Landmark Criminal Action Initiated Against Counterfeiters

At the end of 2015, the District Attorney’s Office in Quito received an anonymous complaint alerting them to the sale of counterfeit pharmaceutical products. Following this complaint, on December 2, 2015 the National Police of Ecuador conducted several raids on various locations. These locations included a site where counterfeit pharmaceuticals were being manufactured, a site where the counterfeits were being prepared, packaged, and stored, and a site where the counterfeits were being distributed. In addition, police raided the residence of one of the principle persons involved in the counterfeiting operation. Eventually, a total of three arrests were made.

Among the products that were seized during the raids were those bearing the IP rights of companies represented by CorralRosales. On behalf of these clients, we took an active interest in the case, and we committed ourselves to advancing a criminal case against those who had been arrested.  After several hearings in which our firm participated, it was decided that a criminal action would be brought against the suspects.

The article of the Ecuadorian Penal Code dealing with counterfeit pharmaceutical products is Article 217, (“Production, fabrication, commercialization and distribution of expired medicines and medical equipment”), which provides:

“Any person who imports, produces, fabricates, commercializes, distributes or dispenses counterfeit drugs or medical devices, or who fails to meet the relevant standards for their composition, stability, and effectiveness, shall receive a term of 3 to 5 years imprisonment.”

Notwithstanding the availability of the above article, there were no prior cases under this provision that could have been used as precedents in a criminal action. Therefore, it was important to obtain a judgment in order to provide a path for future cases of this nature.

It was necessary throughout the proceedings to assist the District Attorney with IP concepts, to ensure that the experts conducting analyses of the counterfeit pharmaceuticals signed appropriate non-disclosure agreements, and to provide evidence to the Court during pre-trial hearings.

Ultimately, at the beginning of June in 2016, the firm succeeded in helping to secure an outcome in which one of the accused took a plea bargain resulting in a sentence of one year in prison. At the time of writing, the sentences for the other persons charged in this case have not been finalized.

While there is still much work to be done on this and future cases, the most significant outcome has been the development and the strengthening of intellectual property rights in Ecuador. Not only has this case received attention by the media and the Ecuadorian public, it has also created a strong judicial precedent that can now be used for this type of case in the future.

5th August 2016