Sale of counterfeit goods is criminal offence even if forgery is self-evident

A recent decision issued by a panel of the Federal Court of Criminal Cassation of the Republic of Argentina has altered a trend that had been gaining momentum over the past five years in criminal lawsuits for trademark infringement. This decision returns to the classic construction of the law in this respect, although one must bear in mind that the decision was issued only by one of the panels of the court. It is expected that this positive change will be followed by the other panels of the court, as well as by the lower courts.   

The approach that was previously followed by the courts in many criminal cases was to conclude that the sale of forged products or copies was not a criminal offence when, due to certain circumstances, consumers were not misled.

The present case arose when the police found out that a street vendor was selling a large number of t-shirts (tank tops) bearing the mark ADIDAS that were clearly counterfeits. Based on this, a lawsuit was brought before a criminal court for violation of the trademark legislation (re Matos Berna (Court File No 361/2013)).

The Federal Court of Appeals in Criminal and Correctional Matters applied the abovementioned precedent and acquitted Ms Beatriz Matos Berna, deciding that the street sale of forged tank tops was not a criminal offence as consumers were not deceived regarding the source of the products.

The fourth panel of the Federal Court of Criminal Cassation intervened in the case following a cassation appeal filed by the attorney general against the decision. The Federal Court of Criminal Cassation was created as an intermediate instance between the Federal Court of Appeals in Criminal and Correctional Matters and the Criminal Oral Trial Courts on the one hand, and the Supreme Court of Argentina on the other, to rule on unconstitutionality and cassation motions lodged against decisions issued by the lower courts.

With a majority opinion, the justices forming the fourth panel decided to admit the cassation motion based on grounds that effectively reversed the prevailing trend in this matter. 

The justices opined that the exclusive rights granted by the trademark legislation entitled the rights owner to prevent all uses of identical or similar trademarks that could lead to confusion among consumers. Further, even if there was no such confusion, the prejudice to the party protected by the law - that is, the owner of the trademark rights - continued to exist. Such prejudice existed irrespective of the number of infringing products, the fact that they were sold in the streets, their low price or their low quality.

In other words, irrespective of the particular circumstances of a case, the sale or marketing of goods or services bearing a forged or fraudulently copied trademark is an unlawful act which is punishable under the Argentine criminal regime set forth in Section 31, Subsection (d) of the Trademark Law No 22.362.

As mentioned above, pursuant to the previous approach of the federal courts of criminal justice, criminal judges tended to consider that forging and/or fraudulently copying registered trademarks (or the marketing of such products) was not punishable under criminal law if the quality of the product, the conditions of sale and the low price of the goods did not lead to confusion among consumers. The courts deemed that, in such circumstances, there was no prejudice to the owner of the trademark rights. 

In re Matos Berna, the fourth panel of the Court of Criminal Cassation, based on the considerations that led to the enactment of the Trademark Law and on a precedent of the Federal Supreme Court of Justice, held that the acts specified in Section 31 of the law (ie, forging, fraudulently copying and/or marketing such products) are punishable when the owner of the trademark and/or the consumers may be adversely affected by the violation of the law. 

This decision may signal that the courts may be returning to the classic construction of the law in terms of trademark infringement from a criminal law standpoint. 

Thus, the courts would once again guarantee that trademark owners - in addition to being able to file civil lawsuits aimed at stopping the marketing of counterfeit products through the precautionary measures set forth in the applicable laws - can resort to the criminal courts of law to enforce their exclusive rights and to prevent the marketing of goods bearing forged or copied trademarks. Otherwise, as stated by the Court of Cassation:

“industrial property rights would be infringed upon, through a lack of legal protection afforded to a party meeting all the requirements established by the Federal Government to protect the trademark at issue.”

Pablo T Armando, Noetinger & Armando, Buenos Aires