News and Analysis • Volume 13 • Number 2 • June 2009

22 - Kenya under Pressure to Change Anticounterfeiting Law

Public health activists and the Indian generics industry have expressed serious concerns over access to medicines under Kenya’s new anti-counterfeiting law, which protects intellectual property rights holders anywhere in the world.

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The Kenyan Congress passed the controversial legislation in December 2008, but opponents are still pushing for amendments that would reduce the bill’s broad scope and expansive definition of counterfeit goods before it enters into force. That will happen upon notification by the country’s minister of industrialisation, but the date has not yet been announced.

The law’s avowed purpose is to prohibit trade counterfeit products. The Kenya Association of Manufacturers estimates that counterfeits cost local firms more than US$642 million in 2008, while annual government revenue losses are thought to exceed US$77 million. A recent survey by Kenya’s National Quality Control Laboratories and the Pharmacy and Poisons Board found that 30 percent of the drugs in Kenya are counterfeit. Some consisted of no more than chalk or water.

Expansive Counterfeiting Definition

As it stands, the law defines counterfeiting as a number of actions taken “without the authority of the owner of any intellectual property right subsisting in Kenya or elsewhere” (editor’s italics), thus potentially bringing within its scope generic copies of medicines still under patent anywhere in the world even when the patent is not in force in either Kenya or the country where it was manufactured.

Counterfeiting actions include the manufacture, production, packaging, re-packaging, labelling or making, whether in Kenya or elsewhere, of goods that are ‘identical or substantially similar copies’ of protected products, or ‘colourable imitations’ that are ‘calculated to be confused with or to be taken as being the protected goods’, or the ‘manufacturing, producing or making of copies, in Kenya or elsewhere, in violation of an author’s rights or related rights’. Bowing to vehement protests from the health community, the following clause was added shortly before the parliamentary vote:

“In relation to medicine, [counterfeiting means] the deliberate and fraudulent mislabelling of medicine with respect to identity or source, whether or not such products have correct ingredients, wrong ingredients, have sufficient active ingredients or have fake packaging.”

On its face, the provision seems geared to prevent the release of medicines that attempt to deceive the buyer. However, many worry that omitting the actual composition of a drug from the counterfeiting criteria may lead authorities to equate safe and effective generic drugs with sub-standard imitations of brandname medicines that are ineffective or even detrimental to human health.

Provisions on Confiscation, Transit

The legislation gives anti-counterfeit officials sweeping powers to detain or seize goods suspected of being counterfeit, including upon petition of right-holders. Applications will be processed within three working days and be granted if authorities determine (i) that the claim does pertain to protected goods, (ii) that an IPR on the subject matter exists, and (iii) the applicant is the owner of the IPR. Compensation for “damage or loss caused by wrongful seizure, removal or detention of goods alleged to be counterfeit [...] shall only be paid where the application for seizure and detention was false or negligent or made in bad faith.”

Health Action International (HAI) Africa has called for the elimination of this section, arguing that the powers it gives to the Kenya Revenue Authority and the future Anti-counterfeit Agency are excessive and likely to be abused, as well as contrary to TRIPS Article 8.2, which provides that “appropriate measures [...] may be needed to prevent the abuse of intellectual property rights by right-holders or the resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology.” In addition, HAI Africa protests the ‘very high’ threshold for compensation for wrongful seizure.

Furthermore, the anti-counterfeiting law also applies to goods in transit, making it an offence to “import into, transit through, transship within or export from Kenya, except, for private and domestic use of the importer or exporter as the case may be, any counterfeit goods.” A provision along similar lines in EU law has been used repeatedly

to seize or detain legitimate generic drugs in transit, as happened in December 2008, when Dutch authorities in Amsterdam confiscated a consignment of losartan en route from India to Brazil. The two countries are still mulling over the initiation of a formal WTO challenge in the matter (Bridges Year 13 No.1, pages 12 and13).

Indian Generics Firms Protest

The Indian Pharmaceutical Alliance (IPA) is lobbying hard against the Kenyan legislation. It views the law as part of a concerted effort by multinational pharmaceutical companies to protect their branded products against generic competition through pressuring governments to adopt legislation that equates effective copies with spurious products. The alliance has enlisted the help of Indian government officials to press Kenya to drop provisions that exceed the requirements of the TRIPS Agreement, including the recognition of extraterritorial intellectual property rights and the law’s application to goods in transit.

In addition, IPA Secretary-General D.G Shah fears that other African countries will adopt similar laws, and thus potentially ‘sound the death knell’ for Indian generics exports to the continent. Africa currently represents some 15 percent of India’s overall pharmaceutical exports, estimated at US$8 billion. Kenya is the continent’s third largest market for Indian drugs, with imports totalling some US$70 million last year.

The Indian pharmaceutical industry also opposes proposed changes to the World Health Organisation’s definition of counterfeit medicines so that it could include trademark violations. The issue was evoked at the WHO’s May Health Assembly (see related article on page 20).