The billion pound crime: counterfeiting in Europe

According to recent statistics, counterfeit goods cost Europe approximately 60 billion euros annually. Not only does this lucrative criminal activity contribute to a lack of employment, but it seems to be increasing on a global scale.

The impact of counterfeit goods on a brand (especially a luxury brand) can cause damage to its brand reputation, dilute its trade mark and give rise to high legal costs for protecting its IP rights. However, luxury brands are usually able to triumph over counterfeiters in the court of law, due to their established reputations and high-powered in-house legal teams. Nevertheless, for a brand that is just starting off, counterfeit goods can pose a real legal problem if the right steps are not taken earlier on.

UK law on counterfeit goods

The sale of counterfeit goods is becoming increasingly widespread through the use of online trading sites such as Amazon, Alibaba and eBay. As a result, owners of infringed IP rights have to become more aggressive in protecting them and deter other offenders.

The Trade Mark Act 1994 (‘TMA 1994’) makes it a criminal offence to infringe a trade mark owner’s IP rights without their consent. Section 92 of TMA 1994 states the following:
“(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).
(2) 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 a sign identical to, or likely to be mistaken for, a registered trade mark to material intended to be used—
(i) for labelling or packaging goods,
(ii) as a business paper in relation to goods, or
(iii) for advertising goods, or
(b) uses in the course of a business material bearing such a sign for labelling or packaging goods, as a business paper in relation to goods, or for advertising goods, or
(c) has in his possession, custody or control in the course of a business any such material with a view to the doing of anything, by himself or another, which would be an offence under paragraph (b).
(3) 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) makes an article specifically designed or adapted for making copies of a sign identical to, or likely to be mistaken for, a registered trade mark, or
(b) has such an article in his possession, custody or control in the course of a business,
knowing or having reason to believe that it has been, or is to be, used to produce goods, or material for labelling or packaging goods, as a business paper in relation to goods, or for advertising goods.”

Consequently, the commercial trading of counterfeit goods, packaging or selling of goods that incorporate the use of a trade mark without the owner’s permission will lead to a finding of criminal infringement. The offending party will likely have to pay damages, hefty fines and in some circumstances, they may have to serve a prison sentence. In addition, the courts have recently ruled that section 92 (1) of TMA 1994 could be expanded to cover a situation where a trade mark owner has consented to the sale of their goods outside of the European Economic Area (‘EEA’), but they have subsequently been imported into the EEA. The Supreme Court held that as the trade mark owner would not have intended for their goods to be sold in the EEA, this raises an issue of consent for the use of their trade mark in the sale of these goods in a specific area. Subsequently, goods that incorporate an authorised trade mark can fall foul of section 92 (1) of TMA 1994.

As the selling of counterfeit goods seems to have risen, the UK and European law seem to have become more proactive in dealing with this dilemma. However, as counterfeiters range from the ‘local pub seller’ to the ‘expert counterfeit’, it is always wise for a trade mark owner to seek legal advice in order to obtain the most practical remedy.

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