Third party liability for unauthorised sale of goods
13 January 2017
The Court of Appeal has confirmed that third parties (including companies) can be liable for prosecution if they sell, offer for sale, distribute or possess with a view to distribute, 'grey market goods', that is goods bearing a trade mark, where a trade mark proprietor has given consent to have the mark applied to the goods (or applied it themselves), but has not given consent to the sale, distribution or possession of these goods.
The defendants were alleged to have been involved in unlawfully selling in the UK various branded goods that were manufactured outside the EU. While some of the goods were unauthorised, and therefore were counterfeits, some were manufactured with the trade mark proprietor's authority, but were later disposed of without authority. It was in relation to the dealing in the unauthorised goods, and the potential for criminal liability, that the court was asked to adjudicate.
Section 92(1)(b) and (c) of the Trade Marks Act 1994 (TMA) states:
"A person commits an offence who with a view gain for himself or another, or with intent to cause loss to another, and without the consent of the proprietor... (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)".
Findings of the Court of Appeal
The appellants argued that a proper interpretation of section 92(1)(b) TMA meant that this section can only apply to goods which bear a sign, identical or likely to be mistaken for a registered trade mark, which has been applied to the goods without the consent of the proprietor. Since a number of the alleged instances related to goods where the relevant sign was applied with the consent of the proprietor, the appellants argued that it followed that such instances could not constitute a criminal offence under this section; and the appropriate remedy should be confined to civil infringement proceedings. They also argued that the language of section 92 TMA was ambiguous, and that there was sufficient uncertainty as to justify references to Parliamentary debates to help ascertain Parliament's intention.
The court did not agree with the appellants' arguments. In its view, their arguments would lead to an "untenable position", as the wording of section 92 TMA was perfectly clear, and should be understood as having a broad application, extending not only to counterfeit goods, but also to "grey goods". This view, they found, was supported by case law and leading legal texts. The court also gave the arguments that there should be references to Parliamentary debates short shrift, finding this was an "impossible argument", as there was not sufficient ambiguity in the language of the section to justify such a reference.
Ultimately, the appeal was dismissed.
This decision will please trade mark proprietors, as it provides another weapon in their arsenal with which to tackle the unauthorised sale of goods, even when the goods in question are not counterfeit, and the mark has been applied to the goods with consent.
Case details at a glance
Jurisdiction: England & Wales
Decision level: Court of Appeal (Criminal Division)
Parties: R (respondent) and C and Others (appellants)
Citation:  EWCA Crim 1617
Date: 01 November 2016
Full decision: http://dycip.com/ewcacrim1617