Is the Tarragona Court of Appeal abandoning the 'consumer error' theory?

Spain

A recent ruling of Section 2 of the Tarragona Court of Appeal in a criminal case suggests that the court has taken a radical turn away from its former jurisprudence on the ‘consumer error’ theory.

This ruling is the outcome of an appeal filed against a decision of the Criminal Court No 2 of Valls, which ordered the provisional discontinuance of the proceedings because the seized products, despite infringing the IP rights of several well-known trademark holders (for reproducing these trademarks without authorisation), did not mislead consumers as to their authenticity for the following reasons:

  • the inferior quality of the products on which the trademarks were reproduced compared to the quality of the genuine products;

  • the lower price of the seized products; and

  • the fact that the seized goods were intended to be sold by street vendors or at flea markets.

The ‘consumer error’ theory, although outdated, is still followed by several Spanish Courts of Appeal. It was developed by the Supreme Court under the former Criminal Code of 1973, under which it was relevant to assess whether consumers had been deceived when purchasing a product bearing a counterfeit trademark.  

In the 1973 Criminal Code, IP crimes were considered as a type of fraud, so that consumer deception was relevant. Article 534 of the former Criminal Code was contained in Chapter IV, entitled “About fraud”. However, Article 274 of the current Criminal Code is found under the heading “Crimes against Intellectual Property” in a different chapter and section from those concerning fraud (Chapter IV) and crimes against the market and consumers (Chapter XI, third section). The consumers’ lack of awareness that they are buying infringing products is not an element of the crime under Article 274 of the Criminal Code, because the only legally protected right is the exclusive and excluding right to use or exploit an IP right derived from its registration with the relevant agencies.

In addition, the word ‘consumer’ is not even mentioned in Article 274, which does not make any reference to the protection of a consumer’s assets, as can be found in other criminal provisions relating specifically to the market and consumers. It is not the consumer who is the victim of the crime against intellectual property, but the holder of the infringed trademark.

Moreover, Article 274 of the Criminal Code does not in any way provide that the “products” as such could be “confused” with others. According to the wording of Article 274, the only thing that may be confusable is a sign illegally reproduced on seized products compared to a trademark registered under trademark law. The only reference to the “products” made in this article is that the products on which the trademark is applied without authorisation must be “the same or similar to those for which the intellectual property right is registered”.

If consumers are deceived or tricked, other criminal provisions may apply in addition to Article 274: those relating to fraud and consumer protection. However, deception is in no way a requirement for applying Article 274, which relates only to crimes against intellectual property.

Until now, the Tarragona Court of Appeal - along with those of Girona, Asturias, Cantabria, Pontevedra and Salamanca - had consistently held that consumer error should be present for wilful trademark counterfeiting to merit a criminal sanction. Criminal specialists seeking to protect their clients’ IP rights struggle daily against this jurisprudence regarding consumer error, and wish to change this dynamic. However, this ruling could mark the beginning of a change in the position of the Tarragona Court of Appeal.

It is hoped that this ruling is the first in a series of rulings which will contribute to abandoning the ‘consumer error’ theory within the Tarragona Court of Appeal and that, with time, fewer Spanish Courts of Appeal will support this theory.

Jordi Camó, Grau & Angulo, Barcelona

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