Trademarks: honesty not a sufficient defence

There was an interesting trademark case, Essex Trading Standards v Singh [2009] WLR (D) 81 in May of last year that noted that an honest belief that you are not infringing a trademark is not a defence - you have to be able to prove that that honest belief was reasonable. So if you spend a day looking after a market stall for a mate with a history of dodgy dealings who has assured you that all the gear on the stall is legitimate, you can still be held responsible for trademark infringement.

"In order to acquit a defendant of a charge of unauthorised use of registered trade marks in relation to goods, contrary to s 92(1)(c) of the Trade Marks Act 1994, under the statutory defence provided by s 92(5) of the Act, it was not enough for the court to conclude on the facts that the defendant had acted in the honest belief that the use of the signs was not an infringement of the registered trade marks; it was also necessary to find that he had reasonable grounds for so believing.

The Divisional Court of the Queen’s Bench Division so held when allowing an appeal by way of case stated by the claimant, Essex Trading Standards, against the decision of 16 May 2008 of the Justices for the County of Essex to acquit the defendant, Wallati Singh, of two offences under s 92(1)(c) of the 1994 Act.

The defendant had been charged with having in his custody and control in the course of a business a quantity of trainers bearing the Nike sign or logo (the registered trademark of Nike International Ltd of Oregon, USA), and trainers bearing the BAPE sign or logo (the registered trademark of Nowhere Co Ltd of Tokyo) with a view to selling them at Pitsea Market, Basildon. The defendant had agreed to mind the stall on behalf of a friend, Anthony Hooper, who worked as a market trader in sports shoes. In evidence, he denied that he knew the trainers were counterfeit, claiming that he had asked Mr Hooper if the trainers were legitimate and that Mr Hooper had confirmed that they were; that he had no experience that would have enabled him to distinguish between legitimate and counterfeit trainers; and that he was of good character.

GOLDRING LJ said that s 92(5) placed a legal, persuasive burden on the defendant. The issue for determination was whether, by asking his friend whether the goods were “OK” or “dodgy” (counterfeit), to which Mr Hooper was alleged to have replied that “it was all sweet, stock clearance, a job lot”, the defendant had discharged that burden. In his Lordship’s view, the magistrates were not entitled to conclude that the defendant had shown that he believed on reasonable grounds that the use of the signs was not an infringement of the registered trade marks. The defendant had known that they had been transported in a van that did not belong to Mr Hooper, but to the defendant’s brother who had previously been warned by Trading Standards Officers for selling counterfeit goods; he had not seen, or sought, documentation; he had relied solely on the word of a person unwell due to drug addiction. Although the magistrates had correctly sought to apply the principles set out in R v Johnstone [2003] 3 All ER 884, they had failed to have regard to that part of the judgment to which they had referred in their first question, namely that “those who act honestly and reasonably are not to be visited with criminal sanctions”. It was not enough to conclude that the defendant had acted honestly; he had to have acted on reasonable grounds also. The defendant had not done so on the evidence, as any reasonable bench of magistrates had been bound to conclude. The magistrates were entitled to have regard to the defendant’s previous good character, but it was irrelevant in deciding whether the grounds for his belief were reasonable."