Fake vaccines in Thailand

A Thai provincial clinic is accused of dealing in fake Moderna vaccines. The police raided Kularb Clinic in Kabinburi, which is 200km west of the capital, Bangkok. 

Customers complained after being charged THB1,500 (just under USD$50) per shot. Customers were not shown packaging or batch details and expiry dates and they found no side effects. This led to suspicions and a complaint to the police. The Moderna vaccine is not approved by Thailand’s FDA yet. However there are apparently Moderna mRNA vaccines available on the black market.

The police raid seized no actual Moderna vaccines but the owner Kularb Yamnok was arrested. The police claim to have found other illegal medicines at the clinic which has now been closed down.

Thai court crackdown on pirate EPL matches

The English Premier League owns various rights, most importantly the broadcast rights to EPL games around the world. A key issue is preventing pirated live broadcasts of the games.  

In Thailand the authorities filed a series of criminal charges for copyright infringement and operating a business illegally without case against a group operating a pirated match streaming service called ThaiExpat.tv. ThaiExpat.tv used a series of domains around the SEA region, first located in Hong Kong, then also found in Indonesia, Singapore, Vietnam, and Malaysia to show live matches as well as offer a full suite of British TV content, including BBC, ITV and Sky programming. They also sold illegal streaming devices, which were preloaded with apps enabling pirate broadcasts of Premier League football.

The charges were:

• Copyright Act - infringement via making a broadcast available for commercial gain (s29(3) & s69), and circumventing technological protection measures
• Computer Related Crime Act – interception of data (s8)
• Broadcasting & Television Act – operating a broadcast business without permission (s66) and importing, selling, offering to sell or installing set top boxes for subscription broadcasts (s70)
• Foreign Business Act – operating a business not permitted for foreigners

The case was heard in the Bangkok IP/IT court following a Department of Special Investigation Technology and Cyber Crime Bureau raid in 2017. The individuals operating the pirate site were two Britons and a Thai woman. One British man originally arrested at the raid subsequently jumped bail and along with other individuals, is being sought by Thai police.  Two defendants plead guilty and the case finally reached sentencing last week.

On 29^th November the IP/IT court sentenced the two defendants a British man and his Thai wife to fines of 3 million baht as well as 2 and 1 year suspended jail sentences. They were required to hand over 7 million baht in cash found in their possession at the raid and pay damages totaling 15million baht. These are huge sums, which illustrate the amount of money IP crime can earn and in this case the severe penalties it can attract. Several of the group's foreign members remain on the run. 

Thai police on the run from counterfeiters

The Department of Special Investigations tried to raid Rong Kluea market on the border with Cambodia last week. The market sells a wide variety of counterfeit goods from clothing to watches to food usually with second hand products which is its main function. It is part of the route for Chinese made fake goods via Cambodia into Thailand. Enforcement officials along with various observers representing rights holders tried to conduct enforcement of court orders to seize fake goods. These were acknowledged to be counterfeits.

 

Suddenly 400 Cambodian labourers attacked the police stoning them with various objects, overturning a car and forcing them to flee. Clearly they were resentful of the attack on their livelihoods in a very poor part of the country, in a tricky border region.  Now a war of words between the police and local officials has blown up, with a politician linked to corruption allegations in the market.

 

There are two points arising from this. The first is that counterfeiting is part of a wider spectrum of low-level criminality and this demonstrates the problem. Governments need to manage illegal activities more effectively in emerging markets, not through force, but by ensuring that everyone observes the law. This requires policies to address poverty and jobs from innovative industries and stamping out corruption. But bare enforcement in a vacuum often causes problems.

Secondly South East Asia's northern land borders are the most lawless part of the region. Vietnam's northern border with China's Guangxi and Yunnan provinces and Myanmar's infamous Muse 105 border gate are the most obvious lawless land routes. But the Laotian border with China also creates a massive trade through Laos and Cambodia into Thailand, which those two countries cannot control. South East Asia's land borders remain one of the major entry points for fakes from China, which places a huge burden on the 5 SE Asian countries involved.

How to measure the volume of raids and seizures - Indonesia, Philippines and Thailand comparative data

Indonesia's IPO investigation team has published its latest figures about enforcement raids. It still makes disappointing reading that only 9 raids have taken place in 2015 so far. The police probably handle a few more, but they do not publish and due to their reputation for demanding operational costs for economic crimes, few IP holders can use them.

Statistics / data 2011-2015
No	Intellectual Property Cases	Year
		2011	2012	2013	2014	2015
1	Copyright	2	4	3	5	1
2	Patent	0	2	0	1	0
3	Trademark	26	25	14	10	6
4	Industrial Design	6	3	0	1	2
Total		34	34	17	17	9

Comparative data from elsewhere isn't always ways to find. So how do we measure Indonesia's 17-34 raids per year - lets say 50 if we include police raids.  
 
In the Philippines they measure the number of products seized. This always sounds better because they can talk of millions of dollars, but basing fake values on real values isn't entirely accurate. That said the Philippines enforcement bodies say they will seize over P13 billion ($287.57 million) worth of fakes in 2015. On July 7 Intellectual Property Office of the Philippines (IPOPHL) announced this target. In the first 6 months of 2015, Philippines authorities have seized some P775 million ($17.15 million) worth of counterfeit and pirated CDs, DVDs, books, medicine, designer bags, shoes, and other items. This does not exclude FDA (Food and Drugs Administration) and Bureau of Customs data which was not yet included.  Whilst they don't say how many raids this took, the expectation is that it would have been thousands of cases, because Thai data does break both out.
 
Thailand's police publish statistics on all raids by all departments.  In 2014 the data shows:
 
Trademarks  - 5,974 cases - 817,792 items seized
Copyrights  -  3,592 cases  - 308,235 items seized

It is hard to know what calculation would be needed to value the goods, but assuming say 25 USD a product that would take the value to USD28 million. The Thai data doesn't include Customs, but they seized hundreds of thousands of products in 2014 too.

What this analysis shows is that Thailand and Philippines are operating enforcement systems that seize4 large quantities f products through thousands of raids each year. Indonesia's enforcement therefore in comparison is almost non existent.



 









 

Thailand's 2015 Special 301 report

In its Special 301 report this year Thailand was maintained on the Priority Watch list. There are concerns over a lack of government priority for IP enforcement and weak coordination among government entities despite the National IPR Center of Enforcement operating since in 2013.

Outside practical enforcement, issues are raised about the backlog of pending patent applications, widespread unlicensed software in the public and private sectors, growing Internet-based copyright piracy, rampant trademark counterfeiting, lengthy civil IPR proceedings and low civil damages, the protecting of unfair commercial use, as well as unauthorized disclosure, of test data generated to obtain marketing approvals for pharma and agrochem products, and finally extensive cable and satellite signal theft.
 
On one hand the report praises the new Customs Act that provides Thai Customs officers with ex officio authority to suspend and seize illegal goods in transit, as well as copyright law amendments to address unauthorized camcording. On the other it complains of poor laws relating to the lack of a much-needed landlord liability provision, inadequate protections against the circumvention of technological protection measures and unauthorized modification of rights management information, and unclear operation of ISP notice-and-takedown procedures.

The Special 301 Priority Watch List doesn't compare countries at the same level. The interesting comparison with Indonesia reads in Thailand's favour since many of the above are complex IPR issues most of which are not even discussed in relation to Indonesia, given that Indonesia faces much more fundamental problems. Thailand is a more developed market so the US expects a higher level of IPR protection.

Thailand targets proceeds of IP crime

Thailand has been threatening to use racketeering laws to target IP violators. On World IP day on 26th April, Thailand’s Commerce Ministry indicated that it has created an agency to target IP violators, called the Operations Centre for the Suppression of Intellectual Property Infringement. It still needs cabinet approval but then dozens of other agencies will be ordered to cooperate on IP investigations.  The names of IP infringers can be sent to the Operations Centre. They will verify their tax payment status and the Anti-Money Laundering Organisation (AMLO)may target their assets if profits comprise the proceeds of IP violation. Apparently the AMLO has already arrested a trader for infringing an apparel trademark and has seized 500,000 Thai Baht.

Corruption and IPR enforcement

IIPR authorities are often in a unique position to capitalise on inside enforcement information.
 

The Bangkok Post ran an incisive article in mid January explaining how counterfeit goods vendors pay police up to 400,000 Baht  (USD13,500) to receive tip offs that raids are about to occur. One Nana trader described how a man came to tell her that the Department of Special Investigation would be conducting a raid, that she should temporarily close down and move all of her counterfeit goods back home for two days.

 
Bangkok's counterfeits in areas like Nana, Khao San and Patpong are popular especially with tourists. The prevalence of the fakes does ebb and flow depending on government enforcement initiatives operating at any one time. A large number of traders make their money through buying trips to China, importing the fakes and selling them at street stands. By all accounts it is a good living.

But vendors report that times are getting harder with rising demands for bribes. the interviewed trader reported that frequent police rotation leads to new negotiations each time. Getting caught might mean an arrest and losing some stock, but not all cases go to court and many traders have survived decades without a conviction.

Bribery costs didn't used to harm profits. The shippers and manufacturers in China are generous with credit, and pay bribes to facilitate shipments to Thailand. As a result Thai Customs hasn't been a problem she said.

The police response to the report was that it could be mafia demanding payments rather than police, or individuals posing as police officers.

This is not to single out Thailand. Such situations happen in the Philippines, where corrupt enforcement officials/police have been known to watch the court lists for search warrant applications. They then rush to the address listed to forewarn the target in exchange for a sizable payment (raids take place several hours or often next day after a court search warrant is granted).

In Indonesia, the general consensus among IP holders is that the police are almost completely unusable because they demand upfront payments to investigate commercial crimes like IPR violation.

What all this shows is that certain macro issues such as corruption need to be addressed as part of IPR reform.

Improving enforcement in Thailand

Around this time of year countries look to improve their status in the USTR's Special 301 review, and hopefully move off the Priority Watch list in late April when the announcement of the review comes. This sanction-less US government initiative, does help drive change in South East Asia, although some elsewhere in the developed world find it unpalatable criticism.

Thailand announced on Friday that it will established a special centre to crack down on IPR violation according to Deputy Commerce Minister Nattawut Saikua. The new initiative will focus not just on IPR infringement but wider laws to help suppress IPR Crime. So food and drug regulation and consumer protection rules will also be used. The centre will also look into the proceeds of IPR crime, such as monitoring money trails, will review tax payments and money laundering activities of suspects.

Mr Nattawut said that Thailand is determined to be removed from the Priority Watch List. At the same time another initiative to attack software piracy, including legalising all government software is under way, with the same goal. 

 

If Thailand does pursue IP infringers with such varied tools outside the usual IPR crimes, and if this leads to more serious penalties then the US Special 301 review will have encouraged Thailand to do more than its neighbours, many of whom still do not regard IPR crime as serious.

Counterfeit pharmaceutical products in South East Asia

A report on counterfeit pharmaceuticals published by the American Enterprise Institute here http://www.aei.org/files/2012/02/27/-appendix-a-master-2_170026856632.pdf called the Deadly World of Fake Drugs provides a highly comprehensive global report on this issue compiled from news reports over the last 10 years or so. IP Komodo summarises some key South East Asia comments below.

In the Philippines estimates vary from 8-30% of pharma products being fake. Fake drugs seen included cardiovascular, rheumatoid arthritis, osteoarthritis, asthma, anti-infective, and anti-inflammatory medications. Many are smuggled too. Counterfeits are imported from India, China, Taiwan, and Pakistan mainly but also Saudi Arabia, Thailand, Malaysia, Singapore, Colombia, Indonesia, Nepal and Myanmar.  But the vast majority is from China and numerous examples of Chinese arrests during police and NBI raids are provided. Local production of fakes has also been reported too; from 2002–2005, there were 20 cases reported of fake manufacturing.  A rise in raids through the early 2000s is alleged although more recently the Department of Health suggests there has been a decline.

In Thailand the figures for fakes vary, but numerous seizures suggest it is a multi million dollar annual  industry.  Viagra features heavily in the data, but other fakes are prevalent. The porous border areas of Myanmar, Malaysia and Cambodia are cited as a major gateway. Significant increases in fines have been implemented recently and 2005, police and customs now use GPHF's Minilab, a mobile, compact laboratory, to quickly detect counterfeit and substandard drugs.

In Indonesia the International Pharmaceutical Manufacturers Group (IPMG) estimates that 25 -40% of the pharmaceutical market is fake, increasing in the last 6 years. Common fake medicines include antimalarials, antibiotics, and analgesics. Examples of fake drug seizures provided by the Indonesian Drug and Food Control Agency (BPOM) include substandard amoxicillin and refilled syringes full of with water. The BPOM complains of weak law enforcement and corruption in the judicial system and lenient sentences for counterfeiters as part of the problem.

 

In Vietnam there is a very large fakes market due to the border with China. These include antibiotics, erectile dysfunction treatments, traditional medications, fake liver disorder drugs,   anti sinusitis products and relabelled generics. Vietnam appears to be a transit route from China to destination markets like Thailand. Smuggling is rife and in the local market there is a problem of unregulated pharma sellers. Weak government capacity to take action appears to be improving over time.