R v C and Others [2016] EWCA 1617

 Black world map on jeans

Background

C, a limited liability company and other individuals, were unlawfully selling branded shoes and clothing into the UK which were manufactured in countries outside the EU. Some of these branded goods were goods which were not manufactured either by the trade mark proprietor itself or by factories authorised by them (counterfeit goods). In addition, there was a significant quantity of goods which were manufactured by authorised factories, but were disposed of without the trade mark proprietors consent, making them grey goods.

The Crown Court held that when applying s.92 of the Trade Mark Act 1994 (‘TMA 1994’) there was no difference between goods where the manufacture and application of a trade mark was not authorised (counterfeit goods) on the one hand and goods where authorisation was present, but subsequent sale or distribution by the factories was not authorised (grey goods).

C appealed the Crown Court’s decision on the ground that s.92(1)(b) of the TMA 1994 applied only to goods which bore a sign, identical to or likely to be mistaken for a registered trade mark, which had been applied without the consent of the owner.

 

Section 92 Trade Mark Act 1994

A person commits an offence if, with a view to gain for himself or with intent to cause loss to another, and without the trade mark owner’s consent, he:
1. Applies to goods or their packaging a sign identical to, or likely to be mistaken for, a registered trade mark (s.92(1)(a) TMA 1994).
2. Sells, lets for hire, offers or exposes for sale or hire, or distributes goods which bear, or the packaging of which bears, a sign identical to such a sign (s.92(1)(b) TMA 1994)
3. Has in his possession, custody or control, in the course of a business, any such goods with a view to sale or hire (s.92(1)© TMA 1994).
Genis [2015] EWCA Crim 2043
The Court of Appeal considered Genis as binding authority when making their decision. In Genis the defendant had been charged with and convicted of a number of offences under s.92(1)(c) of the TMA 1994 for having in his possession goods which bore signs which had been applied without the consent of the proprietor, so counterfeit goods. However, some evidence showed that the goods may have come from authorised factories that had permission from the trade mark proprietor to manufacture such goods. This evidence was rebutted by the prosecution by adducing further evidence to illustrate that the goods in question were actually counterfeit and not grey goods. In the judgement, Sharp LJ said that “By the close of play, though the prosecution case remained that the garments were simply fakes, and none of them had originated in the contracted factories, even if the jury were not sure about that, it was indubitably the case that the use of the trademarks on these goods infringed their trade mark proprietor’s rights as a matter of law. There was no express consent and none had been implied”. Applying Genis to this case, the Appellants argued that Genis only involved counterfeit goods. However, the Court of Appeal rejected this argument and held that whilst the primary case of the prosecution was related to counterfeit goods, the trial and evidence proceeded to cover the alternative scenario that the goods could have been grey goods. In their opinion, the judgement can only be read in one way - finding the defendant guilty would be safe even if the goods were from an authorised factory.

 

Court of Appeal Decision

The Court of Appeal dismissed C’s appeal and reconfirmed the Crown Court’s decision that unauthorised sale of grey goods is capable of being a criminal offence under s.92 of the TMA 1994.

The Court of Appeal rejected C’s argument that a criminal offence can only be committed under s.92(1)(b) or (c) of the TMA 1994 in the case of goods to which a sign identical or likely to be mistaken for the trade mark had been applied without the trade mark owner’s consent stating that s.92 of the TMA 1994 covers the sale of goods bearing the sign or possession of such goods with a view to selling. As mentioned above, the Court of Appeal said that Genis was binding authority as the judgement held even if the goods in Genis were determined to be grey goods, the judge would have still found the defendant guilty under s.92 of the TMA 1994.

Finally, the Court of Appeal considered public policy, stating that it was clear that exposure to criminal liability should be more restricted than civil liability. However, grey mark goods undermine the value of reputable trade marks, for example if the goods were initially rejected for being sub-standard, the sale of these goods may threaten consumer safely. So, although imposing a criminal liability may produce harsh results for the defendant there could be a public benefit in doing so. Finally, the Court of Appeal said that if the defendant is innocent, they do still have a defence under s.92(5).

This decision gives trade mark owners another avenue to pursue those violating their rights as it confirms that trade mark offences under s.92 of the TMA 1994 apply to the distribution and sale of grey goods as well as counterfeit goods.

Link to Judgment

Judgment Date: 01 NOVEMBER 2016

 

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