Last week, members of the European Parliament backed a wide ranging revision of EU trade mark legislation, which included a provision to let inspectors to stop and destroy “trademarked” fakes even if they are not destined for the continent.
At present European customs officials are only allowed to inspect products that they suspect are fakes – including pharmaceuticals - if they are marked for sale in the single market.
In contrast, suspected counterfeits destined for other markets cannont be stopped as a result of a legal precedent set in a 2011 European Court of Justice ruling in trademark infringement cases that involved Philips and Nokia.
In the suits – which involved a shipment of phones stopped in transit from Hong Kong to Colombia and Chinese made electric shavers shipped for storage but not sale in Belgium – the ECJ ruled that goods are not fakes under EU IP law unless they are sold in countries where the laws apply.
This ruling limited customs officials' ability to inspected suspected fake products.
For drugs the situation was further confused when the Indian Government filed a complaint with the World Trade Organisation (WTO) alleging that EU seizures of generic drugs headed for markets in South America and elsewhere breached trade regulations.
Drug industry reaction
The European federation of Pharmaceutical Industry Associations (EFPIA) and the European Generic Medicines Association (EGA) welcomed the idea of new powers for customs officers, telling us they are “an attempt to re-empower customs to seize counterfeit goods in transit.”
EFPIA added that: “The debate on the transit of medicines is a long-standing and sensitive one, which has often relied on wrong premises and confusion between medicines that are legitimate generics and those medicines that bear counterfeited trademarks.”
“Legitimate generic pharmaceutical products in transit through EU countries should not be the target of unjustified detentions, seizures or destructions by customs authorities and this has been EFPIA's position.”
What impact the provision adopted by the European Parliament will have on the global drug counterfeit problem is unclear as those involved in producing knock-off medicines tend not to keep scrupulous inventory record.
According to EFPIA “customs actually control, at a maximum, only some 2% of trade and that is based on risk analysis, targeted intelligence and experience. They do not and will not control everything physically, but only consignments for which a reasonable suspicion exists.”
However, the drug industry organization rejected the idea that granting customs officials more power to check products in transit will mean more inspections.
“Allowing customs a power to control does not render such controls mandatory but rather allows them fully to carry out their role - when they have the requisite suspicion. EFPIA is therefore not convinced that this will necessarily lead to a cost increase.”