K Srinivasan
IN a recent case that will hopefully have a salutary effect on the healthcare regulatory system, the Delhi High Court, in a stinging judgment in favour of Johnson & Johnson (J&J), awarded the company Rs 3.34 crore in damages. The case related to counterfeit products sold under the J&J label. Delivered by Justice Amit Bansal, the judgment held that the defendant’s actions were not just violative of J&J’s trademark rights, but a health hazard with severe risks to citizen’s wellbeing.
The case was first filed by Johnson & Johnson in 2019 after a neurosurgeon at the University of Kentucky Medical Centre, USA, identified irregularities in a surgical device labelled ‘SURGICEL.’ On investigating, J&J discovered that the products were counterfeit and had arrived at the medical centre through a well-organised international network of fraudsters that included the company at the heart of the whole case – New Delhi-based Medserve, owned by Pritamdas Arora. In its suit, J&J said that Medserve had counterfeited, mislabelled, and distributed substandard medical products.
Ex-parte proceeding
The defendants started by denying all allegations without any clear proof of their innocence but once the case started unravelling against them in court, Messers Arora and Company simply stopped appearing in court. Left with no option, the Delhi High Court proceeded ex-parte. Not just that despite multiple efforts by the Delhi Police and Cyber Cell, Arora and Company were untraceable, leading to a non-bailable warrant being issued against them.
“The counterfeit medical products sold by the defendants pose a significant threat to public health. Counterfeiting of medical devices is not merely a case of trade mark infringement, it is a grave offence that endangers the lives of people. The defendants’ conduct demonstrates a deliberate effort to mislead the public, jeopardise consumer safety, and exploit consumer trust for financial gain,” the judgment stated.
In his judgement, Justice Bansal said that the defendant’s actions were “deliberate, fraudulent, and posed a significant threat to public health.” The court awarded ₹2.34 crore as compensatory damages, calculated as 25 per cent of the estimated Rs 9.39 crore in sales generated by the defendants from counterfeit products. Furthermore, an amount of Rs 1 crore was levied as punitive damages to discourage future violations and to penalise the defendants for their “dishonest and fraudulent” conduct.
“I am convinced with the evidence presented and submissions made by the counsel for the plaintiff and conclude that a conservative profit margin of 25 pc can be assumed for awarding actual damages in favour of the plaintiff and against the defendants in the present case,” Justice Bansal stated.
Regulators unpunished
There is little doubt that this is a landmark judgement. The problem, though, is that no action has been taken against officials of the regulatory authority who allow such fraudulent companies to make merry by selling dangerously fake wares. It had happened earlier in the case of fake syrup that killed dozens of children in Gambia, and now in the case of medical devices. While Arora has been penalised, what about the official who allowed him to run amok without any oversight?
The Parliamentary Standing Committee on Health and Family Welfare recently released its report that paints a concerning picture of India’s healthcare system. These reports, while diverse in focus, converge on a central theme: the urgent need for systemic reforms to ensure equitable, efficient, and high-quality healthcare for all Indians. From the inefficiencies of the Central Drugs Standard Control Organisation (CDSCO) to the inadequate budgetary allocations for health and research, the committee has highlighted systemic issues that hinder the growth of India’s medical device industry, research capabilities, and overall healthcare infrastructure.
Licence Raj mentality
The committee’s scathing critique of CDSCO’s ‘licence raj’ mentality, coupled with its concerns over unspent funds under health schemes and the exodus of skilled researchers, underscores the urgent need for reform. These reports not only exposed the bottlenecks in India’s healthcare regulatory framework but also called for a paradigm shift in how it approaches medical innovation, research, and public health delivery.
As India aspires to become a global hub for medical device manufacturing and achieve universal health coverage, the committee’s recommendations offer a roadmap for transforming the sector into a more transparent, efficient, and inclusive system. By embracing transparency, efficiency, and innovation, India can transform its healthcare sector into a global leader, ensuring equitable access to quality care for its 1.4 billion citizens.
