The Court of Appeal has recently laid down a decision in which it was confirmed that the unauthorised sale and distribution of goods where the use of the trade mark has been authorised, is a criminal offence.
It was alleged that the defendant was involved in unlawfully selling branded goods in the UK, all of which manufactured outside of the EU.
Some of these goods were alleged counterfeits whereas some were made by factories that were authorised by the trade mark owner to produce them but not to sell or distribute them.
The prosecution argued that this action, the selling of ‘grey’ goods, those which were authorised to be produced but not sold, was a criminal offence under Section 92(b) where a person commits an offence if, with a view to gain for himself or with intent to cause loss to another, and without the consent of the trade mark owner, he 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.
At first instance, the court ruled in favour of the prosecution, deeming the defendant guilty of the offence.
Appealing this decision, the defendants asked the question,
“Can a criminal offence be committed under section 92(1)(b) or (c) of the [Act]….where the proprietor of the registered trade mark has given its consent to the application of the sign which is its registered trade mark or has itself applied its own registered trade mark, to the goods, but has not given its consent to the sale, distribution or possession of them?”
The Court of Appeal rejected the defendants claim that their actions were not an offence under section 92, and stated that a criminal offence has been committed if goods were sold or distributed without the trade mark owners consent even if consent was given to produce the goods bearing the trade mark.
Davis LJ, the judge considering the case, also rejected the defendant’s claim that section 92 cannot apply as affixing ‘a sign identical to’ the trade mark and affixing the actual registered trade mark were not same as there was not a separate sign.
Davis LJ deemed this argument and the others put forward by the defendant as a “wholesale and illegitimate rewriting of section 92 and a distortion of the structure adopted.”
To conclude, the defendants were found to be guilty of a criminal offence under Section 92 of the Trade Marks Act 1994 for the sale and distribution of ‘grey’ goods.
This case may have a considerable effect on how goods are now distributed especially those made through parallel imports.