Covid-19: when counterfeiting speculates on the pandemic, panic, and scarcity

@ Belkin & Co (Adobe Stock 331493551)

@ Belkin & Co (Adobe Stock 331493551)

The Covid-19 pandemic, which has been raging since the end of December, has aroused among the most unworthy of us inclinations of immorality and inhumanity. Pandemic, panic, and shortage form a bitter cocktail capable of overwhelming the lucidity of the most cautious. Ruthless greed swindlers speculate on the vulnerabilities of a weakened global society to make a fortune. This large-scale abuse of weakness takes many forms, with counterfeiting being one of the most obvious.

The shortage of medical equipments causes terribly favorable circumstances to build confidence in products that take the appearance of goods meeting safety standards and emanating from producers holding intellectual property rights and/or, where appropriate, a marketing authorization. Screening tests, medicines, masks, gloves, protective glasses, protective suits, respirators and filters for respirators, hand sanitizer, etc. are all products which, because of the scarcity with which they are struck, undergo an excessive increase in prices. Some states have limited this inflation, sometimes under threat of criminal penalties. However, such measures were not imposed in all countries, and, in any event, it would not be enough to solve the problem of scarcity. The circumstances are, therefore, proper for the sale of counterfeit medical equipment. Usually, although this is not systematic, the price participates, among other factors, in the detection of counterfeit goods. However, in times of scarcity, counterfeiters may have an interest in aligning their prices with the market price, in particular in the absence of any state interventionism, which conveniently places counterfeiters in a suitable position to take advantage of citizens’ anxiety or patients’ asthenia. The circumstances indicate that the exorbitant nature of the prices may not be prohibitive. Other counterfeiters, on the other hand, sell their products within a more reasonable price range. However, they still capture the attention of their victims with promotions of up to -90%. Fortunately, price is not the only indicator. The authorities are fully aware of this and respond accordingly.

In the United Kingdom, a person has been charged with making medicines including potassium thiocyanate and hydrogen peroxide, presenting them as part of the treatment for coronaviruses and selling them worldwide. A package had been intercepted in Los Angeles. A police search of the accused’s home uncovered 300 treatment kits and approximately 20 liters of chemicals used in the production of counterfeit medicines (worldipreview.com, 2020-03-23). This story is just one example among many.

Faced with the irreducible ferocity of counterfeiters, Interpol is on the lookout. A new Pangea XIII operation, conducted in 90 countries from March 3 to 10, 2020 (Interpol.int, 2020-03-19), led to the takedown of 2,000 hypertext links promoting counterfeit products (mainly masks) specifically intended for people wishing to protect themselves against Covid-19. Interpol recognizes that the seizure of over 34,000 substandard counterfeit masks, “corona spray “, “coronavirus packages” or “coronavirus medicine” only reveals the tip of the iceberg. During this week of action, “authorities in participating INTERPOL countries inspected more than 326,000 packages of which more than 48,000 were seized by customs and regulatory authorities“. 326,000 parcels are only a drop if we take into account the scale of the health crisis in time and space, even if the number of small parcel shipments has been held back by the pandemic. Furthermore, that is not all:

“Compared to the week of action in 2018, this latest edition of the operation reported an increase of about 18 per cent in seizures of unauthorized antiviral medication, and an increase of more than 100 per cent in seizures of unauthorized chloroquine (an antimalarial medication), which could also be connected to the COVID-19 outbreak.”

The European Anti-Fraud Office (known as “OLAF”) takes as an example “counterfeit masks have been offered online in different EU Member States at prices ranging between 5€ and 10€, approximately three times the normal price. Fake face masks for children (Frozen 2) are also being ruthlessly smuggled (ec.europa.eu, 2020-03-20). OLAF continues:

“The empirical evidence suggests that these counterfeit products enter Europe through online sales and are brought into our homes via postal or courier services. Nevertheless, they also arrive in containers with fake certificates, or declared as other products, and then find their way into the normal distribution channels, or are sold on the black market. Until the currently imposed travel bans, they also arrived smuggled through the border in suitcases of air passengers, or smuggled through the land borders.”

On March 4, 2020, several members of the Consumer Protection and Trade subcommittee (energycommere.house.gov/subcommittees) — a branch of the Energy and Trade Commission of the House of Representatives of the United States (energycommerce.house.gov) —, held a hearing devoted to the safety of products made available to the public on online market platforms. Some members of the House of Representatives introduced the issue of consumer safety concerning medical equipment which floods the marketplaces with plenty of keywords such as “covid-19” and/or “coronavirus”. Mr. Mheta (Amazon) assured that Amazon was deploying all the efforts necessary to remove the products which guarantee a cure and, more generally, all the bad operators who try to take advantage of the current situation. Zero tolerance applies. To date, Amazon.com and Amazon.fr, for example, do not offer any medical masks. The same applies in particular to eBay.com and eBay.fr. E-commerce platforms are demonstrating that when the safety of people is at stake, they have the resources and the capacity to remove dangerous goods. Nevertheless, other platforms don’t play the game.

The current circumstances call for a new reflection on the criminal sanctions in matters of counterfeiting. The need to apply the harshest sanctions seems to be essential, not only to envisage punishment in its deterrent function but also or even only, to isolate dangerous criminals from the rest of society. Besides, since a shortage favors parallel markets, including that of counterfeiting, it might be helpful to consider the shortage as an aggravating circumstance.

Ironically, it is companies and groups of companies usually hit by counterfeiting that mobilize their production chains to make protective equipment and hand sanitizer: LVMH, L’Oréal, Kering, Groupe CL, Armor-Lux , Christian Siriano, Zara, Inditex, Nivea, Pernod Ricard, Noyoco, 1083, Saint James or Manifeste011, to name a few. Most of these masks are intended for the medical staff; for lack of anything better, they do not necessarily protect from external respiratory droplets, but they are recognized as having the ability to reduce the risk of transmission from caregiver to patient. The fact remains that these masks do not pretend to be what they are not. Dyson, and many car manufacturers (Ford, Tesla, Roll Royce, Jaguar, Land Rover, General Motors, etc.) have also said they are ready to manufacture respirators and ventilators, sometimes in collaboration with industry specialists (including 3M and GE Health). 

There are different ways to exploit intellectual property rights, some more honorable than others.

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