TWN Info
Service on WTO and Trade Issues (Jun16/12)
17 June 2016
Third World Network
EU sharply criticised over new trademarks directive
Published in SUNS #8260 dated 13 June 2016
Geneva, 10 Jun (Kanaga Raja) - Several developing countries - Brazil,
India, South Africa, China and Indonesia - took the European Union
(EU) to task over its new Directive aimed at harmonising the provisions
of trademark laws in the EU member states.
The new directive, they said, could impose restrictions on legitimate
shipments of goods, in particular essential generic medicines, while
in transit in these EU member states.
According to trade officials, these concerns were voiced at the WTO
TRIPS Council meeting, 7-8 June, where the five countries charged
that the new EU Directive would allow the customs authorities in the
EU member states to seize goods in transit without adequate evidence
of violation of trademarks.
These concerns had originated from seizure by customs authorities
in the Netherlands in 2008 of consignments of generic medicines from
India while in transit in Amsterdam on their way to other developing
countries including Brazil, Colombia, Peru and Nigeria.
Preambular paragraphs 21 to 25 of the new EU Directive 2015/2436 of
16 December 2015 to approximate the laws of the Member States relating
to trademarks state that:
"(21) In order to strengthen trade mark protection and combat
counterfeiting more effectively, and in line with international obligations
of the Member States under the World Trade Organisation (WTO) framework,
in particular Article V of the General Agreement on Tariffs and Trade
on freedom of transit and, as regards generic medicines, the 'Declaration
on the TRIPS Agreement and public health' adopted by the Doha WTO
Ministerial Conference on 14 November 2001, the proprietor of a trade
mark should be entitled to prevent third parties from bringing goods,
in the course of trade, into the Member State where the trade mark
is registered without being released for free circulation there, where
such goods come from third countries and bear without authorisation
a trade mark which is identical or essentially identical with the
trade mark registered in respect of such goods.
"(22) To this effect, it should be permissible for trade mark
proprietors to prevent the entry of infringing goods and their placement
in all customs situations, including, in particular transit, transhipment,
warehousing, free zones, temporary storage, inward processing or temporary
admission, also when such goods are not intended to be placed on the
market of the Member State concerned. In performing customs controls,
the customs authorities should make use of the powers and procedures
laid down in Regulation (EU) No 608/2013 of the European Parliament
and of the Council, also at the request of the right holders. In particular,
the customs authorities should carry out the relevant controls on
the basis of risk analysis criteria.
"(23) In order to reconcile the need to ensure the effective
enforcement of trade mark rights with the necessity to avoid hampering
the free flow of trade in legitimate goods, the entitlement of the
proprietor of the trade mark should lapse where, during the subsequent
proceedings initiated before the judicial or other authority competent
to take a substantive decision on whether the registered trade mark
has been infringed, the declarant or the holder of the goods is able
to prove that the proprietor of the registered trade mark is not entitled
to prohibit the placing of the goods on the market in the country
of final destination.
"(24) Article 28 of Regulation (EU) No 608/2013 provides that
a right holder is to be liable for damages towards the holder of the
goods where, inter alia, the goods in question are subsequently found
not to infringe an intellectual property right.
"(25) Appropriate measures should be taken with a view to ensuring
the smooth transit of generic medicines. With respect to international
non-proprietary names (INN) as globally recognised generic names for
active substances in pharmaceutical preparations, it is vital to take
due account of the existing limitations on the effect of trade mark
rights. Consequently, the proprietor of a trade mark should not have
the right to prevent a third party from bringing goods into a Member
State where the trade mark is registered without being released for
free circulation there based upon similarities between the INN for
the active ingredient in the medicines and the trade mark."
According to trade officials, the EU pointed to its notification of
the Directive (2015/2436 of 16 December 2015), and said the new changes
will make the trademark system across Europe more efficient.
According to the EU, the Directive entered into force in January 2016,
and EU member states will need to transpose it into national law by
14 January 2019.
The EU said that the Directive is intended to harmonise the different
practices of EU member states with regards to their national trademark
system.
According to trade officials, Brazil said that possible restrictions
on legitimate concerns can arise because of this Directive.
It said that the issue of abuse of intellectual property rights for
shipments in transit had already been brought up in the TRIPS Council.
It cited in this context the shipment of generic medicines from India,
which was unlawfully detained in the Netherlands.
It noted that both Brazil and India had voiced concerns about blocking
lifesaving medicines, which were needed for the Brazilian public.
Consultations had taken place with the EU on this.
Brazil is aware that there are damages arising from counterfeiting
but these shipments should not be subject to unnecessary delays.
According to trade officials, India was of the view that some provisions
in the regulation would allow the EU to authorise confiscation and
seizure of goods which originate from one country and destined for
a third country while in transit in the EU, and without evidence that
the product would be imported into the EU market.
This would have a profound impact on access to affordable medicines
as currently set out in this EU trademark legislation, it underlined.
According to India, it appears that there is an exception in the Directive
created for the purpose of generics, but it is limited to ingredients
and not for actual generic medicines in transit.
India noted the incident (seizure of generic drugs in transit) that
happened in the Netherlands in 2008, and said that it does not want
this to happen again.
Pointing out that the Directive on trademarks appeared to violate
provisions of the TRIPS Agreement, to the extent that the measures
in question fail to make a categorical distinction between goods in
transit and those that are not, India said it has serious concerns
over the new EU regulation, and mentioned amongst others Article 51
of the TRIPS Agreement.
India urged the EU to address these concerns.
South Africa expressed concern that various aspects of the EU package
impact goods in transit and allowed the EU to authorise the confiscation
of goods not destined for EU markets without adequate evidence. This
could profoundly affect access to affordable medicines.
The statement by the EU that interception of shipments will only take
place if the trademarks are identical to protected trademarks raised
a lot of questions, said South Africa, adding that it will burden
the holder of these goods and impede international trade in that respect.
China said the new EU trademark legislation will potentially create
risks and uncertainties in international trade, particularly for goods
in transit.
It pointed out that the TRIPS Agreement sets out benchmark obligations
to protect intellectual property rights, and that any unilateral measures
need to take account of multilateral rules.
The inappropriate actions against goods in transit will create a burden
and unnecessary restrictions on legitimate international trade including
generic medicines, it said.
China asked the EU to take its concerns into account.
According to trade officials, Indonesia shared the same concerns expressed
by Brazil, India, South Africa and China.
In response, the EU said that the purpose of these new measures was
to combat illegal traffic in counterfeit goods. It was certainly not
to target in particular pharmaceuticals, it maintained.
The EU said that the new directive on trademark protection contained
specific provisions to prevent undue detention of pharmaceutical shipments
in transit.
It said that there seems to be considerable confusion created between
counterfeits and generics, as the separation between these two types
of products is very clear.
It maintained that the seizure of shipments of medicines in the Netherlands
eight years ago has never been repeated.
According to the EU, it is totally unrelated (to trademark infringement)
and the previous incident concerns suspected patent infringements.
In the meantime, the EU said, measures have been taken so that this
incident will not be repeated, and it has not been repeated.
The procedures under its directive are not that much different than
what currently exists in Brazil where it also allows the same customs
action against illegal goods, it claimed.
The EU further said that it does not know where this idea came from
that seizures (of shipments of goods in transit) can take place without
evidence, adding that a quick look at its legislation clarifies that
this is not the case. It is obvious that evidence would be required.
According to trade officials, there were no other interventions from
the floor on the EU's new directive.
NON-VIOLATION AND SITUATION COMPLAINTS
Meanwhile, discussions took place, both in formal and informal modes,
on the possibility of bringing TRIPS non-violation complaints to the
dispute settlement.
According to trade officials, the US and Switzerland maintained that
such complaints should be allowed.
However, many members - Brazil, China, India, Ecuador, Indonesia,
Bangladesh, Cuba, Russia, Egypt, Colombia, and Nigeria for the African
Group - in line with a May 2015 proposal (IP/C/W/ 385/Rev.1), underlined
that non-violation complaints should not be allowed under the TRIPS
Agreement.
According to trade officials, India said its position is well-known
and remains unchanged. It would like to see non-violation complaints
be not applicable to the TRIPS Agreement.
India also said that it does not support the idea of a Chair or the
Secretariat coming up with 'non-papers' suggesting possible scope
and modalities.
This is a member-driven organisation, and the demandeurs for such
a provision should come up with their own proposal, India said.
India said that it along with many other countries, was a co-sponsor
of the proposal in document W/385. Given that this had wide support,
there is no scope for the Chair or the Secretariat coming up with
any suggestions.
Nigeria, for the African Group, said that it agreed that the TRIPS
Agreement provides minimum standards for protection of intellectual
property.
However, application of non-violation complaints would curtail flexibilities
on access to medicines, it said.
It agreed with Peru, that Peru's paper (W/607) would form a good basis
for discussions on the matter.
[In a communication dated 24 July 2015, Peru, on behalf of Argentina,
Bolivia, Brazil, China, Colombia, Cuba, Ecuador, Egypt, India, Indonesia,
Kenya, Malaysia, Pakistan, Russian Federation, Sri Lanka and Venezuela
had submitted a draft decision on "Non-violation and situation
complaints" for consideration at the 10th Ministerial Conference
of the WTO (held in Nairobi last December).
[The draft decision states: "We take note of the work done by
the Council for Trade-Related Aspects of Intellectual Property Rights
pursuant to our Decision of 11 December 2013 on "TRIPS Non-Violation
and Situation Complaints" (WT/MIN (13)/31);
["After having examined the issue of the scope and modalities
for complaints of the types provided for under subparagraphs 1(b)
and 1(c) of Article XXIII of GATT 1994, the 10th Ministerial Conference
decides that those provisions of GATT 1994 shall not apply to the
settlement of disputes under the TRIPS Agreement."]
[Members at the tenth Ministerial Conference in Nairobi last December
have agreed to extend the moratorium on non-violation complaints until
the next ministerial conference in 2017.
[The Nairobi Ministerial Decision of 19 December 2015 states: "We
take note of the work done by the Council for Trade-Related Aspects
of Intellectual Property Rights pursuant to our Decision of 7 December
2013 on 'TRIPS Non-Violation and Situation Complaints' (WT/L/906),
and direct it to continue its examination of the scope and modalities
for complaints of the types provided for under subparagraphs 1(b)
and 1(c) of Article XXIII of GATT 1994 and make recommendations to
our next Session, which we have decided to hold in 2017. It is agreed
that, in the meantime, Members will not initiate such complaints under
the TRIPS Agreement."]
According to trade officials, Canada and Korea also voiced concerns
about bringing non-violation complaints under TRIPS.
According to trade officials, the Chair of the TRIPS Council, Ambassador
Modest Jonathan Mero of Tanzania, said that he had intended to put
forward a paper in order to help overcome the decades-long deadlock
on the issue, but that this did not receive consensus support as some
delegations believe the process should be entirely member-driven.
On the "triplet" of issues - biotechnology, biodiversity,
and traditional knowledge - the Chair said that while constructive
discussion took place, positions have not evolved, neither in terms
of substance nor procedure.
According to the Chair, a number of members reiterated their position
that a proposed 2011 decision to enhance mutual supportiveness between
the TRIPS agreement and the Convention on Biological Diversity (CBD)
should be the basis of further discussions, and that the CBD secretariat
should be invited to brief WTO members on developments regarding the
convention.
According to trade officials, the Chair said that none of the suggestions
garnered full support of the membership.
On the issue of E-commerce, which was on the agenda of the TRIPS Council
meeting, Canada said that the General Council had established a work
program on electronic commerce in 1998 to be carried out by relevant
WTO bodies, including the TRIPS Council, with discussions on e-commerce
issues taking place within the TRIPS Council between 1998 and 2003.
Noting the Nairobi Ministerial Decision to "reinvigorate the
regular work" of the WTO committees, Canada asked members to
consider possible approaches for re-engaging in discussions under
the e-commerce work programme at the TRIPS Council.
Canada said that the discussions could allow Members to share national
experiences and practices on IP and e-commerce issues in light of
the rapid growth in digital technology and telecommunications as facilitators
of commerce.
According to trade officials, India cautioned against any broad interpretation
of the mandate, and said that talks should be of an exploratory nature
only.
A number of delegations also said they did not want e-commerce to
be a standing item on the agenda of the TRIPS Council. It should be
dealt with on an ad hoc basis, they said.
According to trade officials, the Chair made what he said is a "minor"
procedural suggestion that more extensive use be made of the possibility
to hold parts of the TRIPS Council meeting in informal mode.
According to the Chair, reverting to informal mode would have the
"clear advantage of encouraging an open and stimulating discussion
in which delegates would not feel compelled to be limited to simply
putting well-known positions on record".
Ambassador Mero said his impression, which was shared by many delegations
he spoke to, was that "after over twenty years of work on a relatively
static agenda, it would be timely to have a fresh look at how the
Council manages its agenda and to consider the possibilities for adapting
its working procedures."
"It's time for me and you to do something about it," the
chair said, adding that members "can't feel good" about
discussions that have, in some cases, not advanced in decades.
According to the Chair, the informal discussions he had organized
last week showed that delegations appeared to be generally supportive
of the idea.
