EUROPEAN UNION AND A MEMBER STATE – SEIZURE OF GENERIC DRUGS IN TRANSIT
Document: Request for Consultations by Brazil
Date: 19 May 2010
Document codes: WT/DS409/1; G/L/922; IP/D/29
Complainant: Brazil
Respondent: EU, Netherlands
Dispute stage: Consultation
Agreements cited: Art. V:1, V:2, V:4, V:5, V:7, X:3, V:3  GATT 1994Art. 1.1, 2, 28, 31, 41.1, 41.2, 42, 49, 50.3, 50.7, 50.8, 51, 52, 53.1, 53.2, 54, 55, 58, 59  Intellectual Property (TRIPS)Art. XVI:4  Agreement Establishing the World Trade Organization

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

Request for Consultations by Brazil

 The following communication, dated 12 May 2 010, from the delegation of Brazil to the
delegation of the European Union and to the Chairm an of the Dispute Settlement Body, is circulated
in accordance with Article 4.4 of the DSU.

 Upon instructions from my authorities, pursuan t to Article 4 of the Understanding on Rules
and Procedures Governing the Settlement of Dis putes ("DSU"), Article 64.1 of the Agreement on
Trade-Related Aspects of Intellectual Property Ri ghts (TRIPS Agreement), and Article XXII:1 of the
General Agreement on Tariffs and Trade 1994 ("GATT 1994"), I hereby request consultations with
the European Union and with the Government of the Netherlands regarding the following matters:
(A) A shipment of the generic drug Losartan Potassium, produced in India and destined to
Brazil, was seized
1 when in transit at Schipol Airport, in the Netherlands, in
December 2008, and later returned to the country of origin. The Dutch authorities
seized the shipment pursuant to the Eu ropean Communities Council Regulation No
1383/2003 (EC Regulation No 1383/2003). Based on complaints of suspected
infringement by alleged owners of patent s (or supplementary protection certificates),
over the last two years, customs authorities in the Netherlands have seized a
substantial number of consignments of ge neric medicines from India in transit
through the Netherlands, including the aforementioned shipment of Losartan
Potassium destined to Brazil.
(B) EC Regulation No 1383/2003 sets out rules for "customs actions against goods
suspected of infringing intellectual property rights and the measures to be taken
against goods found to have infringed such rights", including goods in transit through
the territory of the European Union, and provides, among other actions, for the
seizure of goods. The applicability of EC Regulation No 1383/2003 encompasses
medicines
2 in transit through the territory of the European Union that are suspected of
infringing patent rights or are found to have infringed patent rights constituted

1 For the purposes of this request for consultations, the scope of the expression "to seize" and its
derivations ("seizure", "seizing", etc.) includes, but is not limited to, the expressions "to suspend the release"
and "to detain" and their derivations contained in EC Regulation No 1383/2003.
2 For the purposes of this request for consultations, the scope of the word "med icines" includes, but is
not limited to, products of the pharm aceutical sector needed to address health problems, active ingredients
necessary for their manufacture and diagnostic kits needed for their use.

IP/D/29

according to the laws of the EC transit country , regardless of the patent status of such
medicines in the countries of origin and destination.
(C) In Brazil's view, the seizure of the ship ment of Losartan Potassium by the Dutch
authorities, including legal, administrative or judicial measures of any nature which
provided the basis for such measure or whic h were issued in connection with such
measure, is inconsistent with the obliga tions of the European Union and of the
Netherlands under the Marrakesh Agreement Estab lishing the World Trade
Organization ("WTO Agreement") and the Agreements annexed thereto.
(D) Furthermore, in Brazil's view, EC Regulation No 1383/2003 – including, but not
limited to, recitals (3), (4) and (8) as well as Ar ticles 1, 2, 4, 5, 6, 7, 8, 9, 10, 11, 13,
16 and 17 thereof – is inconsistent as such with the obligations of the European Union
and of the Netherlands under the Marrakesh Agreement Establishing the World Trade
Organization ("WTO Agreement") and the Agreements annexed thereto.
(E) Brazil is also concerned that a rule of gene ral and prospective application in force in
the European Union and in the Kingdom of the Netherlands – providing that, ex
officio or following request from right-holders , competent authorities seize, authorize
the seizure, order the seizure or otherwi se restrict the passage of goods in transit
3 on
grounds4 that they infringe patents (or supplementary protection certificates) under a
relevant national law, or are suspected th ereof – is inconsistent as such with the
obligations of the European Communities and of the Netherlands under the
Marrakesh Agreement Establishing the World Trade Organization ("WTO
Agreement") and the Agreements annexed thereto. The aforementioned rule of
general and prospective application seems to result from the individual or combined
operation of the following instruments:
(i) Council Regulation (EC) No. 1383/2003 of 22 July 2003;
(ii) Commission Regulation (EC) No. 1891/2004 of 21 October 2004;
(iii) Council Regulation (EEC) No 2913/92 of 12 October;
(iv) Directive 2004/48/EC of the European Parliament and of the Council of
29 April 2004;
(v) Regulation (EC) No 816/2006 of the Eur opean Parliament and of the Council
of 17 May 2006;

3 For the purposes of this request for consultations, the scope of expression "goods in transit" includes,
but is not limited to, medicines, and generic medicines, in transit. To the extent that the legal nature of the
measures identified in this request may differ if medicines, or generic medicines, are involved, the scope of this
request for consultations covers both situations: the measures as applicable to goods in transit in general and the
measures as applicable to medicines, or generic medicines, in transit.
4 For the purposes of this request for consultations, the grounds on which competent authorities take
one the abovementioned actions include, but are not limited to, the so-called "manufacturing fiction", pursuant
to which a determination as to whether goods in transit infringe, or may be suspected of infringing, patents (or
supplementary protection certificat es) under the law of the relevant EC Member State is made as if the goods
had been manufactured in that EC Member State.

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(vi) Relevant provisions of the Patents Ac t of the Kingdom of the Netherlands,
1995 (Rijksoctrooiwet 1995) (the "Patents Act"), as amended, including, but
not limited to, the provisions of Chapter IV thereof, especially Articles 53
and 79, and relevant rules, regulat ions, guidelines and administrative
practices;
(vii) Relevant provisions of the General Customs Act of the Netherlands (de
Algemene douanewet (Adw)) (the "Custo ms Act"), as amended, including,
but not limited to, Articles 5 and 11 and relevant rules, regulations, guidelines
and administrative practices;
(viii) Customs Manual VGEM (30.05.00 Intellectual Property Rights, Version 3.1)
(Douane Handboek VGEM, 30.05.00 In tellectuele eigendomsrechten,
6 April 2009, Versie 3.1) including, but not limited to, the provisions of
Chapter 6 and of other relevant Chapters;
(ix) The Public Prosecutor's Office Guid e to Intellectual Property Fraud
20005A022 of 1 February 2006 (Aanwijz ing intellectueleeignendomsfraude
2005A022) and the Public Prosecutor's Office Directive (2005R013);
(x) Relevant provisions of the Criminal Code of the Netherlands (Het
Nederlandse Wetboek van Strafrecht) including, but not limited to, the
provisions of Article 337, and releva nt rules, regulations, guidelines and
administrative practices;
(xi) Relevant provisions of the Criminal Pr ocedure Code of the Netherlands and
relevant rules, regulations, guidelines and administrative practices; and,
(xii) Court decisions in the Netherlands
5 finding that goods in transit infringe
patents (or supplementary protectio n certificates) in the Netherlands,
including, but not limited to, due to th e operation of a legal fiction pursuant
to which the legal status of goods in transit is to be assessed as if they had
been manufactured in the Netherlands.
(F) In Brazil's view, EC Regulation No 1383/200 3 – including, but not limited to, recitals
(3), (4) and (8) as well as Articles 1, 2, 4, 5, 6, 7, 8, 9, 10, 11, 13, 16 and 17 thereof –
is inconsistent with the obligations of the European Union and of the Netherlands
under the Marrakesh Agreement Establishi ng the World Trade Organization ("WTO
Agreement") and the Agreements annexed ther eto, as it was applied in the seizure of
Losartan Potassium described in item (a) above.
(G) Finally, Brazil is concerned that the Patents Act of the Kingdom of the Netherlands of
13 December 1994 – including, but not limit ed to, the provisions of Chapter IV
thereof, especially Articles 53 and 79, and relevant rules, regulations, guidelines and
administrative practices – is inconsistent as such and as applied in the seizure of
Losartan Potassium described in item (a) above with the obligations of the European
Union and of the Netherlands under the Marrakesh Agreement Establishing the

5 Such court decisions include, but are not limited to , the judgment of Sosecal v. Sisvel (Case 311378 /
KG ZA 08-617) by the Court of The Hague in preliminary relief proceedings dated 18 July 2008.

IP/D/29

World Trade Organization ("WTO Agreement") and the Agreements annexed
thereto.
 For the measures referred to above, this request also covers any amendments, replacements,
extensions, implementing measures or other related measures.
 The provisions with which the above-mentioned measures appear to be inconsistent include,
but are not limited to, the following:
• Article V:1, V:2, V:3, V:4; V:5, V:7 and X:3 of the GATT 1994;
• Articles 1.1, 2, 28, 31, 41.1, 41.2, 42, 49, 50.3, 50.7, 50.8, 51, 52, 53.1, 53.2, 54, 55,
58(b), and 59 of the TRIPS Agreement, and Article 4bis of the Paris Convention of 1967;
• Article XVI:4 of the WTO Agreement;
 Brazil reserves the right to raise additional claims and legal matters during the course of the
consultations. It looks forward to receiving your reply to this request and to setting a mutually
acceptable date for consultations.