INDIA and EU have worked out a settlement plan for the disputes relating to the generic drugs in transit. EU has acceded to India's request for adoption of guidelines which would confirm the principles agreed to in the Understanding with a view to give greater and immediate legal certainty for producers and traders. India has reiterated the core principle of the Understanding that the mere fact that medicines are in transit through EU territory, and that there is a patent title applicable to such medicines in the EU territory, does not in itself constitute enough grounds for Customs authorities in any Member State to suspect that the medicines at stake infringe patent rights.

However, a situation in which medicines are in transit through EU territory and there is adequate evidence that satisfies the Customs authorities that there is a substantial likelihood of diversion of such medicines on to the EU market may constitute enough grounds for customs authorities to suspect that the medicines at stake infringe patent rights in the EU.

In a related development the European Commission has adopted a proposal for a new Regulation to replace Regulation 1383/2003. India trusts that the EU will reflect appropriately the principles set forth in the Understanding, in particular, the core principle of the Understanding, in the Regulation to be adopted to replace Regulation 1383/2003. India is also conveying its views to the EU on the replacement Regulation proposed by the Commission.