Singapore: High Court Dismisses Alleged Sale Of Counterfeit Medicine

The High Court has recently dismissed a claim that a Singapore company has been selling counterfeit Chinese herbal medicine. Yunnan Baiyao Group ("Yunnan"), one of the biggest pharmaceutical companies in China, had accused Tong Jum Chew ("Tong", a Singapore company, and Tong Jum Chew Medical Store, a related medical hall, of misleading members of the public and trying to pass off their products as the real thing.

The drugs in question had first entered the local market as "Yunnan Paiyao", a herbal medicine said to be used to stop bleeding and heal wounds and is sold within China under the Yunfeng brand. Tong, on the other hand, has been selling the drug "Yunnan Paiyao" in capsule and powder form under the Camellia brand here.

Apparently, Yunnan had changed the packaging of its product and renamed it "Yunnan Baiyao" subsequent to April 1998. Tong resumed selling the "Yunnan Paiyao" product under the Camellia brand in 1999.

The main claims by Yunnan in this case were that

1. since Yunnan was the only licensed manufacturer of the drug, consumers might associate "Yunnan Paiyao" under the Camellia brand of products with "Yunnan Baiyao" under the Yunfeng brand manufactured by Yunnan in China
2. the "Yunnan Paiyao" brand of products were not manufactured in China
3. the packaging of the Camellia brand product was almost identical to that of Yunnan especially in respect of the Chinese characters on the packaging
4. the "Yunnan Paiyao" products were inferior to those of "Yunnan Baiyao"

In defence, Tong’s lawyer argued that his client’s products were genuine since Tong imports the products from another Chinese company, Yunnan Medicines and Health Products Import and Export Corporation, which owns the Camellia brand. The latter company in turn gets its supply from Yunnan. Tong had therefore not attempted to pass off their products as anyone else’s. Moreover, the packaging also indicated that Yunnan was the manufacturer.

In addition, he pointed out that it was the Camellia brand ("Paiyao") and not the Yunfeng brand ("Baiyao") that is well-known here as the former has been traded in Singapore since 1971. As such, consumers would be able to distinguish the red and yellow Camellia brand from the red, green and white packaging of the Yunfeng brand.

With regard to the claim that "Yunnan Paiyao" was of inferior quality, Yunnan rejected the prospect of an independent test of "Yunnan Paiyao" being conducted in Singapore. Yunnan’s witnesses asserted that they were able to distinguish the two products as "Yunnan Baiyao" had a unique fragrance absent in the alleged counterfeit medicine. They were also reluctant to disclose how they were able to distinguish the two products, claiming that they had a secret formula to do it.

The judge presiding over the case, Judicial Commissioner Choo Han Teck, ruled in favour of Tong as Yunnan had failed to establish its case that the public would associate "Yunnan Paiyao" with "Yunnan Baiyao". This is because "Yunnan Paiyao" products sold under the Camellia brand were well-known through over 30 years of local use, years before Yunnan had obtained its licence to manufacture the drug.

This case is a useful illustration of the onerous burden of proving passing off, and the importance of sufficient evidence from the market being adduced to support such a claim.