Selection, clearance and registration

The Ministries of Health and Family Welfare and Chemicals and Fertilizers play a major role in regulating the healthcare and pharmaceutical sectors. The agencies primarily responsible for regulating the import, manufacture, distribution and sale of drugs in India include the Central Drug Standard Control Organisation, the State Drug Standard Control Organisations and the Drug Controller General of India (DCGI) established under the Drugs and Cosmetics Act 1940. Further, the Drugs and Cosmetics Rules 1945 framed under the Drugs and Cosmetics Act set (among other things) the prescribed standards and procedural guidelines for its operation.

The pharmaceutical industry notably accounts for the most trademark registration applications of any sector in India.

Indian trademark law prohibits registration of marks which are descriptive in nature or devoid of distinctiveness, except where the mark has acquired distinctiveness or secondary significance on account of its use, publicity and popularity. However, a feature peculiar to pharmaceutical trademarks is that these marks are often derived from the name of the concerned ailment, organ or chemical compound contained in the relevant drug, and may thus lack inherent distinctiveness. Therefore, the deciding factor is the brand owner’s evidence of secondary meaning.

Section 13 of the Trademarks Act 1999 prohibits registration of the names of chemical elements, compounds and international non-proprietary names (INNs) (which have been declared by the World Health Organisation and notified by the registrar of trademarks in 2012), or which are deceptively similar to such names. If an INN is erroneously registered as a trademark, it is liable to be cancelled. Since INNs are generic names of active pharmaceutical ingredients, they can be used by all drug manufacturers. The existence of a large number of trademarks similar to INNs highlights the need for greater scrutiny of pharmaceutical trademark applications.

In order to increase their competitive edge, brand owners are developing more advanced and innovative ways to distinguish their products. Conventional marks include those consisting of letters, numerals, words, logos, images or combinations of these elements. Notable non-conventional marks in the pharmaceutical field include shape marks, colour marks and holograms. Certain shapes and sounds have already been registered as pharmaceutical trademarks in India. Although the concept of sound marks is not new, they have been granted explicit recognition under the new Trademarks Rules 2017 (as notified on March 6 2017); as such, businesses would be wise to seek exclusivity for their musical or other auditory branding and marketing methods in order to appeal to consumers in today’s highly disruptive market. One such sound mark registered in India for pharmaceuticals is the sound of ‘HI’ ‘SA’ ‘MI’ ‘TSU’ sung over certain musical notations and applied on a ‘proposed to be used’ basis by Hisamitsu Pharmaceutical Co, Inc of Japan. The protection of colour combinations is recognised in India, but the possibility of claiming exclusivity over a single colour remains a grey area.

Parallel imports and repackaging

Where a person lawfully acquires goods bearing a registered trademark, the sale of or other dealings in those goods by that person or its agent will not amount to infringement in India. The concept of parallel imports is inextricably linked to the principle of exhaustion of rights. In respect of trademarks, India follows the principle of international exhaustion of rights as observed by the Division Bench of the Delhi High Court in Kapil Wadhwa v Samsung Electronics.

For the import of any drug, an import licence is required from the DCGI, which is valid for three years. No drug which is prohibited in the country of origin can be imported into India, except for the purpose of examination, tests or analysis. The import of a drug is prohibited where it:

  • is not of standard quality;
  • is misbranded, adulterated or spurious;
  • may involve any risk to human beings or animals; or
  • does not hold the claimed therapeutic value.

Parallel importation may sometimes be followed by repackaging. At this stage, Section 30(4) of the Trademarks Act comes into effect. This section mandates that a brand owner may oppose further dealings in the goods where the condition of the goods has been changed or impaired after having been put on the market. Therefore, if the repackaging of pharmaceuticals causes any material change or impairment, the brand owner may object to such repackaging; otherwise, the repackaging must duly conform to the relevant packaging and labelling requirements.

Anti-counterfeiting and enforcement

Prevention

Brand owners may consider the following points for effective prevention:

  • Ensure that inherently distinctive marks are adopted and protected for the purpose of effective deterrence.
  • Use the mark in such a manner that its genericide is avoided at all costs.
  • Collect and preserve all documentary evidence of use and publicity of a pharmaceutical trademark in order to build a winnable case in future. Maintain a clear record of all such documents for each brand and accumulate them to show continuity.

The available remedies against falsification and false application of trademarks (including counterfeiting) are imprisonment for a term of six months to three years and a fine of Rs50,000 to Rs200,000 (approximately $778 to $3,112). These offences are cognisable under Indian criminal law procedure, which enables a police officer of a rank not below the deputy superintendent of police to search and seize counterfeit stocks and arrest accused persons in possession of such stocks without a warrant or prior court permission. However, the officer must obtain an opinion from the registrar of trademarks before any action is taken on a complaint filed by the rights holder.

Enforcement

For the purpose of enforcement, a civil action for infringement of a registered trademark may be initiated alongside a criminal action for effective deterrence. Through a civil action the rights holder can also obtain remedies in the form of an injunction, seizure and destruction of infringing stock and damages (as the remedy of damages is not available under a criminal action).

If the mark is not registered in India, a civil action for the tort of passing off can be initiated, provided that the mark carries substantial goodwill and reputation in the relevant markets and actual or potential injury will or is likely to be caused to the trademark owner as a result of the misrepresentation.

In respect of pharmaceutical trademarks, specific actions are also available under the Drugs and Cosmetics Act, read with the Drugs and Cosmetics Rules. As one of the main objectives of this legislation is to ensure that publicly available drugs are safe and efficacious, it also stipulates criminal penalties for offences relating to the import, manufacture and sale of spurious drugs. According to Sections 9B and 17B of the Drugs and Cosmetics Act, in relation to the import and the manufacture, sale and distribution of drugs respectively, a ‘spurious drug’ includes counterfeit products and the 2008 amendments have significantly upped the ante, making the penal framework much stricter. The import of spurious drugs entails a punishment of imprisonment for up to three years and a fine of up to Rs5,000 ($78). Further, Section 11(2) of the Drugs and Cosmetics Act provides that the commissioner of Customs or an authorised officer may detain any imported package suspected to contain any drug whose import is prohibited.

The manufacture, sale or distribution of any spurious drug which is likely to cause a person’s death or grievous harm on consumption will entail imprisonment of 10 years to life, along with a fine of no less than the greater of Rs1 million ($15,558) or three times the value of the drugs confiscated. In all other cases involving spurious drugs, the penalty will be imprisonment of seven years to life and a fine of no less than the greater of Rs300,000 ($4,668) or three times the value of the drugs confiscated.

India has a robust border security and enforcement system under the Customs Act 1962, whereby rights holders can enforce their IP rights at the Indian border under the Intellectual Property Rights (Imported Goods) Enforcement Rules 2007. In this regard, the relevant IP rights must be validly registered. The term of customs protection is five years from recordation of the rights with the customs authorities or until expiry of the relevant IP rights registration, whichever is earlier.

Counterfeiting is defined in the Indian Penal Code 1860, Section 415 of which – read with Illustration (b) – makes counterfeiting an act of cheating which can entail imprisonment of up to one year, a fine or both.

In 2017 the Bihar police and drug control wing authorities notably seized fake, expired and spurious medicines and surgical items worth over Rs100 million ($1.55 million) from certain pharmacies. This was officially described as the biggest breakthrough against the life-threatening trade in the state in 13 years.

Advertising

Under the Drugs and Cosmetics Act, a drug will be deemed to be misbranded if it is not labelled in the prescribed manner or if the label contains anything misleading. For instance, any misleading statement with respect to the name, composition, strength or other elements of the drug connotes a misbranded drug.

The Drugs and Magic Remedies (Objectionable Advertisement) Act 1954, which applies to a specified category of drugs limited to a specified list of disorders, diseases and conditions, prohibits advertisements including the display of labels in connection with diagnoses, cures, mitigation, treatments or prevention; with respect to drugs in general, it prohibits false or misleading claims in advertisements. Advertisements for magic remedies are also prohibited under the act.

The Advertising Standards Council of India (ASCI) is a non-governmental organisation whose main objectives include developing self-regulation guidelines for advertising content in order to ensure that the claims made through advertisements are true, thereby preventing the spread of dishonest and misleading content among consumers. On January 20 2017 the Ministry of Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homoeopathy (AYUSH) signed a memorandum of understanding with the ASCI to undertake monitoring of misleading AYUSH-related advertisements appearing in print and TV media, and to bring improper advertisements to the attention of the state regulatory authorities for necessary action.

Further, the Uniform Code for Pharmaceuticals Marketing Practices (which is a voluntary code) states that the promotion of any drug must be consistent with the terms of that drug’s approval for sale or supply and that such promotion cannot be undertaken before the procurement of such approval or a drug licence.

Generic substitution

For the generic pharmaceutical market, Indian patent law includes a provision to apply for a compulsory licence. One of the grounds on which such an application may be submitted is the non-availability of the patented invention at a reasonably affordable price to the public. Therefore, generic versions of patented pharmaceuticals can be manufactured under such a licence.

Recent amendments have been made in the domain of generic medicines. Under the Drugs and Cosmetics Rules, an application for a licence to manufacture a new drug must be accompanied by clinical trial data, which includes bio-equivalency studies. However, after the expiry of a four-year period from the date of first approval, generic manufacturers are allowed to rely on research data generated and submitted by the original manufacturing pharmaceutical companies. Due to this, most generic manufacturers entered the market after expiry of this period – a practice which raised concerns regarding the safety and efficacy of generic drugs, as the generic drug manufacturers were not obliged to prove that the generics were as safe and effective as the corresponding patented drugs, including by way of bio-equivalence tests. To answer this concern, the government has notified the Drugs and Cosmetics (Ninth Amendment) Rules 2017 (effective since April 3 2017), which make bio-equivalency testing mandatory in relation to certain classes of generic drug (including drugs that are not new drugs), even where the manufacturer applying for a licence relies on the past research data submitted by original manufacturing pharmaceutical companies.

Online issues

E-pharmacies

The DCGI issued a notification stating that the online sale of medicines must conform to the requirements laid down in the Drugs and Cosmetics Act. The chief area of concern has been the online sale of prescription drugs.

Online pharmacies are not currently illegal, but those that do not meet the requirements of the Drugs and Cosmetics Rules – including those relating to sales from licenced premises and maintaining necessary records – are not permitted. There have also been deliberations regarding requirements for scanned and electronic copies of prescriptions in the context of prescription drugs sold through e-pharmacies. The Drugs and Cosmetics Rules mandate that a prescription be written and signed by the prescriber with his or her usual signature and usual date; further, the Pharmacy Practice Regulations 2015 define ‘prescription’ as a written or electronic direction from a registered medical practitioner or other properly licensed practitioner to a pharmacist to compound and dispense a specific type and quantity of preparation or pre-fabricated drug to a patient. Thus, electronic and scanned copies of prescriptions are acceptable. In 2017 the Ministry of Health and Family Welfare proposed certain rules for regulating the online sale of drugs, which are subject to public consultation.

The rise of e-pharmacies has led to increased online sales of counterfeit drugs. In case of any infringement or passing off, the rights holder not only has recourse to remedies against the seller or manufacturer of the counterfeit drugs, but can also initiate an action against the e-pharmacy under internet intermediary liability. Notice may be sent to such e-pharmacies to take down content relating to infringing products, which will fulfil the requirement of ‘actual knowledge’ on the part of the intermediary. In case of non-compliance by the e-pharmacy, a cause of action based on internet intermediary liability is available.

Domain names

Like any other sector, pharmaceutical companies may come to be at loggerheads over domain names. In such cases, a complaint may be instituted with the National Internet Exchange of India. As domain names are akin to trademarks, the same remedies available for trademark infringement and passing off are also available with respect to domain names.

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Dheeraj Kapoor

Senior associate

dheeraj@lexorbis.com

Dheeraj Kapoor is a senior associate at LexOrbis. He holds a BSc (Hons) in zoology and an LLB from the University of Delhi. With extensive knowledge and expertise in IP law, he specialises in handling diverse matters before the high courts, the IP Appellate Board, the Trademarks Office and the Copyright Office, and also advises on various related laws. He is closely associated with the legal research and publication team of LexOrbis, and has authored many articles and papers in leading IP publications. He has a diverse client portfolio comprising many Fortune 500 companies, multinational corporations, small and medium-sized enterprises and technology start-ups.

Aprajita Nigam

Associate

aprajita@lexorbis.com

Aprajita Nigam is an advocate currently working as an associate at LexOrbis. She holds an LLM in IP rights from NALSAR University of Law, where she secured an overall Gold Medal encompassing all LLM specialisations. She has in-depth understanding of all facets of IP law and is interested in the exploration of niche areas. Having previous experience in general litigation, she has enriched the firm with her keen insight on contentious issues. Being a valued member of the legal research team of LexOrbis, she has received much appreciation for her articles published in leading IP publications. She has a diverse client portfolio, comprising various Fortune 500 companies, multinational corporations, small and medium-sized enterprises and technology start-ups.