Counterfeit goods cost the luxury fashion market billions of pounds a year. It is no surprise that these brands have had to take extreme precautions to protect their products. The Court of Appeal discusses the need to balance protecting the intellectual property rights against extending legal action to individuals that are unaware of the trade mark infringement.
The luxury fashion brands Burberry and Louis Vuitton sought legal action in Singapore against the shipping company Megastar Shipping (ÂMegastarÂ). Both brands brought an action of trade mark infringement, as they alleged that Megastar handled some counterfeit goods that incorporated some infringing trade marks belonging to the respective brands. It was alleged that the counterfeit goods were handled in Singapore that were bound for Indonesia.
Over 15,000 counterfeit products were found and seized by the Singapore Custom Authorities in March 2013. The luxury brands started proceedings against Megastar in April 2013 and relied upon the Singapore Trade Marks Act (the TMA). Â Section 49 of TMA states the following:
ÂImporting or selling, etc., goods with falsely applied trade mark
49.Â Â Any person whoÂ Â
The High Court in the lower division of the Supreme Court held that Megastar was not the importer of the counterfeit goods but had only intended to handle the goods whilst they were in transit. Furthermore, the intention to export the goods was not sufficient for a finding of trade mark infringement under the TMA. As counterfeit products cost designer brands billions of pounds a year, the luxury brands appealed this decision and sought financial compensation from Megastar.
On appeal, the Court held that although it was important to protect IP rights, it would not be right to extend liability against Âhonest commercial persons who happened to be tangentially involvedÂ in the shipping of counterfeit goods.Â The Court of Appeal held that the luxury brands had to be prove that the Megastar knowingly intended to import or export the counterfeit goods with infringing trade marks. As there was no reason to suspect that Megastar would have known that these products contained infringing marks, the Court of Appeal could not make a finding of this and the appeal was dismissed.