The WTO and “reproductive outsourcing” by US consumers to India?
The latest issue of the Journal of World Trade has an India-related article on an unusual topic. It examines the use of poor Indian women as surrogate mothers by rich Americans from a GATS perspective. The abstract is below. Haven’t read the paper yet but do plan to do so, and will comment on it here. My instinctive and non-academic preliminary response was some discomfort with the treatment of this issue from a trade law perspective. Wouldn’t a human rights or health framework be more appropriate for regulation in this area both in the US (the so-called service consumer) as well as in India (the so-called service-provider). Is gestational surrogacy a GATS “service”?
Here is the abstract:
Christina Stephenson, ‘Reproductive Outsourcing to India: WTO Obligations in the Absence of US National Legislation’ (2009) 43 Journal of World Trade pp. 189-208
Summary:
This article examines the World Trade Organization (WTO) obligations that inhere from US persons or couples contracting with Indian women for gestational surrogacy. Surrogacy contracts are considered in the context of the General Agreement on Tariffs and Trade (GATT) and the differing laws on surrogacy of different US states. By exploring WTO Appellate Body (AB), Panel and GATT Panel decisions, this article endeavors to determine what WTO obligations bind the US in circumstance of cross–border surrogacy contract. This article addresses how the varying state laws on surrogacy affect the WTO obligations of the US in market access, national treatment and most–favoured–nation (MFN) treatment. The article concludes that there are a variety of ways in which the different state laws have the capacity to violate US trade commitments in relation to international surrogacy contracts. In addition, the analysis serves to illuminate the process under which US trade obligations can be scrutinized to determine what commitments are relevant to a service not contemplated in the US Schedule.
Update:
Am still to read this article for the WTO angle, but a recent Indian Supreme Court decision seems to throw a child’s rights mantle over surrogacy at least in Indian domestic law.
Last year, a child was born to an Indian surrogate mother from Japanese parents. The Japanese couple separated and when the child was born, neither parent was in India except of course the natural birth mother.
A public interest habeas corpus petition was filed in the Rajasthan High Court. Eventually, the matter reached the Supreme Court when the Japanese grandmother filed a petition. The Supreme Court gave its decision on 29 September 2008. The decision is available at http://judis.nic.in/supremecourt/helddis.aspx
The Court in effect allowed the baby to leave India with the Japanese grandmother. It did this by stating that any concerns relating to the rights of the baby should be raised before the commission constituted under the Commissions for Protection of Child Rights Act, 2005, and noted that no complaint had been made before this Commission. The Supreme Court also went on to state that the surrogacy procedure "is legal in several countries including in India where due to excellent medical infrastructure, high international demand and ready availability of poor surrogates it is reaching industry proportions".
I find this Supreme Court decision very unsatisfactory. The Court was keen to let the baby leave India (which I don’t have an issue with), but it seems to have laid down the law here (that surrogacy is legal) in the absence of legislation and while a bill was pending before Parliament on the same issue. (See the Assisted Reproductive Technology (Regulation) Bill 2008.)
The Court also abdicated its constitutional responsibility to protect fundamental rights of a child by suggesting that the appropriate forum was the Commission under the Commissions for Protection of Child Rights Act, 2005.
Well, this whole surrogacy issue raises questions of citizenship, which mother’s name will go on the birth certificate under Indian law, immigration, reproductive rights, and child rights. Not too sure of the trade angle.
New blog category added for posts on recent Indian safety measures against Chinese toy imports
Due to the continuing interest in the discussion on the recent Indian measures against imports of toys from China on safety considerations (first the ban and then its revision to new mandatory safety standards), I have created a new blog category Indian safety measure for Chinese toys where all posts and comments on this issue can be accessed. I hope this will facilitate retrieval of information for those interested.
China criticizes new Indian mandatory standards for Chinese toys before TBT Committee
The Economic Times reported yesterday that China has raised the issue of the mandatory safety standards imposed by India on imported Chinese toys before the WTO Committee on Technical Barriers to Trade.
In its complaint to the WTO, China has alleged that India’s quality checks violate the condition of “national treatment” laid down under WTO’s trade rules as they did not apply to toys manufactured in India or imported from any other country.
In its submission to the WTO committee on technical barriers to trade, China pointed out that since the restrictions apply only to Chinese toys, it could be viewed as a general ban on and a discriminatory measure against Chinese toys.
This breached a series of fundamental principles embodied in the WTO agreement, including that of most favoured nation treatment (every member country will be treated on a par with other member countries), and national treatment (product from a member country will be given the same treatment as that given to a product made locally), along with provisions of technical barriers to trade (TBT) agreement.
China also pointed out that India did not inform WTO about the restrictions, a procedure necessary under the transparency obligations of TBT agreement.
“China strongly requests that India revoke its discriminatory and WTO-inconsistent restriction on Chinese toys immediately,” the submission stated.
So China is alleging that even the revised Indian notification violates both MFN and national treatment. Further, it violates the notification requirement in the TBT agreement. For more background, see earlier posts on this subject under the category –public health. See http://indiainthewto.wordpress.com/2009/03/02/indian-government-relaxes-ban-on-chinese-toy-imports/
Why did the Indian government not use Clause 2.10 of the TBT agreement permitting the issue of safety standards in urgent cases with post-facto notification to the WTO secretariat and other members? Such a notification requires the statement of objectives and the rational for the standards. India will probably argue that these are international standards not requiring notification, but the application of these standards exclusively to imports from China does raise potential violations of MFN and NT.
The Indian authorities could have avoided a lot of trouble if only they had also followed the letter of WTO rules in this matter. The flexibility to take action against imports for safety reasons is fully available, but the Indians seem to have messed up on procedure. Is this an example of lack of capacity in Indian government institutions to use the WTO rules effectively? Why do they not consult lawyers more?
The Hindu meanwhile has an interesting take on the matter:
China is likely to convey its concern to India over New Delhi trying to restrict import of Chinese goods, even though Beijing has not "yet" dragged its neighbour to the World Trade Organisation on the issue.
Chinese Vice Minister of Commerce Zhong Shan is expected to convey his country’s strong resentment over India resorting to protect its industry against imports from China, when he meets Commerce Secretary G K Pillai here this week, sources said.
"We have nothing on this yet," WTO spokesperson said in an e-mail from Geneva when asked whether China has lodged any formal complaint against India. China was upset over India slapping a ban on import of Chinese toys on January 23, which was partially eased within six weeks, provided the toys conformed to international health and safety standards.
The official Chinese media had reported that the country was mulling to drag India to WTO for contesting the ban. However, Mr. Pillai is expected to confront Mr. Zhong with data showing surge in imports from China.
While the bilateral trade has seen a sharp rise in the fiscal 2008-09, it is highly skewed in favour of China. In 2007-08, India’s exports to China stood at USD 10.83 billion, while imports was USD 27.11 billion.
So why would Indian Commerce Secretary talk to the Chinese about surging imports in a matter to do with safety issues? To be fair, the discussions between the Indian Commerce Secretary and the Chinese Vice Minister of Commerce will likely cover all the recent trade tensions between the two countries. And the discussion of import surges will probably feature in that context.
Text of Indian statement on Generics seizure before TRIPS council
INTERVENTION by INDIA at TRIPS Council meeting on 3 March 2009
Agenda item ‘M’ – OTHER BUSINESS – Public Health dimension of TRIPS Agreement
Chair,
My delegation would like to draw the attention of Members to developments which undermine the public health dimension of TRIPS Agreement. In the last few months, several consignments of Indian generic drugs have been seized in transit at EC ports. We made an intervention on this issue in the General Council meeting of February 3, 2009. The intervention has been made available to Members at the back of this room.
I will like to mention that my government has taken up the issue bilaterally with the EC and the Dutch Government to urgently review the relevant regulations and the actions of the national authorities based on such regulations, and bring them in conformity with the letter and spirit of the TRIPS Agreement, the rules based WTO system and the DMD on Public Health. We are still awaiting a response.
In addition to the salient aspects of our intervention in the General Council, we would like to make some specific points today in the context of TRIPS Council. Dutch customs authorities have ‘confiscated’ these consignments on grounds of alleged violations of domestic patents and trademarks. This is not a case of ‘temporary detention’ since some consignments continue to be held for over months. Moreover, procedures for their destruction were also initiated. Four such instances have come to the notice of my Government and all these four instances have been reported from the Netherlands. These consignments were headed for Brazil, Peru and Colombia. While one consignment has been returned to the exporter after being held for over a month, the fate of the other three is still unclear. We pointed in GC last month about the consignment of losartan seized in transit in the Netherlands while it was headed for Brazil. The generic drug in question was perfectly IP legitimate generic drug in both India and the destination country. Also, trade of generic drugs is perfectly legitimate.
The action of the Netherlands customs authorities to seize generic drugs, traded between developing countries in full conformity with international disciplines, runs counter to the spirit of the TRIPS Agreement and the resolution 2002/31 of the Commission on Human Rights on the right to enjoy the highest standards of physical and mental health. Measures of this nature 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. 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. MSF has recently stated that they regularly transport and temporarily store medicines in Europe, en route to users in developing countries. In a letter to the EC Trade Commissioner, MSF has expressed concern over the potential consequences of the seizure of medicines in transit in the EU, which are destined for developing countries. MSF has also asked the EC to clarify its position regarding the implementation of the EC Regulation No 1383/2003 with regard to pharmaceutical products.
In addition to going against the spirit of a rules based trading system and impeding free trade, such acts represent a distorted use of the TRIPS Agreement and the international IP system and circumscribe flexibilities enshrined in TRIPS. Let me elaborate.
Article 41.1 of TRIPS provides that enforcement procedures “shall be applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse” and Article 41.2 provides that the procedures shall be “fair and equitable.” These are ‘General Obligations’ which run through Part III of TRIPS Agreement on Enforcement of IPRs. As I just said, trade of generic drugs is perfectly legitimate. Measures taken by Dutch authorities, clearly, create barriers to such legitimate trade, particularly where there is no risk of diversion to the internal market.
Members have always strived for a balance between public health concerns and protection and enforcement of IPRs. The Doha Ministerial Declaration on TRIPS and Public Health recognized “the gravity of the public health problems afflicting many developing and least-developed countries” and stressed “the need for the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) to be part of the wider national and international action to address these problems.” In Paragraph 4 of that Declaration, WTO members agreed that “the [TRIPS] Agreement can and should be interpreted and implemented in a manner supportive of WTO Members’ right to protect public health and, in particular, to promote access to medicines for all.” We are aware of EC’s stated commitment to the full implementation of the Doha Declaration on TRIPS and Public health and the WTO August 30th decision. Measures taken by the EC therefore, create serious confusion in our minds.
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. Among other things, the implementation of the WTO’s Decision of 30 August 2003 regarding the export of pharmaceutical products to countries with inadequate manufacturing capacity (the Para 6 system), will become even more problematic if patent rights, which are territorial by definition, are enforced for goods in transit. As it is, the Para 6 system has been used only once so far in the last five years.
The concept of ‘territoriality’ is a key stone in the edifice of the TRIPS Agreement. There are no indications that the drug consignment was meant for the markets of the EC. Seizure, and initiating procedures for destruction of such consignments, violates this key principle.
The WTO rules based system provides for freedom of transit by the most economical and convenient routes and without unnecessary delays and restrictions. The act of seizure by the Dutch authorities is therefore, a denial of the rules based system which we seek to build and strengthen in the WTO. Repeat of such actions may have an impact on exporters’ choice of transit routes, which may affect the economics of trade of pharmaceutical products and consequently, have a deleterious effect on access to essential drugs and public health budgets of recipient countries.
My delegation would also like to draw the attention of Members to another trend that is acquiring huge dimensions. This is the effort to implement the protection and enforcement of IPRs in a maximalist manner and thereby upset the delicate balance between rights of IPR holders and the public policy objectives under the TRIPS Agreement. A coordinated approach is being witnessed in several international fora like the World Customs Organisation, World Health Organisation, Universal Postal Organisation etc. to promote the IP maximalist agenda. We also note with dismay efforts by some Members to link safe and efficacious but low cost generics with counterfeit medicines, which is essentially an IPR issue. There is an attempt to enlarge the definition of counterfeits beyond its definition in the TRIPS Agreement, to set maximalist enforcement norms, and to include TRIPS plus provisions in RTAs. These are subtle and concerted ways of circumscribing the flexibilities of the TRIPS Agreement. They also run counter to the spirit of the TRIPS Agreement which is a minimum standards agreement. And, this is certainly counter to the understanding given to developing countries when the TRIPS Agreement was being negotiated.
Mr. Chairman, India attaches the highest importance to protection and enforcement of IPRs in accordance with the TRIPS Agreement. However, we do not see the Agreement as divorced from the Objectives and Principles set out in Art 7 and 8 of the Agreement. Efforts to enshrine new, maximalist TRIPS plus provisions in other forums will seriously undermine the delicate balance in the TRIPS Agreement and raise systemic issues.
Mr Chairman, my delegation will like this Council to take note of these points.
———————————————————
Agenda item ‘M’ – OTHER BUSINESS – Effective operation of Para 6 system.
India has always been of the view that the Doha Declaration on TRIPS and Public Health constituted a major landmark in the short history of the WTO because it recognized the primacy of public health needs and the sensitivity of this organization to the problems faced by the poor in the less developed countries. Alongwith several other Members, India worked relentlessly on DMD on Public Health (2001) and the Decision of August 30, 2003 on implementation of Para 6 of the DMD.
The hope was that the Aug 30 Decision would genuinely and completely address the problems faced by WTO Members with insufficient or no manufacturing capacities in the pharmaceutical sector to address public health problems. It may have sounded prophetic at that time when India voiced certain apprehensions in the GC meeting of August 2003. India sounded a word of caution and hoped that “the results accruing from this mechanism would not be negated by the creation of cumbersome systems that would lead to huge delays in getting medicines across at reasonable cost to those that needed them or discourage Members from using the system for the benefit of the people. In order to make this system successful, a sincere collective effort was required on the part of all Members and the entire pharmaceutical industry.” Regrettably, we have been proven right.
We note from our collective experience of 5 years that the export of HIV/AIDS drug "ApoTriavir" by the Canadian pharmaceutical company Apotex to Rawanda in Sept 2008 was the first and only use of the Para 6 system. Here too it took the Company 3 years to supply the medicine. It is time for reflection on the obstacles to use of the system. The Para 6 system, it may be recalled, was supposed to be an ‘expeditious solution’ to the crisis in access to medicines by countries with insufficient or no manufacturing capacity.
Paragraph 8 of the waiver Decision provides that “the Council for TRIPS should review annually the functioning of the system set out in the Decision with a view to ensuring its effective operation and should annually report on its operation to the General Council.” During the 5th Annual Review in the last Council meeting, factual information regarding the implementation and use of the 2003 Decision and the acceptance of the Protocol Amending the TRIPS Agreement was circulated. There was limited discussion on why the Para 6 system had been used only once in the last 5 years. My delegation would call for a wider discussion on legal, procedural, commercial or other obstacles to the ‘effective operation’ of the Para 6 system. In this connection we would request the Chair to consult with concerned Members in order to ascertain the obstacles and prepare recommendations for effective implementation of the Para 6 system. These recommendations could then be considered in the year end meting of the TRIPS Council as a part of the Annual Review.
India, Brazil raise EU seizure of generics in transit in TRIPS council
The Economic Times reports:
… The EU defended the actions of the Dutch authorities, claiming they were acting for the “benefit of mankind”, and said it would continue to do so, as the issue of counterfeit drugs is a public health issue. The EU Customs regulations are in complete conformity of the TRIPS agreement and the WTO disciplines. The European Commission claimed that one-third of the four million counterfeit medicines seized by EU authorities come from India.
Brazil stated that though both countries brought up what they considered was a serious violation of WTO rules at the General Council, as the TRIPS council was the forum dealing with intellectual property matters it could give a better analysis of the factual circumstances of the episode and legal implications. Seizure of goods in transit, regardless of if they were medicines or not, on grounds that they could violate IP rights registered in the country of transit, violates the GATT Article V and other GATT obligations. It is up to Brazil, and not any other country, to inspect whether the goods that Brazil was purchasing were substandard or fake.
Dutch authorities have been regularly acting ex-officio, based on EU procedures of 2003 on the infringement of IP rights, said Ambassador Roberto Azevedo, adding this was a case of extraterritorial application of Dutch patent rights.
Well, the EU is interpreting its action as an anti-counterfeiting exercise. I wondered in an earlier post about whether the EU seizure was an anti-counterfeiting action or an anti-infringement action. This clarifies that the counterfeiting issue was important. Here is a link to an earlier post that mentioned the ongoing disagreements surrounding the work of the WHO agency IMPACT or International Medical Products Anti-Counterfeiting Taskforce.
More posts on this issues can be found under the category public health
Prashant Reddy of SpicyIP has an interesting post on the Indian government’s position on the IMPACT negotiations, read here
India creates Traditional Knowledge Digital Library to fight bio-piracy
Indian scientists have completed an eight-year task of translating and compiling Indian traditional knowledge into a database (that lists over 200,000 treatments and extends to 30 million pages) to prevent patents being granted on this knowledge by overseas patent jurisdictions. The library which has an online home will be made accessible to patent examiners in the European Patent office to prevent attempts at patenting existing traditional knowledge. The EPO and the Government of India have entered into an access agreement that should be interesting to look at. Here is the news item from the website of the EPO:
India’s Traditional Knowledge Digital Library (TKDL): A powerful tool for patent examiners
On 2 February 2009 the Indian government granted access to its Traditional Knowledge Digital Library (TKDL), a unique database that houses the country’s traditional medical wisdom, to examiners at the European Patent Office (EPO).
EPO examiners will use the extensive database to prevent attempts at patenting existing traditional knowledge, a practice described as "bio-piracy".
The co-operation between India and the EPO comes at a time when many countries are struggling to protect traditional and respected knowledge against exploitation, primarily in the pharmaceutical sector.
"We take this seriously. Countries with rich traditional and holistic knowledge often have to spend lots of money on opposition procedures. The database could prevent that by helping the EPO to grant properly scoped patents", said Paul Schwander, Director of Information Acquisition at the EPO.
An improved patent granting process
Experts at the EPO say that access to the 30-million-page database will help to correctly examine patent applications relating to traditional knowledge.
"With the TKDL, examiners have improved access to background information at an early stage of patent examination", Schwander said. "In the old scenario, a patent may have been granted and the countries had to present evidence against it after the fact".
Prominent cases of patent disputes include a US patent on the wound-healing properties of turmeric (revoked in 1997) as well as an anti-fungal product from the Indian Neem tree (revoked in 2008). Both herbal practices were evidence of traditional knowledge and the patents were rescinded.
In both instances, the Indian government needed to prove that the patented methods were not novel and were based on traditional knowledge. The process to challenge the granted patents proved lengthy and cumbersome as some traditional knowledge had only been documented in Sanskrit or other ancient writings and thus required extensive translation.
With the advent of the TKDL however, the once onerous process has been transformed into an organised and objective system. The texts, many of which are hundreds of years old, offer extensive details about ancient medical practices and can now be accessed digitally.
Moreover, the TKDL has translated these texts – first written in Hindi, Sanskrit, Arabic, Persian and Urdu – into English, French, German, Japanese and Spanish, granting easier accessibility to examiners.
A unique encyclopaedia
The TKDL is the result of a US$ 2 million joint project between five Indian government organisations, including the Council of Scientific and Industrial Research (CSIR) and the National Institute of Science Communication and Informative Resources (NISCAIR).
Under the direction of Vinod Kumar Gupta, the head of NISCAIR, more than 150 experts in traditional medicine, law and computer science spent the past ten years arranging and classifying the TKDL.
Highlights of the vast database include:
- 54 authoritative textbooks on ayurvedic medicine
- Nearly 150,000 ayurvedic, unani and siddha medicines
- Over 1,500 physical exercises and postures in yoga, more than 5,000 years old
Protecting prior art
The TKDL allows examiners to compare patent applications with existing traditional knowledge. New patent applications need to demonstrate significant improvements and inventiveness compared to prior art in their field. If the medical use of an herb is a traditional practice, and thereby public knowledge, it is considered prior art under EPO regulations.
"Even if a treatment is only available in Sanskrit in an Indian library, it belongs to the prior art because it had been disclosed openly in the public domain at an earlier point in time", Schwander said.
If a company seeks to patent the medicinal use of an herb listed in the TKDL, EPO examiners conduct a thorough investigation. "In some cases this will lead to a reduction of the scope of the patent or its refusal", Schwander said.
However, the company may still be granted a patent on a new method for industrial-scale production of the active ingredient of the herb, for example, if this process is new and inventive, Schwander explained.
"The public may perceive this as bio-piracy, but there is a difference. The patent applicants would not claim ownership of the active ingredient itself. The scope would then be limited to a method of producing or isolating the ingredient".
Shedding light on gray areas
The TKDL is so precise that it lists the time, place and medium of publication for prior art. This new catalogue system, called the Traditional Knowledge Resource Classification (TKRC), ensures meticulous documentation.
The classification sheds light on what used to be considered gray area. Before the advent of the TKDL, any bio-prospector for a pharmaceutical company could dig up ancient medical wisdom and lay claim to the practice’s healing ability without consequence.
Now, thanks to the TKDL, patent examiners can prove exactly when and where a medical treatment became public knowledge, stymieing would-be bio-pirates.
A collection aimed at Patent Offices
Examiners at the EPO will use secure access methods to work with the TKDL. To measure efficiency, the EPO will count cases in which the database proved helpful.
Other countries have also opened their digital archives on traditional medical knowledge to EPO patent examiners. In 2008, the Chinese patent office (SIPO) granted the EPO access to its 32 000-entry database on traditional Chinese medicine.
"It’s a win-win situation for all involved. These databases help the EPO improve the relevance and content of prior art searches, while the countries holding traditional knowledge can protect their assets against misappropriation", Schwander said.
A Mint story gives more background:
The Indian government is also in talks with the US Patents and Trademark Office, or USPTO, to extend the initiative to that country.
The Council for Scientific and Industrial Research, or CSIR, India’s largest state-managed research agency, will begin sharing the home-grown catalogue with EPO later this month. CSIR and EPO recently signed an access agreement to this effect. This will likely result in at least 40 patent filings in Europe getting rejected, which could have otherwise passed muster.
“The EPO doesn’t give a patent for an invention which has already been known in public anywhere else,” Rainer Osterwalder, director, media relations, EPO, told Mint by email.
The Traditional Knowledge Digital Library, or TKDL, has been created by the National Institute of Science Communication and Information Resources, or Niscair, a CSIR body, and contains a 24-million-page searchable database that translates text from Sanskrit into English, German, French, Spanish and Japanese.
“TKDL provides a new major source…in technical fields that are sometimes concerned with questions of traditional knowledge,” Osterwalder said.
CSIR has collaborated with the health ministry’s department of Ayush (Ayurveda, yoga and naturopathy, unani, siddhi and homeopathy) to make this happen.
A CSIR official said that though 2,000 existing patents can now be challenged, there were no plans to initiate litigation. “This is meant as a deterrent…though technically we can initiate litigation saying that these patents are based on well-known formulations, it would be too expensive and long-drawn,” the official said on condition of anonymity.
“This is a very positive step for us in protecting traditional knowledge. It’s a big achievement,” Samir Brahmachari, director general of CSIR, said over the phone. The next step is to take this initiative to the US. S. Jalaja, secretary, department of Ayush, said: “This is a big breakthrough for us and we are also in talks with the United States Patent and Trademark Office for a similar agreement.”
This will likely result in at least 40 patent filings in Europe getting rejected
Patenting of products that are based on of India’s traditional knowledge has long been an issue the government has been struggling to resolve. In a widely reported case, EPO in 1995 granted a patent on the anti-fungal properties of neem. India opposed the patent, which was finally revoked and invalidated after 10 years of litigation. Again in 1995, USPTO had granted a patent on the wound healing properties of turmeric that was revoked in 1997.
“India did fight successfully the revocation of patent on wound healing property of turmeric at United States Patent and Trademark Office and (a) patent on anti-fungal properties of neem at European Patent Office,” Niscair director V.K. Gupta, who is also lead coordinator for the project, said in a 2006 report. “However…(a) legal battle on revocation is extremely expensive and time consuming.”
For anything to be granted a patent, the applicant must prove that it is novel and not previously known. “Indian traditional knowledge is prior art, which means it is already known publicly. Hence, once TKDL opens out to EPO, anyone applying for a patent on which we hold traditional knowledge will not be successful,” said Elizabeth Varkey, an advocate at the Kerala high court.
“Any patents that have been granted already and fall under TKDL can also be revoked, though that would be a long, expensive process,” she said.
EPO, however, is unsure of the extent to which TKDL will be applicable. “Many cases affected by aspects of traditional knowledge are occurring in the field of medicinal preparations. We estimate that at the EPO, about 100 patent applications per year are related to such aspects, but not all of them relate to subjects covered by TKDL,” Osterwalder said.
There is an argument that the database be used other ways too. “The government should also think about negotiating access rights (to TKDL) to private parties and other non-governmental entities. Given that the new chemical entities pipeline is drying up, innovators need to focus more on traditional knowledge that offer potentially unique insights for new drugs,” said Shamnad Basheer, professor of intellectual property law at the National University of Juridical Sciences, Kolkata.
“Also private parties could then challenge patent applications that misappropriate Indian traditional knowledge.”
The comment by Shamnad Basheer quoted above on granting access rights to private parties and NGOs is interesting but likely to raise issues of compensation for use of this knowledge by private parties. The codification of this knowledge in a repository owned by the government will have ramifications for who will now benefit from this.
Why India should issue a fresh notification giving reasons for the ban on chinese toy imports
Kamal Nath has clarified that the six-month ban on chinese toy imports into India was for public health and safety reasons. Reuters reports:
India’s trade minister said on Friday the government’s decision to ban imports of Chinese toys was taken on the grounds of public safety and the move was compatible with World Trade Organisation rules.
Last month, India banned imports of several types of toys from China for six months "in the public interest" but without giving further details of why, a move that pleased local manufacturers but shocked importers.
"The question of banning Chinese toys was on the grounds of public health and safety," Trade Minister Kamal Nath told reporters after a conference.
"It is a matter which is of public concern rather than commercial, and public concern has to be given priority over commercial concern," he added.
On Wednesday, the China Daily newspaper reported that China may ask the WTO to investigate the six-month import ban, citing a source close to the matter.
The Chinese government will probably ask the global trade regulator to look into whether the move violates its laws, the state-owned paper said, quoting a source who asked not to be named.
"Of course, it is for China to establish this," Nath said.
"We are fully compliant with WTO … Before we take any action we make it sure it is WTO compatible," he added.
To scotch any potential challenge or complaint from China, it would probably be advisable for the DGFT to issue a fresh notification imposing the ban but this time stating these reasons clearly in the notification. This would overcome any objection to the present notification on the ground that the absence of reasons violates principles of natural justice. Further, stating the public health interest in the notification itself will help counter allegations that the prohibition was issued for protectionist reasons. A fresh notification would pre-empt any challenge of the ban by way of writ petition by an Indian importer before a High Court or the Supreme Court of India. (Though the Foreign Trade Development and Regulation Act provides for appellate and revisionary jurisdiction, these provisions won’t apply here.)
For some background on Indian administrative law and Supreme Court rulings on the obligation to give reasons in support of administrative action when such action affects rights or liabilities see here. The statute under which the notification has been issued [the Foreign Trade (Development and Regulation) Act, 1992] can be found on the DGFT website here under the notifications link.
Indian statement on the generics seizure issue to the WTO General Council
India made the following statement to the General Council of the WTO in its intervention on the seizure of Indian generics (bound for Brazil) by the Dutch authorities:
WTO General Council Meeting February 03, 2008
INTERVENTION by INDIA (under agenda item ‘Other Business’)
Mr Chairman,
In the last few months, Dutch customs authorities have seized several consignments of generic drugs of Indian companies on grounds of alleged IP violations. Seizure of the consignment of losartan potassium in December, 2008 was one such case of what is emerging as a clear pattern. Such instances cause us great concern due to their systemic and far reaching implications. In addition to going against the spirit of a rule based trading system and impeding free trade, such acts represent a distorted use of the international IP system and circumscribe TRIPS flexibilities. Repeat of such actions may have an impact on exporters’ choice of transit routes, which may affect the economics of trade of pharmaceutical products and consequently, have a deleterious effect on access to essential drugs and public health budgets of recipient countries.
Losartan Potassium, used in treatment of hypertension, is a perfectly IP legitimate generic drug in both India and Brazil. Trade of such a drug is also perfectly legitimate. The WTO rule based system provides for freedom of transit by the most economical and convenient routes and without unnecessary delays and restrictions. The act of seizure by the Dutch authorities is therefore, a denial of the rule based system which we seek to build and strengthen in the WTO. The concept of ‘territoriality’ is a key stone in the edifice of the TRIPS Agreement. There are no indications that the drug consignment was meant for the markets of the EC. Seizure, and initiating procedures for destruction of such consignments, violates this key principle. Members have always strived for a balance between public health concerns and protection and enforcement of IPRs. The decisions on Public Heath are a valuable part of the WTO acquis and need to be adhered to in letter and spirit. 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.
Mr. Chairman, the importance of generic drugs and their essentiality may vary in inverse proportion to the level of development of a country. Therefore, high importance is attached to generic drugs in developing countries and particularly in the LDCs. Barriers to legitimate trade of generic drugs will seriously impair the efforts of organizations like the Medecins Sans Frontieres (MSF), Clinton Foundation, Bill and Melinda Gates Foundation and a whole lot of other organizations engaged in providing medicines and improving public health in the least developed parts of the world.
I would also like to draw the attention of Members to another trend that is acquiring huge dimensions. This is the effort to implement the protection and enforcement of IPRs in a maximalist manner and thereby upset the delicate balance between rights of IPR holders and the public policy objectives under the TRIPS Agreement. A coordinated approach is being witnessed in several international fora like the World Customs Organisation, World Health Organisation, Universal Postal Organisation etc. to promote the IP maximalist agenda. We also note with dismay efforts by some Members to link safe and efficacious but low cost generics with counterfeit medicines, which is essentially an IPR issue. There is an attempt to enlarge the definition of counterfeits beyond its definition in the TRIPS Agreement, to set maximalist enforcement norms, and to include TRIPS plus provisions in RTAs. These are subtle and concerted ways of circumscribing the flexibilities of the TRIPS Agreement. They also run counter to the spirit of the TRIPS Agreement which is a minimum standards agreement. And, this is certainly counter to the understanding given to developing countries when the TRIPS Agreement was being negotiated.
Mr. Chairman, India attaches the highest importance to protection and enforcement of IPRs in accordance with the TRIPS Agreement. However, we do not see the Agreement as divorced from the Objectives and Principles set out in Art 7 and 8 of the Agreement. Efforts to enshrine new, maximalist TRIPS plus provisions in other forums will seriously undermine the delicate balance in the TRIPS Agreement and raise systemic issues.
I would like to conclude, Mr Chairman, by reverting to the issue of seizure of various drug consignments by the Dutch authorities. We have raised the issue here with the expectation that the EC will urgently review the relevant regulations and the actions of the national authorities based on such regulations, and bring them in conformity with the letter and spirit of the TRIPS Agreement and the rules-based WTO system.
For statements made by Brazil and the EU, see here.
See previous posts on this issue click here.
New developments plus some background on the Indian ban on imports of Chinese toys
Whats new?
The China Daily reports that the Chinese government is considering complaining to the WTO DSB against the recent Indian notification that banned imports of Chinese toys but omitted to specify the reasons for the ban.
The Chinese government is mulling a response to India’s recent ban on Chinese toy imports and will probably ask the World Trade Organization to investigate whether the ban violates WTO laws, said a person close to the issue on condition of anonymity.
This comes after a similar move in which China asked the WTO to investigate anti-subsidy and anti-dumping duties imposed by the US on four categories of imports from China in December.
Experts said it is a sign that China will be leveraging WTO rules to help protect its manufacturers from illegal trade barriers and punitive measures by its trading partners at a time when protectionism is growing amid the global economic recession.
…
"The ban cannot hold water. The Indian side is doomed to lose in the court if the Chinese government appealed to the WTO Dispute Settlement Body," said Fu Donghui, managing director of Allbright Law Firm Beijing, which deals with WTO-related cases.
…
"In the past, the Chinese government always kept silent. But the situation is changing, and resorting to the WTO is a right choice to prevent the trade partners from abusing the WTO regulations," said Fu.
The notification issued by the Directorate General of Foreign Trade should be here but is not. GATT article X calls for prompt publication of such notifications "in such a manner as to enable governments and traders to become acquainted with them" No doubt the notification has been published in the official gazette, but it is not on the DGFT website. How are traders to find the notification?
Correction dated 7 January 2008: The DGFT notification is on their website here. For some reason did not find it before.
This report from a local mumbai news site has some more. Apparently, the notification mentions it is issued in public interest but gives no reasons as my earlier post had noted.
The notification "without reasons" clearly violates Indian administrative law as clarified by numerous Supreme Court decisions and could be challenged in an Indian Court by an importer or consumer of chinese toys. Further, even GATT article X:3(a) requires that WTO member governments administer their laws in a uniform, impartial and reasonable manner. The absence of reasons would seem to make out a case under this provision also.
There seems to be another problem with the notification. Apparently, and this is from news reports only, the notification bans direct imports from China but does not address imports of Chinese toys from third countries. This could also lay open the notification to legal challenge. The argument would be that the notification fails to achieve its objective of "safety" and the ban is being applied in a non-uniform manner.
Meanwhile, the Economic Times had reported earlier that the reason for the six month ban was to enable the government to formulate acceptable safety standards in this period. Why did the government not decide to issue emergency safety standards immediately? I suspect this was because many Indian toys would probably also have failed to comply. An Economic Times report noted that Indian toy manufacturers in the unorganized sector needed time to be able to comply with safety standards.
The background for this whole development seems to be a public interest litigation (PIL) that was filed before the Mumbai High Court by a consumer organization in 2007. The Maharashtra Pollution Control Board had apparently informed the Court in April 2008 that Chinese toys in India were found to contain unacceptable levels of toxins. See here. This PIL deals with both imported and Indian-made toys.
An outlook article has more on the lack of standards issue:
Following a report by Delhi-based NGO Toxics Link in 2006-07, highlighting the presence of toxic materials in a range of toys priced below Rs 150 ($3) found across the country, the Consumer Welfare Association of Mumbai filed the PIL. An added provocation was the government failure to check imports of ‘harmful’ toys. Says Rajiv Chavan, the advocate representing CWA, "There are two issues we have raised: the import of toys and the manufacturing of Indian toys." Indian toys meet around 50 per cent of the Rs 10,000-crore domestic market. According to Toxics Link, high levels of lead, cadmium and phthalates (a chemical used for softening plastics) can be found in most cheap toys—be they Indian or imported—bought by a majority of urban children. "How does the ban on Chinese toys protect consumers’ interest considering half the market is mostly cheap made-in-India toys with no control on quality," asks Ravi Agarwal of Toxics Link. "There is need for a mandatory standard to protect young consumers," he adds.
And spurred on by the judiciary, various ministries—consumer affairs, health, commerce, micro, small and medium enterprises (MSME)—have begun to study ways to enforce quality standards. The bad news: don’t expect safer toys in a hurry. Take, for instance, the norms put out by the Bureau of Indian Standards (BIS), which fall far short of global standards. While the European Commission had 11 safety standards for toys, India had only three—which deal with the mechanical and physical safety and flammability of toys. "The BIS calls these three standards equivalent to European standards…. But for other areas like organic, chemicals, paints and solvents used, we have nothing," complains A.M. Mascarenhas, secretary, Mumbai CWA.
Consumer affairs secretary Yashwant Bhave admits many issues are yet to be looked at. Though BIS has standards, "the issue is of making them compulsory", he says.The ministry is studying the legality of making the standards mandatory and whether it would require "mere notification or bringing in legislation", which would mean seeking Parliament approval. Pillai reveals there’s a proposal to make quality standards mandatory for certain products for young children. Simultaneously, the MSME ministry is studying ways to gradually introduce mandatory requirements to regulate toxicity of chemicals used in toys. "We have been told that in the first stage rules will be set for PVC and metal toys," says Ashok Jain, president, All India Toy Manufacturers Association. To support industry, more toy-testing labs will be set up (there are only four now).
Then, recently, the health ministry constituted a committee headed by Dr Y.K. Gupta of the AIIMS pharmacology department to study the veracity of the Toxics Link report. Says Dr R.S. Dhaliwal of ICMR and coordinator of the seven-member panel, "The health effects of metals are already known. What we are studying is the levels of toxicity in toys and its uptake or migration into the human body." While the domestic toy industry is ready to abide by better quality standards, this will take time: the court has been informed that the process to gauge levels of chemicals in toys can take up to two years.
Why can’t the government issue emergency safety and health standards under Article 2:10 of the agreement on technical barriers to trade?
India and TRIPS plus intellectual property rights
Latha Jishnu of the Business Standard has a very well-researched article recently on what she calls the "policy of encirclement" in the way TRIPS plus and TRIPS plus plus obligations are being pushed through in new international and forums where developing country resistance is not as strong as in the WTO, WIPO and the WHO. She writes about SECURE, which are voluntary new customs standards and best practices for intellectual property rights enforcement and are being formulated by the World Customs Organization (WCO).
That is, if a group of developed countries and their rights holders are successful in pushing through a clever initiative at the World Customs Organization (WCO) to lay down global norms and model laws for heightened protection of IP rights. Unsurprisingly, the majority of developing countries have been caught off guard by the move to push SECURE (Standards to be Employed by Customs for Uniform Rights Enforcement) simply because they did not expect WCO to be looking at IP issues. Besides, SECURE was not a member-driven initiative but put together by the secretariat of the 174-member organisation based in Brussels. SECURE, says the WCO, will be a set of standards, procedures, and best practices to coordinate the “global effort to suppress all kind of IP rights infringements”.
The most lethal provision of SECURE is that rights holders are not obliged to provide adequate evidence to show that there is prima facie an infringement to initiate action. This is not to be wondered at since rights holders (private industry associations) have been driving the agenda. Viviana Muñoz Tellez, programme officer for the Innovation and Access to Knowledge Programme of the South Centre in Geneva, has highlighted the “cosy relationship and role of right holder groups at the WCO” who were participating in the meetings at the same level as member-states. Shockingly, they have their own vice-chair in the SECURE working group.
Latha Jishnu points out the lack of Indian participation in the WCO on this issue and is scathing in her commentary:
India is once again missing in action. Bureaucratic and political apathy have been characteristic of India’s approach to critical trade negotiations, the country usually waking to a fait accompli, allege trade watchers. This has been specially so in the case of IMPACT (International Medical Products Anti-Counterfeiting Taskforce), a WHO-sponsored agency whose proposed regulations for stamping out counterfeit medicines would have had a lethal impact on India’s pharmaceuticals industry (see ‘Choking India’s generics exports’, Business Standard, January 29, 2009). Dilip Shah, secretary-general of the Indian Pharmaceutical Alliance, points out that although there was clear notice that IMPACT was planning a dangerous change in its definition of counterfeit goods, India had not participated in many working groups of IMPACT, “denying itself an opportunity to influence the outcome and thus faced with a definition of counterfeits that would harm its interests”.
As a developing country with a putative reputation for tough bargaining at the World Trade Organization (WTO), India’s officialdom needs to have its pulse on the processes being initiated in different forums by rich countries. Forum shopping is the name of the game: The agenda that cannot be successfully pushed in one forum is shifted to the next and the next till an objective —or part of it — is reached. Even an informal agreement on certain standards can be dangerous because it is then imported into the subsequent forum as a new standard. And as the SECURE proposal shows, even the most unlikely organisations can be used to promote the interests of the developed world and its industries.
Jishnu refers to a report by Professor Susan Sell of George Washington University which documents how "IP maximalists" are engaged in a relentless and multifaceted campaign in multiple forums to ratchet up IP protection and enforcement worldwide. Professor Sell’s report dated June 2008 can be accessed here
Annette Kur and Henning Grosse Ruse-Khan have an interesting paper on this titled "Enough is Enough: The Notion of Binding Ceilings in International Intellectual Property Protection" available on SSRN here. Annette and Henning propose a concept of maximum rights ceiling rules under TRIPS which would protect the flexibility and policy space under the TRIPS agreement from TRIPS plus standards being advocated by IP maximalists in other international forums and under developed country national regulation. Here is the abstract:
Traditionally, international agreements on IP rights are built on the concept of minimum protection which members must implement in their national laws. The concept implies that members are free to provide more extensive protection. However, that observation needs to be qualified in certain regards. First some agreements do contain provisions which seem to impose ceilings, i.e. maximum rights, or mandatory limitations. Examples for this are the express anchoring of the idea/expression dichotomy in TRIPS and the WCT, and the citation right to be found in Art.10 (2) Berne Convention. Furthermore, pursuant to TRIPS Art.1:1, more extensive protection may only be granted "provided that such protection does not contravene the provisions of this Agreement". In spite of that, the general perception in international IP regulation so far has been that above the prescribed minimum standards there is no ceiling or limit other than the sky. This construction results in a spiral movement – driven by bilateral agreements – towards ever-increasing levels of protection, and reducing the flexibilities and policy space left open under the TRIPS Agreement.
In this situation, the concept of maximum rights or ‘ceiling rules’ which provide for a binding maximum amount of IP protection WTO Members can offer in their national laws gains in importance: It might offer a way to ensure and maintain a balanced approach towards IP protection, and to protect members states’ autonomy in preserving public policy goals vis-a-vis pressure exerted against them in bilateral trade negotiations. However, as appealing as the concept may be, it also has potential drawbacks that must be thoroughly explored. This concerns substantive issues – such as the risk that to espouse the principle of maximum rules might reduce instead of enhance member states’ flexibilities – as well as institutional and procedural questions – in particular, how this would fit with the current WTO/TRIPS system. The paper will address those issues. In addition, the meaning and possible impact of existing maximum rules will be set forth, and initiatives will be presented which may give the concept of ceilings a broader range of application than to-date.
The relevance of the 1984 Indian Supreme Court decision in Gramophone Co for the present impasse on the EU seizure of generics in transit
There has been some discussion in the blogosphere on whether the Indian Supreme Court ruling from 1984 in Gramophone Company of India Ltd v. Birendra Bahadur Pandey and Others, [(1984) 2 Supreme Court Cases 534] supports the Dutch seizure of Indian generics bound for Brazil. See previous posts on this issue. The decision can be found here.
I do not agree with SpicyIP bloggers that this 1984 decision would help the Netherlands on the generics seizure issue. Before I set out my reasons, let me first quote the arguments made by SpicyIP that I disagree with.
Shamnad Basheer of SpicyIP writes on the International Economic Law and Policy blog:
However, countries may define import more broadly. And this is exactly what the Indian courts did in the Gramophone Company of India case that Brian cites in his post (involving pirated casettes to Nepal). We discuss this case in an article dealing with the infamous Novartis case and whether the Indian court was correct in ducking the TRIPS issue claiming it had no jurisdiction to rule on this. If you’re interested, is is available on SSRN: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1329201
In the Gramophone case, the Supreme Court interpreted "import" to mean any inflow into India, whether or not it was meant for the Indian market. Sample this extract from the court:
"36. It was submitted by the learned Counsel for the respondents that where goods are brought into the country not for commerce, but for onward transmission to another country, there can, in law, be no importation.
It was said that the object of the Copyright Act was to prevent unauthorised reproduction of the work or the unauthorised exploitation of the reproduction of a work in India and this object would not be frustrated if infringing copies of a work were allowed transit across the country. If goods are brought in only to go out; there is no import, it was said.
It is difficult to agree with this submission thought it did find favour with the Division Bench of the Calcutta High Court, in the judgment under appeal. In the first place, the language of Section 53 does not justify reading the words ‘imported for commerce’ for the words ‘imported’. Nor is there any reason to assume that such was the object of the legislature."
Since the term "import" has not been defined by the TRIPS agreement, a panel is more likely to defer to the concerned member states’ definition (within reasonable bounds of course). I’m therefore not entirely sure that a panel would necessarily interpret import in the restricted way that you envisage. Therefore, at least on this count, my own view is that the EC may prevail in a TRIPS challenge by India or Brazil.
His co-blogger on SpicyIP Prashant Reddy writes that India has also seized goods in transit in the past for IP issues. He goes on:
“In fact the irony is that India itself has been impounding shipments destined for Nepal whenever those transit shipments infringe Indian intellectual property laws. In the 1984 Supreme Court case of Gramophone Company of India v. Birendra Bahadur Pandey Indian custom authorities had impounded a shipment of pirated cassettes that were being sent through India to Nepal by a Singapore based company. The case eventually reached the Supreme Court and in an excellent judgment by Justice Chinappa Reddy the Court held that the term ‘import’ used in the Copyright Act covered the activity of transit. In para 39 of the judgment the Supreme Court held that
39. We have, therefore, no hesitation in coming to the conclusion that the word ‘import’ in Sections 51 and 53 of the Copyright Act means ‘bringing into India from outside India’, that it is not limited to importation for commerce only but includes importation for transit across the country. Our interpretation, far from being inconsistent with any principle of International law, is entirely in accord with International Conventions and the Treaties between India and Nepal.
…
Given the fact that India itself has defined ‘import’ as covering even those goods which are under ‘transit’ it is rather hypocritical of India to expect the E.U. to follow a different set of rules.”
Why do I think this old decision does not help the Netherlands case?
Well, first the Gramophone decision itself states in para 27 that “import” can mean different things in different places and takes color from the context where it occurs and that the sense of the statute is important. The Supreme Court expressly relied upon international opinion that protects copyright (para 29)as established by both international copyright and transit trade conventions. The Court ruled (para 29) “If this much is borne in mind, it becomes clear that the word “import” … cannot bear the narrow interpretation sought to be placed upon it to limit it to import for commerce. It must be interpreted in a sense which will fit the Copyright Act into the setting of the international conventions.”
This is the context in which the Supreme Court ruled that import would include importation for transit in addition to importation for commerce. The gramophone case dealt with copyright violation on which international opinion was clearly against such violations.
The present case is of patent infringement or alleged counterfeiting of generics. The policy context as well as international opinion as manifested by international law and treaties is completely different here. I think the Supreme Court (if this issue were ever to come before it) would take the different context into account and rule differently.
Both the export of generics by India and their import by Brazil are legal and supported by the flexibility provided under the TRIPS agreement in balancing public health and IP rights.
Second, and I will not discuss this here, the Gramophone decision is not in my opinion well-reasoned at all. It is dated and on many issues might not stand the test of time. Most obviously, it cannot be applied without modification to the TRIPS era and to the new IP regulation in India.
Are there any later Indian Supreme Court decisions after 1984? Prashant writes that “India itself has been impounding shipments destined for Nepal” but then only cites this one case from 1984.
I also have a question: Was the Dutch action based upon alleged patent infringement or on alleged counterfeiting?
Update
I have had an interesting discussion on this issue with Shamnad Basheer of SpicyIP on the International Economic Law and Policy Blog. I had posted the above post as a comment in the thread running there. For sake of continuty, here is the conversation:
Shamnad Basheer said…
Dear Seema,
Thanks for your post. I think you must keep my post/analysis on this issue (on this blog) separate and distinct from Prashant’s analysis on SpicyIP. As you will appreciate, although we’re part of the same blog, we think independently as well.
My short point in pointing to the Gramophone case was this: the term "import" does not have just one meaning. It is not defined in TRIPS. How then is it to be interpreted?
Henning makes some really valid points about how it might be differentially interpreted even within TRIPS keeping the context in mind. And you may perhaps be right (as Henning also argues) that given the context of Article 51, imports cannot include "in transit" consignments that violate patent rights..
ps: The Dutch action had nothing to do with counterfeiting–but was based on patents (to be best of my knowledge)
Reply January 30, 2009 at 04:31 AM
Seema Sapra said…
Dear Shamnad,
Mea culpa! I was responding to both Prashant’s SpicyIP post as well as your initial comment in this thread.
But leaving aside my references to Prashant’s post, my comment on the substantive issue of the relevance of gramophone was also addressed to your initial comment in this thread, when you wrote that:
“However, countries may define import more broadly. And this is exactly what the Indian courts did in the Gramophone Company of India case that Brian cites in his post (involving pirated casettes to Nepal). … Since the term "import" has not been defined by the TRIPS agreement, a panel is more likely to defer to the concerned member states’ definition (within reasonable bounds of course). I’m therefore not entirely sure that a panel would necessarily interpret import in the restricted way that you envisage. Therefore, at least on this count, my own view is that the EC may prevail in a TRIPS challenge by India or Brazil.”
But I agree with you that reference to domestic interpretations would be relevant, and that policy contexts would also determine the meaning of import.
Apparently there is an ECJ decision Montex Holdings Ltd. v. Diesel SpA (Case C-281/05), where the court held that there could be no infringement by virtue of goods merely passing through a member state if the goods are not in free circulation there. I get this reference courtesy a comment posted on SpicyIP. For the link see http://www.jenkins.eu/mym-spring-2007/keep-on-trucking.asp
This brings some more information to mind that I found while googling. Don’t know what to make of this or whether this would influence the issue we are discussing. According to http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=1907716:
“Spanish Court Finds in Favor of Stada in Generic Losartan Case Against Merck, Sharp & Dohme 10/4/2007
A high-level Spanish tribunal (APB) in Barcelona has found in favor of the Stada against Merck, Sharp & Dohme, a part of US drugmaker Merck & Co., in a case that followed the commercialization of Stada’s copycat version of the angiotensin receptor blocker Cozaar/Hyzaar (losartan).” Losartan is the very same product seized by the Dutch.”
Thanks for clarifying about whether the Dutch action was for patent infringement or counterfeiting. I ask because the EC regulation allows action for both and a lot of the news reports talk about the relevance of the WHO’s discussions on how to define counterfeiting. Plus I think I read somewhere quotes from some Indian pharma guys as well as Commerce Secy Pillai which mention the issue of counterfeiting in the context of the Dutch action. Let me see if I can dig up one of these reports again.
Reply January 30, 2009 at 05:27 AM
Shamnad Basheer said…
Dear Seema,
No worries. I think I might have made a mistake as well in assuming that the prospect of a successful TRIPS action by India was really weak. I am now reconsidering my position and have just shot off my initial thoughts to Bryan and Henning on private email. Once I am clearer on this, I will run another post on SpicyIP and I will look forward to your insights and inputs.
Reply January 30, 2009 at 08:22 AM
Shamnad Basheer said…
you’re also right abotu the fact that the WHO anticounterfeiting issue has been conflated with this issue. And I warn against this conflation in my very first interview with Mint on this theme. And yes, some EU cases suggest that the "transhipment" part of the EU council regulations have been read down–which might mean that India could moot a challenge in the EU courts itself. I am still studying these cases.
The whole thread can be accessed here.
More on the India generics seizure by Dutch authorities
Well, the issue has heated up now …
The background
Dutch authorities seized Indian generic exports of blood pressure drug bound for Brazil. The Dutch action took place under EC regulation 1383/2003.
Indian commerce secretary has described it as an act of piracy by the EU and both India and Brazil are threatening complaints to the WTO. See previous posts.
The Business Standard has a good story that provides some additional background information.
This might seem like a singular attempt by the EU to show extreme zeal in protecting the rights of pharmaceutical patent holders in the EU. But it has to be viewed against the backdrop a of a host of moves initiated by the developed world to ramp up intellectual property (IP) protection, far in excess of what is required under the TRIPS regime of the World Trade Organization (WTO), under the guise of public health concerns. These initiatives to enforce ever higher standards of IP protection have roped in global organisations with completely different mandates, such as the World Health Organisation (WHO), the World Customs Organisation and Interpol among others.
Leading the charge is the EU which apart from Regulation on trans-shipments is also planning to amend another directive (2001/83/EC) that seeks to prevent the entry of “medicinal products which are falsified in relation to their identity, history or source” into the legal supply chain through a change in the definition of such products. Interestingly, the new definition is based on the proposal accepted at a 2007 meeting of the controversial WHO agency IMPACT or International Medical Products Anti-Counterfeiting Taskforce which critics claim is a cover for protecting IP rights of MNCs. The US and other Organisation for Economic Co-operation and Development (OECD) countries are not far behind in ratcheting up IP enforcement through a host of initiatives ranging from a secretive multilateral treaty called ACTA, or the Anti-Counterfeit Trade Agreement, to a purely regional arrangement like The Security and Prosperity Partnership of North America that brings together North American Free Trade Agreement (NAFTA) signatories (the US, Canada and Mexico). But more on these initiatives later.
A new battleground between big pharma and public health activists over generics is emerging. The Business Standard story goes on:
Big Pharma is very clearly setting the agenda for these changes, according to public health activists promoting access to medicines and domestic industry associations. This charge has been affirmed by trade analysts and academics who point out that recommendations made by Pharmaceutical Research and Manufacturers of America (PhRMA), the powerful lobby of the world’s biggest drug corporations, to the US Trade Representative on ACTA are identical to the ‘Principles and elements for national legislation’ endorsed by IMPACT. The latter is supported by the International Federation of Pharmaceutical Associations (IFPMA) and there are reports that suggest 8 per cent of the funding for the WHO agency is provided by industry.
Developments at the WHO on this issue are being reported by ICTSD:
In a particularly contentious exchange at the WHO meeting, the Brazilian ambassador criticised the seizure. She stated that the “Brazilian Government considers that the decision by the Dutch authorities to detain an input which is strategic to public health in a developing country, and exported in conformity with the existing international norms, represents a grave drawback in the treatment of the issue of the universal access to medicines
The Netherlands’ decision represented a “distorted use of the international intellectual property system, supposedly upheld by European Union legislation, and contrary to the spirit and provisions of the Doha Declaration on TRIPs and Public Health,” the ambassador added.
Brazil indicated that “other possible reactions will be taken into consideration according to how this problem evolves, including within the World Trade Organisation (WTO)”.
This ICTSD story has more. Here is the full story:
Intellectual property was one of the contentious issues debated at the recent World Health Organisation Executive Board (EB) meeting, which concluded on Tuesday after just over a week of talks. Discussions centered on the WHO report and draft resolution on counterfeit medicines and on the global strategy and plan of action on public health, innovation and intellectual property.
Controversy over Counterfeit Medicines
The recent seizure of a shipment of generic medicines, headed to Brazil, by the European Union (EU) customs officials energized debate on the issue of counterfeit medical products. Brazil expressed “great concern” over retention of the hypertension medicines by the Dutch Authorities and indicated that it was considering taking further action in response. (see related story, this issue).
This debate also sparked questions regarding the definition of the term ‘counterfeit’, especially as it relates to the WHO mandate. . Some developing countries, as well as an NGO pointed out that as it stands the term ‘counterfeit’ is associated with trademark violations as defined in the WTO’s Trade-related Aspects of Intellectual Property Agreement (TRIPS). The Swiss delegate suggested that perhaps given the mandate for WHO in the protection of public health, the term ‘counterfeit medical products’ is more appropriate.
At the same time, however, some members questioned why the WHO is focusing on the definition of ‘counterfeit’ rather than directly addressing health issues associated with spurious and substandard drugs. Furthermore, a source present at the meeting suggested that the delegates were apprehensive to use the term ‘counterfeit’ as it can be used to facilitate and expedite the IP enforcement agenda under the guise of working to combat the falsification of medical products and other such illegalities that are a risk to public health.
But the US delegation indicated that it was disturbed that the “WHO secretariat originally circulated a document with a draft resolution with language that significantly widened the scope of the ‘patent’ exclusion to an exclusion for “all intellectual property.” The original WHO report stated that “disputes about, or violations of, intellectual property rights are not to be confused with counterfeiting.” However the US representative added that “such a broad exclusion is technically incorrect” and asked the “secretariat to explain how such a mistake occurred, given the importance of this issue to member states.”
In response, Director General Dr. Margaret Chan apologised, stating that use of the term “intellectual property was unintentional.” The WHO consequently issued a correction to the definition, reverting to the term ‘patents’, as set out in the IMPACT version, instead of ‘intellectual property’.
Concerns about IMPACT
Some members, primarily developing countries, expressed some concerns over the role and working methods of the IMPACT, which was launched in 2006 following a WHO conference in Rome. Included in the mandate of IMPACT, as outlined in the Rome Declaration, is the task of raising awareness among national authorities and decision-makers about counterfeit medicines, and calling for effective legislative measures to combat the spread of the spurious drugs. The taskforce is also charged with promoting coordination among different anti-counterfeiting initiatives.
Members’ concerns focused on the fact that the chair of IMPACT’s working group on technology is also the Director General of the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA), an association of multinational companies. Other members of the IMPACT board include the Organisation for Economic Cooperation and Development (OECD), INTERPOL, and the International Federa¬tion of Pharmaceutical Wholesal¬ers.
Developing countries and several NGOs were also uneasy about what appears to be an endorsement of IMPACT’s work by the WHO. The Secretariat’s report and draft resolution for the Executive Board meeting were propelled largely by the work of its partnership with IMPACT.
Such direct private-sector participation in a WHO initiative could raise serious issues of conflict of interest, some members say. One non-governmental source expressed concern that such endorsement could establish a significant precedent of private sector involvement in WHO activities.
Given these issues, many members were not keen to adopt the proposed resolution. Paraguay on behalf of the group of Latin American and Caribbean Countries (GRULAC) stated that its members were not ready to support the draft in its current form. This position was endorsed by other countries, including Barbados and Uruguay. Ultimately, members agreed that the WHO Secretariat should prepare further reports on the impact of counterfeit medicines on public health, as well as a new document, without resolution, on the way forward to the World Health Assembly in May of this year.
Public Health, Innovation and IP
While the issue of counterfeit medicines gave rise to extensive discussions, the agenda item on public health, innovation and intellectual property was dealt with more swiftly.
The WHO revealed the costing estimates for the implementation of the WHO strategy on global public health and intellection property, giving a detailed breakdown of the funding required from 2009 to 2015 to “carry out the activities associated with each specific actions at two levels: national and international.” The activities include building and improving innovative capacity, promoting the transfer of technology, and improving the application and management of IP. The total cost of the estimated needs (excluding research and development) exceeds US $2 billion; national-level activities constitute approximately 60 percent of this total figure.
On research and development the funding is expected to be as much US $147 billion. Those funds will cover R&D, the education of R&D workers, R&D infrastructure, and support units. Taken together, the implementation of the strategy and action plan is budgeted at US $149 billion, or US $20 billion per year.
These estimated funding needs were one of the outstanding components of the plan of action that the member states had requested the Director General to finalise during this meeting of the EB.
The Medecin Sans Frontieres’ Campaign for Access to Essential Medicines contended that “further work is needed” by the WHO Executive Board on this issue. James Arkinstall, an MSF spokesman called for specific actions on this front, and urged the EB to adopt qualitative indicators as part of Global Plan of Action. “It’s not just the number or the process that needs to be measured, it is the effect and the impact,” the spokesman said.
Barbados and Bolivia presented a proposal on ways to use the ‘prize fund model’ to encourage research with respect to diseases that disproportionately affect developing countries. Both countries requested confirmation from the Secretariat that the proposals would be examined by the expert working group the Director General had established. The Secretariat indicated that the proposals would be examined at the second meeting of the working group later this year. The WHO has also encouraged other member states to submit proposals on ways to encourage research into diseases that disproportionately affect developing countries.
Discussions on counterfeit medical products and the global strategy and plan of action are likely to receive significant attention at the next meeting of the World Health Assembly.
ICTSD reporting; “India may drag EU to WTO on Seizure of Drugs,” HINDUSTAN TIMES, 18 January 2009; “Brazil to object to Dutch Seizure of generic drug,” REUTERS, 23 January 2009; “WHO Puts nearly $150 Billion Proce Tag on Global R & D Strategy for Neglected Diseases,” IP-WATCH, 22 January 2009; “Hope for Consensus on WHO and Counterfeits Moves to May assembly,” IP-WATCH, 27 January 2009.
For some animated discussion in the blogosphere, see the exchange at the International Economic Law and Policy Blog.
Update to EU seizures of Indian generics: Brazil threatens WTO complaint
In an earlier post I had written about the Indian government’s protest against the EU seizing certain Indian generic pharma exports in transit to third country importers. Reuters is now reporting that the Brazilian government has issued a statement threatening a WTO complaint against the EU. A new battleground in the fight to the right to public health versus patent protection seems to be emerging here … will keep an eye on this.
Brazil said it would file a complaint at the World Trade Organization over the seizure by Dutch authorities of a shipment of a generic high blood pressure drug made in India.
Local foreign and health ministries said a company claiming to have intellectual property rights to the arterial hypertension drug losartan in the Netherlands requested customs authorities seize a shipment of a generic version of the drug in transit from India to Brazil, two countries where the patent is not protected.
The Brazilian government can withhold intellectual property rights for a drug if it considers it “in the public interest.” Its health-care system provides free drug treatment for certain conditions such as AIDS and high blood pressure.
“The Brazilian government feels that the decision by the Dutch authorities to detain the basic material critical for the public health of a developing country … a serious step backward on the question of universal access to drugs,” said the note released by the Brazilian ministries late Thursday.
The statement also said the government would take its complaint to the executive council of the World Trade Organization in Geneva.
High blood pressure is one of the leading causes of death among Brazilians.
The cargo of generic losartan that was seized in Rotterdam was sent back to India, where it was manufactured by Dr. Reddy’s, the ministries’ note said. The drug was being imported by Brazil’s EMS.
Losartan is the generic name for the drug Cozaar that was co-developed by Merck & Co and DuPont Co.
Brazil’s statement that it can withhold IP rights in public interest is interesting. Is there a compulsory licence issue here?
leave a comment