New Delhi: Asserting that counterfeit medical products pose a significant threat to public health, the Delhi High Court Tuesday ordered the owner of the offending company pay a compensation of Rs 3.34 crore to the US-based company Johnson & Johnson.
While the court fixed compensatory damages at Rs 2.34 crore, Rs 1 crore was awarded in exemplary damages. Better known as punitive damages, exemplary damages refer to extra damages awarded beyond the damage actually incurred.
“By selling counterfeit medical products, the defendants have not only inflicted substantial financial loss upon the plaintiff but have also misled the consumers who purchased these products under the false belief that they were genuine,” Justice Amit Bansal said on J&J’s plea that sought to permanently stop Medserve, the defendant, from infringing the trademark and selling counterfeits
A trademark is a symbol, design, word, or phrase used to identify a business’s goods or services. Once registered, a trademark owner can claim exclusive rights over its use for 10 years. Section 25 of the Trademarks Act, 1999, says that the trademark—registered at the Office of the Controller General of Patents, Designs, and Trademarks—can also be renewed periodically.
Usually, when a trademark is infringed, courts can step in to provide relief by restraining the use of another’s trademark through ad interim (temporary) or permanent injunctions. They can also order damages in favour of the one whose registered trademark has been infringed.
This case was not “merely” a case of trademark infringement but also a “grave offence” endangering the lives of people, the court said in its 36-page ruling, adding that “counterfeit medical products sold by the defendants pose a significant threat to public health”.
“The defendants’ conduct demonstrates a deliberate effort to mislead the public, jeopardize consumer safety and exploit consumer trust for financial gain,” it added.
Granting a permanent injunction in J&J’s favour, the court said that all counterfeit products seized by the local commissioners can also be destroyed by the healthcare giant.
In its plea, Johnson & Johnson said that the company acquired ‘Ethicon Suture Laboratories’ in 194 and later it was renamed to ‘Ethicon Inc.’, famously known for the manufacture of surgical sutures, bleeding management and wound-closing devices.
One of the medical devices sold by Ethicon was under the trademark ‘SURGICEL’. The term ‘Surgicel’ was coined by J&J in 1957 to refer to sterile absorbable knitted fabric hemostat. However, by 1960, an “oxidized regenerated cellulose hemostat for controlling bleeding in certain critical surgical procedures”, was also introduced, which helped control bleeding during surgical procedures.
By 1990, J&J started using the ‘SURGICEL’ mark for its products in India. Before the court, it asserted that the mark reflects state-of-the-art facilities, which have quality control, specialised equipment and consistent processes which make their products reliable for surgeons.
Noting that the defendants “deliberately” sold counterfeit medical products, the court said that tests conducted by J&J showed that the defendant’s counterfeit products failed to meet the “necessary oxidation levels” required for proper absorption in the body.
Moreover, the use of such substandard medical devices during surgery could result in severe complications, including infections, foreign body reactions, and surgical adhesions, it said.
“By selling substandard counterfeit products under the plaintiff’s trade marks, the defendants have misled consumers and associated the plaintiff’s name with the counterfeit goods.”
Pointing to the evidence, including the reports of the local commissioner, the court found that the defendants received substantial financial gains. “These transactions, as detailed in the Local Commissioners’ Report, and invoices found at the premises, demonstrate a clear pattern of profiting commercially, by selling counterfeits, at the expense of the plaintiff,” it noted.
Flagging the compelling evidence on record and the blatant disregard for the court’s orders, the court said that the defendant’s conduct in this case necessitated the imposition of compensatory and exemplary damages.
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How infringing products were found
In 2019, while performing brain surgery, a neurosurgeon at the University of Kentucky Medical Center, US, had observed “certain irregularities” in surgical devices bearing the plaintiff’s trade mark ‘SURGICEL’.
Later, when the surgeon reported this to the company, it examined the products and found that the device was a fake or a counterfeit. Following an inquiry by the company, it was found that the university had procured over 1,000 units of ‘SURGICEL’ branded surgical devices from a US-based entity, XS Supply.
Subsequently, J&J filed a complaint against XS Supply at the district court, Florida. However, passing on the baton, this company said that it had also purchased these products from another Florida-based company, Lion Heart Surgical Supply.
A visit to the Lion Heart offices also led to multiple units of J&J surgical devices, which, upon testing, were confirmed to be counterfeit. Lion Heart claimed that it had procured these devices from UAE-based Pure Care Traders.
When Johnson mailed the UAE company, its partner revealed that these devices were shipped from Delhi by Pritamdas Arora, who ran a company by the name of Medserve.
Examination showed that the counterfeit devices were inadequately oxidized, non-sterile, and contaminated with bacterial infection. Moreover, some of these were original, expired and repacked to display the “SURGICEL” trademark, along with a false expiry date.
(Edited by Tony Rai)
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