9 December, 2015
PASSING OFF AND COPYRIGHT
Copyright – Infringement
— Singsung Pte Ltd and another v LG 26 Electronics Pte Ltd [2015] SGHC 148 (Singapore, High Court, 29 May 2015)
The 2nd Plaintiff and the 2nd Defendant are brothers who were in what was effectively a partnership from 2001 until its dissolution in 2009. In April 2006, the 2nd Plaintiff incorporated Singsung Pte Ltd, the 1st Plaintiff, of which business involved buying electrical equipment such as DVD players, television sets and rice cookers from China and selling such equipment to foreign trade buyers for export to consumers in Africa. In January 2009, the 2nd Defendant incorporated LG26 Electronics Pte Ltd, the 1st Defendant, which was also involved in the same business. The primary end-consumer market for both companies was in Cameroon.
The Plaintiffs claimed that: (1) the 1st Defendant was liable for passing off by way of its product get-up (“SINGSUNG get-up”), which was identical to that of the 1st Plaintiff; (2) the Defendants had infringed the Plaintiffs’ copyright in some pictures on the packaging of the DVD players, the start-up screen built into the DVD players, the design of a sticker, a logo of the words “Rotary Rotatory” set out in cursive font, and a floral pattern; and (3) the 2nd Defendant had defamed the 2nd Plaintiff by making remarks to a trade buyer to the effect that the 2nd Plaintiff was inter alia a cheat.
The Defendants counterclaimed for: (1) malicious falsehood against the 2nd Plaintiff for making disparaging remarks about the “lousy” quality of the 1st Defendant’s products to a trade buyer; and (2) groundless threats of copyright infringement proceedings.
Decision
Straightforward passing off
The Court held that there was no goodwill generated in the 1st Plaintiff’s get- up that was attached to its goods or services by association, such that the public recognised these to be distinctive of its goods or services, and that brings custom to its business.
Whilst the Court did find that the Plaintiffs have a sufficient business in Singapore (the customers being the foreign trade buyers from Cameroon), there was a complete absence of evidence that members of the Singapore public associated the SINGSUNG get-up exclusively with the Plaintiffs, and most of the foreign trade buyers were aware that the 1st Plaintiff and the 1st Defendant are separate companies competing in the same line of products.
Given the Court’s conclusion that the SINGSUNG get-up did not enjoy goodwill in Singapore, this passing off claim failed without the Court having to consider whether misrepresentation or damage had been established.
Passing off based on instruments of deception
Following the English case of Modus Vivendi plc v Keen (World Marketing Ltd) (5 July 1995) (unreported), the Court considered a second type of passing off based on the doctrine of instruments of deception, under which goods that are manufactured in one jurisdiction is sold for onward distribution in another jurisdiction. Under this type of passing off, the issues of whether the 1st Plaintiff enjoyed goodwill (in the sense that the get-up was exclusively associated by customers with the 1st Plaintiff) in the latter jurisdiction, ie. Cameroon in this case, and whether customers in Cameroon have been misled, are heard in the former jurisdiction, ie. Singapore.
In the absence of survey evidence or evidence from end users from Cameroon, the Court found that there was insufficient evidence to show that the Cameroonian public viewed the SINGSUNG get-up to be distinctive of the 1st Plaintiff. As such, this passing off claim also failed without the Court having to consider whether misrepresentation or damage had been proved.
Notably, the Court also dealt with the Plaintiffs’ contention that passing off could be established if there was proof of a deliberate intention to copy the get-up. The Court dismissed the argument, noting that proof of an intention to copy the get-up could go to questions of misrepresentation, but that the need to establish goodwill could not be obviated in an action for passing off.
Copyright infringement
On the evidence, the Court found that (a) the Plaintiffs did not prove that they owned copyright in the packaging of the DVD players, the start-up screen built into the DVD players, or the floral pattern, which were created by a designer of the Chinese original design manufacturers, as the 2nd Plaintiff did not contribute enough to such works as they were actually expressed, to be considered either as author or joint author thereof; (b) there had been no infringement as the Defendants’ works were different from those of the Plaintiffs; or (c) the Plaintiffs had not been granted an exclusive licence or assigned the copyright in these works.
However, the Court did find that by virtue of their design by an employee of the 1st Plaintiff, copyright in the design of a sticker and the “Rotary Rotatory” logo was owned by the Plaintiffs, which was infringed under Sections 32 and 33 of the Copyright Act by the Defendants during a particular order. In respect of this order, which was made with an original design manufacturer through a third party to conceal the 2nd Defendant’s identity, the Defendants knew or ought to have known then that consent for the substantial reproduction of these works would not be given by the Plaintiffs.
Defamation
Having failed to establish the defences of justification or qualified privilege, the 2nd Defendant was held to have defamed the 2nd Plaintiff by labelling the latter as a cheat.
Malicious falsehood
The Court held that the Defendants’ counterclaim failed inter alia as they had
failed to establish the objective falsity of the disparagement.
Groundless threats of copyright infringement proceedings
Given the Plaintiffs’ failure to establish copyright infringement in respect of the packaging of the DVD players, the start-up screen built into the DVD players, or the floral pattern, the Court held that the Defendants had succeeded in its counterclaim for groundless threats of copyright infringement proceedings.
Comments
A few points were of note in this decision. In respect of passing off, the Court accepted that descriptive get-up, shapes or colour of products, or advertising slogans may acquire secondary signification as an indicator of trade origin, but reiterated that a plaintiff must prove that a substantial portion of the members of public do view the claimed generators of goodwill to be distinctive of the plaintiff. It would not suffice for the public to find the get-up aesthetically attractive or functionally useful.
Further, the Court recognised that apart from the straightforward case of passing off in Singapore, a claim for passing off could be made based on instruments of deception manufactured in Singapore but sold in another jurisdiction. On the facts of this case, this claim failed as goodwill in Cameroon (in the sense that the get-up was exclusively associated by customers in Cameroon with the 1st Plaintiff) was not established. The tortious wrong affording the grant of relief in an appropriate case is the supply of instruments of deception, which enable a middleman or retailer to pass off goods in another market. Where the goods would not inherently lead to passing off, the Court would take into account factors including inter alia the relationship between the supplier and the retailers, and whether the supplier has knowledge that the goods supplied are being used deceptively.
Additionally, the Court opined in obiter that it may be necessary for a plaintiff to establish that the supplied goods are instruments of deception in the country of supply where the suit is brought (in this case, Singapore), and not only in the jurisdiction in which the goods are sold (Cameroon), as goodwill is territorial. This ultimately had no bearing on the final decision since goodwill in Cameroon was not proven, but if this cause of action is heard again before the Court in future, goodwill may have to be established in both jurisdictions by a plaintiff.
Separately in respect of copyright infringement, many of the Plaintiffs’ claims appeared to have faltered on the issue of ownership. This case is a timely reminder of the importance of ensuring the proper contractual vesting of copyright in works created by employees or third parties.
Finally, the strict liability imposed under Section 200 of the Copyright Act for groundless threats of copyright infringement proceedings should be borne in mind by all potential plaintiffs. Under the statute, the only defence available to this claim is proof that the other party had actually infringed his/her/its copyright (or would infringe if the act had been done). Accordingly, it is imperative for potential plaintiffs to consider carefully the merits of all potential claims in copyright infringement, rather than to advance them all.
Copyright – Infringement – Fair use
— Sony/ATV Music Publishing LLC and Sony/ATV Music Publishing (UK) Limited v WPMC Limited and Iambic Media Limited (in liquidation) [2015] EWHC 1823 (Ch) (England and Wales, High Court, 1 July 2015)
Facts
On 11 February 1964, the Beatles held their first concert in the USA at the Coliseum in Washington D.C. In 2009, the 2nd Defendant acquired a copy of the video of the concert and set about making a documentary entitled “The Beatles: The Lost Concert” (“Documentary”). Subsequently the rights to the tape of the concert video were transferred to the 1st Defendant. The Claimants are respectively the owner and the exclusive UK licensee of the worldwide copyright in eight of the songs performed during the concert (“Copyright Works”).
Between late 2009 and October 2010, the 2nd Defendant negotiated with the Claimants for a synchronisation licence in respect of the Copyright Works (i.e., a licence to reproduce and otherwise exploit the Copyright Works as part of the soundtrack to the Documentary). No synchronisation licence was executed as a result of these negotiations.
In April 2012 it came to the Claimants’ attention that the Documentary was being promoted by means of a website located at www.lostbeatlesconcert.com (“Website”) and a trailer (“Trailer”). The Documentary incorporates complete performances of each of the Copyright Works and also repeatedly incorporates parts of the performances of the Copyright Works in the soundtrack at other points.
Following an exchange of correspondence, the Claimants commenced the instant proceedings and applied for an interim injunction. Given that the Documentary had been made in the UK, but the Defendants’ principal target market was the USA, the Claimants brought claims for infringement of both the UK and US copyright in the Copyright Works. The 1st Defendant contended that (1) the Claimants were contractually bound to issue a synchronisation licence to the 1st Defendant on the terms agreed in correspondence requesting the issue of an executed synchronisation licence; and (2) exploitation of the Documentary in the USA would not infringe the US copyright in the 12 songs incorporated in it because the concert video was in the public domain and/or because it would amount to fair use.
Decision
Collateral contract
The 1st Defendant argued that a binding contract was concluded between the 2nd Defendant and the Claimants (the benefit of which was assigned to the 1st Defendant), under which the Claimants became obliged to issue a synchronisation licence provided that the 2nd Defendant complied with the Claimants’ conditions and the agreed fee was paid.
The Court held that there was no collateral contract formed between the parties. Amongst other reasons, the Court’s decision was based on the negotiations between the parties having expressly been “subject to contract”, and also expressed to be subject to approval of the final film.
Proprietary estoppel
The Court held that the 1st Defendant could not rely upon the representations in question as founding an estoppel because they were expressed to be subject to contract. As the would-be purchaser’s expectation of acquiring an interest in the property in question is subject to a contingency that is entirely under the control of the other party to the negotiations, no proprietary estoppels can ordinarily arise.
Accordingly, the representations in question could not be relied upon as having legal effect unless and until a contract was signed. In proceeding to produce the Documentary without an executed synchronisation licence, the Defendants had taken the risk that the Claimants would decline to conclude one.
Fair use
The Court held that the inclusion of the Copyright Works in the Documentary did not constitute fair use under section 107 of the US Copyright Act (Title 17 of the US Code), in which it is provided as follows:
“Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include—
(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
(4) the effect of the use upon the potential market for or value of the copyrighted work.
The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.”
On the first factor, the significance of transformative use was highlighted, being whether the new work merely supersedes the objects of the original creation, or instead adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message; in other words, whether and to what extent the new work is “transformative”. Although such transformative use is not absolutely necessary for a finding of fair use, the goal of copyright, being to promote science and the arts, is generally furthered by the creation of transformative works. The more transformative the new work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use.
The Court held that the Documentary was partly transformative in that it is a serious, albeit entertaining, study of the impact of the Beatles on the USA. However, the performances of the Copyright Works were presented in their entirety in blocks with relatively little in the way of commentary. The Court accepted that it was apparent both from the contents of the Documentary itself and from the surrounding evidence that the performances of the Copyright Works were being presented for their intrinsic entertainment value.
On the second factor, the Court accepted that it called for recognition that some works are closer to the core of intended copyright protection than others, with the consequence that fair use is more difficult to establish when the former works are copied. The Court found that the Copyright Works were fully expressive works falling within the core of copyright protection.
On the third factor, the Court held that the defendant must show that the amount taken is reasonable, and not excessive. If no more is taken than is necessary, then that would be reasonable. That said, the defendant need not show that he had taken the minimum necessary. The Court accepted the 2nd Defendant’s contention that it can be fair use to copy the whole of the copyright work where this is justified by the transformative purpose, particularly but not exclusively if the copy is not a high quality one (e.g., where an image is reduced in size).
However, the Court found that the Documentary incorporated the whole of the Copyright Works with additional use thereof as part of the soundtrack, and therefore that the usage exceeded what was reasonable to illustrate the nature and effect of the Beatles’ performances of the Copyright Works.
On the fourth factor, there was no market or economic evidence before the Court and the 2nd Defendant therefore failed to establish that the Documentary would not damage the market for, or potential value of, the Copyright Works if permitted as fair use. The Court found a likelihood of damage to the market for, or potential value of, the Copyright Works as there was a market for the sale of recordings of performances of the Copyright Works, and also for synchronisation licences of the Copyright Works more generally.
Comments
The factors stated in the US fair use defence in section 107 of the US Copyright Act are largely similar to the factors in Singapore’s own general fair dealing defences in its Copyright Act. Apart from the four factors discussed in this case, Singapore’s sections 35(3) and 109(3) includes a fifth factor for the Court’s consideration, namely the possibility of obtaining the work, adaptation or audio-visual item within a reasonable time at an ordinary commercial price. The determination though of whether the use of the work is “transformative” is a question of fact, and one which must be assessed within the context of the factors stated against the circumstances of each case.
Unlike the US fair use defence which includes criticism and news reporting, separate defences are provided under the Singapore Copyright Act for fair dealing for the purposes of criticism or review (sections 36 and 110) and reporting of current events (sections 37 and 111). In respect of these sections, it should be noted that a sufficient acknowledgment is mandatory if a party is to avail
itself of these defences.
A copy of the decision may be accessed at:
http://www.bailii.org/ew/cases/EWHC/Ch/2015/1853.html
PATENTS
Patents – Inventive Step – Obviousness
— AstraZeneca AB v Apotex Pty Ltd; AstraZeneca AB v Watson Pharma Pty Ltd; AstraZeneca AB v Ascent Pharma Pty Ltd [2015] HCA 30 (High Court of Australia, 2 September 2015)
Facts
AstraZeneca AB and AstraZeneca Pty Ltd (“AstraZeneca”) were respectively the registered proprietor and the exclusive licensee of a patent for a method of administering low dosage levels of rosuvastatin (“Agent”) for the treatment of hypercholesterolemia (“Patent”). The Agent is one of a class of compounds known as statins, which can reduce health threatening cholesterol levels in the human body by blocking the action of an enzyme which mediates a reaction which produces a precursor of cholesterol. The low dosage levels of the Agent defined in the Patent was said to be efficacious in lowering cholesterol with less need for upward titration of dosages over time (and the associated patient supervision and management), relative to other statins existing at the priority date of the Patent, 6 February 1999.
AstraZeneca appealed against the decision of Full Court of the Federal Court to dismiss its appeal against the revocation of the Patent. The Full Court held that the invention lacked an inventive step by reference to common general knowledge considered with either of two prior art publications, applying sections 7(2) and 7(3) of the Patents Act 1990 (Cth):
“(2) For the purposes of this Act, an invention is to be taken to involve an inventive step when compared with the prior art base unless the invention would have been obvious to a person skilled in the relevant art in the light of the common general knowledge as it existed in the patent area before the priority date of the relevant claim, whether that knowledge is considered separately or together with either of the kinds of information mentioned in subsection (3), each of which must be considered separately.
(3) For the purposes of sub section (2), the kinds of information are:
(a)prior art information made publicly available in a single document or through doing a single act; and
(b)prior art information made publicly available in 2 or more related documents, or through doing 2 or more related acts, if the relationship between the documents or acts is such that a person skilled in the relevant art in the patent area would treat them as a single source of that information;
being information that the skilled person mentioned in subsection (2) could, before the priority date of the relevant claim, be reasonably expected to have ascertained, understood and regarded as relevant to work in the relevant art in the patent area.”
The primary judge had found that the existence, name and chemical structure of the Agent, and the fact that it had been subject to clinical trials, were not part of the common general knowledge before the priority date of the Patent. This finding was not challenged on appeal.
Moving on to consider the 2 prior art publications, the first was a patent with priority date of 1 July 1991, the claims in which had identified the Agent (albeit not by its names), variants of it, and processes for its preparation. The specification also stated that test data of the compounds of the invention disclosed exhibit inhibition activities of the cholesterol precursor, which were superior to another inhibitor. Dosages were also mentioned.
The second prior art publication was an article published in 1997, in which the synthesis and biological activity of compounds including the Agent (again designated by another name) was reported. Also reported were its greater potency in inhibiting the cholesterol precursor relative to other inhibitors, and the fact that a clinical trial was in progress.
In construing whether the invention disclosed in the Patent was obvious to a person skilled in the relevant art, AstraZeneca’s primary argument was that as a matter of construction, sections 7(2) and 7(3) had the effect that any prior art information to be considered in the obviousness inquiry must be separately “ascertained, understood and regarded as relevant to work in the relevant art in the patent area”.
AstraZeneca also disputed the Full Court’s finding on obviousness, which was made on the basis that the relevant range of the human dosage selection would be discovered by tests, notwithstanding that neither of the 2 prior art publications had disclosed animal safety data (which AstraZeneca asserted was essential to any human dosage selection). AstraZeneca also relied on the failure of others to produce the invention and its substantial commercial success.
Decision
Construction of statutory provisions
The High Court of Australia rejected AstraZeneca’s primary argument, instead affirming the Full Court’s holding that the skilled person may sort through all manner of information with a view to finding something that is “regarded as relevant”, and that section 7(2) did not prevent the skilled person from using combinations of sources of information to make that finding.
Merits of obviousness finding
The High Court of Australia also rejected AstraZeneca’s challenge of the merits of the primary judge’s obviousness finding, instead agreeing that a person skilled in the art would have been led directly and as a matter of course by the second prior art publication, to try the Agent at the low dosage levels disclosed in the Patent, in the expectation that it might well be an efficacious treatment for a patient suffering from hypercholesterolemia.
As for AstraZeneca’s contention that the Full Court had disregarded the failure of others to produce the invention and its substantial commercial success, the High Court of Australia agreed with the Full Court that the fact no one had proceeded to make the invention was beside the point; the notional non-inventive worker was not aware of the 2 prior art publications. As for the invention’s commercial success, this was found to be due to the quality of the Agent itself (which AstraZeneca did not invent) and not to the entirely conventional low dosage levels.
Comments
In reaching its decision, the High Court of Australia observed that the skilled person is an artificial construct, intended as an aid to the Courts in addressing the hypothetical question of whether a person, with the same knowledge in the field and aware of the problem to which the patent was directed, would be led directly to the claimed invention. The Courts determine this question by reference to available evidence including that of persons who might be representative of the skilled person, though ultimately whether an invention is obvious is a question to be answered by the Courts.
The Singapore Courts likewise accept that the notional skilled person is a legal construct, and that ultimately it must be determined whether the reasons for rival expert witnesses’ opinions would be perceived by this skilled person.
A copy of the decision may be accessed at:
http://www.austlii.edu.au/au/cases/cth/HCA/2015/30.html.
TRADE MARKS
Trade marks – Invalidation
— Global Tobacco Manufacturers (International) Sdn Bhd v Jamal Abdulnaser Mahmoud Al Mahamid [2015] SGCA 51 (Singapore, Court of Appeal, 29 September 2015)
Facts
The Appellant appealed against the High Court’s decision to invalidate its trade mark hitherto registered in respect of Class 34 goods comprising cigarette and related products.
The ground of invalidation relied upon in the High Court was contravention of section 8(2)(b) of the Trade Marks Act, namely that there was a likelihood of confusion on account of similarity between the Appellant’s mark and an earlier trade mark, and identity or similarity between the respective goods or services for which the marks were registered.
The Respondent is the registered proprietor of the following earlier mark, which was also registered as of 7 June 2005 in respect of the same goods in Class 34 (this being apparently undisputed).
Cigarettes bearing the Respondent’s Mark were sold in Singapore through duty-free channels, primarily to retail dealers specialising in providing supplies to ships, who would then resell the same to personnel on ships arriving at Singapore ports.
The Appellant filed its application for registration on 8 June 2012, and its mark was successfully registered on 29 November 2012 without opposition notwithstanding that the Appellant had advertised its application for registration on 14 September 2012.
The Appellant asserted that there had neither been evidence of actual confusion in the proceedings below, nor was there evidence of how particular segments of the likely consumer base might perceive the respective trade marks, or of how consumers may or may not be confused.
Decision
The Court of Appeal affirmed the High Court decision and dismissed the appeal.
Similarity of marks
The Court of Appeal considered that there was a high degree of similarity between the marks for the following reasons:
(1)the dominant element of both the composite marks was the textual component, “Manchester”;
(2) the non-textual component had limited impact in differentiating the marks;
(3) the textual component was inherently distinctive in relation to the goods in
question, namely, cigarettes;
(4) the textual component of both marks was identical; and
(5)the marks were identical aurally and substantially similar visually
and conceptually.
Likelihood of confusion
The Court of Appeal reiterated that evidence of actual confusion was not a necessary element of the cause of action. Without reaching a conclusive view on whether a higher burden of proof was applicable where an application is made to invalidate a duly registered trade mark, the Court of Appeal was satisfied that there was sufficient material on which the judge could fairly infer the existence of a sufficient likelihood of confusion, given (1) the high degree of similarity between the marks; and (2) the fact that the goods were identical. The appeal was thus dismissed.
Comments
In asserting a higher burden of proof, the Appellant had relied on the absence of a reported decision on the precise approach to be taken in respect of the burden of proof, in cases where an application is made to invalidate a duly registered trade mark. Against this, the Court of Appeal referred to its earlier decision in Hai Tong Co (Pte) Ltd v Ventree Singapore Pte Ltd [2013] 2 SLR 941, in which some reasons why undue weight should not be given to the absence of evidence of actual confusion were given. Amongst these was the absence of any reason that deceived persons would contact the parties to inform them of their past confusion. The issue of burden of proof may be definitively decided in a future case where the degree of similarity in goods and/or marks is lower.
Trade mark – falsely applying trade marks – copyright infringement – sentencing
— Public Prosecutor v Lee Kok Leong [2015] SGDC 232
Facts
This was a sentencing hearing in respect of Lee Kok Leong (“Accused”) who had pleaded guilty to two charges for having in his possession for the purpose of trade, together with another person and in furtherance of their common intention, goods to which certain trademarks had been falsely applied, which are offences under section 49(c) of the Trade Marks Act (Cap 332) (“TMA”), read with section 34 of the Penal Code (Cap 224) (“Penal Code”).
Three similar charges under the same provisions and one charge for possession of infringing articles for the purpose of trade under section 136(2)(a) of the Copyright Act (Cap 63) (“CA”), read with section 34 of the Penal Code were also taken into consideration for the purposes of sentencing.
The Accused ran a sole proprietorship retailing clothing, footwear and leather goods under the name “M Mall Singapore” (“M Mall”). Sales were conducted through online sales at the M Mall website, mail orders and walk-in sales at the M Mall business premises.
Investigations revealed that the Accused and his wife personally ordered goods from China, packed them upon arrival, and arranged for the delivery and/or collection of packages by customers. They also took photographs of the goods themselves, and uploaded them onto the M Mall website.
The police raided the M Mall business premises on 10 September 2013 and found 1,531 items of shoes and apparels, to which trade marks of various brands (including “Crocs”, “Marc by Marc Jacobs”, “Fitflop”) were applied or which were infringing copies of copyrighted works.
The authentication reports for the various brands of goods showed that there were obvious differences between the seized goods and the genuine goods produced by the respective brand owners, the seized goods were generally of poorer quality as compared to the genuine products, and the seized goods did not come in the usual packaging used for the genuine products.
Decision
The court referred to the case of Goik Soon Guan v Public Prosecutor [2015] SGHC 31 which formulated a sentencing framework for offences under section 49(c) of the TMA. This framework requires the court to consider the nature and extent of the infringements, and the manner in which the infringements were carried out, and whether there were any other relevant aggravating or mitigating factors.
Level of involvement by the Accused
The Accused’s level of involvement in the whole operation would be the appropriate starting point in determining the appropriate sentence.
In considering the offender’s level of involvement, the “complexity and scale of the whole operation involved would be a critical factor” and may be assessed by considering the size of the company concerned, the number of employees it had, and its financial figures. After considering the factors above, the sentence should then be adjusted depending on the number of infringing articles and their value.
The court noted that the Accused did not act as a wholesaler, but ran his own retail business and sourced for the infringing articles himself, thereby placing his level of involvement within the moderate to high involvement bands, which, subject to other relevant factors for sentencing, could warrant a six to twenty months’ imprisonment for each charge.
The scale of the business operation was also not considered to be large – however given that a total of 1,531 infringing items were found in the Accused’s possession, it was still of a significant scale and could not be described as unsubstantial. Further, the fact that the infringing goods were advertised and made available for sale online, thereby allowing for greater access to the general public despite the small physical space of his business premises, was a relevant aggravating factor that had to be taken into account.
Duty to ensure that goods were not counterfeit
The Accused sought to mitigate by asserting that he had relied on his supplier’s assurances that the goods were genuine products. The court however took the view that the Accused had a duty to ensure that the goods he bought were not counterfeit, and would not be entitled to rely on such assurances given by suppliers without conducting further enquiries or checks.
The court also held that quite a number of the counterfeit goods seized bore obvious differences from the genuine products, which the Accused would not have failed to notice if he had taken steps to make sample purchases in respect of all of the relevant goods, before ordering them in bulk. Further, the Accused did not take steps to verify the goods’ authenticity, such checks being especially crucial given that the Accused was a newcomer to the retail industry. These were considered to be aggravating factors which were taken into account for sentencing by the court.
Having considered the above main factors, the value of the goods (about $35 to $60 for each item), precedent cases relating to the sale of counterfeit goods and various other factors, the Accused was sentenced to four months’ imprisonment for the charge involving 628 pairs of footwear which had been falsely applied with the “Fitflop” trade mark, and one months’ imprisonment for the charge involving 13 bags which had been falsely applied with the “Marc by Marc Jacobs” trade mark. The sentences were ordered to run concurrently, making it a total sentence of four months’ imprisonment, which the Accused is now appealing against.
Comments
The sale of counterfeit goods may expose an offender to liability under both the TMA and the CA. A particular product, such as a printed T-shirt, may infringe both copyright (e.g., by copying and printing a drawing on the T-shirt) and registered trade mark rights (e.g., by falsely applying a registered trade mark on the T-shirt).
The punishment prescribed for an offence under section 49(c) of the TMA or section 136(2)(a) of the CA is the same. The court may with respect to either offence order fines not exceeding $10,000 for each infringing good or article, up to an aggregate of $100,000, or imprisonment not exceeding five years or both.
For further information, please contact:
Chung Nian Lam, Partner, WongPartnership
chungnian.lam@wongpartnership.com
