On this day, 3 February 2009, H.E. Ambassador Roberto AZEVÊDO, Permanent Representative of Brazil to the World Trade Organization (WTO) and other economic organizations in Geneva made the following intervention at the WTO General Council meeting on the seizure by Dutch authorities of a cargo of 500 kilos of losartan potassium en route from India to Brazil.
An informed source notes that India and 16 other members of WTO including Argentina, Bolivia, Burkina Faso, China, Costa Rica, Cuba, Ecuador, Egypt, Indonesia, Israel, Nigeria, Peru, Pakistan, South Africa, Thailand and Venezuela supported Brazil’s intervention.
Intervention by Brazil
WTO General Council (February 03 and 04, 2008)
1. On December 04, 2008, the customs authorities of the Netherlands seized a cargo of generic medicines en route from India to Brazil. The cargo consisted of 500 kilos of losartan potassium, an active pharmaceutical ingredient used in the production of medicines for arterial hypertension. The substance was being traded between the Indian company Dr. Reddy’s and the Brazilian importer ems.
2. Apparently, the decision was motivated by an administrative request lodged by a third company, which allegedly holds the patent of losartan potassium in the Netherlands. To Brazil’s knowledge, this request was based on a claim of violation of patent rights pursuant to provisions set out in the EC Council Regulation 1383, of 22 July 2003, and in the Dutch Patent Act of 1995. This Regulation concerns customs actions against goods suspected of infringing intellectual property rights and the measures to be taken against goods found to have infringed such rights. The cargo was held back by Dutch authorities for 36 days, after which it was released to return to India. As a result of the Dutch authorities’ actions, the medicines never reached Brazil.
3. The measure taken by the Dutch authorities clearly violates the freedom of transit, which is a right enshrined in GATT Article V. Only very exceptional circumstances warrant restrictions on that freedom. Brazil is not aware of any such circumstance in this concrete case.
4. The decision to impede the transit of a cargo of generic medicines – which was not headed for the Dutch market – is unacceptable and sets a dangerous precedent. Worse still, there are indications that this is not an isolated case.
5. Trade in generic medicines is perfectly legal from the intellectual property point of view. Nevertheless, as we understand it, the EC Regulation empowers customs authorities to interfere with the transit of generic medicines. The concept of generic must not be mistaken with counterfeit or pirated. Generic medicines are not substandard or illegal. They simply do not enjoy patent protection in the relevant market. In Brazil, the falsification of medicines is typified as heinous crime.
6. Under TRIPS, the medicines seized are generic under the law of the market in which they were meant to be commercialized. In this case, they are generic as regards Brazilian law, and Indian law, as we understand it. Whether or not the medicines were generic under the law of the country of transit is an irrelevant question. What is not irrelevant is the decision taken by Dutch customs authorities to block the transit and thus impede the access of Brazilian hypertension patients to safe and price-competitive generic medicines. In Brazil and in other countries, hypertension is a common but serious disease, often leading to death.
7. Irrespective of the value or volume of the cargo involved, Brazil is gravely concerned with the setting of a precedent for extraterritorial enforcement of IP rights. Attempts to extend the rights granted by patents beyond national borders have critical systemic implications. They affront fundamental canons of the multilateral trade system, in particular the well-established principle of territoriality, a fundamental pillar of the international intellectual property regime.
8. Extraterritorial enforcement of patent rights cannot be reconciled with the terms of the Doha Declaration on TRIPS and Public Health. That Declaration, adopted by the Ministerial Conference on November 14, 2001, states that the TRIPS Agreement “can and should be interpreted and implemented in a manner supportive of WTO Members’ right to protect public health and (…) to promote access to medicines for all”. The same declaration also establishes that each provision of the TRIPS Agreement shall be read in the light of the objectives and principles of the Agreement. In this sense, Brazil recalls that the protection of public health and the promotion of the public interest are still part of TRIPS fundamental principles.
9. The undue interference of Dutch authorities with the transit of the generic medicines may have other serious systemic consequences. It could undermine the ability of Members to address public health needs by means of cross-licensing arrangements. It is worth recalling that Paragraph 6 of the Doha Declaration on TRIPS and Public Health represents a much needed and long awaited response to the specific situation of countries with insufficient or no manufacturing capacities in the pharmaceutical sector. The so-called “paragraph 6 system” permits a Member without manufacturing capacity to import medicines from other Members under a compulsory cross-licensing arrangement.
10. What would happen to the Doha Declaration on TRIPS and Public Health and, in particular, to the “paragraph 6 system” if the denial of transit to generic medicines became a systematic and widespread practice? What if countries commenced to create impediments to the legitimate trade of generic medicines based on the wrongful allegation that it violates national patent rights? In that case, trade in generic medicines would be rendered virtually impossible.
11. Brazil is fully committed to intellectual property protection. It is a founding-Member of the Paris Convention, and Brazilian legislation provides fair and adequate protection to IP rights holders. Brazil also believes that a functioning and effective IP international system can only be built on the solid basis of a fair balance between private and public interests. This is the very foundation of the TRIPS Agreement. The protection of intellectual property cannot supersede the protection of more fundamental values, such as the protection of life and the right to promote public health.
Mr. Chairman,
12. The application of enforcement procedures to goods in transit is being advocated in the World Customs Organization and in the World Health Organization. In the WCO, within the SECURE Working Group, some countries are pushing for the adoption of standards that would give customs the authority to seize goods in transit suspected of infringing IP rights. Similarly, in the World Health Organization, the IMPACT initiative claims that national legislations should provide for enforcement procedures over goods in transit.
13. First, neither the WCO nor the WHO are adequate fora for discussing IP rights enforcement. In the WHO, the focus should be on the quality, safety and efficacy of medicines, as well as on the issue of access. On its turn, the WCO should concentrate on developing methodologies to enhancing customs’ performance, rather than venturing into TRIPS-plus norm-setting.
14. Second, interfering with the freedom of transit for the sake of enforcing IP rights violate trade disciplines negotiated by Members of this Organization. IP rights can – and should – be enforced in a Member’s own market. Such enforcement, however, cannot reach goods that are not intended for that market.
15. Brazil has already expressed to the Netherlands its concern. In light of the above, Brazil would appreciate if the Netherlands and/or the European Communities could clarify the circumstances and legal basis of the decision taken by Dutch authorities, which led to the refusal of transit for generic intellectual property-free medicines. Brazil also expects that the Netherlands and the EC bring their legislation into conformity with multilateral trade disciplines so that episodes such as this one no longer happen.