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Case law: Trade mark owners benefit from ruling clarifying that sale of ‘grey’ goods is a criminal offence

Trade mark owners should monitor the markets for their goods within the EU to identify anyone selling, or dealing with ‘grey’ goods bearing their mark, as criminal proceedings can now be brought against the sellers.

Legal Alert

This update was published in Legal Alert - January 2017

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

It is a criminal offence under trade mark law for a person to sell, hire out, offer, ‘expose for sale or hire’ or distribute goods with someone else’s trade mark (or a mark likely to be mistaken for it) on either the goods or their packaging, without the trade mark owner’s consent. It is also an offence to even possess or control such goods with a view to doing any of those things.

There are defences, for instance, that the offender reasonably believed that the goods did not infringe the trade owner’s rights, or that the trade mark owner’s rights are ‘exhausted’ (because, for example, the goods had already been sold lawfully within the EU and are now being sold second hand).

The offence clearly covers counterfeit goods, but it has been unclear whether it was also an offence to sell, etc, goods showing someone else’s trade mark (on the goods or packaging), where the mark was originally applied with the trade mark owner’s consent — but the goods are now being sold without that consent. Such goods are commonly called ‘grey’ goods.

Examples of circumstances when goods are grey goods include when a manufacturer makes trade marked goods with the owner’s consent for sale outside the EU, but the goods are then sold in the EU; and when goods are made to order but the order is cancelled or the goods are rejected as below standard – but the goods are sold anyway.

In one case, a business had been selling grey goods and the court had to decide whether the business had committed a criminal offence. The Court of Appeal ruled that it did.

Operative date

  • Now

Recommendation

  • Trade mark owners should monitor the markets for their goods within the EU to identify anyone selling, etc, ‘grey’ goods bearing their mark, as criminal proceedings can now be brought against sellers of such goods

Case ref: R v C & Ors [2016] EWCA Crim 1617

Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.