Jacobs University Bremen International Trade Law - Lecture 10: Fake Commodities and Medicine

1. JUB International Trade Law
Scope of Lecture 10
Spring Term 2011
Dr. Carsten Weerth BSc (Glasgow)

2. Lecture by Dr. Carsten Weerth BSc (Glasgow)
JUB Int. Trade Law Lecture 10
Part D.
D. Selected Global Trade and Customs Problems
10.Trade in fake commodities / fake medicine
This lecture focusses on the problem of counter-
feit products for manufactureres and users –
known brands and medicine products.
The WTO agreement of TRIPS will be introduced,
Trade-Related Aspects of Intellectual Property-
Rights.

3. Lecture by Dr. Carsten Weerth BSc (Glasgow)
JUB Int. Trade Law Lecture 10
What are Intellectual Property Rights (IPR)?
- The painter has the right do be identified and
named as "creator" (e.g. Vincent Van Gogh).
- The author has the right to be named as
"creator" (e.g. J.K. Rowling).
- An owner of a patent has the right use it solely
and nobody else is allowed to use it, e.g. SMART.
- The owner of a brand has the right to identify
his / her products by help of this sign, e.g.
3 stripes for adidas...

4. Lecture by Dr. Carsten Weerth BSc (Glasgow)
JUB Int. Trade Law Lecture 10
What legal agreements have been negociated
for IPR?
Old international agreemets were seeking to help
IPR holders, such as
- Paris Convention for the Protection of Industrial
Property which was signed in Paris in 1883,
- Berne Convention for the Protection of Litarary
and Artistic Works (Convention governing the so
called Copyright) which was signed in Berne,
Switzerland in 1886... (cont.)

5. Lecture by Dr. Carsten Weerth BSc (Glasgow)
JUB Int. Trade Law Lecture 10
- Madrid Agreement concerning the International
Registration of Marks which was signed in Madrid
in 1891,
- The Hague Agreement concerning the Interna-
tional Deposit of Industrial Designs which was
signed in The Hague / NL in 1925,
- other agreements that are governed by the
World Intellectual Property Organization (WIPO),
see www.wipo.int ...

6. Lecture by Dr. Carsten Weerth BSc (Glasgow)
JUB Int. Trade Law Lecture 10
- So there was a very detailed and good
system of agreements however only very few
countries signed the many agreements...
- that dilemma was solved during the WTO
negotiations in 1994 when TRIPS was drafted
as an overall bracked agreement (all other
agreements are since then compulsory for the
153 WTO members)
- TRIPS means that since 1995 there are
universal IPRs...

7. Lecture by Dr. Carsten Weerth BSc (Glasgow)
JUB Int. Trade Law Lecture 10
- TRIPS consists out of 73 Articles
- basic idea of TRIPS can be read in the
preamble (please read yourself later)
- TRIPS Covers:
- Copyright and Related Rights (Section I)
- Trademarks (Section II), e.g. adidas
- Geographical Indications (Section III) such as
Cammonbert, Gouda, Champaign or Solingen

8. Lecture by Dr. Carsten Weerth BSc (Glasgow)
JUB Int. Trade Law Lecture 10
TRIPS Covers:
- Industrial Designs (Section IV)
- Patents (Section V)
- Layout-Designs (Topography designs) of
integrated circuits (Section VI)
- Protection of undisclosed information (Section
VII)
- Control of Anti-Competitive practices in
Contractual Licences (Section VIII)

9. Lecture by Dr. Carsten Weerth BSc (Glasgow)
JUB Int. Trade Law Lecture 10
TRIPS Enforcement by help of customs:
- Part III of TRIPS (Articles 41 – 61 TRIPS)
rules the procedure of enforcing IPR offences
- Basic and overall principle: customs authori-
ties may stopp goods that are possibly counter-
feit or against the IPR of a IPR-holder
- In the EU Reg. (EC) Nr. 1183/2003 contains
the possible procedures including the suspen-
sion of release by customs authorities (see Art.
51 TRIPS)...

10. Lecture by Dr. Carsten Weerth BSc (Glasgow)
JUB Int. Trade Law Lecture 10
- TRIPS Enforcement may lead to longer
import procedures (max 10 + 10 days of
suspension of the release for free circulation)
- In case of proven IPR offences they may lead
to fines and criminal procecutions by the
national criminal customs authorities and
possibly prosecutions (criminal pillar)
- In case of proven IPR offences they may also
lead to private procecutions by the IPR holder
because he/she wants his/her rights (private
pillar)

11. Lecture by Dr. Carsten Weerth BSc (Glasgow)
JUB Int. Trade Law Lecture 10
- Trade in counterfeit products and other IPR
harmful trade practices are very popular due
to the huge amounts of money that can be
gained. The possible gains cenario is like
trade in drugs or trade in weapons, but it is
less riskful due to fewer enforcement
authorities looking into the trade pattern...

12. Lecture by Dr. Carsten Weerth BSc (Glasgow)
JUB Int. Trade Law Lecture 10
Trade tendencies:
- Brands are very popular with private
consumers (see ebay), e.g. adidas, Nike,
Nokia, HP, Apple...
- Counterfeit products are mostly produced
cheaply in Asia (e.g. China, India,...) and sold
to "rich" countries
- counterfeit products are harmful to producers
and IPR holders but also to consumers...

13. Lecture by Dr. Carsten Weerth BSc (Glasgow)
JUB Int. Trade Law Lecture 10
- Example 1: WENGER Multi-Tool Card
- Ebay auction from the US contained the ad
for a "Wenger Swiss Multi Tool Card"
- Swiss army knife producer Wenger is also
producing Knife-Cards and stands for a high
quality product...
- Victorynox the Swiss competitor is producing
credit card shaped knifes...
- so is the seller allowed to use the brand
Wenger?

14. Lecture by Dr. Carsten Weerth BSc (Glasgow)
JUB Int. Trade Law Lecture 10
- Example 2: PARKER Sonnet fountain pen
- Ebay auction from Pakistan contained the ad
for a "Parker Sonnet fountain pen cisilled"
- Parker is producing the Sonnet with silver
plated outer surface and gold plated nib...
- Counterfeit Sonnet fountain pens are found
since the 1990ies from different countries...
- so is the bought pen an original and how can
you file a complain? Discuss...

15. Lecture by Dr. Carsten Weerth BSc (Glasgow)
JUB Int. Trade Law Lecture 10
What happens when counterfeit products are
being imported?
What are the regulations of TRIPS?
"Article 41 TRIPS General Obligations
1. Members shall ensure that enforcement procedures as
specified in this Part are available under their law so as to permit
effective action against any act of infringement of intellectual
property rights covered by this Agreement, including expeditious
remedies to prevent infringements and remedies which
constitute a deterrent to further infringements. These procedures
shall be applied in such a manner as to avoid the creation of
barriers to legitimate trade and to provide for safeguards against
their abuse."

16. Lecture by Dr. Carsten Weerth BSc (Glasgow)
JUB Int. Trade Law Lecture 10
"Article 51 TRIPS Suspension of Release by Customs Authorities
Members shall, in conformity with the provisions set out below,
adopt procedures to enable a right holder, who has valid grounds
for suspecting that the importation of counterfeit trademark or
pirated copyright goods may take place, to lodge an application in
writing with competent authorities, administrative or judicial, for the
suspension by the customs authorities of the release into free
circulation of such goods. Members may enable such an
application to be made in respect of goods which involve other
infringements of intellectual property rights, provided that the
requirements of this Section are met. Members may also provide
for corresponding procedures concerning the suspension by the
customs authorities of the release of infringing goods destined for
exportation from their territories."

17. Lecture by Dr. Carsten Weerth BSc (Glasgow)
JUB Int. Trade Law Lecture 10
"Article 52 TRIPS Application
Any right holder initiating the procedures under Article 51
shall be required to provide adequate evidence to satisfy
the competent authorities that, under the laws of the
country of importation, there is prima facie an
infringement of the right holder’s intellectual property
right and to supply a sufficiently detailed description of
the goods to make them readily recognizable by the
customs authorities. The competent authorities shall
inform the applicant within a reasonable period whether
they have accepted the application and, where
determined by the competent authorities, the period for
which the customs authorities will take action."

18. Lecture by Dr. Carsten Weerth BSc (Glasgow)
JUB Int. Trade Law Lecture 10
Article 54 TRIPS Note of Suspension
"The importer and the applicant shall be
promptly notified of the suspension of the
release of goods according to Article 51."

19. Lecture by Dr. Carsten Weerth BSc (Glasgow)
JUB Int. Trade Law Lecture 10
Article 55 TRIPS Duration of Suspension
"If, within a period not exceeding 10 working days after the
applicant has been served notice of the suspension, the customs
authorities have not been informed that proceedings leading to a
decision on the merits of the case have been initiated by a party
other than the defendant, or that the duly empowered authority has
taken provisional measures prolonging the suspension of the
release of the goods, the goods shall be released, provided that all
other conditions for importation or exportation have been complied
with; in appropriate cases, this time-limit may be extended by
another 10 working days. If proceedings leading to a decision on
the merits of the case have been initiated, a review, including a
right to be heard, shall take place upon request of the defendant
with a view to deciding, within a reasonable period, whether these
measures shall be modified, revoked or confirmed. [...]"

20. Lecture by Dr. Carsten Weerth BSc (Glasgow)
JUB Int. Trade Law Lecture 10
Article 59 TRIPS Remedies
"Without prejudice to other rights of action open to the
right holder and subject to the right of the defendant to
seek review by a judicial authority, competent authorities
shall have the authority to order the destruction or
disposal of infringing goods in accordance with the
principles set out in Article 46. In regard to counterfeit
trademark goods, the authorities shall not allow the re-
exportation of the infringing goods in an unaltered state
or subject them to a different customs procedure, other
than in exceptional circumstances."
So destruction is possible but re-exportation is not.

21. Lecture by Dr. Carsten Weerth BSc (Glasgow)
JUB Int. Trade Law Lecture 10
Article 60 TRIPS De minimis imports
"Members may exclude from the application of
the above provisions small quantities of goods
of a non-commercial nature contained in
travellers' personal luggage or sent in small
consignments."
So this is an exception from the ban of
counterfeit and pirated products which is in force
in the EU. Travelling passengers are allowed to
bring a very small amount of pirated goods for
their own use...

22. Lecture by Dr. Carsten Weerth BSc (Glasgow)
JUB Int. Trade Law Lecture 10
Conclusion:
Importers are facing
- problems with customs authorities
- problems with lawyers of IPR holders
- problems with IPR holders
- court proceedings for the payment of damage
- court proceedings for criminal actions
- the loss of the whole goods
- the payment of all charges (transport, warehou-
sing, destruction, charges, legal counsels)...

23. Lecture by Dr. Carsten Weerth BSc (Glasgow)
JUB Int. Trade Law Lecture 10
Trade in fake medicine
- Is rising constantly due to huge income (as good as
trade in illicit drugs or weapons but less dangerous)
- easy marketing ways through the internet
- huge demand on the globe
- buyer thinks/hopes that he/she gets helpful medicine
- Problem: remedies against cancer or HIV or artificial
insulin or antibiotics are not working at all...
- Viagra and other products may be the tip of the
iceberg but they are only known to the public – the real
problem lies underneath the water surface...