PharmExec Blog

Murky EU Definition of ‘Counterfeit’ Set to Hit Pharma

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Paul McClenaghan

Paul McClenaghan looks at how the UK high court’s recent decision regarding a shipment of fake Nokia phones could have serious ramifications for the transit of pharmaceuticals in Europe.

Recent complaints made by Brazil and India to the World Trade Organization regarding the seizure of generic pharmaceutical products in transit through the European Union illustrate the tension between the principles of free trade and those of intellectual property.

The conflicts involving Brazil started in 2009 when a shipment of the generic drug Losartan was seized in Rotterdam. Merck Sharp & Dohme, the owner of various European national patents for Losartan, was informed of the seizure by customs and able to detain the goods on the basis that they could infringe its intellectual property rights. The EU’s Border Measures Regulation empowers customs authorities to retain goods suspected of infringing certain IP rights in order to enable the right-holder, within a fixed term, to initiate proceedings to determine whether that right has been infringed or to settle the matter under the simplified procedure.

If the European Court agrees with the English court then drug companies will not be able to prevent fake medicines in transit through the EU.

The European Court is due to clarify this power in relation to ‘counterfeit goods,’ being branded goods that do not originate from the brand owner, after two references were made from national courts. A reference from the English High Court came about when UK customs (HMRC) stopped a consignment of fake Nokia branded phones at Heathrow en route from Hong Kong to Colombia. Nokia, as the owner of various intellectual property rights, asked HMRC to seize and retain the phones under the powers granted to it by the Border Measures Regulation but they refused. Nokia then made an application for judicial review of the decision and HMRC’s policy whereby goods travelling through the EU from one non-member state to another are not considered ‘counterfeit’ goods when they do not enter into free circulation in the EU.

The Court refused Nokia’s application, holding that the phones were not ‘counterfeit’ within the meaning set out in the Border Measures Regulation. A similar case was heard in front of the Belgian Court and a reference to the European Court also made.
Although these two references do not involve pharmaceutical products, the implications are obvious. If the European Court agrees with the English court then drug companies will not be able to prevent fake medicines in transit through the EU. Transit of such goods through Europe is increasing used by fraudsters to disguise the origin of the goods and make the goods appear more legitimate.

This has dramatic consequences for rights holders and for consumers, particularly those in the least developed countries

Paul McClenaghan is Associate, Intellectual Property Group, Stephenson Harwood. Tel.:+44 207 809 2335.

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