Counterfeiting and End-User Liability

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Counterfeiting and End-User Liability Counterfeiting case-laws
4. Counterfeiting case-laws 4.1 General introduction Counterfeiting cases keep on mounting everywhere on earth, except those countries that have understood that only by disrupting demand will they be able to deter this illegal trade. No lawsuit has yet been tried against end-purchasers of counterfeits; reason being that those found liable are mostly punished by fines imposed by relevant authorities and they do not really contest their punishment in courts, knowing that they have done an unlawful act. In the following cases, which have been brought mostly against manufacturers, distributors and sellers of fake products, it will be shown how courts still take consumers as victims of counterfeiting. However, a French case will argue that consumers of today do not buy fake items out of confusion and ignorance but are rather willing to choose the imitations. The EBay landmark cases will be discussed as well as two Mauritian cases on the Ralph Lauren dilemma.
  1. Non-Mauritian Cases
4.2.1 Definition of counterfeit goods
  1. NOKIA CORPORATION v REVENUE & CUSTOMS[1]
This High Court of Justice case defined “counterfeit goods” as the bearing of a sort of symbol which is similar or essentially identical to the registered mark and it must be used on products of the same kind as those protected genuine goods. This definition comprises of but is not limited to fakes. It also covers the use of the registered mark on the same type of goods even if the right holder is not utilising the mark on those goods himself.
  1. Confusion element
  1. R v JOHNSTONE[2]
The House of Lords says that confusion is not an ample element to describe a counterfeit product. The genuine products should have been “photocopied” to such an extent rendering the fake item identical or even undistinguishable from the protected goods. It is only like this that confusion can be created.
  1. COLGATE–PALMOLIVE COMPANY v J.M.D. ALL–STAR IMPORT AND EXPORT, INC[3]
The United States Court held that marks which are alike to the protected mark but are different by two or more letters cannot be deemed as counterfeit. On the other hand, marks that are identical to the registered mark as it appears in the marketplace have been held to be counterfeit. This case demonstrates that adding or even removing one or more letters from a legitimate brand name cannot be considered as counterfeiting. If this case’s rule is followed in Mauritius, then the use of “addidas” instead of “adidas” on socks for instance would not be an offense.
  1. Cour de cassation, Chambre criminelle, 15 mai 2012[4]
The present case clearly argues that the seized goods by customs in that case, being glasses, could not cause confusion in the mind of the customer due to its specific differences. The seized goods were viewed as imitations of the famous “Chanel” glasses, but the defendant argued that there was no similarity in terms of quality, texture of the frames and glasses that could lead the consumer less prudent to consider they are in the presence of glasses produced by a great brand. Moreover, the logo used were different in so that the Chanel brand logo consisted of two inverted and crossed-together “C” whereas the seized glasses’ logo was made up of two circles crossed together. The defendant sustained his defense on the fact that the Chanel logo was globally known and identifiable at first glance by the vast majority of consumers; even the most moderately observant cannot ignore the difference between the logos appearing on the brand Chanel sunglasses and the allegedly infringing ones. The French case unmistakably makes it obvious that the seized products could not cause bewilderment in the mind of even the “less prudent” buyer; therefore, if any one would be tempted to buy the seized glasses, it would be in their full knowledge that the product is not the famous Chanel glasses.
  1. EBay lawsuits
This online-selling platform has been frequently criticised as being an intermediary facilitating the trade in counterfeit items. Many famous brands have seen the number of fake items being sold as originals. The IACC blames eBay for “turning a blind eye” to the quantity of counterfeiting that occurs on its website, which according to that organization, amounts to 29% of the total number of online counterfeit sales.[5] In the case of Tiffany Inc. v. eBay Inc. [6], a case brought before the United States Court of Appeals for the Second Circuit, Tiffany suspected eBay for violating the Lanham Act and New York state common law by allowing the sale of counterfeit Tiffany items on its platform, and thus profiting from the sales of such items. Nonetheless, Tiffany’s arguments were not well founded enough and the court concluded that eBay did not ignore the infringing activities and tried to prevent the sale of counterfeit items, through its VeRO program and the “fraud engine”. Moreover, no contributory infringement was established, as EBay must have had more than a general knowledge or reason to know that its service is being used to sell counterfeit goods; which was not the case. Nevertheless, the French Court took another standing in the case of “la société Louis Vuitton Malletier (LVM) c. la société EBay INC[7]” in 2008 and 2010; whereby in its first case, LVM sued eBay inFrancefor the selling of counterfeitperfumesandhandbagson its website and alleged that the American Incorporation had not taken sufficient measures to stop the sale of counterfeit goods. The French Court accused EBay andin 2010, LVM sued EBay again; this time for spoiling the repute of theLouis Vuittontrademark andbrand name.LVM won and received € 200 000as damages.The French tribunal points out that it is the duty of eBay to impose sufficient measures to stop illicit products from coming into the market. Commentators have advocated that this discrepancy between French and U.S. reasoning may “weaken the integrity of the online marketplace.”[8]
  1. Mauritian ‘Ralph Lauren’ cases
Three cases were heard in 2012 on the counterfeit trading of only one prestigious brand name “Polo Ralph Lauren”. All the lawsuits were brought against sellers and on the case of DOBA V. THE STATE[9], where the appellant was charged and convicted before an inferior for having in his possession without the legitimate permission of the right holder, in the course of trade, a number of shirts bearing the logo of Polo Ralph Lauren. The shirts could not be sold as the trademark, which was for years 1992-1999 had already expired in 2004. Even if the appellant was not the owner of the shop but only the manager and because he had been ordered the appellant to remove the impugned articles exposed for sale. In the case of SOOBIAH A. A. v. THE STATE[10], the appellant was found on the 3rd December 2008 in possession of 359 T-shirts and 74 shirts of different sizes and colours which had been exposed for sale and which were found bearing the counterfeited trademark of “Ralph Lauren”. He pleaded guilty to the charge but appealed to the Supreme Court as the fine penalty of Rs. 250 000 was way too excessive to be infringed by a District Magistrate. The penalty was reduced to Rs. 10 000, but not on the above ground but because the amount was found as would be disproportionate in relation to the degree of seriousness of the offence. Soobiah’s profession as beach hawker, his clean record, age (60) and the number of goods found in his possession also helped in lessening the appellant’s sentence. Another case is that of POLO LAUREN CO v MAUDHOO S[11], the plaintiff who was notified by the MRA that the defendant had imported goods bearing the registered trademarks of Polo/Lauren Co., which was a mark exclusively distributed by the appellant. The goods were detained by Customs as ordered by the appellant but the defendant now avers that those 129 goods were bought from USA through the internet, and the appellant could not restrict the buying of originals even if he avers to be the exclusive distributor. The defendant also averred that there was non-use of the marks. Same had not been proved, however and the defendant was found liable as such parallel importation could be permissible only if done with the approval of the owner of the trademark as provided for under section 40(5) of the PIDTA. It should be noted that parallel importations with the consent of the owner are referred to as ‘Grey Goods’ and they are different from black market goods which are often counterfeit goods. This case was compared to a European Court case, Mastercigars Direct Limited v Hunters & Frankau Limited[12], where 10 consignments of ‘Habanos’ cigars were alleged to be counterfeit and unlawful parallel importation. The Court of Appeal reversed the decision of the trial judge as there was implied consent on the part of the appellant to the parallel importation of the cigars.
  1. Conclusion
Different case laws on counterfeiting were analysed, firstly by understanding of the definition of the word counterfeiting itself, the confusion element which stills finds its ways into the judges’ mind and making them believe that consumers still buy counterfeits thinking they are originals; then some foreign cases were reviewed including those against EBay Inc. and finally the Ralph Lauren problem encountered in Mauritius was explored through case-laws. 1
[1] [2009] EWHC 1903 (Ch) (27 July 2009) [2] [2003] UKHL 28 [UK] [3] 486 F.Supp.2d 286 [4] N° de pourvoi: 11-86196 [5] IACC Urges U.S. Appeals Court to Hold Ebay Contributorily Liable for Continuing Rampant Internet Sal[e], 2008. [6] 600 F.3d 93 (2d Cir. 2010) [7] Arrêt n° 1261 du 7 décembre 2010 (09-16.811) - Cour de cassation - Chambre commerciale, financière et économique [8] Supremes Say: 'You're On Your Own' — Analyzing Supreme Court's Decision Not to ReviewTiffany v. eBay, 2010. [9] 2012 SCJ 10 [10] 2012 SCJ 435 [11] 2012 SCJ 494 [12] [2007] EWCA Civ 176
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