Patent News London
November 2011
Border Enforcement Of Intellectual Property Rights ACTA Is On Its Way Introduction Saturday 2 October 2011 saw the first eight countries1 sign the Anti-Counterfeiting Trade Agreement (more commonly known by its acronym, ACTA). The signing ceremony in Tokyo was attended also by delegates from a number of other parties who reaffirmed their commitment to joining the agreement as soon as practicable – these included representatives from the European Union. ACTA has had a controversial history for a number of reasons, not least due to the fact that much of the negotiation has taken place behind what has been perceived as a veil of secrecy. Furthermore, there has been much comment on the implications of ACTA (in particular, its early drafts) with regard to the enforcement of intellectual property rights (“IPRs”), including against everyday consumers, in the digital environment. Here, we focus on what the final version of ACTA has to say in relation to the enforcement of IPRs, in particular patents, at international customs borders. We consider the implications of ACTA for the trade in, and transport of, legitimate generic medicines. Finally, we take this opportunity to touch upon the EU’s legislation on the border enforcement of IPRs, the so-called Anti-Piracy Regulation2 and its proposed replacement.
ACTA on Border Enforcement – Possible Implications for Generic Pharmaceuticals While the title of ACTA refers to counterfeiting (i.e., fakes of branded goods), the stated aim of ACTA is to provide an international framework for the effective enforcement of all IPRs. Turning to border enforcement, ACTA provides the contracting States “shall” (i.e., must) adopt or maintain procedures with respect to the import/export of goods suspected of intellectual property infringement to allow its customs authorities (acting on their own initiative, or on request by the rights holder) to detain those shipments. With regard to in-transit goods, the contracting states “may” (i.e., if they want to) provide such measures. It will be remembered that the application of the European regime for the border enforcement of IPRs came under heavy criticism a couple of years or so ago due to the detention of bona fide generic medicines transiting through the EU en route to Third World countries where there was seemingly no question of patent infringement. This was seen as being contrary to, at the very least, the spirit of the Doha Declaration. The positive news for generic medicinal companies is that patents are expressly excluded from the scope of the border enforcement measures provided for in ACTA. Furthermore, ACTA records (albeit only in a recital) the contracting States’ recognition of the principles in the 2001 Doha Declaration on the TRIPS Agreement and Public Health (which, in effect, stated that TRIPS should not stand in the way of the least developed nations’ access to inexpensive life-saving medicines). This is all good news for the generic medicines industry, isn’t it? Well, the first thing to note is that, at least for Europe, there is already an existing regime whereby patents are included in the IPRs that can be enforced at the border (i.e., the Anti-Piracy Regulation, more on which below)3. Presumably, despite patents being expressly excluded from the border enforcement section of ACTA (to which the EU will be a signatory), the conflicting EU legislation will still be relevant. Second, despite the furore over the detention in the EU of generic medicinal goods in transit, ACTA makes it clear that the contracting states may detain “suspect in-transit shipments.” This begs the questions as to whether the goods are to be considered “suspect” by virtue of prima facie infringement of IPRs in the country of transit (even though there may be no real risk of the goods ever being marketed there4) or the country of ultimate destination (which would seemingly be introducing a new dimension to the territorial scope of IPRs and the jurisdiction of national courts to police IPRs outside their borders). Australia, Canada, Japan, the Republic of Korea, Morocco, New Zealand, Singapore and the United States Council Regulation 1383/2003 3 Other regimes, e.g. the border enforcement of patent rights by the ITC in the USA, might also remain relevant. 4 Such an outcome would be inconsistent with the CJEU’s position in various trade mark cases, including most recently the Advocate General’s opinion in the joined cases of Philips (C466/09) and Nokia (C495/09). 1 2
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Some commentators have raised a concern that, notwithstanding the exclusion of patents from ACTA’s border enforcement provisions, the trade in and transit of generic medicines might still be hindered by the overzealous enforcement of other IPRs, notably trade marks. A difference between ACTA and the existing EU Anti-Piracy Regulation is that ACTA’s provisions extend to goods suspected of trade mark infringement generally, i.e. not just counterfeit goods. This means that customs acting under ACTA will no longer be restricted to looking out for fakes, where trade mark infringement is often blatant, but could also be asked to carry out an assessment of more subtle issues such as the likelihood of confusion. It may be this concern is more theoretical than real, given branded and generic versions of a medicine are often named quite differently and the origin of the goods may well be clear. However, Europe has seen cases of “mistaken identity” where a generic drug having a name with a passing resemblance to a brand name (of a different medicine) has been detained. Any sort of border detention under ACTA, whether through overzealous IPR enforcement or misplaced good intentions on the part of customs officers, could have significant implications. This is because – and here is another significant difference from the EU regime – there is no fixed timeframe prescribed in ACTA as to how long the IPR holder can wait before bringing the matter before a competent court5.
The European Regime and Proposals for Change The existing EU border enforcement Regulation (1383/2003) is undergoing an overhaul. A proposed draft replacement Regulation has been published. Some points to note in the replacement Regulation (as currently drafted) are: • There is a new three-day right of reply period for the holder of the goods before a decision on detention by customs is adopted. While this seems fair and could be effective in clear cut cases of non-infringement (e.g., mistaken identity), the question might be whether this extra step in the timetable6 could prolong the detention period. • As with ACTA, the scope of the replacement Regulation on trade marks now goes beyond just counterfeit goods7 – suspected trade mark infringement per se is now also covered (although, it is only counterfeits and pirated goods that are subjected to the simplified procedure8). Again, this raises the possibility of customs officials having to make judgment calls on the issue of likelihood of confusion. So, what about the vexed issue of goods in transit through the EU? The scope of the replacement Regulation still extends to all situations where goods suspected of infringing an IPR are subject to customs supervision within the territory of the EU. However, one of the recitals does name-check the Doha Declaration and goes on to state: “In particular with regard to medicines [in transit through the EU], customs authorities should, when assessing a risk of infringement of [IPRs], take account of any substantial likelihood of diversion of these goods onto the market of the [EU].” There has been a degree of disappointment that something more concrete has not found its way into the body of the replacement Regulation. It will also be interesting to see how customs officials approach the likelihood of diversion into the EU. Will there be a presumption of no likelihood of diversion, rebuttable only by cogent prima facie evidence to the contrary from IPR holders? It is also not clear whether the likelihood of diversion test should apply equally to all goods, or whether medicinal goods should be given particularly careful treatment, given the context of the relevant recital is the promotion of access to medicines for all. After all, the recent Court of Justice cases on transhipment have been concerned with electronic goods.
ACTA merely provides the substantive question of infringement be determined within “a reasonable period.” The 10-day (extendable to 20) period to bring proceedings remains. 7 Under the existing Regulation 1383/200, infringing goods in so far a s trade marks are concerned are limited to counterfeits and pirated goods. 8 Whereby goods may be destroyed by without the need for a finding of infringement by a court. 5 6
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Conclusions The border enforcement of IPRs is a crucial weapon in the war against the tide of potentially life-threatening and economically damaging fake goods entering the EU. The ultimate question still remains as to whether such measures, however well-intended, are also suitable for policing patent infringement and/or, subject to ACTA and the proposed replacement Anti-Piracy Regulation entering into force, all trade mark infringements (i.e., not just counterfeiting). Only time will tell if the right balance can be achieved – in the EU and beyond – between enforcing IPRs at trade borders and protecting the rights of legitimate traders of, in particular, generic medicinal products. Phil Carey +44 (0)20 7011 8728
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This publication has been prepared for general guidance only and does not constitute professional advice or a comprehensive review of the law. No representation or warranty (express or implied) is given to the accuracy or completeness of the information contained in this publication. You should seek specific legal advice before acting on the information contained herein. No reproduction or redistribution is permitted without the written permission of Winston & Strawn LLP. © 2011 Winston & Strawn LLP
