Pharma boss arrested for allegedly selling 'deadly' counterfeit drugs

Indonesian National Police arrested the director of pharmaceutical company PT Jasa Karunia Investindo (JKI) over alleged distribution of potentially lethal counterfeit drugs. The suspect, identified only as AFAP, 52, was arrested by the police in Semarang, Central Java in July.

The National Police’s Criminal Investigation Department (Bareskrim) crime division director, Brig. Gen. Mohammad Fadil Imran, announced in the media that AFAP was repackaging generic drugs and selling them as if they were patented drugs. The suspect allegedly obtained the contents by using generic drugs, fake drugs and expired drugs. Apparently he also stamped fake expiration dates on the packaging.

“[The counterfeit drugs] are not only harmful to public health, but they can be deadly when consumed,” Fadil said. AFAP reportedly obtained generics through his own company and through various pharmacy outlets in Semarang and Pancoran, South Jakarta.  

According to the police, the suspect was able to sell what were originally government-subsidized drugs for patients covered by the national health insurance (JKN) and Health Care and Social Security Agency (BPJS Kesehatan) as non-subsidized drugs at much higher prices. AFAP had allegedly been involved in the distribution of illegal drugs for three years and at least 197 pharmacies across Jakarta and Semarang routinely bought medicines from PT JKI, Fadil added.

The suspect faces charges under Article 196 and Article 98 and/or Article 197 of the 2009 Health Law, which carries a maximum 15 years' imprisonment, as well as Article 62 and Article 8 of the 1999 Consumer Protection Law, which carries a maximum 5 years' imprisonment. Interestingly no trademark crimes have been filed, perhaps due to the higher complexities in involving the IP owners. 

Design validity and infringement claims in Indonesia

The bifurcation of validity and infringement is a common problem in many, usually civil law countries. In Indonesia the practice is to hear the disputes separately. In the DC Comics Superman case (see here) the case was rejected for combining claims. This is also a risk when you run validity and infringement in the same case.

A designs case from the Surabaya Commercial Court is a good example of how case involving both validity and infringement should be decided to avoid wasting court time on separate cases. PT Solihin Jaya Industri sued Chung She for invalidity claiming his industrial designs (which dated back to 2009) for wheelbarrows with various features were not novel and should be revoked. Chung She counterclaimed for infringement. The Surabaya Commercial Court rejected the Plaintiff’s revocation arguments. Instead they found the Plaintiff had infringed the Defendant’s designs. They granted a reasonable material damages of IDR 250,000,000 (USD14,000), plus a ridiculous IDR 13 billion immaterial damages (USD 1 million)!

On appeal to the Supreme Court, the Supreme Court upheld the finding of novelty on the basis that the Plaintiff had not provided sufficient evidence otherwise. The Plaintiff’s appeal on novelty was a factual matter for the lower court, and did not concern comprise an error of law, which was the only proper subject for appeal. Meanwhile the infringement was clear. The Supreme Court did however cut immaterial damages down to a more reasonable IDR 1 billion (USD70,000).

This case sets out a clear pattern to argue for both validity and infringement. It would be interesting to see a Supreme Court case deal with the other usually opposite pattern, namely an allegation of infringement leading to an invalidity defence. There is a difference the other way around, since the IPO must be a party to be bound by a cancellation decision. The IPO would not normally be a party in an infringement claim, making a counterclaim for invalidity more complex to enforce.