Dutch minister admits to flaw in EC rule

Dutch minister admits to flaw in EC rule
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First Published: Tue, Feb 10 2009. 01 26 AM IST

Updated: Wed, Feb 11 2009. 10 04 AM IST
New Delhi: Dutch trade minister Frank Heemskerk has admitted to a flaw in a key European Commission (EC) regulation that has given European customs authorities scope to hamper free trade under the guise of protecting patent rights.
Heemskerk met Indian commerce and industry minister Kamal Nath in New Delhi on Tuesday.
Nath said he had raised these issues with his Dutch counterpart after a series of seizures of inexpensive Indian generics medicines at ports in the Netherlands on the way to developing countries in Latin America.
At least five such cases are known to have occurred over the past four months.
The Indian minister also added that the Dutch government has assured him that it would “look into the matter in the context of GATT (General Agreement on Tariffs and Trade)”.
Heemskerk added that the Netherlands “supports TRIPS”. He also admitted that the seizure of the consignments “was a technical error on the EU (council) regulations, and we will sort it out”. He added that “patent protection is important but should not be misused to hamper access to generic medicines”.
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The agreement on Trade Related Aspects of Intellectual Property Rights, or TRIPS, is a global agreement to establish minimum norms on intellectual property (IP) in the countries that are members of the World Trade Organization (WTO), while ensuring that these norms or related measures themselves do not become barriers to free trade.
Mint has been reporting on a recent increase in seizures in EU of generic drugs consignments in-transit on suspicions of patent infringement, even though these were neither patented in the country from where they were shipped (India) nor in the destination (Latin American countries). The issue gained global momentum after a consignment of one of India’s largest generic drug manufacturers, Dr Reddy’s Laboratories, or DRL, that was en route to Brazil, was seized in December by the Dutch customs authority.
While Brazil aggressively opposed the move by the Netherlands at a World Health Organization executive board meet in January, the matter was also raised by India and Brazil at the WTO meet on 3 February.
The EC then denied that the consignment was “seized” and said it was “temporarily detained” and that the detention was in line with Dutch and EC laws, which are fully consistent with Article 51 of TRIPS and Article V of GATT.
The EU customs can, on the basis of a 2003 EC regulation, detain goods in transit if they suspect violation of an IP right, including a drug patent.
However, Article 51 of TRIPS says there’s no obligation to apply such procedures, among other things, to goods in transit. This means there’s scope for countries to interpret if their measures to protect private IP rights is hampering free trade.
Responding to the EC’s statement, a DRL spokesperson said in an email response: “To the best of our information and belief, the submission of the EU that the Dutch authorities had ‘temporarily detained’ and not seized the consignment is misleading. Lovells, the attorneys of EI DuPont Nemours and Co. and Merck and Co., have stated in their communication of 24 December 2008 to us that ‘The release of...(Losartan) was suspended on the basis of Council Regulation dated 22 July 2003’.”
The problem seems, therefore, to lie with the contentious EC regulation in light of what international agreements say.
As R.V. Anuradha, a lawyer specializing in international trade law and partner at New Delhi-based Clarus Law Associates said: “The TRIPS Agreement does not unequivocally preclude suspension of goods in transit. However, an arguable case can be made out since there are two rights to be balanced here: (i) the protection of IPRs of rights holders in one’s territory; and (ii) the freedom of transit of goods not intended for one’s territory, especially when such goods are legitimate under other principles of international law, and the country of exportation and importation.”
While the Dutch authorities now promise to evaluate their interpretation of these laws, the EC also did acknowledge an interpretation problem at the 3 February meet.
Anuradha added, “The EC seems to recognize (in its WTO statement) that a country of transit cannot insist on its IPRs for goods not intended for its territory. There is sufficient basis within the TRIPS and the GATT agreements to argue that a country of transit cannot insist on extra-territorial enforcement of its IPRs.”
Graphics by Sandeep Bhatnagar / Mint
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First Published: Tue, Feb 10 2009. 01 26 AM IST