COUNT NTERFEITING NG & THE MEDICA CAL DEVICE INDUSTRY BY: - - PowerPoint PPT Presentation

COUNT NTERFEITING NG & THE MEDICA CAL DEVICE INDUSTRY

BY: RICHARD M. BARNES, ESQ. GOODELL DEVRIES LEECH & DANN, LLP. AUGUST 25, 2016

41 410-783-4004 rmb@gdldlaw.com

SETTING T G THE S STAGE GE: : Examples O Of Medica cal D Device ce C Counterfeiting

Counter erfei eit Contact act Len Lenses

• February 2016: Federal Grand

Jury Indictment

• Defendant accused of

importing thousands of colored contact lenses from the People’s Republic of China and South Korea.

• Contacts bore the trademarks

for “Ciba Vision FreshLook COLORBLENDS,” which are manufactured by Novartis International AG.

Counter erfei eit Blood

• od

Glucos cose T e Test Strips ps

• August 2013: Johnson &

Johnson v. Azam Intern. Trading, 2013 WL 40482

• Defendants distributed

counterfeit blood glucose test strips, originating in Pakistan and/or China.

• Test strips bore the trademark

“OneTouch,” owned by Johnson & Johnson.

SETTING T G THE S STAGE GE: : Examples O Of Medica cal D Device ce C Counterfeiting

Counter erfei eit Contact act Len Lenses

• February 2016: Federal Grand

Jury Indictment

• Defendant accused of

importing thousands of colored contact lenses from the People’s Republic of China and South Korea.

• Contacts bore the trademarks

for “Ciba Vision FreshLook COLORBLENDS,” which are manufactured by Novartis International AG.

Counter erfei eit Blood

• od

Glucos cose T e Test Strips ps

• August 2013: Johnson &

Johnson v. Azam Intern. Trading, 2013 WL 40482

• Defendants distributed

counterfeit blood glucose test strips, originating in Pakistan and/or China.

• Test strips bore the trademark

“OneTouch,” owned by Johnson & Johnson.

Counter erfei eit Contact act Len Lenses

• Customers complained

about quality of lenses.

• Contacts allegedly

contaminated with hazardous bacteria.

• Could cause eye

infections, corneal ulcers, and even blindness. Counter erfei eit Blood

• od

Glucos cose T e Test Strips ps

• Worldwide sale and

distribution of potentially deadly counterfeits.

• Unreliable performance,

including highly inaccurate test results.

• Could result in serious injury
• r death from insulin

treatment based on inaccurate blood glucose results.

SETTING NG T THE S STAGE GE ( (Cont.) .): : Counterfeiting C Consequences

SCOPE OF THE PROBLEM

WITH TH MU MUCH A AT T STAKE, TH THERE A ARE MA MANY NY STAKEHOLDER DERS

United Nations FDA U.S. I.C.E. Interpol WHO CDC National Consumers League National Crime Prevention Council National Association of Boards of Pharmacy PhRMA National Health Service (England) Health Canada TGA Health Sciences Authority, Singapore The Media

COUNTERFEITIN ING I G IN T THE N NEWS

USA Today 2011 2011

• The Dangerous

us W World O d Of Count unterfeit Prescript ption D n Drug ugs

CBS 60 Minutes 2011 2011

• The Difficul

ult F Fight ht Agains nst C Count unterfeit D Drug ugs

Forbes 2012 2012

• Fake D

e Drugs s – All A At a a Pharma rmacy N Near Y r You!

Bloomberg 2013 2013

• Inside

de P Pfizer’s F Fight ht A Agains nst Count nterfeit Drugs

Newsweek 2015 2015

• The

he Fake D Drug ug I Indu ndustry i is E Exploding, and W nd We Ca Can’t D Do A Any nything A Abo bout I It

Regulatory Affairs Professionals Society 2016 2016

• US Gener

erics F Firm R Repor

• rts

s Counterfei eit C Cancer D Drug Sales es in Three ee Co Coun untries

THE BOTTOM LINE

MEDIC DICAL D DEVIC ICE C E COUNTERFEIT EITIN ING: G: An n Int nternational I Issue

In 2010, the World Health Organization (WHO) estimated that more t than 8% 8% of medical devices in circulation are counterfeit.

Operat ation

• n P

Pangea V ea VIII: J : June 2015 G Global Effo Effort (FDA)

• Cooperative effort (115 countries) to combat
• nline sale and distribution of potentially

counterfeit and illegal medical products.

• Shut down 2,400 websites and seized $81

$81 milli llion in illegal medicines and medical devices worldwide.

• 2008 – 2015 FDA’s Office of Criminal

Investigations (OCI) has resulted in the seizure

• f more than $172 m

$172 million in unlawful medical products.

BEYOND THE BOTTOM LINE

Counterfeiting C Consequence ces

• Potential health risks to

consumers

• Legal liability
• Negative branding and/or brand

diminishment

• Revenue loss
• Intellectual property theft
• Loss of consumer confidence in

medical products, healthcare providers and health systems

• Threat to innovation
• Loss of tax revenue
• Health plans defrauded
• Resources wasted to combat

counterfeiting

COUNTERFEITIN ING G FAST F FACTS

The WHO has found that the majority of counterfeit drugs contain no active ingredient, the wrong active ingredient, or the wrong amount of the correct active ingredient. At least 60 different Pfizer products are being counterfeited around the world. More than 920 medical products are reported to be substandard, spurious, falsely labelled, falsified and counterfeit (SSFFC), according to WHO (2016). As many as 1 million people die annually from ingesting counterfeit drugs, which have been found to contain rat poison, brick dust, boric acid, floor polish, paint and inkjet material, and are sometimes contaminated with bacteria. WHO estimated the counterfeit drug trade to be a $431 billion industry (2012). Worldwide counterfeit sales are increasing about 13% annually – nearly twice the rate of legitimate

• pharmaceuticals. Sales of counterfeit medical products rose 90% between 2005 and 2010.

50% of online pharmacies are selling counterfeit medications.

PRODU DUCT L LIABIL ILIT ITY I IMPLIC ICATIO IONS

• Plaintiff purchased counterfeit LIPITOR from Rite Aid and sued Pfizer.
• Argued that Pfizer failed to institute reasonable safeguards against

counterfeit LIPITOR products entering the stream of commerce and that the risks of counterfeit proliferation were well known to them.

Ash shworth v. . Albers Medical, In Inc.

410 F F.Supp.2d 4 471 (S.D.W.V. Aug. 2 23, 2 2005)

Ashw hwor

• rth v

v. . Alb lbers M Medical, In Inc.

Stric ict L Liabilit ility and Breach o h of Warra rranty C Claims

• Dismissed because

Pfizer was not a participant in the counterfeiting scheme.

• It would not make

sense for Pfizer to counterfeit its own product – nor did Plaintiff allege this.

Frau aud C Clai aim

• Dismissed because

any representation about the counterfeit product was not made by Pfizer.

• Pfizer only made

representations about genuine LIPITOR, not the counterfeit product.

Neglige gligence C Claim im

• Typically, under West

Virginia law, a person “does not have a duty to protect others from the deliberate criminal conduct of third parties.”

• However, some

special relationships can be imposed.

Ashw hwor

• rth v

v. . Alb lbers M Medical, In Inc.

Pfizer should have designed a more counterfeit resistant product/package.

Manufacturers do not have a duty to anticipate and frustrate criminal

• tampering. Pfizer is not a marketplace

insurer of counterfeit goods.

Pfizer should have exercised more control over its distributors.

There was no law the Plaintiff could point to that placed a duty on Pfizer to police its distributors.

Plaintiff advanced two negligence theories.

PROTECTING YOUR TRADEMARK

WHAT I IS A TRADEM DEMARK?

Tradem emar ark: A trademark is a brand name used to identify and distinguish the goods/services of

• ne seller or provider

from those of others, and to indicate the source of the goods/services.

TRADEMARK

BRAND QUALITY SOURCE

WHAT I IS A COUNTER ERFEIT IT?

• Unregistered marks

cannot form the basis for a counterfeiting claim. Counter erfei eit: “[A] spurious mark that is identical with, or substantially indistinguishable from” a mark registered in the United States PTO. 15 U.S.C. §1127.

Why w would s someone c count nterfeit yo your ur tradem emar ark?

Your r trad adem emar ark is valu luable le, and and coun

• unterf

erfeiters ers know now it.

• Counterfeiters want to

trade on your brand.

• Favorable risk/reward

ratio: Penalties are lenient and profit margins are high.

THE GR E GRAY M MARKET

Company X manufacturers a prescription medication that is branded and sold in countries outside of the Unites States. That product, substantively identical to a United States branded product (under a different name), enters the U.S. Gray Market. Product is resold for a much lower price than its American counterpart.

The t trade de o

• f p

produ ducts through l legal di distribution chan annels that at ar are n not in intended b by t the m man anufac acturer. Remember, gray market goods are legitimate goods – not counterfeit.

A CASE STUDY

Widget Company v. Russian Counterfeiting Incorporated

THE FACTS

■Widget Co. manufacturers highly technical medical devices. ■While using a widget during a procedure, a famous

European doctor notices the widget does not work properly (caused injury to patient).

■Following the procedure, the doctor calls Widget Co. to

report the problem.

■Ultimately, Widget Co. determines that, although the widget

bore its trademark, it was not manufactured by Widget Co.

STEP ONE

Obtain the product/device from end user. Obtain all invoices and documentation. Pull all information relevant to the

• rigination and chain of commerce
• f that particular product.

Gather e evidence and maintain c chain o

• f c

custody.

STEP TWO

Analysis of packaging. Analysis of device. Comparison of internal SKU and

• ther product

identifiers. Show differences between legitimate inventory (i.e. product design). Look for places where counterfeiters attempted to strip off

• riginal/legitimate

markings.

Establi lish t the d device is counterfeit a and p prove t that i it is not y your product.

STEP THREE

Analyze the chain of evidence information. Look at the packaging and match any connection to internal supply chain. Might need to sort through multiple layers

• f

sub-distributors.

Trace t the c counterfeit t to t the criminal. l.

WH WHAT TO DO DO NE NEXT?

• 1. I

Ident ntif ify Y Your M Marks T That A Are Infring inged.

• 2. M

Make S Sure T Those se M Marks A s Are R Regist istered I In The U Unit ited S States. s.

• 3. D

Determin ine W Whether Y You W Want nt T To Avoid O Or Commenc nce C Civil il L Litig igatio ion. n.

AVOIDIN IDING C G CIVIL IL LITIGA IGATIO ION

Sen end a a Ceas ase e an and Des esist L Let etter Cont ntact F FDA DA’s Offi ffice o

• f

f Cr Crimina nal Inves estiga gation

• ns

Con

• ntact t

the U e U.S. Attorney’s Of Office ice Cont ntact C Cust stoms for

• r Im

Imported ed Counte terfeit t Goo

• ods

CONSIDERA RATION ONS W WHEN AVOIDIN IDING L G LITIG IGATION

• Cease and desist letters and government interaction may

eliminate the element of surprise.

• Counterfeiters may conceal or destroy counterfeit goods

and related documentation.

• It is uncertain how quickly the government would move to

shut down the counterfeiter, if at all. Such a delay could have a detrimental effect on company profits, reputation, and good will.

PREVENTING L LITIGATION ON: PRO ROTECT Y YOUR I R IP

LEGAL BUSINESS

COMMENCIN ING L G LITIG IGATIO ION: STANDARD C CLA LAIMS

Infr fringem ement of a

• f a

Registered M Mark Unfair ir C Compe petit ition Trade demark Dilu Dilution

• f a F
• f a Fam

amou

• us Mar

ark that is is Dis Distinctive False D Designation

• f Or
• f Origin

(Registered and Unregistered Marks) Com

• mmon L

Law aw Trademark Infrin ingeme ment

REMED EDIES IES A AGAINST A A COUNTER ERFEIT EITER ER

TRO/Prelim limin inary Inj njun unction

(ex parte)

Perman anen ent Injunc unction Sei eizure of

• f

Counte terfeit t Good

• ods

(ex parte) Destruct uction o n of Counte terfeit t Good

• ods

Actual Monetary ry Damages Treb eble e Damages Statutory ry Monetary ry Damages Attorn rneys ys’ F Fees

CONSIDERA RATION ONS W WHEN COMMENCIN ING L G LITIG IGATIO ION

Make sure the owner of infringed mark is named as the Plaintiff. Request the TRO include a gag order, preventing communications between defendant and third-parties (suppliers/manufacturers) to avoid concealment or destruction of evidence. Federal Rules of Civil Procedure provide for expedited discovery. Prepare Requests for Production, interrogatories and deposition notices. Make sure to seek injunctive relief against third parties acting in concert with or in participation with defendants. For ex parte seizures, file the case under seal to avoid alerting counterfeiters and third-parties involved.

AVAILABLE E EQUIT ITABLE R E REMED EDIES IES

TRO/ O/Prelim liminary Inj njun unction

Permane nent nt Injun njunction Seizure o re of Counterfe feit it Good

• ds

Destru ruction

• n
• f C

Counterf erfei eit Good

• ds

AVAILABLE MONET ETARY R REMEDIES DIES

Actual al Mon

• netar

ary Dam amag ages Tr Treb eble Dam amag ages Statutory ry Mon

• netar

ary Dam amag ages Attorney eys’ s’ Fees ees

A court may…

• issue a TRO against a counterfeiter ex parte when

necessary to preserve the status quo.

• grant a preliminary injunction against a counterfeiter that

restrains it from engaging in any counterfeiting activity through trial.

• issue a permanent injunction after a trial on the merits or

as part of a decision on a summary judgment motion.

TEMPORA ORARY R RESTRA RAINING O ORDERS A AND PRELIMINARY I INJUNCTION ONS

• An Ex Parte order can permit a plaintiff to seize counterfeit

goods located at the defendant’s place of business and all property/equipment used to make the counterfeit goods.

• Plaintiff should also seek the seizure of the books and

records related to the importation and distribution of the counterfeit goods.

SEIZURE O E OF COUNTERFEIT IT G GOODS DS

SHUT THEM DOWN

Wor

• rk w

with l loc

• cal an

and d forei eign author

• rities

es t to accom compl plish t thes ese g e goal als.

Stop the manufacturer. Stop importation to the United States. Stop importation to other jurisdictions where you have a protected mark.

After y you’ve i identified your counterfeiter a and traced their s source, t these a are your next s steps.

QUE QUESTION ONS?

Richard M. Barnes, Esq. Goodell, DeVries, Leech, and Dann, LLP 410-783-4004 rmb@gdldlaw.com