Burberry Limited and Louis Vuitton Malletier (“Appellants”) failed in their action against Megastar Shipping Pte Ltd (“Respondent”), a freight forwarder providing transhipment services for trademark infringement (Civil Appeal No. 237 and 238 of 2017 respectively).
The goods in question were counterfeit luxury goods in two sealed containers and were being shipped from China to Batam via Singapore. Before the goods could be transhipped to Batam, the goods were seized by Singapore Customs during the inspection process and the Appellants commenced infringement proceedings under Section 27 of the Trade Marks Act (“TMA”).
The High Court found that while the counterfeit goods were ‘imported’, the Respondent was not liable for trademark infringement. An appeal was filed before the Court of Appeal.
The Court of Appeal’s Decision
Based on the evidence before the Court of Appeal, the Respondent’s role was limited to receiving and subsequently forwarding the cargo from one country to another. The Respondent did not have sight of the contents of the two sealed containers and was unaware if they bore any marks. The Respondent had no reason to believe that the goods being transhipped bore any marks in view of the fact that the goods as listed in the documents were described as “household goods”.
The Court of Appeal agreed with the High Court that even if not intended for the Singapore market, as long as goods were brought into Singapore, such goods would be considered to be imported for the purposes of the TMA. In this regard, the Court of Appeal had to rely on the definition under the Interpretation Act (Cap 1, 2002 Rev Ed) (“IA”) which is “bringing or causing the goods to be brought into Singapore by land, sea or air”. An importer or exporter is understood to mean a person who brought the goods or caused the goods to be brought into or out of Singapore, and this applied to goods brought into Singapore only in transit.
In relation to finding liability under Section 27 of the TMA, the Court of Appeal agreed with the High Court that whether the Respondent is the importer/exporter of the goods is a question of fact. It is not sufficient that the local consignee identifies itself as the importer on customs declarations. A mere intention to export the goods was insufficient to find liability under Section 27. However, the Court of Appeal qualified this statement by adding that “where there are accompanying actions which are clearly directed at fulfilling the said intention to export or where there is clear evidence that export would definitely take place (for instance, the alleged exporter is under a contractual obligation to do so)”, the trade mark proprietor is entitled to apply for an injunction against the exporter. Further, as the goods were seized by Singapore Customs after arrival in Singapore, there was no opportunity for the goods to be exported. In these circumstances, the Respondent’s mere intention to export did not attract liability under Section 27(4) TMA.
The Court of Appeal also addressed the issue of intent while analysing whether liability arose in this case. There was no evidence in the present case that the Respondent was aware of what was contained in the sealed containers or that the Respondent had any reason to believe that there were signs on the goods. In this regard, the Court of Appeal therefore found that the Respondent was not liable under Section 27 of the TMA.
While the Appellants argued that trademark infringement was a strict liability tort, the Court of Appeal differentiated between a scenario where a party might at least be aware that the infringing signs were applied or used on the goods and the present case where on the facts of the case, the Respondent had no knowledge that there was a sign present on the goods in issue.
The Court Appeal’s analysis with respect to the application of strict liability to trademark infringement cases has brought greater clarity to the issue as it attempts to balance intellectual property rights and the rights of an honest commercial person or entity. The introduction of a mental element in trademark infringement cases is likely to increase the burden of proof to be discharged by trademark proprietors in proceedings.
In particular, the decision is significant in analysing the liability of freight forwarders vis-à-vis the intended consignee of the counterfeit goods. While the Court of Appeal clarified that trademark infringement is not a strict liability tort, the Court of Appeal appears to have taken into consideration the recently enacted Intellectual Property (Border Enforcement) Act 2018 (No 34 of 2018) (“the IPBE Act”).
This article was first published in Lexology on 13 June 2019. For more information, visit http://www.lexology.com.