EUROPEAN UNION AND A MEMBER STATE – SEIZURE OF GENERIC DRUGS IN TRANSIT
Document: Request for Consultations by India
Date: 19 May 2010
Document codes: WT/DS408/1; G/L/921; IP/D/28
Complainant: India
Respondent: EU, Netherlands
Dispute stage: Consultation
Agreements cited: Art. V:2, V:4, V:5, V:7, X, V:3  GATT 1994Art. 2, 7, 8, 28, 31, 41, 42  Intellectual Property (TRIPS)

EUROPEAN UNION AND A MEMBER STATE – SEIZURE OF GENERIC DRUGS
IN TRANSIT

Request for Consultations by India

 The following communication, dated 11 May 2010, from the delegation of India to the
delegations of the European Union and the Neth erlands, and to the Chairman of the Dispute
Settlement Body, is circulated in accordance with Article 4.4 of the DSU.

 My authorities have instructed me to request consultations with the European Union (the
"EU") and the Kingdom of the Netherlands (the "Netherlands") pursuant to Article 4 of the
Understanding on Rules and Procedur es Governing the Settlement of Disputes, Article XXII:1 of the
General Agreement on Tariffs and Trade 1994 (the "GATT 1994") and Article 64.1 of the Agreement
on Trade-Related Aspects of Intellectual Property Rights (the "TRIPS Agreement"), regarding the
repeated seizures of consignments of generic drugs originating in India at ports and airports in the
Netherlands on the ground of alleged infringement of patents subsisting in the Netherlands while
these consignments were in transit to third country destinations (the "measures at issue").

 Based on complaints of alleged infringement by alleged owners of patents over the last two
years, customs authorities in the Netherlands have seized a substantial number of consignments of
generic drugs from India in transit through the Netherlands. India understands that these seizures were
made by applying the so-called "manufact uring fiction" under which generic drugs actually
manufactured in India and in transit to third countri es were treated as if they had been manufactured
in the Netherlands. These consignments were initially detained and later, either destroyed or returned
to India. In a few cases, the consignments were permitted to proceed to the destination country after
considerable delay. Available evidence confirms that the customs authorities seized at least
19 consignments of generic drugs in 2008 and 2009 while in transit through the Netherlands, 16 of
which originated in India. An illustrative list setting fo rth relevant details of some of these seizures is
provided in the Annex to this request.

 The measures at issue also include the reitera ted conduct and practice of seizing generic drugs
in transit on the ground of alleged patent infringeme nt and the following, among other, laws, rules,
regulations, guidelines and administrative practices of the EU and of the Netherlands but only to the
extent that they authorise or require the seizure or destruction of drugs in transit on the ground of
alleged patent infringement:

 (a) Council Regulation (EC) No. 1383/2003 of 22 July 2003;

 (b) Commission Regulation (EC) No. 1891/2004 of 21 October 2004;

IP/D/28

 (c) Council Regulation (EEC) No 2913/92 of 12 October 1992;

 (d) Directive 2004/48/EC of the European Parliament and of the Council of
29 April 2004;

 (e) Regulation (EC) No 816/2006 of the European Parliament and of the Council of
17 May 2006;

 (f) Relevant provisions of the Patents Ac t of the Kingdom of the Netherlands, 1995
(Rijksoctrooiwet 1995) (the "Patents Act"), as amended, including, without limitation,
the provisions of Chapter IV thereof, especially Articles 53 and 79, and relevant
rules, regulations, guidelines and administrative practices;

 (g) Relevant provisions of the Gene ral Customs Act of the Netherlands ( de Algemene
douanewet (Adw)) (the "Customs Act"), as amende d, including, without limitation,
Articles 5 and 11 and relevant rules, regulations, guidelines and administrative
practices;

 (h) Customs Manual VGEM (30.05.00 Intell ectual Property Rights, Version 3.1)
(Douane Handboek VGEM, 30.05.00 Intellect uele eigendomsrechten, 6 April 2009,
Versie 3.1 ) including, without limitation, the provisions of Chapter 6 and of other
relevant Chapters;

 (i) The Public Prosecutor' s Office Guide to Intellectual Property Fraud 20005A022 of
1 February 2006 ( Aanwijzing intellectueleeignendomsfraude 2005A022 ) and the
Public Prosecutor's Office Directive (2005R013);

 (j) Relevant provisions of the Cr iminal Code of the Netherlands ( Het Nederlandse
Wetboek van Strafrecht ) including, without limitation, the provisions of Article 337,
and relevant rules, regulations, guidelines and administrative practices; and

 (k) Relevant provisions of the Criminal Pro cedure Code of the Neth erlands and relevant
rules, regulations, guidelines and administrative practices.

 This request also covers any amendments, replacements, extensions, implementing measures
and any other related measures with respect to the laws, rules, regulations, guidelines and
administrative practices of the EU and of the Netherlands set forth above.

 India considers that the measures at issue are, in several respects, inconsistent as such and as
applied, with the obligations of the EU and the Netherlands under the following provisions of the
GATT 1994 and of the TRIPS Agreement:

 1. Paragraphs 2, 3, 4, 5 and 7 of Artic le V of the GATT 1994 because the measures at
issue, inter alia , are unreasonable, discriminatory and interfere with, and impose
unnecessary delays and restrictions on, the freedom of transit of generic drugs
lawfully manufactured within, and exported from, India by the routes most
convenient for international transit;

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 2. Article X of the GATT 1994, including, w ithout limitation, Article X:3, because the
measures at issue, inter alia , are not administered in a uniform, impartial and
reasonable manner;

 3. Article 28 read together with Artic le 2 of the TRIPS Agreement, Article 4 bis of the
Paris Convention, 1967 and the last sentence of paragraph 6(i) of the Decision of the
General Council of August 30, 2003 on the Implementation of Paragraph 6 of the
Doha Declaration on the TRIPS Agreement and Public Health (the "August 30, 2003
Decision") because a cumulative reading of these provisions confirms, inter alia, that
the rights conferred on the owner of a patent cannot be extended to interfere with the
freedom of transit of generic drugs lawfully manufactured within, and exported from,
India;

 4. Articles 41 and 42 of the TRIPS Ag reement because the measures at issue, inter alia,
create barriers to legitimate trade, permit abuse of the rights conferred on the owner
of a patent, are unfair and inequitable, unnecessarily burdensome and complicated
and create unwarranted delays; and

 5. Article 31 of the TRIPS Agreement r ead together with the provisions of the
August 30, 2003 Decision because the measures at issue, inter alia , authorise
interference with the freedom of transit of drugs that may be produced in, and
exported from, India to Members of the Wo rld Trade Organization with insufficient
or no capacity in the pharmaceutical sector that seek to obtain supplies of such
products needed to address their public hea lth problems by making effective use of
compulsory licensing.

 India considers further that the measures at issue also have a serious adverse impact on the
ability of developing and least-developed country members of the World Trade Organization to
protect public health and to provide access to medici nes for all. Accordingly, the provisions of the
TRIPS Agreement referred to above must be interpre ted and implemented in light of the objectives
and principles set forth in Articles 7 and 8 of the TRIPS Agreement, the Doha Ministerial Declaration
on the TRIPS Agreement and Public Health adopt ed on 14 November 2001 and in the light of
Article 12(1) of the International Covenant on Economic, Social and Cultural Rights, which
recognizes the right of all persons to the enjoyment of the highest attainable standard of physical and
mental health.

 We reserve the right to raise additional clai ms and legal matters regarding the measures at
issue during the course of the consultations.

 We look forward to receiving your reply to this request to set a mutually convenient date for
these consultations.

IP/D/28

ANNEX

Seizures by Dutch Customs of Pharmaceutical Products

Originating in India during Transit through the Netherlands

1. Seizure in October 2008 at Schiphol airport (Netherlands) of a consignment of clopidogrel
from India destined for Colombia, on the ground of infringement of one or more patents
1
alleged to be valid and enforceable in the Netherlands and owned or licensed by Sanofi-
Aventis.

2. Seizure in November 2008 at Schiphol airpor t (Netherlands) of a consignment of abacavir
from India, purchased on behalf of UNITAID and destined for Nigeria, on the ground of
infringement of one or more patents alleged to be valid and enforceable in the Netherlands
and owned or licensed by Glaxo.

3. Seizure in November 2008 at Schiphol airpor t (Netherlands) of a consignment of olanzapine
from India destined for Peru, on the ground of in fringement of one or mo re patents alleged to
be valid and enforceable in the Netherlands and owned or licensed by Eli Lilly & Co.

4. Seizure in November 2008 at Schiphol airport (N etherlands) of a consignment of rivastigmine
from India and destined for Peru on the ground of infringement of one or more patents alleged
to be valid and enforceable in the Netherlands and owned or licensed by Novartis AG.

5. Seizure in December 2008 at Schiphol airpor t (Netherlands) of a consignment of losartan
from India and destined for Brazil on the ground of infringement of one or more patents
alleged to be valid and enforceable in the Neth erlands and owned or licensed by E.I. Du Pont
de Nemours and Co. Inc., Merck & Co. Inc. and Merck Sharp & Dohme B.V.