Trade Mark Infringement, Spurious Drugs or Misbranded Drugs?

A previous post[1] discussed the difficulties in criminal prosecution of trade mark infringement in cases involving medicines. It seemed from that discussion that the justice system deterred trade mark owners from being able to successfully prosecute for offences under the Trade Marks Act. That post also contained a few suggestions to reform the law and practice of drug labelling.

If the Trade Marks Act is not effective in prosecutions for infringement, is there a remedy elsewhere to prevent fraudsters gambling with peoples’ lives? In a recent discussion with senior police officers, the answer proffered was that there was a better remedy in the Drugs and Cosmetics Act. However, the police officers seemed unaware of these provisions.

In the recent case involving the cancer drug, Adcetra, manufactured by Takeda, the police registered an FIR citing the provisions of Sections 420, 336, 483, 486 and 34 IPC, and provisions of the Trade Marks Act and the Copyright Act, but not the Drugs and Cosmetics Act (Drugs Act),[2] and seized counterfeit drugs from a dealer in Mumbai. The only explanation that can be offered for this is the lack of awareness of the provisions of the Drugs and Cosmetics Act among the police and the pharma industry.

Here are the various provisions of the Drugs and Cosmetics Act, 1940 that could have been applied to that case and included in the FIR:

Section 17(c) – a drug shall be deemed to be misbranded if its label or container or anything accompanying the drug bears any statement, design or device which makes any false claim for the drug or which is false or misleading in any particular.

Section 17-B – a drug shall be deemed to be spurious if,–

(a) it is manufactured under a name which belongs to another drug; or

(b) it is an imitation of, or is a substitute for, another drug or resembles another drug in a manner likely to deceive or bears upon it or upon its label or container the name of another drug unless it is plainly and conspicuously marked so as to reveal its true character and its lack of identity with such other drug; or

(c) the label or container bears the name of an individual or company purporting to be the manufacturer of the drug, which individual or company is fictitious or does not exist; or

(d) it has been substituted wholly or in part by another drug or substance; or

(e) it purports to be the product of a manufacturer of whom it is not truly a product.

Section 18. Prohibition of manufacture and sale of certain drugs and cosmetics.— No person shall himself or by any other person on his behalf (a) manufacture for sale or for distribution, or sell, or stock or exhibit or offer for sale or distribute (i) any drug which is misbranded, adulterated or spurious.

Would the procedure and the outcome be different if these provisions were used to prosecute the dealer of counterfeit drugs?

To begin with, the FIR would have disclosed a more serious offence than just trade mark infringement or fraud under the IPC. The punishment for the offence of dealing in spurious drugs is seven years to life imprisonment[3] and this would make the offence cognizable and non-bailable. It is also likely that the court would be reluctant to grant bail to the accused given the seriousness of the offence and the likely harm caused to public if the accused was allowed to be free on bail.

Mens rea of the accused in trade mark infringement and IPC cases would be a burden on the prosecution and that is perhaps one of the reasons for low rates of conviction and the rare case of imprisonment in such cases. However, there is no need to prove mens rea in cases like this thanks to Section 19 of the Drugs Act which states unequivocally that “it shall be no defence in a prosecution under this chapter to prove merely that the accused was ignorant of the nature, substance or quality of the drug in respect of which the offence has been committed or of the circumstances of its manufacture or import”. Therefore all that the prosecution has to state in the charge-sheet is that the dealer did not have a licence for the import and sale of that counterfeit drug and had not acquired it from a licensed distributor. It would then fall on the accused to show that he was duly licensed and had imported the drug in accordance with such licence or that the drug was purchased from a licensed distributor.

It should now be evident that the procedure for trial under the Drugs Act is simple, almost a summary trial given how little has to be proved by the prosecution and the limited defences available to the accused. It is a mystery why pharma companies, the State drug regulator and the police are not using the stringent provisions of the Drugs Act more effectively to enforce the law and save lives. Is it because the courts have not been keen to impose the punishment of seven years to life imprisonment[4]? Are the cases of violation of the Drugs Act that have been brought before the courts merely “technical violations” and not the kind that occurs in the case of Adcetra?

† Murali Neelakantan is currently Principal lawyer at Amicus. He is a dual qualified lawyer (India and UK) and among other positions, he was formerly a partner at an international law firm in London, Cipla’s first global general counsel, and Executive Director and Global General Counsel of Glenmark Pharmaceuticals.

[1] Criminal Trade Mark Infringement for Medicines – An Ineffective Remedy. See Here

[2]Mumbai : Women Arrested for selling fake medicines to cancer patients, See HERE .

[3] Drugs and Cosmetics Act, 1940, S. 27.

[4] A search on SCC Online shows that in all the cases before the Supreme Court where punishment under S. 27 was in issue, the punishment was usually a small fine and occasionally simple imprisonment for a few months. There were no cases where imprisonment of more than a year was imposed.