Singapore: invoking the right laws and navigating the challenges
In May this year, as part of the annual Operation Pangea, an Interpol-led international internet week of action targeting the illegal online sale of counterfeit and unlicensed medicines, the Singapore Health Sciences Authority (HSA) seized more than 56,000 units of counterfeit health products, with a total estimated street value of more than US$320,000. More than 60% of the counterfeit health products seized were sexual enhancement drugs, some of which contained undeclared potent Western medicinal ingredients like tadalafil.
In light of this crackdown, we consider the existing legal framework in Singapore for drug anti-counterfeiting actions and set out the legal and practical challenges involved. To curb such activities effectively, right owners should consider alternative modes of enforcement and wield them in combination for effective brand protection.
Existing legal framework
Right owners in Singapore may choose to take civil and/or criminal action against drug counterfeiters.
Civil actions
If the packaging of the counterfeit drugs or the drugs themselves bear registered marks, which may be a company name, product name, sign, shape or even a colour, the trademark owner may bring claims for trademark infringement, as well as passing off. Where the labels are not protected by trademarks, copyright infringement may also apply if the packaging of the counterfeit drugs is similar enough to the packaging of the original drugs.
Patent infringement is becoming an increasingly attractive option as sophisticated counterfeiters are shifting their focus from manufacturing “visual fakes” to adulterated drugs containing active ingredients. Blockbuster drugs, such as Viagra (sildenafil) and Cialis (tadalafil), are usually protected by product patents that cover the active ingredients.
The remedies derived from civil infringement actions include damages or an account of profits; an injunction; an order for delivery up and/or destruction of infringing goods; and costs. Right owners may also apply for a civil search order, previously known as an Anton Piller order, and seize incriminating evidence such as supply and distribution records to determine the source, as well as the extent of the infringement, to compute the damage suffered. Clearly, not every remedy may be claimed within the same action, and the right owners will have to elect their preferred relief.
Criminal actions
In Singapore, trademark and copyright infringement, but not patent infringement, are criminal offences. Counterfeiting a registered trademark or copyrighted work on the packaging or the drug itself may attract a fine of up to US$80,000 and/or a jail term of up to five years. Similar penalties will also apply to importers of such counterfeit products, with fines of US$8,000 imposed per article, capped at US$80,000 in the aggregate, and/or a jail term of up to five years.
There are two forms of IP criminal actions: private actions commenced by the right owners and ex officio actions triggered by the IP Rights Branch of the Singapore Police Force (IPRB).
From a regulatory perspective, drug counterfeiting activities are also separate criminal offences. Such offences will fall within the purview of the HSA.
(i) Private IP criminal action
Right owners can, upon reasonable suspicion that trademark and/or copyright infringement offences are committed, apply to the Singapore State Courts for criminal search and seizure warrants. These warrants, when granted, are executed by the IPRB, and provide for the entry into and search of any premises which are believed to contain infringing articles. Infringing articles are seized, including incriminating documents such as supplier records in physical or electronic form. Practically, once the warrants are executed, right owners can issue demand letters asserting civil infringement, and attempt to achieve a favourable settlement.
Private prosecution is also a possible option. Right owners may apply for a fiat from the Attorney General Chambers, which allows them to prosecute the infringers on behalf of the state. Essentially, the right owner will have autonomy in deciding their next course of action.
(ii) Ex officio IP and regulatory actions
The IPRB, from time to time, may carry out investigations and execute IP raids on its own initiative or act upon complaints from the general public or right owners.
However, in relation to ex officio actions for counterfeit drugs, the IPRB generally defers to the HSA as the HSA is the relevant regulatory authority for drugs. As highlighted above, drug counterfeiting activities may constitute separate criminal offences from a regulatory perspective. For example, in Operation Pangea, some of the illegal drugs were found to contain tadalafil, a substance which is classified as both a medicinal product and a listed poison in Singapore. Without the requisite product licence and poisons licence, it is an offence to supply tadalafil or offer it for sale. Offenders face a maximum penalty of a jail term of up to two years and/or a fine of US$4,000 under the Medicines Act, with even heftier fines of up to US$8,000 under the Poisons Act. Further, it is a separate offence under the Medicines Act to adulterate medicinal products, or to sell or supply such adulterated medicinal products. The penalty for such dealings is a fine of US$4,000 and/or imprisonment for two years.
The HSA has broad search and seizure powers under the Medicines Act and Poisons Act in cases where regulatory offences are suspected to have been committed. Such powers were invoked during Operation Pangea.
Navigating the challenges of enforcement
Choosing the right approach
Preliminary investigations are usually required to assist right owners in deciding upon their next course of action. As sellers of counterfeit drugs are savvy at evading detection, investigations may require sophisticated pretexts which would cost more than the average enforcement action.
With the evidence from investigations, the types of infringement can be ascertained, such as whether the counterfeits are visual fakes, which will trigger trademark and copyright infringement, but not patent infringement in most cases, or whether they are adulterated unmarked products which contain the right owners’ active ingredients, which may trigger patent infringement but not trademark and copyright infringement.
"As sellers of counterfeit drugs are savvy at evading detection, investigations may require sophisticated pretexts which would cost more than the average enforcement action."
The investigations’ outcome can also offer some clues to the extent of the infringers’ operations, such as whether they are local brick and mortar businesses, or whether they are sinister syndicates. For the former, if trademark and/or copyright infringement have taken place, a criminal search and seizure warrant may be useful as the threat of criminal prosecution may incentivise a favourable settlement. For the latter, alerting the IPRB or HSA can be considered if costs are a concern, as these authorities are naturally better equipped to undertake extensive investigations.
When counterfeit drugs are supplied as active ingredients in their raw form, or are later mixed with other substances to be eventually sold as adulterated drugs, claims of trademark or copyright infringement cannot be established when the counterfeit product seized is simply the patented active ingredient. Absent any packaging, the only avenue available to the right owner will be for patent infringement. Civil search orders may be deployed to obtain evidence of patent infringement.
Generally, costs permitting, private actions are recommended given that the right owners retain control and autonomy. The results are also quicker. On the other hand, for ex officio actions, the authorities, if they choose to act, will have full control over the conduct of the matter, and there is no right to damages.
Nonetheless, there is no hard and fast rule on which option to invoke. Various factors will need to be considered, such as the type of infringement; the extent of the infringers’ operations and the costs involved. For instance, if there is trademark and copyright infringement, a criminal search and seizure warrant may complement civil actions, for the reasons described above. If syndicates lurk beneath the surface, alerting the IPRB or HSA may also be considered.
Online enforcement
Online marketplaces such as eBay and Qoo10, as well as forums and social media websites, may sometimes offer illegal drugs for sale. Right owners could shortlist several targets and make sample purchases to determine the authenticity of the products. However, this time-consuming process may have marginal returns on investment given the nature of online suppliers, which tend to operate on a smaller scale than bricks-and-mortar businesses.
Right owners could consider engaging brand protection service providers to monitor and report on potential counterfeits among the various online marketplaces, social media platforms and other websites. With the results, right owners may better assess the cost-efficiency of enforcing their rights against each target.
Conclusion
Ultimately, enforcement is as much a commercial decision as it is a legal recourse. Right owners should not rule out regulatory avenues as an anti-counterfeiting strategy, and seek legal advice to develop comprehensive brand protection plans.
Andy Leck is the managing principal of Baker & McKenzie.Wong & Leow, the Singapore member firm of Baker & McKenzie. He can be contacted at: andy.leck@bakermckenzie.com
Ren Jun Lim is a senior associate at the same firm. He can be contacted at: ren.jun.lim@bakermckenzie.com
