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June 25, 2020

Emerging Pandemic Effect: Upsurge in the Sale Of Counterfeits


- Manisha Singh, Partner [ LexOrbis ]
- Hemlata Verma, Associate [ LexOrbis ]

Manisha-Singh-&-Hemlata-Verma

Sale of counterfeits of essential medical supplies such as spurious drugs and medicines, surgical masks, diagnostic kits, ventilators, and other essential medical devices and appliances has been seen during the pandemic...

The COVID-19 pandemic worldwide has inflicted an incalculable loss on human health and the economy and is continuing to proliferate every day. As on 07 June 2020, WHO1 discovered 67,99,713 confirmed cases, 397,388 confirmed deaths across 216 countries, areas or territories, with cases of COVID-19. Within India, according to WHO2, as on the abovementioned date, 246,628 total confirmed cases, 9,971 total confirmed new cases, 6,929 total deaths, 287 total new deaths, and clusters’ transmission had been discovered.

 COVID-19 lockdown effects:

WTO in its report on “E-COMMERCE, TRADE AND THE COVID-19 PANDEMIC3 revealed that the enforcement of social distancing, lockdowns during the COVID‑19 pandemic has directed consumers to bank online. The pandemic has led to projection in sales of business-to-consumer (B2C) and an upsurge in business-to-business (B2B) e-commerce. The upsurge in B2C sales in online sales of food products, medical supplies, and household essentials has been marked. Several challenges relating to e-commerce have been encountered such as price gouging, deceptive practices, concerns relating to product safety, and development‑related concerns.

The pandemic is prolonging the paralysis from manufacturers to families, from giant trading partners to more isolated economies and developing and under-developed economies. The impact of COVID-19 is reflected across entire industries and sectors including production, manufacturing, construction, logistics, tourism, etc.

transformation foreseen worldwide:

During this lockdown phase, a massive increase in the sale of counterfeit products through e-commerce has been observed. Specifically, the sale of counterfeits of essential medical supplies such as spurious drugs and medicines, surgical masks, diagnostic kits, ventilators, and other essential medical devices and appliances has been seen. Studies reveal that according to Europol4 in only 8 days from March 3 to March 10, 2020, law enforcement officers seized 34,000 counterfeit medical supplies such as surgical gloves and surgical masks from the market which were mostly sold across the 2,000 websites. Also, around 4.4 million items of spurious pharmaceuticals were seized. Overall, $14 million fake medicines and pharmaceuticals have been seized. The statistics which resulted in rise in the online sale of fake and unauthorized antiviral medicines and the antimalarial “hydrochloroquine” are terrifying.

Under Article 61 of TRIPS, the member states should have the provisions for criminal procedures and penalties for trademark counterfeiting or piracy of copyrighted matter on a commercial scale.

India has not enacted any specific laws and regulations concerning piracy and counterfeiting of goods. However, in India, under trademark laws, the rights holder or applicant of the trademark has rights under the law of passing off5 which safeguards the merchants/ traders from misrepresenting goods or services as being another’s goods and services. Generally, India’s Customs Act is read with the Imported Goods Enforcement Rules that permit trademark, designs, brand holders to reserve their rights with Indian Customs Authorities for the seizure of the imported counterfeit merchandise.

After the COVID-19 outbreak, in order to regulate the quality standard and safety of medical devices, the Central Government of India has notified that all medical devices sold in the country will be treated as “drugs”6 under the Drugs and Cosmetics Act with effect from April 1, 2020. Through this notification, the Government of India has endeavored to safeguard the public against using counterfeit or sub-standard medical devices which might be extremely disastrous for public health. The distribution of counterfeits of medical supplies may not be controlled and stopped just by raids. The trafficking of such counterfeit pharmaceutics and other medical products through e-commerce without being monitored is one of the major contributing factors which is still unresolved. Therefore, the need of the hour is to formulate a global co-ordinated plan that brings together all stakeholders – manufacturers, brand owners, online traders, governments, and law enforcement bodies – and result in a strong monitoring and check of such unlawful activities because such activities not only hamper public health but also disrupt the Nation’s economy to much extent in this pandemic outbreak. The online and/or offline trafficking of fake medical supplies calls for speedy up-gradation and revision in existing laws to restrict counterfeiting. We urgently need to see the enactment of stringent regulations and heavy penalties for such criminal offenses.

1 https://www.who.int/emergencies/diseases/novel-coronavirus-2019
2 https://www.who.int/docs/default-source/coronaviruse/situation-reports/20200607-covid-19-sitrep-139.pdf?sfvrsn=79dc6d08_2
3 https://www.wto.org/english//tratop_e/covid19_e/ecommerce_report_e.pdf
4 https://www.europol.europa.eu/
5 https://en.wikipedia.org/wiki/Passing_off
6 https://arogyalegal.com/2020/article/all-medical-devices-in-india-to-be-regulated-as-drugs-medical-devices-amendment-rules-2020/


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