LICOMAN HERBAL RESEARCH LAB. LTD v. THE CHINESE MEDICINES BOARD OF THE CHINESE MEDICINE COUNCIL OF HONG KONG

HCMP 2420/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2420 OF 2009

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BETWEEN

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J U D G M E N T

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Introduction

1.  This is an application brought pursuant to s. 141(1), Chinese Medicine Ordinance (Cap. 549).  That provision reads:-

“A person aggrieved by any decision of the Medicines Board made under section … 140 may appeal to the Court of First Instance within 1 month from the date of service of the notice.”

S. 140, Cap. 549 provides for a review by the Medicines Board (“the Board”) of decisions made by two committees which were set up pursuant to the provisions of Cap. 549.

2.  The applicant was set up in 1998 and is one of the local manufacturers of over-the-counter Chinese medicine products.  A typical product is medicated liniment for the treatment of minor ailments such as skin rash or muscle ache.

3.  The Board was set up also pursuant to the provisions of Cap. 549.  The Board’s functions are provided for by s. 24 and Schedule 3, Cap. 549.  In relation to proprietary Chinese medicines, an important function of the Board is their registration and de-registration.

Nature of Court of First Instance’s Powers

4.  The Board submits that an appeal brought pursuant to s. 141, Cap. 549 falls within that provided for under RHC Ord. 55. Ord. 55 r. 3(1) stipulates (among other things) that such an appeal shall be by way of rehearing.

5.  However, the Board says the word “rehearing” does not mean a rehearing in the full sense.  Reliance is placed on authorities including Montres Tudor SA v. Concord Watch Co SA HCMP 5789/2000 (25 July 2001), an appeal brought pursuant to the former s. 79(2), Trade Marks Ordinance (Cap. 43) (which also provided in effect for a rehearing by the court) where the court said:-

“Although the appeal is by way of rehearing, it is well established that at the hearing of the appeal great weight should be attached to the decision of the acting registrar. In Prince Sovereign and Device Trade Mark [1989] 2 HKC 247 Jones J held that great weight must be attached to the decision of the Registrar who was an expert in his field dealing with such applications and his decision should not lightly be disturbed unless he had improperly exercised his decision either by making a mistake of law or had clearly come to a wrong conclusion. This was also the effect of Wellcome Foundation Ltd -v- Otsuka Pharmaceutical Co. Ltd.[1989] 2 HKLR 365 and Re Mitac [1992] 2 HKC 22. In my view those authorities should be followed. In my judgment great weight must be attached to the decision of the acting registrar which should not be lightly disturbed.” (emphasis supplied) (para. 7 thereof)

6.  The appellant does not dispute the Board’s above submission.  It appears appropriate to adopt the same approach in this appeal and I shall do so.

Legislative Framework

7.  Traditional Chinese medicines have been widely used to prevent or treat diseases (or to enhance health) for a long time in Hong Kong.  In fact, their importance to the local community can be gleaned from a specific article in the Hong Kong Basic Law providing for their development and improvement: Art. 138 thereof.

8.  Cap. 549 was enacted in July 1999.  Three matters are specified in the long title of Cap. 549:-

(a) the registration of practitioners in Chinese medicines;

(b) the licensing of traders in Chinese medicines;

(c) the registration of proprietary Chinese medicines.

By reason of its context (see below for details), there is no need to further consider sub-para. (a) or (b) in this appeal.

9.  In relation to “proprietary Chinese medicines” (defined in s. 2, Cap. 549) (see also para. 33 below), ss. 119 and 121, Cap. 549 require all of them to be registered before they can be sold, imported or possessed.

10.  For proprietary Chinese medicines already manufactured and/or sold in Hong Kong as at 1 March 1999, s. 128, Cap. 549 provides that applications can be made for their registration to be determined.  Those medicines will then be deemed to have been registered until the occurrence of one of 3 prescribed events (two of which are: (1) when they have been registered under s. 121, or (2) when their application has been refused).

11.  Thus, in effect a “grace period” has been given to those medicines which fall within the provisions of s. 128, Cap. 549 (that period expired in June 2004).

Relevant Background

12.  The appellant’s business is stated in para. 2 above.  Pursuant to s. 128, Cap. 549, it applied to the Chinese Medicines Committee (“the Committee”) to register 83 of their products.  The Committee refused the applications relating to 42 of those products (but only 40 of them are in issue in this appeal) (“the appellant’s products”).

13.  For the purpose of this appeal, it is common ground those products which were not refused by the Committee contained not more than 1% Thymol.  On the other hand, the appellant’s products contained about 1.5% to 2% Thymol.

14.  According to the appellant, the Thymol in the appellant’s products was a substance used for preservative purpose.

15.  Both the Committee and the Board (on review pursuant to s. 140, Cap. 549) disagreed and concluded that, where the Thymol found in the appellant’s products is in excess of 1%, it has pharmacological effect, and should be considered an active ingredient.

16.  As the appellant explained during the appeal hearing, applications under s. 128, Cap. 549 are of significant importance to its business.  This is because if those applications are refused, the appellant will have to apply for registration of the appellant’s products pursuant to ss. 119 and 121, Cap. 549 (which may take a long period of time to process, and may be more expensive).

Issues in This Appeal

17.  The appellant’s complaints in this appeal can be summarized as:-

(1) it was not informed of the factors adverse to its applications;

(2) the Board failed to exercise the discretionary powers conferred by Cap. 549;

(3) the Board has acted irrationally and/or exercised its discretion improperly.

(a) Failure to Inform

18.  This complaint has no merit.

19.  There has been a long line of correspondence passing between the parties prior to the Board’s decision (the hearing of which took place in September 2009).  In the correspondence, the reasons for refusing the s. 128 applications of the applicant’s products have always been expressly stated.

20.  In letters sent in April and May 2006, those reasons were given by the Department of Health:-

“貴公司所提供的 … (第138章)附表2第II組「特別豁免」一項指,麝香草酚或百里香酚(Thymol)是根據《藥劑業及毒藥規例》 … 可獲豁免 … ，但同時 … 適用於第8條(1)(b)所指藥劑製品的每種物品或物質。

因此,有理由相信貴公司含有麝香草酚或百里香酚的產品是屬於藥劑製品,而非中成藥。” (letter dated 3 May 2006).

21.  In November 2006, the Department of Health wrote again to the appellant:-

“中藥管理小組認為麝香草酚並非中藥材,不能作為中成藥的有效成分,而作為中成藥的輔料時,其含量則不能多於1% …

此外,就中成藥註冊申請更改完整處方的事宜,中藥管理小組 … 決定已遞交註冊申請的中成藥,不可更改完整處方 … ” (letter dated 2 November 2006).

22.  After the applications have been refused by the Committee in March 2008, the Chinese Medicine Council of Hong Kong wrote to the appellant pointing out the appellant’s products contained Thymol and did not fall within the meaning of “proprietary Chinese medicines” as defined by s. 2, Cap. 549.

23.  When the review was heard by the Board, it was submitted by the Committee that:-

“申請人 … 提交申請表及完整處方等資料一共42份。根據申請書上「有效成分的名稱及份量」及完整處方均顯示該42個產品含有效成分「麝香草酚」，其含量由1.5%至2%不等。

…

…根據《中藥大辭典》所載 …

衛生署未能從中醫藥典籍中找出「麝香草酚」作為中藥材使用的記載,該署的中藥專家亦認為麝香草酚不會作為中藥材使用。根據藥物典籍《Martindale》(35^th Edition)顯示，麝香草酚(thymol)具有抗細菌及抗真菌的功用 … 根據內地的衛生部部頒化學藥品標準 … 麝香草酚的【作用與用途】為消毒防腐藥，主要用於霉菌感染 … 麝香草酚在藥劑製造中主用於外用製劑作防腐劑和着香劑，使用濃度一般應為0.5%至1%。

根據以上資料,小組認為「麝香草酚」並非中藥材 … ”。

24.  The Board’s reasons for decision dated October 2009 (“the Board’s written reasons for decision”) basically echoed the above:-

“中藥組信納40個過渡性註冊產品 …於1999年3月1日時的組方實際包含1%至2%的「麝香草酚」，不符合中成藥的定義 … ”。

(b) Failure to Exercise Discretion

25.  The appellant contends that the Board:-

“failed to exercise its discretion to allow [the appellant] to conduct a very minor amendment on the [formulae] of the 40 products by reducing the percentage of excipient (賦形劑) namely ‘Thymol’ … from 2% to 1% or alternatively by deleting this excipient totally … ” (para. 15, appellant’s skeleton submission).

26.  The appellant’s contention overlooks the Board’s conclusion that the percentage of Thymol found in the appellant’s products concerned shows that it was used as an active ingredient (rather than as an excipient or preservative, as the appellant claimed).

27.  At one stage during the appeal hearing, the appellant seemed to be arguing that the Board’s above conclusion was either wrong or unreasonable; but that was retracted (or at least not pursued further).

28.  With the Board’s said conclusion in mind, the amendment sought by the appellant cannot properly be regarded as “minor”.

29.  The reasons why the Board reached the conclusion that Thymol in excess of 1% in the appellant’s products:-

(a) is an active ingredient;

(b) cannot be “Chinese herbal medicine” (中藥材),

are summarized below.

30.  The Board’s written reasons for decision stated the Board had considered the background information, records, and the written and verbal submissions of the parties appearing before reaching the conclusion set out in para. 15, 24 and 26 above.  A summary of those matters was also given in the Board’s written reasons for decision:-

(1) the appellant’s own application forms and formulae stated Thymol was one of the active ingredients (see also para. 23 above);

(2) the authoritative textbook provided by the appellant (中藥大辭典) did not say Thymol is only used as a preservative (see also para. 23 above);

(3) the authoritative textbooks which the Department of Health had read did not say Thymol is a Chinese herbal medicine (see also para. 23 above);

(4) the Department of Health’s Chinese medicine expert opined Thymol is not a Chinese herbal medicine (see also para. 23 above);

(5)   the document from the Mainland health authority recorded that Thymol in excess of 1% had pharmacological effect;

(6)   the appellant’s claim that many products also contain Thymol in excess of 1%.  It also claimed that a mistake was made in its application forms and formulae as regards whether Thymol should be stated as an active ingredient.

31.  There is no need to go into the details suffice it to say there is ample material in support of the Board’s said conclusion. The Board was also entitled to reject the appellant’s claims (and the Board must have rejected them) after having considered them.

32.  Given the nature of the court’s discretion in this appeal, there is no valid basis for departing from the Board’s said conclusion.

33.  The term “proprietary Chinese medicine” has been given a statutory definition.  In order to fall within that definition, in brief a substance must (among other things) be composed solely of any Chinese herbal medicines, or any materials of herbal, animal or mineral origin customarily used by the Chinese.

34.  Accordingly, by reason of the Board’s above conclusion, the appellant’s products do not fall within the definition of “proprietary Chinese medicine”.  The Board was thus correct in informing the appellant it has no discretion in the matter; the jurisdiction conferred upon it by s. 128, Cap. 549 is premised on the substance being “a proprietary Chinese medicine”, and one which was manufactured or sold in Hong Kong on 1 March 1999.

35.  The appellant’s reliance on the two exceptions set out at the Chinese Medicine Council’s letter of 28 June 2006 (referred to at its website) regarding “Natural Moschus” (天然麝香) and “Aristolochic Acid” (馬兜鈴酸) (to be replaced by specified substitutes) is misconceived.

36.  It is accepted during the appeal hearing both substances were widely used in proprietary Chinese medicines and need to be replaced because the former was sourced from endangered species while the latter was considered toxic herbal medicine (the letter dated 28 June 2006 also states that other similar substances would be considered on a case-by-case basis).

37.  On the other hand, it is not the appellant’s case Thymol in excess of 1%:-

(a) was commonly used in proprietary Chinese medicines;

(b) originated from endangered species;

(c) was a toxic herbal medicine.

38.  The appellant also relies on s. 124(1), Cap. 549 which concerns the variation of a proprietary Chinese medicine registered under s. 121 thereof.

39.  That provision reads:-

“The holder of a certificate of registration may ... apply ... for approval to vary the registered particulars of the proprietary Chinese medicine to which the certificate relates except the following particulars-

(a) the product name;

(b) the dose form; and

(c) the name and quantity of any active ingredient.”

(emphasis supplied)

For example, if the appellant’s products became registered under s. 121, Cap. 549, any application for variation of the registration will have to be brought within the terms of s. 124(1) above.  But an application for variation which involves “the name and quantity of any active ingredient” cannot do so.

40.  This exception to the power to approve a variation conferred by s. 124(1) shows that Cap. 549 does not intend registered proprietary Chinese medicines’ active ingredients can be varied and yet remain registered “as is”.

41.  There is no valid reason to conclude a registration under s. 128, Cap. 549 (which is described as a “transitional registration”) should be different from that under s. 124(1) thereof in this regard.  On the contrary, Cap. 549 must likewise have intended not to permit any variations to be made to active ingredients of proprietary Chinese medicines already manufactured and/or sold in Hong Kong on 1 March 1999.

42.  The appellant also complained during the appeal hearing the Board has considered the issue of public safety without affording it an opportunity to address that issue.  Although Cap. 549 is ultimately concerned (among other things) with public safety, there is no evidence to show in reaching its decision, the Board has addressed issue(s) other than those set out above.  This complaint therefore is invalid.

(c) Irrationality

43.  Finally, as regards the argument that the Board has acted irrationally and/or exercised its discretion improperly, by reason of the above matters, I find the argument to have no substance.

Conclusion

44.  To sum up, this appeal should be, and is, dismissed.

Costs Order

45.  The parties agree the costs of this appeal should follow the event.  There will accordingly be a costs order they be paid by the appellant to the Board to be taxed if not agreed.