England and Wales Court of Appeal (Criminal Division) Decisions

IN THE COURT OF APPEAL
CRIMINAL DIVISION

		Royal Courts of Justice Strand London, WC2
		Thursday, 22nd April 2004

1. Lord Justice Pill: On 25th April 2003 at the Crown Court at Peterborough before His Honour Judge McKittrick and a jury, James Rupert Isaac was convicted of two counts of selling goods bearing a sign identical to a registered trade mark contrary to section 92(1)(b) of the Trade Marks Act 1994. He was sentenced to a fine of £750 in respect of each count with 28 days' imprisonment in default and ordered to pay £3,000 towards the prosecution costs.
2. He appeals against conviction by leave of the single judge.
3. The appellant was a market trader selling clothing from a stall in Peterborough. On 15th November 2001 sweatshirts bearing the logos Boss and Polo were being sold for £3.00 each or four for £10. The garments were not genuine Hugo Boss or Polo Ralph Lauren items and the fabric, labelling, embroidery, design and packaging were all inferior. The unauthorised use of the Boss and Polo trade marks may be detrimental, as was agreed, to the character and reputation of those trade marks. A trading standards officer purchased two sweatshirts from the appellant's stall. These formed the basis for the counts in the indictment.
4. The prosecution case was that by selling goods marked with the words Boss and Polo the appellant committed an offence of selling goods bearing marks identical to the registered trade marks.
5. It was the defence case that the sweatshirts bore no resemblance to the genuine trade marked items and that it was not the appellant's intention to suggest to the public that these were genuine Boss or Polo items. The appellant gave evidence and claimed that the goods he was selling in no way resembled the genuine articles. He did not believe that he was using the signs as trade marks. He had taken advice from those who supplied the goods as to whether he was entitled to do what he did.
6. Section 92(1)(a) and (b) of the Trade Marks Act 1994 provides that:

"A person commits an offence who with a view to gain for himself or another, or with intent to cause loss to another, and without the consent of the proprietor --

(a) applies to goods or their packaging a sign identical to, or likely to be mistaken for, a registered trade mark, or

(b) sells or lets for hire, offers or exposes for sale or hire or distributes goods which bear, or the packaging of which bears, such a sign, ..."

7. Section 92(5) provides:

"It is a defence for a person charged with an offence under this section to show that he believed on reasonable grounds that the use of the sign in the manner in which it was used, or was to be used, was not an infringement of the registered trade mark."

8. We have been shown photographs of the goods the subject of the charge and there has been produced to us a typical Hugo Boss sweatshirt which we are told retails at about £90.
9. On behalf of the appellant Mr Douglas-Jones submits that the direction of the judge was inaccurate having regard to the need before a criminal offence can be established to prove a trade mark infringement as defined in section 10(1) of the Act:

"A person infringes a registered trade mark if he uses in the course of trade a sign which is identical with the trade mark in relation to goods or services which are identical with those for which it is registered."

10. The submission is that there was not a sufficient direction upon the principle that the offending sign must be used as an indication of trade origin.
11. The judge was supplied with a document headed "draft jury directions". He had previously been supplied with what was described as "an agreed statement of the law", but that was superceded once the draft jury directions were submitted to him.
12. Mr Fender, who appears for the respondent, tells us, and we accept, that the document which went to the judge was agreed between counsel. It bears a note to that effect in the handwriting of the judge. Manuscript amendments had been made to it. As was the intention of counsel, that document went with the jury to their retiring room.
13. It is now submitted by Mr Douglas-Jones on behalf of the appellant that the directions were in one respect incorrect and inaccurate. We are dismayed in those circumstances that matters proceeded as they did. The draft was apparently prepared on the basis of directions given in a case in another court. We fully accept that Mr Fender acted in good faith in preparing them and agreeing them. We find it unattractive that counsel for the appellant agreed them and yet now seeks to persuade the Court that they were inaccurate and inaccurate not because of any event subsequent to the hearing before the court. We mention that because, since the trial, the House of Lords have considered a question relevant to the present issue in R v Johnstone [2003] 2 Cr App R 33.
14. Mr Douglas-Jones has sought to persuade the Court that the jury directions were merely a template which he expected to have elaborated by the judge, and yet all he now seeks as an addition is a single sentence which could easily have been included in the directions submitted. He submits that he did not want over-elaboration, but we fail to see how what he claims to have been omitted would have amounted to an elaboration which would in any way have made more difficult the jury's deliberations. Indeed, it appears to us it would have been a simplification of the draft.
15. Two points are taken. The first we have already identified, that the direction as to whether there had been a trade mark infringement was defective. Secondly, it is submitted that there was an insufficient direction upon subsection (5). In substance it is the same point because, as Mr Douglas-Jones accepts, had a sufficient direction been given on the first point, with a sufficient reference back to it when considering the statutory defence under subsection (5), there could have been no complaint. The submission is that the statutory defence could only be considered in the light of a proper direction on the first point.
16. Mr Douglas-Jones now accepts, the point having been put to him somewhat forcefully by members of the Court, that if draft jury directions are to be submitted to a judge, and particularly in a technical area of the law such as this, it is important that care is taken in their preparation and that they are not only as succinct as may be, but that they are accurate and that no attempt will be made to go behind them.
17. Having said that, we refer to the direction about which complaint is made. The written directions did go before the jury. It is common ground that they were accurately rendered by the judge, though not in identical words, in the oral direction he gave to the jury. The judge properly emphasised the burden of proof on the prosecution in the following respects (page 5B):

"In order to prove guilt on either of these counts the prosecution must satisfy you so that you are sure (a) that the defendant infringed the trade mark in question, depending on which count you are considering, either the Boss or the Polo trade mark."

18. Later:

"But if you are sure that the prosecution have proved that the defendant infringed the trade mark in question then you go on to consider (b), that the elements of the offence are made out, and I will look at each of these in more detail in a moment."

19. The other elements specified in section 92(1)(a) were not in fact in issue in this case and it is not necessary to say more about them, save that they are essential ingredients of the offence, and upon those points some cases may turn, but that is not the situation in the present case. We need only consider the question of infringement.
20. At 5G:

"Remember the first was infringement. Infringement of a trade mark is not a criminal offence, but there can be no offence unless there has been an infringement. In relation to both of these counts the prosecution must make you sure first that the defendant was using the sign in the course of trade. In other words, respectively the Boss and Polo sign in the course of trade. To put it another way, what was the defendant's intention in using the sign and did it prejudice the function of the trade mark? In other words, did it impinge and prejudice the normal function of the Boss and Polo trade mark?"

21. The need for a clear direction upon that issue has been stated by the House of Lords in Johnstone. The issue in Johnstone was indeed whether such an infringement had to be shown, or whether section 92 could be considered in isolation of section 10. Lord Nicholls stated at paragraph 31:

"For these reasons section 92 is to be interpreted as applying only when the offending sign is used as an indication of trade origin. This is one of the ingredients of each of the offences created by section 92. It must therefore be proved by the prosecution. Whether a sign is so used is a question of fact in each case. The test is how the use of the sign would be perceived by the average consumer of the type of goods in question (see Sabel BV v Puma AG Case C-251/95 [1997] ECR 1-6191 (para 23))."

22. At paragraph 27 Lord Nicholls had said:

"In my view it is implicit in these provisions [that is section 92] that the offending use of the sign must be used as a trade mark. Take, as an illustration, section 92(1)(a). This prohibits the application to goods of a sign identical to, or likely to be mistaken for, a registered trade mark. Apply this to a case where the registered trade mark consists of words capable of being used descriptively. Use of these words in their descriptive sense would be, in terms of trade mark law, unobjectionable. The registration of the word 'Alabaster' as a trade mark would not preclude others from lawfully stating that their product was 'made from alabaster'. Section 92 cannot have been intended to criminalise such conduct."

23. At paragraph 76 Lord Walker of Gestingthorpe stated:

"'trade mark use' is a convenient shorthand expression for use of a registered trade mark for its proper purpose (that is, identifying and guaranteeing the trade origin of the goods to which it is applied) rather than for some other purpose."

24. Lord Walker went on to consider the differences in the authorities between "distinctiveness" and "descriptiveness" (paragraph 86). He referred to the judgments of Dillon and Bingham LJJ in Mothercare UK Limited v Penguin Books [1988] RPC 113. He stated his general conclusion at paragraph 88:

"I come back to what I described as the issues which lie at the heart of this appeal. First, is trade mark use a necessary ingredient of criminal liability under section 92? On this point I am in respectful agreement with the reasoning and conclusions in the speech of Lord Nicholls. It is a necessary ingredient, and there is no need to go on a circuitous route through art 6(1)(b) or section 11(2)(b) in order to arrive at that conclusion. It is adequately (if not pellucidly) expressed in the language of section 92, which in its three offence-creating subsections requires the defendant, for the purpose of gain, to have applied a sign to goods (or their packaging), or to have engaged in other acts or conduct in relation to goods (or business materials) which bear that sign. I would hold that such acts or conduct must be restricted to acts or conduct amounting to trade mark use."

25. The expression used in the agreed directions submitted to the judge appears to have originated in the judgment of Laddie J in Arsenal FC v Reed [2003] 1 All ER 137, at paragraph 20:

"Where the defendant's use of a mark is not intended by him, or understood by the public, to be a designation of origin, there can be no infringement because such use does not prejudice the essential function of the registered mark."

26. We have to say, and do so with reluctance, that, in the circumstances we have described, the direction given to the jury, with its reference to use "in the course of trade" and "prejudicing the function of the trade mark", was not sufficiently clear to permit this conviction to stand. The words used by the judge, at the invitation of counsel, may have been stated by reference to the reason given by Laddie J for the relevant proposition, but it is the proposition upon which the jury must be directed clearly. Mr Douglas-Jones submits that words to this effect should have been used: that the prosecution have to satisfy the jury that the defendant's use of a trade mark was not intended by him or understood by the public to be a designation of origin. That in substance is the proposition stated by Laddie J before using the additional words to which we have referred.
27. We repeat that counsel are agreed that the decision in Johnstone does not change the law which was the same at the time this trial was conducted as it is now. However, the relevant principle is set out, if we may say with respect, helpfully and clearly in the speeches of Lord Nicholls and Lord Walker in Johnstone. The jury must be directed that a criminal offence is committed only when as a first element the offending sign is used as an indication of trade origin, as explained in Johnstone. On the evidence in this case, there was substantial room for argument as to whether that was the case and the jury should have had a clear direction on that topic.
28. In his helpful submissions Mr Fender argues that the case as a whole was about the appellant's intention. It was argued on that basis. The jury understood it on that basis and considered all the relevant material on that basis, it is submitted. It is nevertheless essential that directions are given on each ingredient of a criminal offence when the facts relating to each of them are in issue. The direction given was confusing for reasons already given. The jury may well have not understood the approach which they were to adopt to the evidence in the case.
29. We add that to put directions in question form is not always a good way to do it. However, the mischief here is less that the direction was given in question form than in the words used. A direction upon the burden of proof and upon intention was given. It needed to be accompanied by a sufficient direction on the question of trade mark use. The judge was guided by counsel who had researched the matter. It is not surprising that, having had the agreed legal statement and the agreed direction as to which we have referred, he summed up as he did.
30. Notwithstanding the fact that the judge is not open to criticism, this conviction is not, in our judgment, safe. The appellant, whatever mistakes were made by counsel at the trial, was entitled to a direction in accordance with the views expressed by the House of Lords in Johnstone. It follows that this appeal must be allowed and the two convictions quashed.
31. LORD JUSTICE PILL: Are there any applications?
32. MR FENDER: My Lord, I do not have any instructions upon whether or not the prosecution would wish to have these matters tried again. I anticipate that given the age of these matters, going back as they do to November 2001, it may be that the Court considers them too old to be retried now, but --
33. LORD JUSTICE PILL: If you have an application, then we will hear you and Mr Douglas-Jones and make a decision.
34. MR FENDER: My Lord, my application would be for time to get instructions about whether or not the City Council wish to have the matter tried again. That is as far as I can take it at this stage and I apologise for that. But it is an application for time.
35. LORD JUSTICE PILL: What do you say about that, Mr Douglas-Jones?
36. MR DOUGLAS-JONES: My Lord, my friend concedes the matter in relation to time. This defendant faced a trial concerning an identical offence and two like offences on a later date, some two weeks later, and was acquitted in relation to all three of those. Notwithstanding his acquittal he --
37. LORD JUSTICE PILL: We are only considering whether we should allow time for an application to be considered.
38. MR DOUGLAS-JONES: My Lord, I would respectfully suggest that time should not be allowed.

(Pause)

39. LORD JUSTICE PILL: No, your application for time is refused, Mr Fender.
40. MR FENDER: Well, I can't --
41. LORD JUSTICE PILL: You can make your application now, and we will consider it.
42. MR FENDER: Well --
43. LORD JUSTICE PILL: If you want to make it.
44. MR FENDER: My Lord, on the evidence in my submission this was fairly and squarely an issue for the jury to consider. It is one which by no means the jury --
45. LORD JUSTICE PILL: But the points are made on the comparatively small nature of the penalty, on the lapse of time.
46. MR FENDER: Yes.
47. LORD JUSTICE PILL: It does not come well, as is clear from what we have said in our judgment, as to how the matter was dealt with, but there it is.
48. MR FENDER: Well, I have nothing specifically to bring to the attention of the Court as to whether or not there should be a retrial. I know the Court will have in mind the period of time, the seriousness of the allegations, that they were visited with a fine only, and, of course, the defendant -- the prospect of the defendant facing trial once again for this matter after the passage of time which clearly --
49. LORD JUSTICE PILL: Mr Douglas-Jones?
50. MR FENDER: -- has gone by.
51. MR DOUGLAS-JONES: My Lord, I don't know if you need to hear from me in the circumstances. I can only say that following the Swansea intervention Mr Isaac ceased trading. He has had to move abroad and he works as a yacht chandler and is no longer involved in market trading.
52. LORD JUSTICE PILL: Mr Fender, we are not prepared to direct a retrial. Thank you for your submissions.