Scottish Sheriff Court Decisions

SHERIFFDOM OF GLASGOW AND STRATHKELVIN AT GLASGOW

                                    

 

O P I N I O N O F

 

SHERIFF C A L SCOTT, Esquire, Advocate, Sheriff of Glasgow and Strathkelvin

in causa

 

PROCURATOR FISCAL, Glasgow

 

against

 

JOSEPH GALLACHER

 

 

 

(1) When this case called for trial on 8 February 2006, the accused pleaded not guilty in respect of two alleged contraventions of Section 92(1)(c) of the Trade Marks Act 1994.

 

(2) The Crown led evidence from two Trading Standards Officers and from Mr Alastair Campbell, the head of "Brand Protection" at Rangers Football Club. At the close of the Crown case, Mr Fitzpatrick, for the accused, submitted that there was no case to answer. It was argued that the Crown had failed to corroborate the absence of consent on the part of the proprietor (viz the Rangers Football Club plc) and that such failure was fatal to its case. For reasons that I need not set out in the present context, the defence submission was repelled and the accused himself gave evidence.

 

(3) On the second day of the trial, a further witness was called for the defence, namely, Russell Campbell, a street trader. Thereafter, the defence case was brought to a close and the court heard submissions on the evidence. The competing arguments continued into the third day of the trial.

 

(4) Much of the factual material in the case was not in dispute. Indeed, two joint minutes of agreement had been entered into thereby restricting the evidence which required to be led in court. Put shortly, the accused is, and has been for a number of years, a street trader. Since 1974 he has traded in football related items. These items are sold before, during and after football matches involving teams such as Rangers and Celtic.

 

(5) On 9 December 2003, prior to a European match involving Rangers and Panathanaikos, the accused became the subject of an anti-counterfeiting operation involving Trading Standards Officers and the police. The accused's car was parked on spare ground at the corner of Copeland Road and Mafeking Street. The accused was approached by the Crown witnesses, David Hopkirk and Peter Farmer. He consented to a search of the vehicle, all in furtherance of the powers vested in those witnesses qua Trading Standards Officers. The witnesses seized Crown labels 1 to 9 on the basis that these labels consisted of counterfeit goods. Numerous hats and scarves were recovered. They bore the word "Rangers" or the "RFC" monogram shown in Crown production No 2 or a combination of the two.

 

(6) In a previous trial at Glasgow Sheriff Court in April 2003, the now accused had been acquitted in respect of similar charges alleging a contravention of Section 92(1)(c) of the 1994 Act said to have arisen through an infringement of the trade marks of both Celtic and Rangers. The 334 hats referred to in charge (1) on the present complaint had, originally, been seized by the authorities in December 1999 and formed productions for the purposes of the accused's trial in April 2003. Similarly, a number of the scarves referred to in charge (2) on the complaint were originally seized in December 1999 and were also lodged as productions at the trial in April 2003. The hats and those scarves seized in December 1999 were returned to the accused by the Glasgow City Council Trading Standards Department in July of 2003.

 

(7) It should also be stated that, as at April 2003, a civil litigation in England involving Arsenal Football Club and a "self-employed proprietor of a wholesale and retail football merchandise business", namely Matthew Reed, was still ongoing. It seems that for all of those involved in or connected with the present criminal prosecution, the outcome of that case (hereinafter referred to as "the Arsenal case") was expected to assume considerable significance, not least because the circumstances were very similar. At first instance, Mr Justice Laddie, after a reference to the European Court of Justice, held that the trade marks, when applied to the goods involved in the Arsenal case, were purchased and worn as badges of support, loyalty and affiliation to Arsenal Football Club and that, accordingly, there was no infringement of the trade marks.

 

(8) However, Arsenal appealed the decision and on 21 May 2003, the English Court of Appeal handed down its judgment. Laddie J's decision was, in effect, over-turned and the Court ruled in favour of Arsenal. Whilst it may have been eagerly awaited, it appears that the decision of the Court of Appeal, rightly or wrongly, did not necessarily provide clarity for the purposes of those having a direct interest in the matter. In the course of the evidence in the present case, a newspaper article which appeared in the Glasgow Evening Times on 17 September 2003 was produced. On the face of the article, the head of the Glasgow City Council Trading Standards Department had used the word "muddied" to describe the then current situation as far as taking action against counterfeiters was concerned. The article related to his department's refusal to seize counterfeit goods in the run up to the Champions League match between Rangers and Manchester United. In evidence, David Hopkirk, one of the Trading Standards Officers, agreed that as at 17 September 2003, it appeared that the law was considered "complex, muddied and unsettled". However, according to Alastair Campbell of Rangers Football Club, the law was clear in 2003 and has remained so.

 

(9) As it happens, the day after the Arsenal decision was issued, the House of Lords gave their decision in the (criminal) case of R v Johnstone [2003] 1 WLR 1736. Unsurprisingly, due to the short interval in time between the issue of the two judgments, their Lordships only made reference to the decision of the European Court of Justice. In the course of closing submissions during Joseph Gallacher's current trial, much reference was made, on both sides of the bar, to the Arsenal decision and the decision in the Johnstone case. Certainly, from the Crown perspective, it was submitted that with the issue of these decisions, clarity had, indeed, been restored to this area of the law.

 

(10) The procurator fiscal depute invited the court to hold that both charges had been established and to convict the accused. He accepted that the Crown had to show that trade mark use had been involved with a view to gain or with the intent of causing loss to another, all without the consent of the proprietor.

 

(11) As at December 2003, according to the evidence of Alastair Campbell, aside from the authorised Rangers outlets, no-one else had been authorised to produce or retail Rangers Football Club scarves and hats with Rangers' trade marks on them. The procurator fiscal depute also referred to Mr Campbell's evidence regarding a conversation with the accused at the 2003 Scottish Cup Final during which, according to Mr Campbell, he had mentioned the Appeal Court's decision in the Arsenal case and had advised the accused that Rangers Football Club still took the view that the accused's goods were counterfeit. Mr Campbell also maintained in evidence that he had advised the accused as to the club's intention, as at the start of the new season, to send out a letter to street traders advising them of the court's decision and the club's attitude as a consequence.

 

(12) A specimen of the letter to which Mr Campbell referred, dated 4 August 2003, was produced and it was Mr Campbell's evidence that such a letter had been sent to the accused.

On behalf of the Crown it was submitted that there was an abundance of evidence regarding lack of consent and that the "view to gain" aspect of each charge was a clear and inevitable inference in all the circumstances. The accused had accepted that he was trading in the items under consideration and the procurator fiscal depute reminded the court that even a single incident of such trading would be sufficient to merit a conviction. Reference was made to the case of Elder v Crowe 1996 SCCR 38.

 

(13) The main issue in the Arsenal case had been whether there was trade mark use when the trademark was used as a badge of support or loyalty or affiliation to the trade mark proprietor. The conclusion of the Court of Appeal was to be found at paragraph 48 within the report. In effect, the court determined that trade mark use was established even where the intended use of the mark concerned took the form of a badge of support or loyalty. The procurator fiscal depute stressed that in the Arsenal case and, indeed, in the present prosecution, goods contravening a trade mark were in circulation and, therefore, the guarantee of origin indicated by the presence of the trade mark was jeopardised. That was the view taken by the English Court of Appeal in paragraph 48 aforesaid; it coincided with the decision of the European Court of Justice; and it represented a clear ruling on the point in issue.

 

(14) As I understood his submission, the procurator fiscal depute maintained that the House of Lords' decision in the case of Johnstone served to enhance the legal clarity afforded by the Arsenal decision.

 

(15) With regard to the statutory defence under Section 92(5) there seemed little doubt that any such defence had to be proved by an accused person to the satisfaction of the court on the balance of probabilities. In this connection, the Crown's contention was that for an reasonable belief to qualify for the purposes of the sub-section it had to relate to the facts of the case. Erroneous belief or ignorance as to the law provided no excuse and could not found a relevant defence for this purpose. Equally, under reference to the article produced from the Glasgow Evening Times, the procurator fiscal depute submitted that whatever the views of others, including Mr Iain Wilson or, for that matter, the procurator fiscal, in regard to the state of the law as at September 2003, these reported views had absolutely no bearing on the question of what the accused may or may not have believed regarding trademark infringement, particularly in December of 2003, some three months later.

 

(16) In the Johnstone case, Lord Nicholls, at paragraph 52, had set out six propositions dealing with Section 92 of the Act. The procurator fiscal depute highlighted his Lordship's description of these offences as being offences of "near absolute liability". Additionally, under reference to paragraph 53, it was contended that the accused had failed to satisfy the "reasonable belief" test. It was argued on behalf of the Crown that, on the evidence, there was no reasonable belief upon which the accused could have thought that nothing he was doing on 9 December 2003 amounted to counterfeiting. He was not acting in good faith.

 

(17) The procurator fiscal depute also stressed the need to consider what might be described as the "end user" as opposed to the individual initially making a purchase from the likes of the accused. It was submitted that the underlying purpose of the legislation was to avoid counterfeit goods being put into circulation. The court should realise that an "end user" or, indeed, a separate third party viewing the goods purchased would not necessarily be aware of the circumstances in which items were sold.

 

(18) In reply, Mr Fitzpatrick invited the court to prefer the witnesses called for the defence where any factual dispute arose. In particular, he had in mind, as I understood it, Alastair Campbell's evidence regarding the conversation on Cup Final day. This had been refuted both by the accused and by Russell Campbell. The likelihood of any such meeting/conversation was also a matter of considerable doubt standing the conditions attaching to the accused's bail order. This area of factual dispute went to the heart of the statutory defence available to the accused under Section 92(5) of the 1994 Act. At all odds, Mr Fitzpatrick submitted that in order to succeed with this prosecution, the Crown required to prove an infringement of the trade marks concerned and, in that connection, they had to prove that the use had amounted to "trade mark use". It was important to note that, as far as the Arsenal case was concerned, the original criminal prosecution had been dropped with the result that the Court of Appeal were, of course, dealing with a civil litigation.

 

(19) Mr Fitzpatrick rehearsed the history of the Arsenal case and, naturally, took notice of the decision in the Johnstone case. On the facts of the present prosecution, it was submitted on behalf of the accused that the use of the word "Rangers" and the "RFC" monogram on the goods in question was not an indication of trade origin and, accordingly, did not amount to trade mark use. In the Johnstone case, Lord Nicholls, at paragraph 16, had set out the European Court's reaffirmation of "its characterisation of the purpose of a trade mark" in the following terms:

 

"the essential function of a trademark is to guarantee the identity of origin of the marked goods or services to the consumer or end use by enabling him, without any possibility of confusion, to distinguish the goods or services from others which have another origin. For the trademark to be able to fulfil its essential role in the system of undistorted competition which the Treaty seeks to establish and maintain, it must offer a guarantee that all the goods or services bearing it have been manufactured or supplied under the control of a single undertaking which is responsible for their quality..."

 

(20) In light of that characterisation, Mr Fitzpatrick maintained that, on the present facts and circumstances, the use of "Rangers" or "RFC" on a scarf or hat did not guarantee that it originated from the Rangers Football Club plc. On that hypothesis, the court could not hold that there had been an infringement under and in terms of Section 10 of the 1994 Act. Mr Fitzpatrick stressed that the use by the accused was not designed to indicate or guarantee origin but was intended to indicate allegiance to a football club. That was not an infringement for the purposes of Section 10 of the Act.

 

(21) At paragraph 31 in the Johnstone case, Lord Nicholls stated the following:

 

"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, Rudolph Dassler Sport [1997] ECR I - 6191, 6224, para 23."

 

(22) The European Court of Justice had excluded the use of a trade mark for "purely descriptive purposes" (paragraphs 83 to 85 in Johnstone refer) and Mr Fitzpatrick suggested that the accused in the present case was in what he described as the "no mans land" in the middle. In other words, the use by the accused had been neither purely descriptive nor had it been completely distinctive.

 

(23) However, in summary, the court was invited to conclude that the Crown had failed to prove that the use of the trade marks amounted to a guarantee of trade origin. For that reason alone, Mr Fitzpatrick maintained that the accused should be acquitted. It was important to focus upon the particular circumstances of the case. The use by the accused was not to indicate or to guarantee a trade origin to consumers. There was no confusion in the minds of consumers as to the trade origin involved.

 

(24) It was submitted that the court should find as a matter of fact that the use was not trade mark use. Alternatively, it would be open to the court to hold that the Crown had failed to prove beyond reasonable doubt that the use involved was trade mark use.

 

(25) Only if the Crown had succeeded in proving trademark use would the statutory defence become relevant. Were that so, Mr Fitzpatrick maintained that the circumstances in which Section 92(5) fell to be invoked were unique. He submitted that the procurator fiscal depute was wrong to suggest that the accused could not rely upon legal uncertainty. In 2003, the law had been uncertain at least up until May of that year. The accused, himself, had been acquitted in April and in July the various productions from his trial were returned to him. It was significant also that a number of these items related to the present charges. Moreover, it was beyond dispute that the means by which the allegedly offending marks were produced had also been returned to the accused along with the goods in question.

 

(26) As Mr Fitzpatrick put it, the accused had been "reinforced in his view" as a result of the article in the Evening Times and, in particular, the quotations therein. The accused had become aware of the article in September of 2003 and between that time and December of the same year nothing seemed to have happened to alter matters.

 

(27) There had been reference to a conversation between the accused and Mr Campbell in October of 2003 but that merely disclosed a difference in view between each party as to the applicable law. There was also evidence to the effect that, in the Autumn of 2003, the accused was not on the list of street trader licence holders. Mr Fitzpatrick submitted that it was doubtful whether the letter from August of 2003 had been received by the accused but that, in any event, its terms made no reference to any criminal sanctions. No civil proceedings had ever been brought against the accused. Accordingly, for all these reasons, it was submitted that the accused had "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." If that were established on the balance of probabilities the accused ought to be acquitted.

 

(28) The certified question on the appeal in the Johnstone case was whether it was a defence to a criminal charge under Section 92 of the Trade Marks Act 1994 that the defendant's acts did not amount to a civil infringement of the trade mark. Lord Nicholls expressed the view that it was implicit in the Section 92 provisions that the offending use of the sign must be use as a trade mark (see para 27). At para 31, he stated:

 

"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."

 

(29) In conclusion, his Lordship stated:

 

"The answer to the certified question is that use of the offending sign as an indication of trade origin is an ingredient of the offences created by Section 92 of the 1994 Act." (see para 55).

 

(30) Lord Walker of Gestingthorpe, at para 75, acknowledged that one of the issues which lay at the heart of the appeal in the Johnstone case was whether "trade mark use" was a necessary ingredient of criminal liability under Section 92. At paragraph 85, he also acknowledged that the law was "in something of a state of disarray". However, Lord Walker agreed with Lord Nicholls in determining that trade mark use was a necessary ingredient of criminal liability under Section 92 (see para 88).

 

(31) Lord Walker observed that:

 

"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 purposes 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 trademark use." Lords Hope, Hutton and Rodger agreed with Lords Nicholls and Walker.

 

(32) It is, perhaps, unfortunate that the decision of the English Court of Appeal in the Arsenal case was not available for consideration by the House of Lords in Johnstone. Nevertheless, I do not consider that that feature materially impacts upon the conclusions which can be arrived at as to the application of the law. In the Arsenal case, the leading judgment was given by Lord Justice Aldous. Before Laddie J., at first instance, the respondent, Matthew Reed had asserted that there could be no infringement if the use complained about was not trade mark use and that, on the facts of his case, his use was not trade mark use. It was that point which caused the reference to the European Court of Justice.

 

(33) It is worthwhile setting out in full Lord Justice Aldous' conclusion on the issues before the Court of Appeal as it appears at paragraph 48:

 

"For the reasons given, I do not believe that the ECJ disregarded the conclusions of fact made by the judge in his first judgment. However I accept that they did conclude as a fact that, in the circumstances found by the judge, use by Mr Reed was liable to jeopardise the guarantee of origin which constituted the essential function of the trade mark rights owned by Arsenal. That was, I believe, a finding of fact that was inevitable in the circumstances. As found by the judge, the trade marks, when applied to the goods, were purchased and worn as badges of support, loyalty and affiliation to Arsenal, but that did not mean that the use by a third party would not be liable to jeopardise the functions of the trade marks, namely the ability to guarantee origin. To the contrary, the wider and more extensive the use, the less likely the trade marks would be able to perform their function. As the ECJ pointed out, the actions of Mr Reed meant that goods, not coming from Arsenal but bearing the trade marks, were in circulation. That affected the ability of the trade marks to guarantee the origin of the goods. I therefore conclude that the result reached by the ECJ was inevitable once their judgment had made it clear that the material consideration was whether the use complained of was liable to jeopardise the guarantee of origin, not whether the use was trade mark use. The judge should have followed the ruling and decided the case in Arsenal's favour."

 

(34) From these two decisions, I conclude that before an individual can be convicted in respect of a criminal offence under Section 92 of the 1994 Act, the Crown requires to prove that the registered trade mark in question has been infringed in terms of Section 10 of the Act. It is not difficult to reach that conclusion on the basis of the authorities. Indeed, I did not understand the proposition in question to be disputed by either the procurator fiscal depute or Mr Fitzpatrick.

 

(35) Greater difficulty attaches to the issue of whether, on the facts established in the present case, such an infringement has been made out. In Johnstone, Lord Nicholls proceeded upon the basis that offending use of the sign had to be "use as a trade mark". It is clear that he regarded "use as a trade mark" as equating to use "as an indication of trade origin" (see paras 31 and 55). Similarly, Lord Walker in considering the requirement for "trade mark use" agreed with Lord Nicholls.

 

(36) The phrase "trade mark use" is referred to in both the Arsenal and Johnstone cases and, indeed, in other authorities. However, it will be seen that in the Arsenal case, the conclusion reached by the European Court and approved by the Court of Appeal was "...that the material consideration was whether the use complained of was liable to jeopardise the guarantee of origin, not whether the use was trade mark use". That approach, on the face of it, seems to conflict with the statements made by Lords Nicholls and Walker. However, it is apparent that Lord Walker at least, placed considerable store in the European Court's "exposition of the general principles" (see para 85).

 

(37) Importantly, Lord Walker seems to accept the European Court's view to the effect that "...even though the consumer treats the mark as a badge of support for or loyalty to the trade mark proprietor" there will be infringement if the sign is used, without authority, "to create the impression that there is a material link in the course of trade between the goods concerned and the trade mark proprietor."

 

(38) Accordingly, in my opinion, the material consideration, in addressing the issue of infringement, is whether the use complained of was liable to jeopardise the guarantee of origin. In reaching that view, I should state that the Court of Appeal's adherence to a distinction between use amounting to placing the guarantee of origin in jeopardy and "trade mark use" (see para 48 supra) is, perhaps, unhelpful in an area of law which is not without difficulty. For my part, I consider that "trade mark use" embraces and includes use which, in some way, undermines or jeopardises the guarantee of origin which is the essential function of the trade mark.

 

(39) Reverting back to the present case, I am satisfied that the scope existed for "trade mark use" in the "jeopardy" sense, all as determined in the Arsenal case. The accused himself accepted that he was in a similar situation to Matthew Reed. On the facts of the present case, it is reasonable to infer that the Rangers trade marks, when applied to the hats and scarves would be "purchased and worn as badges of support, loyalty and affiliation to" Rangers Football Club. However, that usage does not thereby preclude infringement of the trade marks. As the procurator fiscal depute submitted, the purpose of the legislation is to avoid counterfeit goods being put into circulation. The court requires to look further than the circumstances pertaining to the initial transaction in question. The accused's position was that the Rangers marks were being used as "badges of allegiance". However, in my view, it does not follow that use by a third party would not be liable to jeopardise the function of the trade marks, namely the ability to guarantee origin. As Aldous L.J. put it in the Arsenal case, "To the contrary, the wider and more extensive the use, the less likely the trade marks would be able to perform their function."

 

(40) Of course, it should not be overlooked that "trade mark use" is a question of fact in each case (see paras 39, 40 and 87 in Johnstone). The only evidence regarding the way in which the Rangers trade marks were placed in jeopardy came from a single source, namely Alistair Campbell, head of brand protection at Rangers. He spoke of how the club had received complaints regarding goods which had, in fact, been sold without its approval. Whether that feature of the case required corroboration for the Crown to achieve a sufficiency of evidence was not discussed. Nevertheless, in my judgement, Mr Alistair Campbell's evidence on its own was not adequate in terms of weight or quality to entitle the court to hold that the potential for the guarantee of origin being placed in jeopardy had been established. Accordingly, on the evidence, I consider that "trade mark use" has not been established and that the Crown case must fail for want of an infringement of trade mark.

 

(41) Even if the evidence was such as to establish that an infringement had taken place, the court would still require to consider the application of Section 11(2) of the 1994 Act. In the case of Bravado Merchandising Services v Mainstream Publishing 1996 SLT 597, Lord McCluskey suggested that the sub-section had to be construed in terms of its own language. He stated that:

 

"Section 11 has no practical application unless the use under consideration can be and is characterised as a Section 10 infringement by reason of the application of Section 10 to that use. In effect, therefore, Section 11 appears to be saying that, even if a use is otherwise caught under Section 10, it may escape condemnation as an infringement in one or more of the ways allowed by Section 11."

 

(42) For present purposes, the court requires to consider whether the accused's use of the trade marks amounted to a use of indications concerning the characteristics of the goods. In my opinion, what the accused in the present case was doing was using these registered trade marks as an "indication" that the owner, wearer or carrier of the items concerned was or would be regarded as a supporter of Rangers Football Club. A similar approach was taken, albeit on different facts, by Lord McCluskey in the Bravado case and it seems to me that the same sort of approach is justified in the present instance. Therefore, once again, by reason of the application of Section 11(2)(b) of the 1994 Act, the Crown has not established one of the necessary "ingredients" in terms of criminal liability.

 

(43) The other matter for consideration by the court concerned the statutory defence under Section 92(5) of the 1994 Act. In this regard, I have reached the view that the submissions advanced by the procurator fiscal depute, particularly those recorded at paragraph 15 supra, are well-founded. Even when one takes account of the full circumstances I do not accept that the accused had successfully established the necessary belief on reasonable grounds. For the avoidance of doubt, I should also state that I am not prepared to hold on the facts that the conversation on cup final day took place, as suggested by Mr Alistair Campbell. Nor am I prepared to hold that the letter of 4 August 2003 was received by the accused. Nevertheless, when those two aspects are left out of account the accused has, to my mind, still failed to satisfy the court on the balance of probabilities.

 

(44)           I have endeavoured to express my views in some detail and it will be seen that in two specific areas of this case I consider that the Crown case was deficient. I feel that considerably more might have been said in terms of the inevitable contrasts between civil litigation and criminal prosecution, bearing in mind, of course, that the Arsenal case and, indeed, the Bravado case were civil actions. However, I do not consider it necessary to add anything further except to say that the Crown required to prove the accused's guilt beyond all reasonable doubt. Having regard to the views which I have expressed above, I was not satisfied that the criminal burden of proof had been discharged in the present case.

 

 

 

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