Field Reports1 Jun, 2005 By: Thomas Haire, Nicole Urso Reed, Gregory J. Sater Response
Combating Counterfeit Pharmaceutical Marketing
Counterfeiting is a serious problem in the pharmaceuticals industry — made worse because more people are buying pharmaceuticals online without really knowing what they are getting.
This problem is not new. Twenty years ago, 1 million counterfeit birth control pills made their way into the U.S. market, causing injury to many consumers and forcing the the authentic pill's manufacturer to conduct a recall. But the growing tide of counterfeiting in Asia, Eastern Europe and other countries — some of which has been linked to organized crime and terrorist groups — combined with Internet technology have conspired to make things much worse.
For example, earlier this year, a San Diego man was sentenced to 51 months in prison for operating an online pharmacy at www.worldexpressrx.com, which sold millions of dollars worth of counterfeit pharmaceuticals in the United States, including counterfeit versions of Viagra, Cialis and Levitra. He also offered credit card processing to unrelated Web sites that sold counterfeit drugs.
Most popular drugs are now counterfeited. Two years ago, the Food and Drug Administration (FDA) issued a consumer alert warning that no fewer than 200,000 bottles of counterfeit Lipitor (a cholesterol drug) were on the U.S. market. That same year, a 16 year-old liver transplant recipient received two months of counterfeit Epogen injections. Though the young man did not die, it caused him serious personal injury.
The World Health Organization estimates that 10 percent of all pharmaceuticals sold are counterfeit and that, in developing nations, it can reach 60 percent. What legal remedies are currently available in the United States to help marketers address this problem?
Register Your Product
First, marketers should register all trademarks with the U.S. Patent and Trademark Office, and should register all copyrightable materials with the U.S. Copyright Office. Next, marketers should record these registered trademarks and copyrights with U.S. Customs, now part of the Department of Homeland Security and known as Customs and Border Protection (see www.customs.gov ). The cost for a trademark is $190 per class of goods in the registration — a small price to have U.S. government agents working to inspect, seize and destroy counterfeit goods before they enter the U.S. marketplace and hurt your sales and consumers.
In 2004, there were 7,000 seizures, valued at $140 million. Although Customs is improving, thanks to a new intellectual property initiative called Strategy Targeting Organized Piracy (STOP), product marketers must assume agents will miss most counterfeit shipments entering the United States (see www.stopfakes.gov, for information about government efforts to stop counterfeiters).
Thus, the third remedy: private investigation and civil enforcement. In proper jurisdictions, the Lanham Act gives owners of validly registered U.S. trademarks the right to sue a person dealing in counterfeit goods over the defendant.
A counterfeit mark is defined as "a spurious mark which is identical with, or substantially indistinguishable from, a registered mark." If you know who the defendant is, you can seek a court order, without giving prior notice, authorizing the seizure of all counterfeit goods and all documents relating thereto. In addition to injunctive relief and the destruction of the materials bearing the counterfeit mark, you can recover treble profits, treble damages, statutory damages, costs and attorneys' fees.
Criminal and Civil Remedies
Other remedies exist. In some cases, the United States prosecutes counterfeiters criminally. Civil petitions also can be filed with the U.S. International Trade Commission (ITC), which can result in administrative hearings and orders from the ITC directing Customs to stop all imports of a particular product. In several states, there also are laws that create civil remedies for damages and for ex parte seizure of counterfeit goods.