New Face Of Counterfeit - Copycat COVID Products

While India continues to fiercely battle the novel coronavirus, the looming threat of counterfeiting rises and the market faces an strong attack of counterfeit products, especially drugs and medical supplies, thereby causing distraught to the public and manufacturers alike. Ever rational consumer was caught off guard at the inception of this pandemic, as an impulse to create stock piles of groceries, medical supplies, drugs etc. reverberated throughout the country. Despite reassuring claims of the government and manufacturers picking up the production pace, deep seethed fear amongst the public was palpable and some viewed this as a lucrative opportunity to cash-in upon this distress.

Focus will be on established brands during COVID-19 pandemic due to such counterfeiting, stressing majorly on the pharmaceutical sector and how their Intellectual Property (IP) rights are affected.

Counterfeiting in layman's terms is deceptively posing as established brands, in order to market illicit products to the public and has been projected to drain approximately USD 4.3 trillion from the global economy, along with piracy by 2022. Since the outbreak of the coronavirus, dependency on e-commerce has increased exponentially, thereby making a consumer more susceptible to online counterfeit attacks. Reportedly, Amazon had to remove more than 1 million fake products claiming to cure the virus. As per Forbes estimate, the market is flooded with counterfeit drugs worth USD 200 billion annually and with India being the 3rd largest producer, with an estimate industry value standing at USD 55 billion this year, it would be too optimistic to rule out the possibility of counterfeiting plaguing this industry.

Counterfeit Sanitizers during Pandemic

Fearing its ripple effect in India, the Central Bureau of Investigation (CBI) issued warning across all States and Union Territories to maintain a strict vigil for counterfeit gangs posing as PPE and selling hand sanitizers containing methanol, a highly-toxic substance as its base as opposed to ethanol, isopropanol or a combination of these. Things took a turn for the worse, when the market saw an influx of 'opportunists' selling similar products under deceptively similar brand names. A few notable examples can be viewed herein:

Additional statistics showing regarding counterfeit sanitizer industry amidst lockdown:

• Hyderabad - Seized 25,000 units of 100 ml hand-sanitizers and raw materials worth INR 40 lakh. Racketeers managed sale worth INR 1.4 crore.
• Bangalore - Seized fake hand-sanitizers worth INR 56 lakh during raids conducted in factories.
• Delhi - Seized 2,480 kg of raw materials, including masks, hand-sanitizers, PPE kits being smuggled to China.
• Mumbai - Seized fake sanitizers worth INR 2 lakh, manufactured by company with an expired license.

Intellectual Property (IP) and Counterfeiting

In India, ever since the Ministry of Consumer Affairs (MCA) declared hand-sanitizers and face masks as 'essential commodities' and introduced INR 20 lakh crore economic relief package catering specifically to local manufacturing, several budding companies and SMEs jumped on this lucrative business opportunity to secure a footing in the industry.The Indian Trade Mark Offices saw a surge in trademark filings for sanitizers just between the periods of March - May, 2020 (approx. 350 applications).

It is factual knowledge that robust IPR regime of a country stimulates economic development, as there is innovation growth, technology transfer and strong legal enforcement. For developing countries particularly, IP can provide tax incentives, attract FDIs, foster growth of small-medium enterprises (SMEs) and create employment opportunities.

With circulation of counterfeits, not only is the economy crippled, there is infringement of intellectual property of well-known entities. In the case of pharmaceuticals, counterfeiters can reverse-engineer the laborious and capital-intensive research to produce a cheaper substitute and pass it off under the pretext of original product.

Brand imitation is not a new phenomenon and has been vexing established brands for years. Its influx by way of counterfeiting, is just another medium of infringing upon the rights of bona fide manufacturers and eating away their profits and now, it has vicariously jeopardised the safety and health of the nation in its wake. Especially, e-commerce platforms wherein the physical lag and lack of 'seller' information enables counterfeiters to guise themselves as the official supplier.