Legal Updates

Intellectual Property Law – Trade Mark Infringement – Replicas – Criminal Offence

The case of R v Morgan [2008] was a prosecution appeal under s.58 of the Criminal Justice Act 2003 (“the Justice Act”), regarding a dispute over the unauthorised use of a registered trade mark. According to s.92 of the Trade Marks Act 1994 (“the 1994 Act”):

“(1) A person commits an offence who with a view to gain for himself or another, or with intent to cause loss to another, and without the consent of the proprietor:

(a) applies to goods or their packaging a sign identical to, or likely to be mistaken for, a registered trade mark, or

(b) sells or lets for hire, offers or exposes for sale or hire or distributes goods which bear, or the packaging of which bears, such a sign, or

(c) has in his possession, custody or control in the course of a business any such goods with a view to the doing of anything, by himself or another, which would be an offence under paragraph (b)...”

The Justice Act allows for appeals in cases where criminal charges have been brought. The defendant in this case was charged on an indictment of two counts for contravention of s.92(1)(b) of the 1994 Act. It was alleged that the defendant had offered for sale on the Internet, for personal financial gain and without the consent of the trade mark proprietor, replica watches bearing the words “Chanel” and “Rolex”. It was alleged by the prosecution that those signs were likely to be mistaken for a registered trade mark.

The watches in question did not have any indication on them that they were not genuine products originating from Chanel or Rolex. However, it should be noted that the defendant had made it clear on the Internet to prospective purchasers that the items were “replicas”. Arguably, this meant that those who elected to purchase the watches from the defendant would not have been misled into believing that they were buying genuine Chanel or Rolex merchandise.

In addition, the defendant was charged with a contravention of s.92(1)(c) of the 1994 Act. It was alleged that during the course of his business, the defendant had in his possession plus the intention to sell, three presentation boxes for watches which bore signs which were likely to be mistaken for registered trade marks. The boxes were labelled “Rolex”, “Tag Hauer” and “Cartier” respectively. There was no suggestion that the boxes in question displayed any indication that they and their contents were not genuine products of “Rolex”, “Tag Hauer” and “Cartier”.

The issue to be decided was whether the defendant had committed an offence by having the intention to sell to consumers, who were informed that the boxes and their contents were replicas.

The judge presiding over the case held that that those who elected to purchase the watches from the defendant would not have been misled into believing that they were buying genuine Chanel or Rolex merchandise and therefore the defendant had not committed an offence. This was due to the fact that it could not be ignored that the watches were offered for sale as replicas. He ruled that the use of the trade mark in describing the design of the replicas was not a trade mark use and was not an indication of the trade origin of the goods. The prosecution subsequently appealed against this decision, pursuant to s.58 of the Justice Act.

The principal issue that had to be decided on appeal was whether the Agreed Facts showed that no offence had been committed under s.92(1)(b) of the 1994 Act. The prosecution argued that the important issue was what the mark on the watches indicated to potential buyers about the watches, rather than what the defendant might have said about the mark on the watches to potential buyers, namely that the watches bore the mark but were in fact replicas.

The defendant submitted that the test under s.92 was how the use of the sign would be perceived by the “average consumer” of the type of article in question. He argued that no watch had been sold under the trade mark of an authentic article in order to suggest a connection in the trade between goods and the proprietor of the trade mark. According to the defendant, it therefore followed that there was no liability under the 1994 Act.

The appeal was allowed in favour of the prosecution.

The court held that s.92(1)(b) was not limited to circumstances where the other party to the transaction would regard the sign as indicative of trade origin. An indication to the purchaser that the product in question was a replica did not of itself exclude a conclusion that the signs in question were indicative of a trade origin. This therefore meant that an offence was committed under s.92(1)(b) and (c). By including the mark on the replica watches, the defendant had committed an offence under both s.92(1)(b) and (c) due to the fact that a registered trade mark was displayed on the replica goods, which was deemed to be a use of the registered trade mark on goods which were not of the trade origin. Such goods were also in the defendant’s possession during the course of his business.

The court stated that the starting point was that in order to contravene s.92 of the 1994 Act, the sign in question had to be identical to, or likely to be mistaken for, a registered trade mark; not only in the use of the words of a registered trade mark but also in that the words used had to be an indication of a registered trade origin. According to s.92(1)(b), certain types of dealings had been identified, such as selling goods, allowing them to be hired, offering them for sale and distributing them.

The court was of the opinion that due to the fact that counterfeiting was a serious problem for both traders and consumers, Parliament must have had the intention to punish those responsible for trading in counterfeit goods by implementing the 1994 Act. Accordingly, the judge when making the initial ruling, had been incorrect in concluding that there was an absence of trade mark use, and therefore the prosecution’s appeal was warranted. The judge had focussed on the immediate transaction, which included the irrelevant statement made by the defendant to potential buyers, rather than on the impression which the sign would make on potential buyers if the goods or packaging were examined in their own light without such a statement being made. As a result, the judge’s initial decision was set aside and the prosecution’s appeal was allowed.

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© RT COOPERS, 2008. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.   

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