APPEAL COURT, HIGH COURT OF JUSTICIARY
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Lord Macfadyen
Lord
Johnston
Lord Penrose
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2007
HCJAC19
XJ568/06
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OPINION OF THE COURT
delivered by LORD MACFADYEN
in
STATED CASE
in causa
PROCURATOR FISCAL, Glasgow
APPELLANT;
against
JOSEPH
GALLACHER
RESPONDENT.
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Act: Di Rollo Q.C., A.D.; Crown Agent.
Alt: Mitchell; Fitzpatrick & Co.
13 March 2007
Introduction
[1] The respondent, Joseph Gallacher, was charged at the instance
of the appellant on a summary complaint with two charges alleging that he
contravened section 92(1)(c) of the Trade Marks Act 1994 (the 1994
Act). After trial, he was acquitted of
both charges. On the application of the
appellant, the sheriff has stated a case for the opinion of this court.
The legislation
[2] Section 92 of
the 1994 Act provides inter alia as
follows:
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"(1)
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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 ―
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(a)
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applies to goods or their packaging a sign identical to, or
likely to be mistaken for, a registered trade mark, or
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(b)
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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, or
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(c)
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has in his possession, custody or control in the course of
a business any such goods with a view to the doing of anything, by himself or
another, which would be an offence under paragraph (b).
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...
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(4)
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A person does not commit an offence under this section
unless ―
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(a)
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the goods are goods in respect of which the trade mark is
registered, or
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(b)
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the trade mark has a reputation in the United Kingdom and the use of the sign takes or
would take unfair advantage of, or is or would be detrimental to, the
distinctive character or the repute of the trade mark.
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(5)
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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."
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The facts
[3] As appears
from findings in fact 16 to 18 in the stated case, Rangers Football Club plc
(Rangers) are the proprietors of inter
alia the two registered trade marks shown in Crown productions 1 and
2. The mark shown in production 1 is the
word "Rangers". The mark shown in
production 2 is a monogram of the letters "RFC".
[4] Findings in
fact 1 to 8 may be summarised as follows.
The respondent is a street trader who, since 1974, has traded in
football-related items. These items are
sold before, during and after football matches involving inter alios Rangers. On 9 December
2003, prior
to a match between Rangers and Panathanaikos, the respondent's estate car was
parked on spare ground at the corner of Copland Road and Mafeking Street, Glasgow.
Although the findings in fact do not expressly say so, that location is
close to Ibrox stadium, where the match was to take place. The respondent was approached by police officers
and trading standards officers undertaking an "anti-counterfeiting"
operation. With his consent, his car was
searched. In it were found various bags
and boxes containing hats and scarves bearing the word "Rangers" or the "RFC"
monogram or both. The hats and scarves
were seized.
[5] Finding 9
records that, of the 334 hats referred to in charge 1, 216 had applied to them
signs identical to, or likely to be mistaken for, the registered trade mark
shown in production 1; 113 had applied to them signs identical to, or likely to
be mistaken for, the registered trade mark shown in production 2; and five had
applied to them signs identical to, or likely to be mistaken for, both of the
registered trade marks. Finding 10
records correspondingly that of the 139 scarves referred to in charge 2, 24 had
applied to them signs identical to, or likely to be mistaken for, the
registered trade mark shown in production 1, and 115 had applied to them signs
identical to, or likely to be mistaken for, both marks.
[6] In Finding
20, the sheriff held that the trade marks, when applied to the hats and
scarves, would be purchased and worn as badges of support, loyalty and
affiliation to Rangers. In Finding 21,
he held that the acts and conduct of the respondent did not amount to trade
mark use. In Finding 22, he held that,
in any event, the respondent was using the marks as an indication concerning
the characteristics of the goods, to the effect that the owner, wearer or
carrier of the hats or scarves was or would be regarded as a supporter of Rangers.
[7] The events
giving rise to the complaint which is the subject of this appeal were not the
first time that the respondent had been charged with contraventions of section 92(1)(c)
of the 1994 Act in similar circumstances.
As is recorded in Findings 11 to 14, the 334 hats referred to in
charge 1 were originally seized from the respondent in December 1999. A number of the scarves referred to in charge
2 were likewise seized from the respondent in December 1999. In that connection the respondent was charged
with contraventions of section 92(1)(c).
In April 2003, he was acquitted of those charges. Following his acquittal, the hats and scarves
were returned to him by the Trading Standards Department.
Submissions - the elements of the offence
[8] The Advocate depute submitted that, for the Crown to prove
the respondent's guilt of an offence under section 92(1)(c) it was necessary
for it to establish five facts beyond reasonable doubt. These were:
(1) that
the conduct libelled was carried out without the consent of the proprietor of
the trade mark in question;
(2) that
the conduct was carried out either with a view to gain or with intent to cause
loss to another;
(3) that
the goods were goods in respect of which the trade mark was registered;
(4) that
the conduct involved the use of a sign in respect of the goods which was
identical to, or likely to be mistaken for, the registered trade mark; and
(5) that
the respondent had the goods in his possession, custody or control in the
course of a business with a view to their being sold, let for hire, offered or
exposed for sale or hire or distributed.
In addition, if the section 92(5) defence was put in issue,
the court required to consider on the balance of probabilities whether it had
been made out.
[9] The Advocate
depute submitted that each of the five necessary facts had been proved, and
that accordingly, the section 92(5) defence having been rejected, the
respondent should have been convicted.
We did not understand Miss Mitchell, for the respondent, to dispute that
the facts identified by the Advocate depute had been proved, and it is
therefore unnecessary for us to discuss them individually in any detail. Miss Mitchell's contention, rather, was that
there was an additional requirement, namely that the Crown must prove that the
use made by the respondent of the marks was "trade mark use", and that in the
circumstances of this case the sheriff had been right, in finding in fact 21,
to hold that the acts and conduct of the respondent did not amount to such use.
[10] The Advocate
depute submitted that in reaching the conclusion he did on this issue the
sheriff misunderstood the effect of the decisions in Arsenal Football Club plc v Reed
[2003] EWCA Civ 696, [2003] 3 All ER 865, and Regina v Johnstone [2003] UKHL 28, [2003] 1 WLR 1736. Johnstone
had nothing to do with the circumstances of this case. It was concerned with cases where the word or
words comprising the trade mark could be applied as pure description of the
goods or some property of the goods. It
involved the identification by name of the performer of the music on a compact
disk. The marks on the goods which the
respondent was charged with possessing had no such descriptive character. Properly understood, Arsenal demonstrated that in circumstances such as those of the
present case the application of a sign identical to the trade mark to goods in
order to sell them was incontrovertibly trade mark use.
[11] Initially,
Miss Mitchell sought to argue that the Crown had failed to establish that the name
"Rangers" and the monogram had been applied to the hats and scarves as trade
marks, and that accordingly the Crown case was incomplete. She referred in particular to Johnstone, paragraphs 13 and 27. She came to accept, however, that the
respondent's use of the signs could not be said to be descriptive in the sense
discussed in Johnstone. In the end, therefore she accepted that,
subject only to the question raised by the section 92(5) defence, the
respondent should have been convicted.
Discussion - the elements of the offence
[12] In these
circumstances, therefore, we need only make limited comments on the issue of
trade mark use. In the first place, in finding in fact 20, the sheriff held
that: "The aforementioned Rangers trade marks, when applied to the hats and
scarves, would be purchased and worn as badges of support, loyalty or
affiliation to Rangers Football Club".
As was pointed out by the European Court of Justice in Arsenal [2003] All ER (EC) 1 at 31-32
(paragraphs 62 and 63), however, that consideration is immaterial to the
question of infringement.
[13] Secondly, as Johnstone demonstrates, there will be no
infringement if words constituting a trade mark are applied to goods not as a
trade mark, but as a description of some property or quality of the goods. As Lord Nicholls of Birkinhead said by way of
illustration in Johnston at paragraph
27,
"The registration of the
word 'Alabaster' as a trade mark would not preclude others from stating that
their product was 'made from alabaster'."
But the application of the word "Rangers" or the monogram to
the hats and scarves which the respondent proposed to sell was in no way
descriptive of any inherent quality or property of the garments. This is simply not a descriptive use
case. In finding in fact 22 the sheriff
found that "The respondent was, in any event, using the registered trade marks
... as an indication concerning the characteristics of the goods, to the effect
that the owner, wearer or carrier of the hats or scarves in question was or would
be regarded as a supporter of Rangers Football Club". We simply do not understand that
finding. We fail to see how that
inference as to the affiliation of the ultimate user, sound though it may
be, can be regarded as relating to an
indication of a characteristic of the goods in the sense discussed in Johnstone.
[14] In the result,
we are of opinion that the conclusion justified by the sheriff's findings of
primary fact was that the respondent was guilty of contraventions of section
92(1)(c). As the European Court of
Justice held in Arsenal (EC)
(paragraph 51), the exclusive right acquired by the trade mark proprietor
may be exercised where a third party's use of the sign affects or is liable to
affect the essential function of the trade mark, namely of guaranteeing to
consumers the origin of the goods. In
the absence of a legitimate descriptive use of the sign, the inference that the
respondent's use of it in the present case was liable to affect that guarantee
is in our view inescapable. We therefore answer questions (a) and (b) in the
stated case in the affirmative.
The section 92(5) defence
[15] In
anticipation of our reaching that conclusion, Miss Mitchell sought to fall back
on the section 92(5) defence. The
question whether, in the event of there being a prima facie infringement, that defence has been made out is not
sharply focused in the stated case. The
sheriff rejected the defence (paragraph (43) of his Note), but his views on
that matter were obiter. The Advocate depute submitted that it was not
open to Miss Mitchell to re-open the issue, but did not suggest that he was
unprepared to deal with the point. In
these circumstances we did not consider that it would have been fair to the
respondent to deny him the opportunity of arguing section 92(5), when we were
minded, but for that consideration, to find against him.
[16] It is to be
noted at the outset that there is nothing in the stated case to suggest that
the sheriff did not believe the respondent's evidence to the effect that he
believed that his use of the signs was not an infringement of the trade
marks. The live issue was whether that
belief was held "on reasonable grounds".
[17] As the sheriff
recorded in finding in fact 11, the respondent was acquitted after trial in
April 2003 of contraventions of section 92(1)(c). As is recorded in findings in fact 12 and 14,
these charges related in part to the same goods as are the subject matter of
the present charges. Findings in fact 13
and 14 narrate that following the respondent's acquittal in April 2003, the
hats and scarves were returned to him by the Trading Standards Department in
July 2003. In paragraph (8) of his Note
the sheriff records that there was evidence of a newspaper article which appeared
in the Glasgow Evening Times of 17 September 2003 in which the head of the
Trading Standards Department was quoted as using the word "muddied" to describe
the then current position so far as taking proceedings against counterfeiters
was concerned. The article related to
the refusal of the Trading Standards Department to seize counterfeit goods in
the run up to a Champions League match between Rangers and Manchester
United. In evidence, a Trading Standards
Officer endorsed the view that as at 17 September
2003 the law
was "complex, muddied and unsettled".
Alastair Campbell, the head of "Brand Protection" at Rangers gave
evidence of having had a conversation with the respondent at the Scottish Cup
Final in 2003 in the course of which, he said, he had mentioned the Court of
Appeal decision in Arsenal and had
advised the respondent that Rangers adhered to the view that his goods were
counterfeit (Note, paragraph 11).
Evidence was also given about a letter sent by Rangers to street traders
on 4 August 2003 advising them of the Arsenal
decision and Rangers' attitude (Note, paragraph (11)). Mr Campbell said that that letter was sent to
the respondent (Note, paragraph (12)).
[18] The sheriff
was not prepared to hold that the conversation alleged to have taken place on
cup final day had taken place, or that the letter of 4 August
2003 had
been received by the respondent. It
would not be appropriate for us to differ from the sheriff on his assessment of
the acceptability of that evidence. The
factors that are left are (a) the acquittal in April 2003, (b) the return of
the goods by the Trading Standards Department in July 2003, and (c) the
attitude to the enforcement of the legislation publicly expressed by officers
of the Trading Standards Department. Taken
together, they amount, in our view to reasonable grounds for the respondent's
belief that his use of the signs did not infringe the trade marks. The sheriff (Note, paragraphs (15) and (43))
accepted that reasonable ground for belief could not be founded on error of
law. Even if that is correct (as to
which we reserve our opinion), it does not preclude the section 92(5) defence
in the present case, because the considerations which we have set out in
paragraph [17] above are matters of fact.
The respondent is therefore in our opinion entitled to be acquitted.
Result
[19] As we have
already indicated, we answer questions (a) and (b) of the stated case in the
affirmative. That done, however, we find
the section 92(5) defence established, and refuse the appeal.
