Appeal court holds that goods in transit are imported and thus could infringe trademark rights

Singapore
  • The Singapore Court of Appeal ruled on an appeal against a High Court decision to dismiss trademark infringement claims based on the transshipping through Singapore counterfeit goods from China to Batam
  • The court held that “goods in transit” are still considered to be imported for the purpose of the Trademarks Act. However, the respondent did not use the signs at issue and thus was not guilty of infringement
  • The imposition of liability for infringement on a freight forwarding service which had no knowledge of the infringing goods would have been against the letter and spirit of the Trademarks Act

In Burberry Ltd v Megastar Shipping Pte Ltd ([2019] SGCA 1 (Court of Appeal)) the appellants appealed against the High Court’s decision to dismiss their trademark infringement claims against the respondent in respect of the respondent’s acts of transshipping through Singapore counterfeit goods from China to Batam. The Court of Appeal dismissed the appeal.

Facts

Infringing counterfeit goods were shipped from China to Singapore in two sealed containers for onward shipment to Batam, Indonesia. They were expected to arrive in April 2013.

In March 2013 the respondent received letters from an Indonesian company requesting it to transship these containers to Batam. It also received two seaway bills for the two containers, packing lists and commercial invoices listing a third party as the consignee, and arrival notices listing the respondent as the consignee.

The respondent then arranged for the transshipment of the goods using the Port of Singapore Authority (PSA) Portnet System. At no time did it personally see or interact with the goods. The PSA undertook the placement into transshipment stacks and loading of the containers on board the outward bound vessel.

After the containers arrived, they were inspected by Singapore Customs and found to contain more than 15,000 counterfeit products.

The appellants (along with three other trademark owners) commenced trademark infringement action against the respondent.

High Court decision

The High Court dismissed the appellants’ claims on the basis that the respondent did not import the goods.

It was not disputed that the goods bore infringing signs, and it was held that the signs were used in the course of trade. The court also held that the goods were imported under the sign – the definition of ‘import’ included goods in transit and did not require that the goods be intended for free circulation in Singapore.

However, the court held that the respondent was not the importer because it had no part in making the shipping arrangements or in the packing or loading of the containers on board the vessels. The importer was either the shipper in China or the third party as the ultimate consignee in Batam.

The court also held that the goods were not exported under the sign because they had not left Singapore; the mere intention to export was insufficient to amount to use since this was inconsistent with the plain wording of Section 27(4)(c) of the Trademarks Act. It also held that the respondent was not the exporter and was only a freight forwarder engaged for the limited purpose of arranging the transshipment of the containers and acted as agent for the third party during the transaction. If any party was the exporter, it was the third party.

Appeal

Trademark use
A preliminary discussion surfaced relating to the requirement of trademark use (ie, the infringing sign must have been used as a trademark in that it indicated that the origin of the goods was the mark owner). The amicus curiae argued that if Singapore consumers were not intended to and never saw the infringing sign, there was no trademark use. The court disagreed with this argument and held that the test for trademark use was whether the “sign was intended to depict a trade mark and thereby the origin of the goods”, which was clearly made out in this case.

Does ‘import’ include goods in transit?
The court held that ‘import’ under the Trademarks Act means “to bring or cause to be brought into Singapore”.

The court agreed with the High Court that “goods in transit” are still considered to be imported for the purpose of the Trademarks Act, on the basis that this interpretation is consistent with the context and structure of the act. The plain meaning of Section 27 supports the view that goods can be considered to be imported even if they are not intended for the Singapore market, since the acts considered as use for infringement purposes do not explicitly contemplate that the goods must be intended for sale in the country or to be placed on the Singapore market.

In support, the court noted that it was not evident from the act that its purpose is only to protect trademark owners which market their trademarked products in Singapore; certain provisions of the act suggest that Singapore-registered trademark owners are protected notwithstanding the fact that their intended market is overseas. There is nothing in the act suggesting that trademark protection is limited to protecting the trademark owner’s rights to place the goods on the Singapore market.

Accordingly, provided that the goods were brought into Singapore, they would be considered to be imported even though they may be intended for a foreign market. The court’s position was therefore contrary to the position in the United Kingdom and before the European Court of Justice (where goods in transit are not considered to be imported).

Meaning of ‘export’
The court held that ‘export’ under the Trademarks Act means “to take or cause to be taken out of Singapore”.

The Court of Appeal also agreed with the High Court that a mere intention to export is insufficient, although if there are accompanying actions clearly directed at fulfilling the said intention to export or where there is clear evidence that export would definitely take place, then the trademark owner may apply for an injunction.

Who is the importer or exporter?
On whether the respondent was the importer or exporter, the Court of Appeal agreed with the High Court that this was essentially a question of fact which was dependent on the level of involvement of the respondent and whether its involvement was needed for the goods to be brought into Singapore. The identification of the importer or exporter in shipping documents or its treatment under the Customs Act was not determinative. Rather, the court held that the importer is the person who, by its acts, brought goods or caused goods to be brought into Singapore, and the exporter is the person who took goods or caused goods to be taken out of Singapore.

Whether there was infringement
For infringement to take place under Section 27 of the Trademarks Act, it must be established that the defendant intended to do the act constituting the infringing use under Section 27(4) of the act with knowledge or reason to believe that there was a sign present on the goods. It was insufficient that the defendant was responsible for the physical act of importing or exporting the infringing goods. It also had to be established that the defendant intended to import or export goods under the signs, and in particular that the defendant knew or had reason to believe that the signs were used on the goods.

If the above is satisfied, it is irrelevant whether the defendant knew that the signs were infringing.

On the facts, while the respondent may have done or facilitated the physical act of importing the goods, it did not use the signs because it was not even aware of their presence and had no reason to believe that they were on the goods. It was merely providing a commercial service as freight forwarders, and to impose liability for infringement would be against the letter and spirit of the Trademarks Act.

As regards the export of the goods, even if the respondent had shipped the goods to Batam, the appellants would still have to establish that it had been done with knowledge or reason to believe that the signs were on the goods.

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