Decision sets the bar for higher level of damages in counterfeiting cases

The District Court of Stockholm has issued its decision in one of the largest and most significant counterfeiting cases in Sweden in recent times (Case No B 16581-11).

Between 2009 and 2012 thousands of counterfeit Canada Goose parkas and Lacoste, Ralph Lauren and Lyle & Scott golf shirts were imported and sold in Sweden. The main defendant wrote in chat messages found on his computer that he had made between six and seven million Swedish kroner from this illegitimate business.

To find their customers, the group of five defendants sent several thousands of spam emails to small businesses in Sweden, claiming that they had bought the goods from bankrupt companies. The main defendant lived in Thailand and bought the goods in that country. The goods were then sent to the small Swedish town of Norrköping, where three of the defendants repackaged the clothes so that it appeared to customers that the goods were being sent from Sweden. To disguise themselves as a legitimate Swedish business, they used one of the defendant’s Swedish corporate bank account.

The district court began its judgment by explaining that counterfeiting is a major problem in the western world, and that, in the European Union alone, it is estimated that 10% of all goods are counterfeit. With this judgment, the court thus recognises the severity of the problem and that it is time for the authorities to start tackling it.

The main defendant’s disregard for the law was clear when he wrote in an email to a friend: “they will never catch me here; Bangkok is too large”. However, to his surprise, he was arrested in May in Bangkok by the Thai Police and transferred to Sweden to be tried. The main defendant was sentenced to two years and eight months in prison for felony fraud and trademark infringement - this was three months more than the prosecutor had sought. The main defendant is currently in custody, waiting for the judgment to become legally binding.

The other defendant in Thailand was sentenced to one year and two months in prison for complicity of felony fraud and trademark infringement, as well as money laundering. The three defendants that repackaged the goods in Sweden were convicted of complicity of felony fraud and trademark infringement; they were given suspended sentences and ordered to pay fines.

The rights holders were granted damages, which the defendants shall pay jointly and severally in major parts. The damages were calculated based on a hypothetical licence fee of 20% of the retail price of the goods, plus compensation for further damage. This hypothetical licence fee was significantly higher than in previous case law, where it used to be between 5 and 12%.

This judgment arguably sets the bar for future counterfeiting and trademark cases in Sweden.

Tom Kronhöffer and Alexander Raaum, von lode advokat ab, Stockholm