Trouble Brewing around NBER Paper on Indian Pharma – Part II

Yesterday, I wrote about the big storm brewing around an NBER paper which claimed that the Indian pharma industry was intentionally sending lower quality drugs to African countries. In response to this paper, it appears the Government of India may be launching legal proceedings. In yesterday’s post, I discussed the paper itself – concluding that the paper in its current state was not quite convincing in its own conclusions. [The lead author has responded to a few points in the comments section]. In today’s post, Gautam Bhatia, a friend of the blog, discusses the second issue in this ‘storm’ – the issue of the government taking legal action in response to the paper. Gautam, a free speech scholar, is an NLSIU graduate, as well as a Rhodes scholar and Yale Law school alumnus. He also runs the IndConLaw blog. [Long post ahead]. 

Defamation, Research Papers, and the Pharmaceutical Industry: Some Legal Issues

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As Swaraj has written, at the end of last month, the Times of India and the Economic Times reported that the government is considering legal action against the American Enterprise Insititute (AEI), and a few research scholars, for “maligning” the Indian pharmaceutical industry. At this stage, the details are hazy. The Times of India reports that the action is being initiated by the India Brand Equity Foundation on behalf of the government and domestic industry; whereas, according to the Economic Times, government officials have gone on record stating that it is the government that intends to launch a defamation suit against the AEI research scholar, Roger Bate, for “maligning the country and running a smear campaign against the Indian pharmaceutical industry.” In a September 25 press release, the IBEF itself states that it has asked “the government to initiate legal proceedings against all concerned.”

At the heart of the trouble is an article published by Bate and some other research scholars, which claims to have tested 1470 samples of India-made drugs, collected from different geographical locations, and found that bad samples disproportionately tend to be unregistered products found in the African cities they’ve sampled. They’ve also indicated that this distribution may be intentional by Indian manufacturers. [Editor’s note: This para had earlier made some mistakes in representing the findings of the article. It has now been corrected.]

Whatever the merits and the qualities of the research article in question, there are a few reasons why a defamation lawsuit, filed in an Indian court, is perhaps not the best response available to India, and to the Indian pharmaceutical industry. There are a few reasons why.

(1) Which law?

The first task before an Indian judge would be to determine whether or not he has jurisdiction to hear a case brought against a foreign organization, and foreign nationals, none of whom can (viably) be served with a notice. Assuming that the judge does find he has jurisdiction, he will then need to wade through some fairly complex rules of private international law, to determine which law to apply to the dispute. The first enquiry that he must undertake will be to determine the “place of publication”. This is because the law applicable to the dispute will depend upon whether what has occurred in this case is a “foreign tort”, or a domestic tort. In defamation law, this classification is dependent upon determining the place of publication of the allegedly defamatory statement.

In this case, the research paper has been published by members of the American Enterprise Institute, under the auspices of the National Bureau of Economic Research. It is an online publication, that can be downloaded from the NBER’s website. Physically, the NBER and the American Enterprise Institute are located in the United States. However, in this case, the enquiry is complicated by the fact that what is at issue here is not physical publication, but online publication. There is no definitive rule determining the place of publication in cases of online defamation: courts around the world have been divided over whether the place of publication is the place where the author uploaded the defamatory statement, where the servers of the hosting website are located, or where the reader downloaded it, with further complications for situations in which the offending piece could only be downloaded upon an online payment.

If it is found that the place of publication is the United States, and the tort is a foreign tort, then the rule of “double actionability” will apply (see a detailed discussion here). Eschewing various complications, under this rule, the plaintiff will need to demonstrate that the defendant’s conduct was wrongful in both jurisdictions (the place of publication, and the place of suing). This will be an impossible burden to discharge, since the defamation law in the United States is by far the most speech-protective in the world: when it comes to speaking about public officials, or public figures, or effectively making any statement that has public-interest ramifications, the “actual malice” rule in New York Times vs Sullivan applies: it must be shown that the defendant either knew his statement to be false, or acted with reckless disregard for its truth or falsity. Under the Sullivan rule, the American press has never lost a defamation lawsuit. It is clear, therefore, that if the double actionability rule is applied, and applied correctly, the plaintiffs’ suit is liable to be dismissed at this stage itself.

(2) Why the Government?

Let us assume, however, that the publication of the article is held to constitute a domestic tort, and Indian defamation law applies. There are a few procedural hurdles that remain, before the case can even get to merits.

First, how does the government acquire the standing to sue? Under general principles of locus standii, the party initiating a lawsuit must demonstrate that some legal interest has been affected by the defendant’s conduct. Under defamation law, that legal interest is reputation. At this stage, two possibilities arise.

The government might argue that it has been defamed – i.e., in “maligning” the Indian pharmaceutical industry, the defendants – by extension – have maligned the Indian people as a whole, which are represented by its government. Apart from the problematic nature of this argument, it also runs up against the barrier of R. Rajagopal vs State of Tamil Nadu, where the Supreme Court held, rather unambiguously:

     So far as the Government, local authority and other organs and institutions exercising governmental power are concerned, they cannot maintain a suit for damages for defaming them.

The logic in Rajagopal (drawn from American, English and Privy Council cases) was that in a democracy, which is premised upon the State’s accountability to the people, the actions of the government must be open to complete and unfettered critical scrutiny. Thus, while public officials might sue for defamation (in which case, the Rajagopal Court held, the actual malice rule in Sullivan applies), the government qua government cannot maintain such a suit.

If, on the other hand, we assume that the reputational interest is that of the Indian pharmaceutical industry, then the obvious question is: what gives the government the standing to sue? Admittedly, in the Bhopal Gas Tragedy case, the government did sue Union Carbide on behalf of the victims. However, that was based upon a specific enactment that vested such a right in the government. A quick look at the reasoning of the Constitution Bench of the Supreme Court in Charan Lal Sahu vs Union of India should reveal the narrowly circumscribed contours of such an action:

It is true that victims or their representatives are sui generis and cannot as such due to age, mental capacity or other reason not legally incapable for suing or pursuing the remedies for the rights yet they are at a tremendous disadvantage in the broader and comprehensive sense of the term. These victims cannot be considered to be any match to the multinational companies or the Govt. with whom in the conditions that the victims or their representa- tives were after the disaster physically, mentally, finan- cially, economically and also because of the position of litigation would have to contend. In such a situation of predicament the victims can legitimately be considered to be disabled. They were in no position by themselves to look after their own interests effectively or purposefully. In that background, they are people who needed the State’s protection and should come within the umbrella of State’s sovereignty to assert, establish and maintain their rights against the wrong doers in this mass disaster. In that perspective, it is jurisprudentially possible to apply the principle of parens patriae doctrine to the victims. But quite apart from that, it has to be borne in mind that in this case the State is acting on the basis of the Statute itself. For the authority of the Central Govt. to sue for and on behalf of or instead in place of the victims, no other theory, concept or any jurisprudential principle is required than the Act itself.

It is clear that the logic of the Bhopal tragedy, where individual victims were pitted against the might of a multinational corporation, allowing for the invocation of the parens patriae doctrine, does not apply to a case where the Indian pharmaceutical industry is arrayed against the writers of an academic article and their supporting institute. And, subject of course to correction, I am unaware of any enactment that vests a right to sue for such cases in the government.

(3) Who has been defamed?

Let us assume, however, that ultimately, it is the pharmaceutical industry that initiates the lawsuit, asking compensation for damaged reputation (or, alternatively, the government gets around the locus standii issue by filing a complaint of criminal defamation, under S. 499 of the IPC (which, of course, will bring about its own set of private international law issues)).

One of the central elements of defamation is that the defamatory statement must refer to the plaintiff. The meaning of this was clarified by the Delhi High Court in a case with strikingly similar facts, M/s Crop Care Foundation vs Rajasthan Patrika.  An association of insecticide manufacturers sued a newspaper for publishing various articles critical of the levels of pesticides used, and the harm they were causing to the environment. Relying upon the Supreme Court case of G. Narasimhan vs T.V. Chokkappa, it was held by Justice Ravindra Bhat that:

A suit for defamation cannot be maintainable if the alleged defamatory statements do not refer to a determinate or definite class or group of persons… the principle behind Explanation (2) to Section 499, IPC is also, in essence, the same… thus, even if it is argued that parts of the impugned articles make an indirect reference to firms/companies/individuals engaged in the manufacture, production, processing and/or distribution of pesticides, insecticides etc., it would still not amount to a reference to a definite or determinate class or group of people… it is a settled position that when it is written that “all lawyers are liars” or “all religious heads are simulators”, no particular person occupying that position can sue the writer unless he can establish that the words were pointed at him.”

An examination of the precedents – both national and international – cited in Crop Care Foundation reveals that this practice is followed world-over. A perusal of the impugned article in this case also reveals that it does not mention any pharmaceutical companies by name: rather, it is a critique of certain kinds of practices (much like the situation in the pesticides case). Consequently, there is no identifiable target of the defamatory statement – the pharmaceutical industry, as a whole, does not meet the standard of a “definite or determinate class or group of people”, which is a basic pre-requisite for a defamation claim to succeed (either civil, or under the Explanation to S. 499 of the IPC).

(4) Is it defamation?

After all this, we finally come to the merits themselves. It is, of course, difficult to pre-judge the merits of a defamation case. Suffice it to say, at this stage, that a well-established defence to defamation is that of fair comment upon a matter of public interest. There can hardly be any doubt that the manufacture and export of generic drugs is a matter of public interest. Consequently, in order to succeed, the plaintiffs will need to show that the facts upon which the “comment” (i.e., the argument of the scientific paper) is based are untrue. So far, the criticism from the pharmaceutical industry has focused on the methodology of the study. Given that this is an academic study, a flawed methodology will, of course, undermine its authority and credibility in the field. It will not, however, be sufficient to hold the authors liable for defamation.

(5) Conclusion

It can hardly be doubted that the claims made in the article are of far-reaching importance. They deserve to be thoroughly engaged with, and to the extent that its conclusions are unsupported by evidence, or based on flimsy methodology, the paper should be extensively rebutted, both in the scientific arena and in informal public sphere. A defamation lawsuit against the authors and publishers of a research paper, however, is not the answer. Not only will it help to further cement India’s reputation as an illiberal society when it comes to free speech, as well as ensure that a good opportunity to engage in public debate is foregone, but also, in the long run, it is unlikely to succeed.

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2 thoughts on “Trouble Brewing around NBER Paper on Indian Pharma – Part II”

  1. I am grateful to Mr. Barooah’s careful reading of our paper, and to Mr. Bhatia’s rich knowledge in Indian and international laws. I will post a blog shortly to address the legitimate criticism of Mr. Barooah and answer some questions raised by the industry.

    On Mr. Bhatia’s blog, I am afraid our findings have been mis-presented.

    We did test 1470 “made-in-India” samples, collected from different geographical locations, but we never claimed to have “found them to be of substantially lower quality than drugs produced by other mid-income countries.” All of our samples are labeled “made-in-India” on the package, so the comparison is NOT between India-made drugs and drugs made by other countries. Rather, we ask whether the quality of “Indian-made” drugs is different across three groups of PURCHASE countries – namely, Africa, India-domestic and non-Africa. For the drug type that we have samples from all three country groups (ciprofloxacin), we find the passing rate lowest in Africa and highest in non-Africa. For the other drugs types that we have samples from Africa and India-domestic, we find the passing rate lower in Africa than in India-domestic. There are clearly limitations to our study, which I will clarify in the upcoming blog, but we cannot be held responsible for things we did not do in the paper.

    1. Thanks for catching that – I apologize for letting it slip through. I think both of us, he while writing and me while uploading it, overlooked that para as we were focusing on the meat of the defamation issue he was dealing with.
      However, it’s certainly not what you’ve presented in your paper. I will edit in the correction to the main post immediately.

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