A 1950's era Canada Customs cap was purchased at the Cookstown ON Antique Centre by antefixus21 (CC BY-NC-ND 2.0) https://flic.kr/p/jCvuNY

A 1950's era Canada Customs cap was purchased at the Cookstown ON Antique Centre by antefixus21 (CC BY-NC-ND 2.0) https://flic.kr/p/jCvuNY

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Just Passing Through: Why Canadian Anti-Counterfeiting Law Should Not Permit In-Transit Shipment Searches

As Canadian officials prepare for the forthcoming NAFTA renegotiation, changes to Canada’s border measures provisions seem likely to surface as a U.S. demand. Late last month, the USTR released its annual Special 301 report and the issue of Canadian anti-counterfeiting law – in particular, the absence of provisions to allow for the search of in-transit shipments that are not bound for Canada – topped the list of concerns. The U.S. report states:

The United States remains deeply concerned that Canada does not provide customs officials with the ability to detain, seize, and destroy pirated and counterfeit goods that are moving in transit or are transshipped through Canada. As a result, the United States strongly urges Canada to provide its customs officials with full ex officio authority to address the serious problem of pirated and counterfeit goods entering our highly integrated supply chains.

The U.S. position has garnered some support in Canada. For example, a recent Globe and Mail editorial urged the government to change the 2014 anti-counterfeiting law by granting customs agents the power to search and seize shipments that are not bound for Canada.

The Globe editorial echoed longstanding U.S. government pressures that date back to the introduction of the law.  The Canadian law granted customs officials unprecedented powers, but the U.S. was still unsatisfied with then-ambassador Heyman stating:

“We are pleased Canada has introduced legislation that will give its border officials the authority to seize pirated and counterfeit goods, but the United States is concerned because the bill does not apply to goods that are shipped through Canada, from a third country to the U.S.”

James Moore, the Canadian Industry Minister at the time, rejected the criticism, noting that Canada need not act as a customs agent for the United States.

What neither the Globe nor Moore mention is that the seizure of in-transit shipments in other jurisdictions has involved the seizure of generic pharmaceuticals, posing a threat to international trade, development and public welfare. For example, in November 2008, Dutch customs agents seized a shipment of AIDS/HIV medications at Schiphol Airport near Amsterdam. The Nigeria-destined medications originated in India, which produced a generic version of abacavir, an anti-retroviral drug. The global health group UNITAID had purchased the 49 kilograms of abacavir with the Clinton Foundation scheduled to assist in their distribution once they reached Africa.

The seizure in the Netherlands came at the request of GlaxoSmithKline, the pharmaceutical giant that claimed the Indian drug violated its patent rights and contained counterfeit materials. UNITAID maintained that the drugs were not counterfeit, but the seizure dragged on for months.

The Dutch seizure was not an isolated incident. During 2008 and 2009, Doctors Without Borders found at least 19 shipments of generic medicines from India to other countries were impounded while in transit in Europe. Several years later, the Court of the European Justice ruled against in-transit seizures, concluding that there was no infringement in the EU.

While Dutch seizures of Africa-bound pharmaceutical drugs have little connection to Canada, the experience with in-transit seizures of generic pharmaceutical drugs provides an important cautionary tale of why countries are right to resist targeting shipments that do not originate domestically and are destined for a different country. Canada adopted the right approach in 2014 and should reject calls to amend a law in a manner that would increase Canadian costs and pose global health risks.

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