[Ip-health] Revised EC Customs Regulation - Passing the Buck

Baker, Brook b.baker at neu.edu
Thu May 26 08:07:57 PDT 2011

Following extensive criticisms from AIDS, human rights, IP, and health activists and a WTO Complaint by India and Brazil, the EC undertook to reform its notorious regulation EC 1383/2003.  If the purpose of the reform was to stop the illegal practice of intercepting lawful generic medicines, the proposed new regulation has failed miserably, although it has succeeded in passing the buck to individual countries whose IP legislation continues to allow seizure of medicines for fictitious patent violations (using the manufacturing fiction) and in creating procedural requirements that might deter spurious enforcement applications by Big Pharma.

Problems with the proposed regulation include:

1.  The regulation covers all intellectual property rights, including patents and patent extensions, Art. 2(1)(e) &(f).
2.  The definition of "goods suspected of infringing an intellectual property right [including patent rights" merely requires that there be evidence that would satisfy customs authority that the goods are prima facie subject to an action infringing an intellectual property right under the law of the Union or of that Member State, Art. 2(7)(a).  Although this language is somewhat confusing , its main import is that the law of individual EU Member States will continue to apply apply.  (The applicable law is clearly that of the Member State where the goods are found, Art. 3; moreover, the proposed regulation does not affect in any way the laws of Member States, Art. 1.3.  Accordingly, if a country maintains the patent-manufacturing fiction, 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.
3.  The exhortation for customs authorities to acknowledge the Doha Declaration, to acknowledge transhipment as occurring within the context of international trade, and to "take account of any substantial likelihood of diversion [of medicines] onto the market of the Union" has no teeth as it is only preambular and has no meaningful definition of how the likelihood of diversion is to be established.  Preamble (17).
4.  The requirement that patent right holders (and other IP right holders other than the owners of trademark-related non-counterfeiting rights or of non-pirating copyright rights) apply for a court decision determining that a patent right has been violated does not prevent pre-determination seizure either upon application of the right-holder or sua sponte by the customs authority.  Admittedly, there are many new procedural requirements in place, e.g., notice and opportunity to object (Art. 16..3, Art. 17.3), costs borne by the right-holder, and liability if the goods are not rights-infringing (Art. 21), these do not totally ameliorate the problem.  The presence of increased procedural safeguards (opportunities to be heard and to object and reverse charges/liability in case of unproven or dropped claims) may deter Pharma applications, but does not prevent them.  In addition, the alleged infringer, in order to obtain release of seized goods, must still post security even when precautionary orders have not been obtained in court. Id.
5. By continuing to allow seizures even without application for alleged trademark infringements, the proposed regulation would not prevent the types of seizures that have previously occurred based customs officials' confusion over international generic names.

A better regulation would have excluded coverage of patents and/or excluded application of the manufacturing fiction.  It would have much more directly addressed the Doha Declaration and clarified that no customs action should be undertaken with respect to in-transit generic medicines lawfully produced in the country of origin and lawfully imported into the country of use.  Instead, the EC has attempted once again to pass the buck back to country-specific IP legislation and enforcement criteria.

I'm eager to hear what others think about the new proposal.

Professor Brook K. Baker
Health GAP (Global Access Project) &
Northeastern U. School of Law, Program on Human Rights and the Global Economy
Honorary Research Fellow, Faculty of Law, Univ. of KwaZulu Natal, SA
400 Huntington Ave.
Boston, MA 02115 USA
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b.baker at neu.edu<mailto:b.baker at neu.edu>

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