Counterfeit is a world spread phenomenon in which the product of someone, company or individual, is imitated to reproduce the original, although often made with materials and components of reduced quality and illegally bearing a trademark or a copyright of another without their permission.
We live in a world of frenetic consumerism, where people are more often judged based on what they own rather than what they are. Having a specific product from a specific brand can provide the sensation of having a certain status or making a statement to other, however brand goods can be expensive and unreachable to many and that is where counterfeit plays a strategic role.
As counterfeit goods cost a fraction of the price of the original goods, people who under normal circumstances would not have access to those products can afford them.
Counterfeit products are everywhere nowadays, filing the markets with twin scourges, often very similar, or even fairly identical to the originals, with certainly lower quality but much cheaper, which makes them very understandably more attractive for consumers that have no means to purchase the real deal – the first generation goods.
Recently, whilst attending one workshop on Anti-Counterfeiting, the panellist told the audience something that caught in my mind: if you want to know if a specific product, from a specific brand is trending at the moment, just take a look at its presence and demand in illegal markets. The more desirable a product is the higher the tendency to replicate it and meet that parcel of consumers that want to join the trend but cannot pay the price. Very frequently we observe that the percentage of consumers that are unable to buy an item (but would if that product was within their price point) is larger than the percentage of consumers that can afford the first generation good, especially when we talk about high end goods, luxury goods. Profit is one of the many reasons that make counterfeit an attractive business for many.
if you want to know if a specific product, from a specific brand is trending at the moment, just take a look at its presence and demand in illegal markets
In 2017, a report from Frontier Economics - based on a previous report of 2016 by OECD -prepared for BASCAP and INTA and later disclosed by the International Chamber of Commerce (ICC) estimated that in 2022 the total international trade in counterfeit and pirated goods will be as high as 991 Billion, almost doubling the number reported in 2013 of 461 Billion.
The astonishing numbers affect economic activity, taxes revenue, investment and employment worldwide. The report projected that counterfeiting activity will put at risk between 4.2 and 5.4 million legitimate jobs. Annually, is estimated that the counterfeit drug market alone is worth around 200 billion US Dollars worldwide, making it the most profitable trade of illegally copied and sold goods.
Africa, unfortunately but not surprisingly, is one of the most affected continents, comprehensible since its markets have become a huge target for second generation goods, with a major focus on pharmaceutical drugs.
The World Health Organization (hereinafter, WHO) stated that 42% of all fake medicine reported to them between the years of 2013 and 2017 was linked to the African continent and we expect that these numbers fall short from accuracy since the report system to the WHO relies on national or regional regulatory authorities which means the data is only as good as the national reporting systems are, which probably means the situation is far worse than the one reported.
Counterfeiting is a crime and, I highlight, not a victimless one, apart from negatively affecting markets and economy, as well as people’s jobs, counterfeiting is dangerous and it supports child labour and organized crime. Especially when we look at counterfeit of pharmaceutical goods there is an actual threat to the consumers’ health, wellbeing and, in a severe but not uncommon number of cases, to their lives.
Africa is seriously affected by it and one clear example is the anti-malarial medication. Anti-malarial and antibiotics are amongst the most commonly reported as fake or substandard medical products. Worldwide, more than half a million people will die each year as consequence of being infected with malaria, being that children, namely in the Sub-Saharan Africa, are especially affected by the disease with a higher risk of contracting and dying from it. In 2013 an alarming 73% of the analysed medication for malaria in Nigeria was substandard, according to the United Nations. It is estimated that substandard and fake anti-malarial drugs could be causing over 150 thousand extra deaths from this disease in the Sub-Saharan Africa. Another study, in 2015, has estimated that more than 122 thousand children under the age of five die each year due to substandard anti-malarial drugs in the Sub-Saharan Africa. Around 45 million counterfeit anti-malarial drugs valued at more than 430 Million US Dollars were sold in West Africa in 2008. But even fairly normal medication can be very dangerous. Drugs found during raids usually include cough syrup, anti-parasitic, anti-malarial, antibiotics and contraceptives. For instance, in February 2009, the Health Minister of Nigeria reported 84 baby’s deaths after taking a Teething Mixture called “My Pikin Baby”, which was intended to relieve pain for the growing infant teeth. It was later found that the concussion contained diethylene glycol, an industrial solvent and an antifreeze and brake fluid which were added to taint the mixture. Another case happened in Niger, where it was discovered during vaccination campaigns in 2015 and 2017 that vials contained water, in consequence hundreds of people died. Last year, in 2019, the government sounded the alarm for it was discovered that new fake vaccines were being sold at a local pharmacy following a meningitis outbreak in the country.
Individuals who are administrated fake medicines can suffer disastrous health consequences as these products can contain a number of problems: they can be composed of toxic ingredients, the active ingredients can be completely different or in different quantities than the first generation goods it is meant to imitate, they can have the packaging’s data altered or damaged in the transportation or have been repackaged entirely. All of these can compromise the efficiency and safety of the pharmaceutical and seriously damage the consumers’ health by either worsen their condition or by jeopardizing their chance of survival due to being ineffective.
Intellectual Property protection plays a very important role in the fight against counterfeiting and in helping to diminish its negative impact on the economy of a specific jurisdiction. However, Intellectual Property in Africa is currently insufficient to deal with the problematic properly, despite the progress that is being made daily with emphasis in the further developed countries.
Intellectual Property protection plays a very important role in the fight against counterfeiting and in helping to diminish its negative impact on the economy of a specific jurisdiction
It is important to take an overall look into the continent’s most relevant economies and how they are dealing with counterfeiting in general.
Nigeria, where 180 million people live below the poverty line, levels of counterfeiting are extremely high, mainly due to pharmaceutical drugs. It is estimated that an overwhelming 70% of all pharmaceuticals sold in the country are second generation goods. There is no specific framework for the enforcing of measures against counterfeiting that cover every economical sector in the country however there are several Acts and regulations that address the issue directly. The Trademarks Act provisions infringement proceedings before the Courts (High Federal Court); the Merchandising Marks Act determines that trademark forgery is a crime punishable by law and allows the police force to conduct searches and raids, as well as seizure the counterfeited goods; finally, the Fake Drugs and Unwholesome Processed Foods Act provisions the criminalisation of counterfeited pharmaceuticals and processed foods.
Unlike Kenya and South Africa, and despite the dimension of the problem in the country, Nigeria lacks a Counterfeiting Act, dedicated exclusively to controlling the problematic. Nevertheless, authorities in in the country are starting to understand the importance of training their teams to the identification of counterfeiting goods with the assistance of brand owners.
Measures at Customs play a crucial role in the fight against counterfeiting in the country. Nigeria Customs Service has a mandate to intercept contraband (such as illegal drugs as well as weapons), conduct baggage, cargo and mail inspection to traveller, protect businesses against illegal trade malpractices and enforce import and export restrictions and prohibitions.
Trademark owners can also register their products at NAFDAC (National Agency for Food and Drugs Administration and Control). NAFDAC’s mission is to ensure the quality and efficacious of regulated products, to maintain laboratories of reference according to International standards and to promote a trained and effective workforce. A written application must be made and addressed to the NAFDAC Director, stating the names of the manufacturers and the products and it is mandatory to have the trademark registered or, at least, applied for. The application to register with NAFDAC must be accompanied with samples that will be analysed in a laboratory. Both the results of the laboratory analysis, as well as the on-site factory inspections, are forwarded to a NAFDAC approval Committee, which included the Directorate Committee, Sub-Directorate Committee and Final Approval Committee. For a registration to be granted the approval of the three Committees is necessary.
In Algeria any act of trademark infringement is considered counterfeiting. In this sense, the importance of protecting products through trademark registration is essential. If the owner of a trademark has their trademark being counterfeited in the country they should immediately file an action for infringement. The Court judge will appoint a bailiff to investigate the case and detain the goods if counterfeiting is indeed proved. The trademark owner has thirty days to file a civil claim to then have the infringement confirmed and the goods destructed.
As for Customs action, in Algeria it is possible to request brand vigilance at Customs, which means workforce at borders will be alert to identify possible counterfeited products of a specific brand, the vigilance lasts for five years.
In Ghana, trademark infringement actions are also possible and effective against counterfeiting. According to the Trademark’s Act, trademark infringement is a criminal offence. The Court can order seizure and destruction of second generation goods.
At Customs there is a standardize practice although no specific provisions were made. Usually, if officials find any goods to be suspicious they will contact the rights holder and the importer of the goods. If these are confirmed (by the importer) to be fakes, the goods are destroyed, and otherwise the rightful owner will have to file a civil action in court proceedings.
In Madagascar, counterfeiting of goods is a crime punishable by law. The perpetrators can serve jail time from between six months to three years, pay a fine, or both penalties combined. A bailiff is appointed to investigate suspect cases and to collect evidence. According to the Madagascan legislation, namely the Ordinance Establishing Arrangements for the Protection of Industrial Property (89-019), however, to have the fake goods seizure, a guarantee shall be handed by the author of the claim.
At Customs, it is possible to register trademarks. Officials will detain goods suspected of being counterfeited for one month only, unless there is a Court order establishing otherwise.
The Industrial Property Law in Morocco establishes different proceedings. The right’s holder is requested to submit a petition to the President of the Commercial Court requesting the appointment of a bailiff. After investigation and if there is evidence that the goods are counterfeited, the trademark owner has a period of 30 days to file a lawsuit against the infringers. The Court can order measures to prevent further damage of the owner’s rights, such as seizures.
Counterfeiting in Mozambique is very common. There are several laws addressing the problematic directly, the most relevant are the Mozambican Industrial Property Code (Decree 47/2015), which establishes that counterfeiting is an industrial property violation and the Mozambican Industrial Property Code (Law 35/2014), which establishes counterfeiting of goods as a crime punishable by imprisonment or fine, according to its Article 310.
In Mozambique there is a public institute responsible for controlling counterfeit activity, the National Inspectorate of Economic Activities (INAE, in Portuguese) which is under supervision of the Ministry of Industry and Commerce. INAE inspects locations where commercial and industrial activity is carried out with the help of brand specialists.
South Africa is one of the largest economies in Africa, making the demand for counterfeit products very high. Although the Trademarks and Copyright Act provisions civil and criminal proceedings for Intellectual Property infringement, the Counterfeiting Goods Act of 1997 provisions specific matters against counterfeiting. Acts of counterfeiting require deliberate and fraudulent infringement of trademarks registration, irrespective of what type of goods are being manufactured. Customs vigilance is provisioned for in the Counterfeit Goods Act and officials are appreciative of training from the brand owners or other entities.
Kenya is one of the few countries that have an Anti-Counterfeiting Act (2008). The Act has established the Anti-Counterfeiting Agency, which amongst other functions, is mandated to enlighten and inform the public on matters concerning counterfeit activity and to promote training sessions to combat counterfeiting.
It is important to understand why Africa is such a vulnerable target to the prosperity of counterfeiting and the reason is linked to several factors.
Africa is mostly an underdeveloped continent. In the countries in which a huge parcel of the population lives below the poverty line it is easy to understand why people turn to street bought goods, for they often have no means to buy the trustable medicines in the pharmacies due to the elevated price point. The high cost of medicines is a determining factor for consumers in Africa, for they are not subsidized by the governments and are paid in full by the consumers. A study by the World Health Organization and the Health Action International found that “duties, taxes, mark-ups, distribution costs and dispensing fees are often high, regularly constituting between 30% to 40% of retail prices, but occasionally up to 80% more of the total”. For this reason it is fairly naïve to think people will not resort to drug outlets, such as kiosks, street vendors and open drug markets for first-line treatments.
Most countries in Africa do not have modern healthcare systems, which also difficult patient’s access to first generation drugs and legitimate treatments.
Another essential factor is the lack of border control between countries. It is easy for smugglers to operate undetected in Africa. The United Nations recently found that the prevalence of fake medicines is not higher in those countries with potentially higher profit but in those in which chances of detection is the lowest, namely in West Africa were it was reported that at least – since reported numbers are most certainly lower than the reality - 10% of circulating medicine is fraudulent.
Furthermore there is the lack of regulation and weak or inconsistent legal frameworks that are insufficient to address the problematic and create efficient measures to fight it. African government agencies in charge of licensing and regulating drugs suffer from lack of training have insufficient manpower and on top of that they are often plagued by corruption. It is known that government agency workers, such as inspectors, often accept bribes to allow the fake drugs to pass borders illegally.
Another major weak spot is the inability to effectively track and shut down unlicensed drug vendors, most of them selling fake pharmaceuticals on the streets, kiosks or open-market vendors.
Although stopping counterfeiting is proven to be an extremely difficult challenge in Africa, several countries, along with the help of World Health Organization and other Institutions have been joining the fight. The WHO is assisting countries in developing the expertise needed to regulate drugs. One of the most important measures is the effective drug registration. Drug registration, also known as marketing authorization and product licensing, allows a country to evaluate if a specific pharmaceutical is safe for consumers to use. Through marketing licensing authorities can also assure that the manufacturing, the storage as well as the distribution of a pharmaceutical was righteously made and cared for without putting at risk the product efficiency and most importantly safety.
The incursion of Anti-Counterfeiting Acts in the jurisdictions is of extreme importance to give Authorities the necessary mandate to combat counterfeiting by means of carrying out the adequate and necessary actions that will address the issue directly.
A strategy that has been put in place in Tanzania and Ghana, for instance, is to instead of shutting out illegal vendors, invest in training, regulating and licensing them.
Furthermore, different countries are investing in awareness campaigns to educate locals to the dangers of consuming fake pharmaceuticals. By educating the consumers they are making people more alert to the signs. Pharmaceutical red flags include, but are not limited to the following: they almost always have a cheaper price tag, they can have a different packaging or the packaging can be altered from the original, the location where the drugs are being sold is usually not reliable and trustworthy.
Of course, it can be difficult, at times, to set the original product from the fake product apart. The best indicatory is usually the price point of the fake drug, being set much lower than the first generation good and the problem aggravates when the underground markets take advantage of the loopholes existing in the pharmaceutical distributing systems to channel their counterfeited drugs into the hospital, pharmacies and other distributors, which is one big reason for the education and training of consumers and health workers who are often unable to detected fake products from first generation goods.
Countries like Kenya, Ghana and Nigeria have also implemented mobile telephone based consumer verification into their regulations. This system allows consumers to be protected, empowering them against fraudulent products.
African countries working together is crucial, regional coordination can help control the problem at customs and at safeguarding borders. Nigeria and Cameroon had signed a cooperation agreement and compromise to sharing experiences and technical expertise to combat the problem. More recently, the Presidents of the Democratic Republic of Congo, Niger, Senegal, Togo, Uganda, Ghana and Gambia signed the Lomé initiative, dated of January 2020, a binding agreement to criminalize trafficking of falsified medicines. The Lomé initiative tackles soft spots such as the lack of regulation and weak healthcare systems.
Several African countries are now trying to implement a set of measures at customs such as enabling the interception of contraband (illegal drugs as well as weapons), conduct baggage, cargo and mail inspections to travellers, protect businesses against illegal trade malpractice and enforce import and export restrictions and even prohibitions.
However, and although countries are making more efforts into fighting the pharmaceutical counterfeiting problematic, the matter is extremely complex. It involves dangerous lobbies and the work of organized crime, corruption and bribery. All of these are not easy to dismantle. Several previously mentioned factors such as extreme poverty, the uneducated level of the people and lack of an effective and responsive Healthcare System aggravates the predicament. More often than not, consumers have no other alternative than to resort to drug outlets.
We have to join efforts worldwide to combat fake medicine markets to thrive in Africa and other areas and Intellectual Property has an enormous role in the fight. More and more regulations are being put in place and a larger number of officials are being trained at customs to be able to detect and identify counterfeited goods, either pharmaceutical or not. Counterfeiting is a global pandemic with tragic consequences and it is crucial for countries and other institutions governmental and non-governmental to join forces and keep fighting to end the problem thus save millions of lives and jobs each year.
This article was originally published in China IP Magazine.
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