Various N95 respiration masks at a laboratory of 3M that has been contracted by the U.S. government to produce extra marks in response to the country's novel coronavirus outbreak, in Maplewood, Minn, March 4, 2020.Nicholas Pfosi/Reuters
Medical supply giant 3M Co. has filed a lawsuit in Ontario claiming a Canadian company has been selling N95 respirators online at “exorbitant” prices and misleading buyers into believing the masks came from suppliers affiliated with 3M.
The Minnesota-based 3M filed an application with the Ontario Superior Court of Justice in Windsor on Tuesday, asking the court for an emergency hearing of its claims against the directors of Caonic Systems Inc., a federally incorporated company. 3M said it wants to evaluate any N95 respirators still in Caonic’s possession for authenticity – and get them to health care workers if genuine – and contact any customers who already bought the masks.
3M has taken similar actions in Florida, New York, Texas and California to crack down on counterfeiting and price gouging. N95 respirator masks are designed to prevent the transfer of airborne particles and are a crucial piece of personal protective equipment (PPE) for health care workers during the COVID-19 pandemic.
In its court filing, 3M claims the respondents, Zhiyu Pu and Harmen Mander, sold N95 respirators for US$17 each, much more than 3M’s suggested list price of US$3 apiece. The company alleges the masks were sold through the website 3M-Health.com using an e-commerce platform provided by Shopify Inc.
Shopify closed the site on March 31 at 3M’s request, but 3M claims the respondents started a new one, now also shut down.
“At 3M, we are working hard to continue to increase production of respirators for the health care workers who need them the most in the fight against COVID-19,” Denise Rutherford, senior vice-president of corporate affairs at 3M, said in a statement. “We are dedicated to putting a stop to those who are trying to cash in on this crisis."
3M said it also plans to pursue claims of trademark violation.
Mr. Pu said on Tuesday that he and Mr. Mander are computer science students at the University of Waterloo and made an “honest mistake.”
He said they bought the N95 respirators from Lagos, Nigeria, in January after becoming concerned about their safety in packed classrooms as the coronavirus began to spread. He said they shared them with family and friends and then sold “less than 50 packs of respirators in total” online, with 10 in each pack.
In its court filing, 3M included a receipt it says shows the respirators were bought in December. Mr. Pu declined to comment on that. He also declined to comment on the prices charged, but said, “I didn’t feel I was price gouging.”
Mr. Pu said about 650 respirators are left, and that he was in touch with the Ontario Ministry of Health on Tuesday afternoon about donating them. He said his company made “less than $2,000” in profit reselling the respirators, was planning to donate that to a COVID-19 relief fund and was “working together with 3M to resolve this.”
“As students, we did not have that much knowledge and background on ... intellectual property,” Mr. Pu said. “It wasn’t our intention to dress up as 3M to sell those respirators.” Asked why they picked the name 3M-Health for their website, he said, "I can’t speak to what I was thinking before. It was definitely an honest mistake.”
3M spokeswoman Jennifer Ehrlich said the company has been in contact with lawyers for the respondents, but continued with a lawsuit because “3M wished to ensure that we have the capability to use the legal system’s tools to get information about their wrongdoing and to confirm if the respirators are legitimate.” Ms. Ehrlich added: “[The] respondents have already shown themselves quite willing to mislead consumers. There also remain significant inconsistencies in the information received from Shopify and that provided by Mr. Pu’s lawyers. We will continue to discuss the matter with their counsel.”
The government of Ontario passed an emergency order in late March that prohibits charging “unconscionable prices" for necessary goods, which includes PPE.
“I commend 3M for taking action against a company that has taken advantage of a very difficult situation," Premier Doug Ford said in an e-mailed statement on Tuesday. "This deliberate attempt to profit off a pandemic is unfortunate and it is un-Canadian. There is a desperate need around the globe for this vital medical equipment in the fight against COVID-19 and anyone trying to exploit this crisis should be held accountable.”
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.