Quality of counterfeit product is irrelevant, says Court of Appeal
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After considering appeals brought by the public prosecutor and the companies Nokia Corporation and Nokia GmbH against a criminal court judgment, in July 2008 the Madrid Court of Appeal held that the accused was guilty of the criminal offences of design infringement contrary to Article 273(3) of the Criminal Code and trademark infringement contrary to Article 274(2).
The court of appeal overturned the criminal court judgment and sentenced the accused to:
- two years’ imprisonment;
- an 18-month penalty payment at the rate of €6 a day; and
- a three-year disqualification from conducting commercial activities.
In addition, the court ordered the accused to pay over €55,000 in damages, as well as the costs of the first instance trial and the appeal.
Proceedings began following two police raids carried out at the Madrid sales establishment of the accused in which 13,000 counterfeit Nokia mobile phone covers were seized.
After analyzing the evidence, the court of appeal considered that:
- all the requirements set forth by Articles 273(3) and 274(2) of the code were fulfilled; and
- the accused had committed a criminal offence in selling identical products or products which had similar designs (Article 273(3)) or displayed registered trademarks (Article 274(4)), knowingly or without the authorization of the trademark holder.
The criminal court - which, surprisingly, did not consider the possible crime of design infringement - had found the accused not guilty of trademark infringement, taking into account that the seized covers were not exact copies of the original because of their price, place of sale and presentation to the public. In its opinion, they were outright imitations and not counterfeit products, so there was no risk of confusion with the original products. The court then applied the so-called ‘theory of consumer error’, according to which no crime is committed if the consumer knows that he or she is purchasing a counterfeit product.
The court of appeal plainly rejected this approach, ruling that the quality of a counterfeit product is irrelevant when analyzing whether use of a trademark or design constitutes a criminal offence. It considered that the legislature intended to protect the exclusive rights of IP rights owners - whether a consumer knows that he or she is buying a counterfeit product is irrelevant.
Therefore, the court of appeal considered that the accused had infringed Nokia’s exclusive trademark rights under Article 274(2)of the code, regardless of the quality of the products or their presentation, as the NOKIA trademark appeared on some of the seized covers.
With regard to the accusation of design infringement under Article 273(3), the court found that all the necessary elements (objective and subjective) were present. Regarding the objective element, the court considered it proven that the accused:
- possessed covers that displayed Nokia's registered designs with a view to selling them; and
- had acted without Nokia's consent.
With regard to the subjective element, the court considered that bad faith was sufficiently clear, not only because NOKIA is a well-known trademark and the accused sold mobile telephone products, making him well acquainted with the sector, but also because of the circumstances following the first of the two raids in which a notice was found in his sales establishment offering covers for Nokia models at reduced prices.
Leticia Lloret, Grau & Angulo, Madrid
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