Defending Trademark Cases
Trademark Act 1994
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Trading Standards departments are increasingly bringing prosecutions for offences under the Trademark Act 1994.
Anyone trading on Ebay, or has a market stall or who supplies imported or locally sourced goods which are branded i.e they had the logo of companies such as Ralph Lauren, Moschino, Henleys, Prada, Armani, Juicy Couture, Ted Baker on them could be prosecuted on the "say so".
What can a wholesaler or retailer do to check that the goods are not infringing of a company´s Trademark?
Making Enquiries/Due Diligence
It is far more difficult to make these enquiries than might be expected. Recently MJP solicitors instructed Probe Investigations UK Limited to perform test enquiries to local Trading Standards Department and to Trademark holders asking what checks could be made by wholesaler or retailer.
The response from Trademark holders was unclear and simply pointed to looking at the quality of the goods, the quality of the logo and whether the goods had supporting packaging such as polythene bags branded in the company´s name or security tags which have no apparent evidential value.
Trading Standards department suggested taking a sample of the goods to local shops to compare them with goods on sale and checks as above.
Section 92 of the Trademark Act 1994 provides that it is an offence if a person possesses with a view to gain goods that bear a registered Trademark "without consent".
Section 92(5) of the Trademark Act 1994 provides that it is a defence for a person to show that "he believed on reasonable grounds that the use of the sign was not an infringement of the registered Trademark".
If it can be shown from all the circumstances surrounding the possession of the goods that it was reasonable to believe that the goods were not infringing goods then this is a defence to a charge.
Trademark offences (like copyright offences) now carry a maximum sentence of ten years imprisonment and therefore, it is a very serious strict liability offence with a defined line of defence.
Proof of Goods being "Counterfeit"
Trademark holders put forward employees and third parties as expert opinion witnesses who examine goods that are said to be infringing goods and arrive at conclusions based on: -
1. The fabric and colours used.
2. The tags and codes attached to the goods.
3. The hand tags attached to the goods.
4. Types of stitching or other alleged manufacturing errors.
In giving this evidence, it is not set against any standard that the goods should meet and it amounts to a bare opinion.
Following the introduction of the rules in relation to expert evidence, it is necessary for Trademark holder witnesses who are giving evidence to assert their independence and recognition of their duties as an expert. In their statements, invariably, they do not do this, the evidence that goods are infringing goods cannot be used to convict a person of the offence.
All of the expert witnesses called the goods "counterfeit" .
The word "counterfeit" is not a word derived from the Trademark Act 1994, which deals with goods that infringe a registered Trademark, and the act uses a description in its civil context as "infringing goods".
The prosecution have to prove the owner of the Trademark did not give consent to the goods.
The Trademark Registry now under the Intellectual Property Office (IPO) , grants Trademarks in relation to particular classes of goods but it does not keep any record of the licence or part assignment of rights in the Trademark. The Trademark Registry search will not show that XYZ Company Limited licensed ABC Limited to sell its t-shirts in, say, Wales or any of the terms of such a licence. It will not show any chain of licenses from manufacture to retail which proves whether the goods are goods that have been generally consented to by the Trademark Holder as possibly a batch of millions. All that can be proved from the Trademark Registry is the existence of the registered Trademark.
The prosecution have to prove the owner of the Trademark did not give consent to the application of its sign or logo to the goods.
The owner of a Trademark can licence or assign the use of the Trademark for manufacture, wholesale, retail in relation to specific classes of goods and usually does so in order to exploit their brand.
The Trademark Act 1994 provides that such licenses must be in writing. The word licence refers to the consent and it is the absence of the consent upon which the criminal offence is focused.
Trademark holders should keep written records of the consents that they have given to third parties. This is not only a requirement of the law, (section 28 of the Trademark Act 1994) but is necessary for the effected exploitation by a Trademark holder of its Trademark.
A Trademark holder needs records of the licenses it has granted many years previously, to ensure that the licenses it grants today do not overlap. These records should form the basis upon which a Trademark holder claims that the goods are "without consent".
If such records are not produced, the defence can infer unlimited consent. Whilst untested, the point remains obvious that an employed representative of a Trademark holder who can produce no records of any consents given in relation to the type of goods in question, is not a person who can speak as to the lack of giving of consent, if they don´t keep records of what they actually have consented to.
Due Diligence/How can I show that I have acted reasonably?
In order to show that as a trader you have acted reasonably you need to be able to demonstrate that:-
1. Prices paid for goods represent the market price for such branded goods within a range of prices on the market.
2. Proper paperwork exists demonstrating the contract or agreement, the price and sufficient detail to identify the goods including the name of the Trademark holder if any e.g Levi Jeans both at purchase and at sale.
3. The identity of the buyer and seller should be clear from the paperwork and insofar as it is possible identity should be confirmed.
4. Samples of goods should be inspected and notes made with regard to the quality.
If in doubt:-
1. Contact local Trading Standards and record their advice in writing.
2. Contact registered office of the Trademark holder and describe the transaction and seek their advice.
The last two steps need only be done where there is some cause for suspicion.
If it is a very large transaction then you might be well advised to obtain legal advice from a specialist in Trademark law who will be able to give you an indication of what to do relatively cheaply and how to cover yourself or contact Mark Jones at MJP solicitors at Mark.email@example.com.
It is important to get this right because the consequences in terms of the criminal law are serious and include confiscation of assets under a lifestyle enquiry of the Proceeds of Crime Act 2002 if a conviction occurs.
It is important that you have a solicitor who is competent in Trademark law to represent you at a police station interview as there is only one legitimate line of defence if it can be proved that a person is in possession of goods with a Trademark applied to them "without consent".