R v C & Ors [2016] EWCA Crim 1617

[2016] EWCA Crim 1617Case No 201601228 C1, 201601229 C1, 201601230 C1 and 201601231 C1
IN THE COURT OF APPEAL (CRIMINAL DIVISION)
ON APPEAL FROM THE CROWN COURT AT ST ALBANS
HIS HONOUR JUDGE PLUMSTEAD
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 01/11/2016
Before
LORD JUSTICE DAVISMR JUSTICE BIRSSHIS HONOUR JUDGE ROOK QC (SITTING AS A JUDGE OF THE CACD)
Between
RRespondentCAppellantsand OthersAppellant
Julian Christopher QC and Joel Smith for RespondentMichael Bromley-Martin QC and Simon Baker for Appellants C and THenry Blaxland QC and Edward Henry for Appellants M and JHearing Hearing date: 21 October 2016
Judgment Approved

Introduction

[1]This is the judgment of the court.[2]This appeal, which is against a decision of Judge Plumstead sitting in the Crown Court at St. Albans given at a preparatory hearing and for which we grant leave, involves consideration of the circumstances in which persons may be liable to prosecution for trade mark offences. It raises issues of interpretation of s. 92 of the Trade Marks Act 1994 (“the 1994 Act”).[3]As put compendiously by the appellants, the point of law arising is stated to be this:
“Can a criminal offence be committed under s. 92(1)(b) or (c) of the Trade Marks Act 1994 (selling, offering for sale or distribution/possession with a view) 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?”
[4]Stated in rather different language, the question is whether persons can be liable for prosecution if, with a view to gain or to causing loss, they sell or possess goods which are sometimes loosely known as “grey” goods; or whether they are only liable to prosecution if the goods are counterfeit goods (in the sense of the manufacture of the goods and application of the relevant mark to the goods being unauthorised by the trade mark proprietor). The appellants argue that prosecution is limited to the latter scenario; the respondent argues that it extends also to the former scenario.

Background

[5]There has as yet been no trial and so no facts, we stress, are as yet established. In short, what is alleged is that the various defendants – a limited liability company engaged in the business of selling shoes and clothing and various individual defendants who were connected with the management and operations of the company – have engaged in activities which contravene the provisions of s. 92 (1)(b) of the 1994 Act.[6]As set out in the prosecution case summary, the defendants are alleged to have been involved in unlawfully selling in the United Kingdom various kinds of branded goods: all of them manufactured in countries outside the European Union. Some of those goods are, as it is alleged, goods which were not manufactured either by the trade mark proprietor itself or by factories authorised by the trade mark proprietor. On any view such goods would be fake and counterfeit. But in addition a significant quantity of the goods which are the subject of the prosecution case are goods which were manufactured by factories which had been authorised by the trademark proprietor but which thereafter were disposed of without the proprietor’s authority. These include, or may include, goods which had been part of an order placed with an authorised manufacturer by the trade mark proprietor but then cancelled; goods part of a batch whose manufacture had been authorised but which, after manufacture, were rejected as not being of sufficient standard; or goods manufactured, pursuant to an order, with authority but in excess of the required amount (on the “baker’s dozen” principle). What is, however, not alleged in this case, it should be noted, is that the defendants were engaged in the United Kingdom in importing and selling branded goods which were both manufactured and sold with the authorisation of the proprietor in a country outside the European Union (sometimes also known as parallel imported goods).[7]In all instances the brands involved in this case are very well known; Ralph Lauren, Adidas, Under Armour, Jack Wills, Fred Perry and so on. The prosecution case involves allegations that ostensible attempts by the defendants variously to check on the legitimacy of the provenance of the goods were bogus and indeed that, in some instances, paperwork supplied was forged.[8]Further detail of the factual allegations made by the prosecution is neither necessary nor appropriate. But what is manifest, and is reflected in the wording of the relevant counts on the indictment, is that the prosecution draws no distinction between goods where the manufacture and application of the relevant logo was never authorised by the proprietor on the one hand; and goods where there was such authorisation but where subsequent sale by the factories was unauthorised on the other hand. This led to assertions by the defence that the counts on the indictment were misleading or bad for duplicity; and the underlying legal dispute thereby surfaced.[9]The judge in an oral ex tempore ruling, followed by a written ruling, fully confronted the competing arguments. He ruled in favour of the prosecution.

The law

[10]A trade mark is defined by s. 1(1) of the 1994 Act in the following way:
“In this Act a “trade mark” means any sign capable of being represented graphically which is capable of distinguishing goods or services of one undertaking from those of other undertakings. A trade mark may, in particular, consist of words (including personal names), designs, letters, numerals or the shape of goods or their packaging.”
[11]Section 9 (1) provides as follows:
“The proprietor of a registered trade mark has exclusive rights in the trade mark which are infringed by use of the trade mark in the United Kingdom without his consent. The acts amounting to infringement, if done without the consent of the proprietor, are specified in section 10.”
In the relevant respects, s. 10 then provides as follows: “(1). A person infringes a registered trade mark if he uses in the course of trade a sign which is identical with the trade mark in relation to goods or services which are identical with those for which it is registered. (2). A person infringes a registered trade mark if he uses in the course of trade a sign where because— (a) the sign is identical with the trade mark and is used in relation to goods or services similar to those for which the trade mark is registered, or (b) the sign is similar to the trade mark and is used in relation to goods or services identical with or similar to those for which the trade mark is registered, there exists a likelihood of confusion on the part of the public, which includes the likelihood of association with the trade mark. (3). A person infringes a registered trade mark if he uses in the course of trade a sign which— (a) is identical with or similar to the trade mark, and (b) is used in relation to goods or services which are not similar to those for which the trade mark is registered, where the trade mark has a reputation in the United Kingdom and the use of the sign, being without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark. (4). For the purposes of this section a person uses a sign if, in particular, he— (a) affixes it to goods or the packaging thereof; (b) offers or exposes goods for sale, puts them on the market or stocks them for those purposes under the sign, or offers or supplies services under the sign; (c) imports or exports goods under the sign; or (d) uses the sign on business papers or in advertising” . . . .[12]Section 12 deals with the principle of exhaustion of rights. It provides as follows:
“(1) A registered trade mark is not infringed by the use of the trade mark in relation to goods which have been put on the market in the European Economic Area under that trade mark by the proprietor or with his consent. ” (2) Subsection (1) does not apply where there exist legitimate reasons for the proprietor to oppose further dealings in the goods (in particular, where the condition of the goods has been changed or impaired after they have been put on the market).”
[13]As the long title to the 1994 Act makes explicit, one purpose of the legislation was to implement the provisions of Council Directive No 89/104/EEC and Council Regulation (EC) No 40/94. The provisions of sections 9 to 12 are self-evidently designed to give expression to Articles 5 to 7 of Council Directive 89/104/EEC. However, it may be noted that such Directive sets a minimum, as it were, on what Member States are required to do, so that it does not necessarily seek to restrict states from legislating for additional protections in favour of trade mark proprietors. So far as the criminal law is concerned, Article 61 of the 1994 Agreement on Trade Related Aspects of Intellectual Property Rights requires Member States to provide criminal penalties for “wilful” trademark counterfeiting; but again that is stipulated solely as a minimum.[14]Section 92 of the 1994 Act relates to criminal offences. Criminal law is not harmonised as between Member States and such provisions are not to be taken as implementing any part of any Directive. The appellants in fact suggest that s. 92 finds its genesis in s. 58A of the Trade Marks Act 1938 (as introduced by the Copyright, Design and Patents Act 1988). That in broad terms may be so; but the fact remains that the 1994 Act is an entirely new Act and must be read and construed accordingly.[15]Section 92 is headed:
“Unauthorised use of trade mark & c. in relation to goods.”
It provides as follows:
“(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. (4) A person does not commit an offence under this section unless— (a) the goods are goods in respect of which the trade mark is registered, or (b) the trade mark has a reputation in the United Kingdom and the use of the sign takes or would take unfair advantage of, or is or would be detrimental to, the distinctive character or the repute of the trade mark. (5) It is a defence for a person charged with an offence under this section to show that he believed on reasonable grounds that the use of the sign in the manner in which it was used, or was to be used, was not an infringement of the registered trade mark. (6) A person guilty of an offence under this section is liable— (a) on summary conviction to imprisonment for a term not exceeding six months or a fine not exceeding the statutory maximum, or both; (b) on conviction on indictment to a fine or imprisonment for a term not exceeding ten years, or both.” (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). (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). (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, (a) the goods are goods in respect of which the trade mark is registered, or (b) the trade mark has a reputation in the United Kingdom and the use of the sign takes or would take unfair advantage of, or is or would be detrimental to, the distinctive character or the repute of the trade mark. (a) on summary conviction to imprisonment for a term not exceeding six months or a fine not exceeding the statutory maximum, or both; (b) on conviction on indictment to a fine or imprisonment for a term not exceeding ten years, or both.”
[16]It can be noted at this stage that the structure and wording of s. 92 is different from that of s. 10. It cannot, at all events, possibly be said that potential liability for civil infringement is the same as potential liability to criminal prosecution and conviction. One very obvious difference is the mental element. Section 10 contains none. But s. 92 (whilst not providing for a mental element of dishonesty) stipulates that the relevant act must be done “with a view to” gain or causing loss. Another clear difference is the provision of a special defence conferred by s. 92 (5) which has no counterpart in s. 10. There is also at the very least an argument that the phrase “likely to be mistaken for”, as contained in s. 92, is narrower than the phrase “a likelihood of confusion on the part of the public”, as contained in s. 10.[17]These and other points are noted in the speech of Lord Walker in the case of Johnstone [2003] 2 CAR 33, [2003] UKHL 28, at paragraphs 73 and 74. That decision generally is a very important authority on aspects of the operation of s. 92: among other things, deciding (as it does) that proof of the elements of the criminal offence requires also proof that there has been (civil) infringement. It also authoritatively establishes that the provisions of s. 92 (5) impose a legal, and not simply an evidential, burden on a defendant.[18]The decision in Johnstone is of particular relevance to the present case, however, in this respect. It was the submission before us of Mr. Bromley-Martin QC and Mr. Blaxland QC for the appellants that the criminal provisions of the 1994 Act are a code separate from the civil provisions of the 1994 Act. One can understand what they mean, in one sense. As Lord Walker put it at paragraph 73 of Johnstone, there would have been a desire to frame the offence–creating provisions of the 1994 Act so as to be as self-contained and simple as possible. But that said, it remains a general rule of statutory interpretation that a statute is to be read as a whole; and, more specifically, in Johnstone it is expressly stated (as is in any event inherent in the actual decision) that s. 92 must be set in the context of the general scheme of the 1994 Act: see, for example, paragraph 65 of the speech of Lord Walker.

Discussion

[19]It is against that legislative context that the present arguments are to be placed.[20]It was submitted on behalf of the appellants that, properly interpreted, s. 92 (1)(b) – the statutory provision on which the indictment is based – applies only to goods which bear a sign, identical to or likely to be mistaken for a registered trade mark, which has been applied without the consent of the proprietor. Since, as accepted by the prosecution, a number of the alleged instances relate to goods where the relevant sign was applied with the consent of the proprietor (even if the subsequent sale by the factories was not) it follows, so it is said, that such instances cannot constitute criminal offending under the section. The relevant remedy is confined to (civil) infringement proceedings.[21]In our view, that is not a tenable proposition. It is not a tenable proposition because(a) it is flatly contrary both to the heading and, much more importantly, to the wording of s. 92; and for good measure(b) it is flatly contrary to authority.[22]The language of the section is, in our judgment, clear in these respects. Section 92(1)(b) refers to goods or packaging which bear “such a sign”. Those words must, as a matter of ordinary language, refer back to s.

(a) :

“a sign identical to, or likely to be mistaken for, a registered trade mark”
. There is no possible linguistic basis, however, notwithstanding the appellants’ argument to the contrary, for reading the words “such a sign” as also linking back to the word “applies”. Nor is there any possible basis for linking those words back to the opening three lines of s. 92(1). On the contrary, those opening lines, as the structure of the section makes clear, independently govern each of (a), (b) and (c). The arguments of the appellants involve, with respect, a wholesale and illegitimate rewriting of the section and a distortion of the structure adopted. The arguments also, we add, do not fit with the general scheme of the 1994 Act as reflected, for example, in s. 9(1).[23]Mr. Bromley-Martin nevertheless objected that if s. 92 (1)(b) was intended to apply to cases where the mark had been applied with the authorisation of the proprietor (even if thereafter sold by the factory without authorisation) then the words “which is or is” should, he said, have been – but were not – included before the words “identical to”, in s. 92(1)(a). He said that the phrase “identical to” connoted that there were two separate things to be compared: and yet, he said, the mark was in the postulated case one and the same. Where there is authorisation by the proprietor, he asserted, what has been affixed to the goods “is the registered trade mark” (in his words). He maintained this even when Birss J observed in argument that on some occasions trade mark proprietors will authorise the affixing of a mark which is in fact somewhat different from their trade mark as registered.[24]To the extent that we followed this argument we reject it. We would in fact query the premise. For one thing, it is not always necessarily the case - even if it is usually the case – that to say that something is identical to something connotes the comparison and contrasting of two different objects (there was briefly discussed in argument the proposition sometimes used in philosophical debate to the effect that the Morning Star is identical to the Evening Star: connoting the planet Venus, one and the same object). But quite apart from those niceties the more simple point is, by reference to the argument of Mr. Bromley-Martin, that the sub-section is comparing two separate “things”: a sign on the one hand and a trade mark which is registered on the other hand. That makes entire sense. The registered trade mark is that which can be found registered on the Register maintained by the Comptroller of Patents, Designs and Trademarks. What therefore requires comparison, for the purpose of seeing whether there is identity or likelihood of mistake, is the sign affixed to the particular T-shirt (or other item of goods involved) and the trade mark as registered for such goods.[25]We should record that Mr. Blaxland sought at one stage to rely on the wording of s. 58A of the Trade Marks Act 1938 as supporting the overall interpretation of Mr. Bromley-Martin. For the reasons we have already given, we do not think that this is a legitimate aid to the interpretation of s. 92. Even if it is, we in any event understood that Mr. Blaxland ultimately withdrew this submission in the light of the suggestions put to him by the court in argument that, properly read, s. 58A if anything told against this argument.[26]The conclusion we have indicated as a matter of ordinary statutory interpretation also accords with such authority as there is on this point.[27]We were referred to the leading text book in this field, Kerly’s Law of Trade Marks (15th ed.). Although this present point is not fully discussed, it is clear enough that the editors consider that s. 92 has a broad application, potentially extending not only to “counterfeit” goods, as such, but also to grey goods: see in particular paragraphs 22-01 and 22-18 of chapter 22. If the appellants are right, the distinguished editors are sadly mistaken.[28]More specifically, we were referred by Mr. Christopher QC for the respondent (as the judge had been referred) to the recent decision of a constitution of the Court of Appeal (Criminal Division) in Genis [2015] EWCA Crim 2043.[29]In that case, the defendant had been charged with and convicted of a number of offences by reference to s. 92(1)(c) of the 1994 Act. The prosecution case, and evidence, throughout was that the goods – items of clothing – in his possession bore signs which had been applied without the consent of the proprietor: that is, actual counterfeits in the sense the appellants here used that word: they were utter fakes. In the course of evidence, however, some of the defence witnesses suggested that the goods may have originated from the “grey” market via factories which had been licenced by the trade mark proprietor to manufacture the goods. The prosecution was then permitted at trial to adduce further evidence to rebut that suggestion. That evidence was to the effect that no “side door” sales by the factories were permitted: indeed they were expressly prohibited.[30]In deciding the matter the court, in the course of the judgment delivered by Sharp LJ, said this at paragraph 25:
“By the close of play, though the prosecution case remained that the garments were simply fakes, and none of them had originated in the contracted factories, even if the jury were not sure about that, it was indubitably the case that the use of the trademarks on these goods infringed their trade mark proprietor’s rights as a matter of law. There was no express consent and none had been implied.”
[31]At first sight, and indeed at second sight, this is authority flatly against the appellants. It is true that this was a decision on a renewed application for leave to appeal (not a substantive appeal) and it is also true that the applicant appeared in person. But as against that, this was a reasoned judgment; it is plain from the report that the applicant had put forward in support of his application a detailed written argument prepared on his behalf by leading counsel specialising in intellectual property matters; the respondent was represented by counsel; and for good measure the court had been specially constituted – as this court in the present case has been specially constituted – to include a Chancery Division judge with specialist knowledge of trade mark law.[32]It was nevertheless suggested by Mr. Bromley-Martin and Mr. Blaxland that these remarks of the Court of Appeal in Genis were obiter: the prosecution case had, they said, only involved goods which were indeed counterfeit. We reject that. Whilst that was the primary case of the prosecution, the trial ultimately proceeded – and evidence had been called – so as to cover the alternative scenario. Paragraph 25 of the judgment delivered by Sharp LJ can be read in no other way. It was a necessary part of the court’s overall reasoning that the conviction was safe even where the mark had initially been applied to the goods with the proprietor’s consent.[33]Mr. Bromley-Martin objected that the language used by Sharp LJ in paragraphs 25 and 28 of the judgment referred to “infringement”: a civil concept. That is true. But it is plain that, read in context, Sharp LJ was in those statements focusing on criminal offending under s. 92. That is reinforced by her subsequently going on in paragraph 29 of the judgment to deal with a separate point raised by reference to the decision in Johnstone and her references to “civil infringement” for that purpose.[34]We should regard that decision – even if that decision did not enter into the level of debate deployed before us – as binding on us. In any event, lest the appellants be concerned that they fail on this appeal solely by virtue of an over – rigid adherence in a criminal appeal to the doctrine of precedent, we state our view (for the reasons given above) that the decision in Genis was in any case correct on this point.[35]There is yet another obstacle to be found in the authorities to the appellants’ present arguments. That lies in the decision of Pumfrey J (which itself involved a thorough review of relevant European authorities) in the parallel import case of Levi Strauss Inc v Tesco Stores Ltd. [2003] RPC 18, [2002] EWHC 1556 (Ch). It is also a case which in substance was approved by the Supreme Court in Oracle America Inc. v M-Tech Data Ltd. [2012] 1 WLR 2026, [2012] UKSC 27. It was, we record, accepted by the appellants before us that Levi Strauss was correctly decided.[36]In that case, as Mr. Bromley-Martin and Mr. Blaxland stressed, Pumfrey J was dealing only with the (civil infringement) provisions of s. 10 of the 1994 Act: not the (different) provisions of s. 92. That is true. But the whole decision is necessarily predicated on the proposition that a sign can be “identical with” the trade-mark as registered in cases where the sign has been applied to the goods with the authorisation of the trademark proprietor. That is also, in the relevant respects, the position here: and that proposition is not undermined, pace Mr. Blaxland’s submissions to the contrary, by reference to the fact that s. 10 is also explicitly concerned with goods or services which are identical with or similar to those for which the trade mark is registered.[37]We can overall see no coherent basis, even accepting as we do that s. 10 is dealing with civil liability and s. 92 is dealing with criminal liability, for giving a different meaning or approach to the like phrase as used in s. 92. There is in truth no proper basis for doing so. The statute is to be read as a whole; and the provisions in s. 92 are, as Johnstone confirmed, part of the overall statutory scheme.[38]Mr. Bromley-Martin pointed out as one part of his argument that the words in s. 10 are “identical with” – faithfully reflecting the words of the Directive – which are different from the words in s. 92: “identical to”. That variation in prepositions, he suggested, could be significant as reflecting the different ultimate origins (civil on the one hand and criminal on the other hand) of the provisions of s. 10 and of s. 92; and thus may, it is suggested, in itself connote an intentional differentiation on the part of Parliament. This is not a tenable approach, in our view, for the reasons we have given. In truth, such differentiation in prepositions is as immaterial as, say, the use of “different from” (no doubt the strictly correct grammatical usage) and “different to”. Whatever the strictly correct approach, the point is that it makes no difference as a matter of sense. So here: “identical with” means, in this context, precisely the same as “identical to” and no wider significance can be extracted from the differing usages in s. 10 and s. 92.

Policy and Parliamentary intent

[39]Finally, the appellants submitted that at all events here there was ambiguity. Statutes creating criminal offences and imposing criminal sanctions (and here the maximum available sentence is 10 years imprisonment) should be read strictly: the more so, it was said, when property rights are in play (and we were briefly referred to Article 1 Protocol 1). It is said that, in such circumstances, there ultimately is – notwithstanding what might at first sight appear to be no real ambiguity – sufficient uncertainty in the statutory language so as to justify references to the Parliamentary debates to help ascertain what the Parliamentary intention was.[40]This too is, in our judgment, an impossible argument.[41]The first, and conclusive, point is that in our view there is no sufficient ambiguity in the language of s. 92 in this regard such as to justify reference to the Parliamentary debates. Mr. Bromley-Martin sought to rely on what was said to be the fact that Trading Standards authorities generally have hitherto not sought to prosecute, by reference to s. 92, in “grey goods” cases. But that, even if right, cannot really weigh with us. First, the necessary ambiguity ultimately has to arise from the statutory language itself: it cannot simply be established by extrinsic matters (although of course it may be a matter of legitimate forensic observation – for example, in some given cases, that different text books take differing views on the meaning of a statute). But be that as it may, the second point is surely that the disinclination of trading standards authorities to prosecute in grey goods cases is primarily based on the potential difficulties in proof that are involved: as Mr. Bromley-Martin himself accepted.[42]In any event, we considered various extracts from the Parliamentary debates, as relied upon by the appellants, de bene esse. Having done so, we conclude that they lend no real support to the appellants’ argument. Various references in the Parliamentary debates to “counterfeit” goods do not indicate any real precision of thought or expression as to what is thereby connoted. What, we can agree, does emerge is a stated intention that the exposure to criminal liability should be more restricted than the exposure to civil liability. But on any view that is in any event the effect of s. 92 when compared with s. 10: without resort to the further strained arguments on interpretation advanced by the appellants in this case.[43]It was also said, however, that the prosecution’s interpretation gives rise to such harsh (or potentially harsh) consequences that the interpretation of s. 92 which is advanced could not be right or represent Parliament’s intention; or, at all events, thereby made the section ambiguous. We reject this too. There was a balancing exercise here. Trade mark violation gravely undermines the value of a brand and affects legitimate trade. The very fact of a cheap sale of a an unauthorised branded item can both dupe a customer and diminish the market and overall value of the trade mark, in terms of perception of quality and exclusivity. In some cases moreover (for example, electrical goods or toys) very real issues of public health and safety can arise where the goods are fake or, even if originally manufactured with the trade mark proprietor’s authorisation, are then rejected as sub-standard but nevertheless sold on without authorisation. Moreover, on the appellants’ argument, for example, if a proprietor cancels an order with an authorised factory shortly before manufacture commences a criminal offence may be committed if the manufacturer nevertheless proceeds and the branded goods are then sold by the factory without authority; whereas if the order is cancelled shortly after the manufacturing process is concluded then no criminal offence can be committed if the branded goods are then sold by the factory without authorisation.[44]The appellants nevertheless say in this regard that, on the respondent’s arguments, persons engaging in parallel imports such as Tesco (in the Levi Strauss case) are rendered potentially vulnerable to criminal prosecution and conviction. Another example briefly debated in argument before us was the case of a young student who purchases from an authorised outlet a pair of legitimately branded jeans in, say, New York at a favourable price: if that student then returns to the United Kingdom and advertises those jeans for sale on eBay then, the appellants say, that student is, on the respondent’s argument, potentially vulnerable to criminal prosecution and conviction. That cannot, it is said, have been Parliament’s intention.[45]We are perfectly prepared to accept for present purposes that those examples may be right: and that seems also to be the view of Kerly in, for example, 22-18 on the basis that the term “grey goods” as there used extends to parallel imports (cf. 16-071). However we need express no concluded view given that they do not correspond to the facts of the present case. Nevertheless, assuming for present purposes that they are right, that does not move us. It may be that such an outcome is capable of being tough in certain cases for certain users. But that, speaking generally, has to be set against the often unscrupulous conduct of some of those determined to exploit to their own advantage, and to the detriment of proprietors and consumers, the proprietary rights in trade marks belonging to, and established at great expense by, others. Overall, it is to be understood that Parliament has weighed the balance and decided as it has by the wording of s. 92(1) of the 1994 Act. Moreover, it is important to bear in mind that in all cases the prosecution has to prove to the criminal standard the essential ingredients of the offence: which, in the case of grey goods, may well be particularly difficult; and, even if the prosecution can, a defendant still potentially has the statutory defence, in an appropriate case, conferred by s. 92(5). As Lord Nicholls stated at paragraph 43 of Johnstone, those who act honestly and reasonably are not to be visited with criminal sanctions. As to trifling cases or cases which are close to the line, it can be left to the good sense of trading standards officers not to prosecute in inappropriate cases: see also the remarks of Lord Walker in Johnstone at paragraph 73.[46]We should also record that we were referred by the appellants to the provisions of Regulation 608/2013, relating to the enforcement of intellectual property rights by customs agencies of Member States. Paragraph 6 of that Regulation, it can be accepted, refers to goods the subject of illegal parallel trades and goods which are “over runs”. The Regulation states that it is “not appropriate” that customs authorities “focus” their efforts on such goods and that “illegal parallel trades and over runs” should be excluded from the scope of the Regulation. In our judgment, that adds nothing of substance to the debate about the actual meaning of s. 92 of the 1994 Act.

Conclusion

[47]This appeal has had to engage in a criminal context with somewhat esoteric arguments on trade mark law. As we see it, the Crown Court judge, whilst perhaps some of his remarks were over broad, in substance correctly understood the intent and effect of the language of s. 92. He was also right to consider himself obliged to follow the decision in Genis. In the result, in the circumstances of this case we are of the clear view that the judge reached the right conclusion.[48]This appeal is dismissed.

Cited in 1 later judgment