Import of counterfeits should not be treated as minor misdemeanour

​In a January 7 2015 decision, Section 4 of the Valencia Court of Appeal sentenced a defendant responsible for the import of counterfeit components and accessories for PlayStation video games.

The defendant had commissioned in China the manufacture of the counterfeit products seized in order to put them on the market in Spain. According to information provided by the Tax Agency, the defendant was responsible for at least seven previous imports involving the retention of counterfeit products by Customs.

As the defendant was a regular importer, the appeal court held that the reduced penalty included in the Criminal Code did not apply in this case. According to the code, the following cumulative requirements must be fulfilled in order for the mitigating circumstances reduction to apply:

• The offender must be a minor retailer;
• The offender has certain characteristics;
• The offender must receive reduced economic benefit from the offence; and
• None of the aggravating circumstances set out in Article 276 of the Criminal Code apply.

The appeal court declared that, as the defendant had sold products to the end consumer, it was considered to be a minor retailer. However, the appeal court held that the defendant's characteristics did not fit those needed to create mitigating circumstances which, according to case law and doctrine, are reserved for "people in poverty, often used by criminal organisations, whose actions aim to achieve minimum subsistence incomes".

Further, the appeal court added that a reduced penalty can be imposed in a small-scale retail case of minor significance. Thus, the judgment stated that a "minor retail case of minor significance" is one that can be carried out by an individual person and which involves a number of products or illegal copies seized that can reasonably be transported by a single person. Therefore, the appeal court concluded that the reduced penalty could not be applied in import cases, particularly in the case at hand, where the offender had imported illegal goods from China on several occasions through a company to be distributed in a commercial establishment. Thus, the appeal court declared that the reduced penalty for IP criminal offences did not apply to the importer's activities.

Having confirmed the offence, the appeal court argued that compensation for damages should be calculated from the moment when the infringement could be proved, even though the product had never been commercialised because it was seized by Customs. In this regard, the appeal court reasoned that the mere act of counterfeiting discredits a trademark by making it more common, leading to trademark dilution which may affect market value.

The appeal court considered it appropriate to calculate the amount of damages regarding the number of products seized by the average retail price of the genuine products, taking into account that mere destruction was not enough to repair the damage caused and thus should be considered a cumulative penalty to the criminal sentence.

Elisenda Perelló, Grau & Angulo, Madrid