rapporteur had expressed concern "with reports of IP enforcement measures that have resulted in multiple seizures at some ports of shipments of generic medicines heading to developing countries and LDCs."

Widespread and repeated seizures have an adverse systemic impact on legitimate trade of generic medicines, South-South commerce, national public health policies and the principle of universal access to medicines. The importance of generic drugs to public health in developing countries and particularly in the LDCs is obvious, said India.

"Such barriers to legitimate trade of generic drugs will also seriously impair the efforts of civil society organisations engaged in providing medicines and improving public health in the least developed parts of the world."

India further reminded the EC that trade of generic drugs is perfectly legitimate. Moreover, it is also desirable from the public health and access to medicine perspective. "It is ironical that while on one hand WTO has taken steps to promote access to affordable medicines and remove obstacles to proper use of TRIPS flexibilities, on the other hand, some Members seek to negate the same by seizing drug consignments in transit and creating barriers to legitimate trade."

India pointed out that it is the EC regulation 1383/2003 itself that is "problematic and can be misused, and has been misused, to create barriers to legitimate trade". It again called upon the EC to urgently review the Regulation and the actions of the national authorities based on the Regulation, and bring them in conformity with the letter and spirit of the TRIPS Agreement, the rules-based WTO system and the Doha Ministerial Declaration on Public Health.

According to trade officials, Brazil and India were supported by China, Cuba, Colombia, Ecuador, Egypt, Argentina, Venezuela and South Africa.

The EC responded by saying that it remains fully committed to ensuring access to affordable medicines in developing countries. The EC maintained that it is important to continue to allow the Customs Authorities to control goods in transit and ensure that measures can be taken against global trade in counterfeit products, and in particular, fake medicines whose effects mainly hit developing countries.

The EC further maintained that the Customs Regulation is fully in line with WTO/TRIPS requirements, in terms of scope and coverage of customs intervention.

According to trade officials, the US, referring to the need to crack down on counterfeits, said that brand names are a guarantee of quality, whereas fakes mislead consumers and can be dangerous. It called for cooperation between countries and between the private and public sectors to deal with counterfeit trade.

Meanwhile, positions at the TRIPS Council remained unchanged over the issue of patents, bio-diversity and traditional knowledge.

According to trade officials, some members have continued to link this issue, in particular the proposal to amend the TRIPS Agreement to require patent applicants to disclose the origin of genetic resources or traditional knowledge used in their inventions, with two proposals on geographical indications (the multilateral register for wines and spirits and extending the higher level of protection currently given to wines and spirits to other products).

For these members, the "disclosure" proposal is essential to prevent bio-piracy and patents being granted when the material and knowledge used are not new. According to trade officials, those who spoke included India, Brazil, the African Group (Egypt speaking), Ecuador, Cuba, Peru, China, Pakistan, Nigeria, Angola, Norway, Switzerland, and the EU.

Other members continued to oppose the link. According to trade officials, speakers included New Zealand, the US, Canada, Japan, Argentina, Korea, Chinese Taipei and Chile.

According to trade officials, the main focus of the discussions is now in consultations chaired by Director-General Pascal Lamy. Some members said that the full membership should be informed as to what is happening in the consultations, which are taking place among a smaller group of members.

(* With inputs from Kanaga Raja.) +