R v Johnstone

Date

22 May 2003

Legislation

Trade Marks Act 1994 ss 10, 92

Keywords

trade mark use; Arsenal v Reed; criminal offences; counterfeit goods

Counsel

David lane QC , John Boumphrey, David Perry, Brian O'Neill, George Hayman, Geoffrey Hobbs QC , David Groome,

Solicitors

Audu for defendant; Crown Prosecution Service; Richards Butler for the intervenor.

Judge

Lord Nicholls of Birkenhead, Lord Hope of Craighead, Lord Hutton, Lord Rodger of Earlsferry, Lord Walker of Gestingthorpe

Court

House of Lords

Reported

[2003] 1 WLR 1736, [2003] FSR 42

Summary

Johnstone had been prosecuted under s92 of the Trade Marks Act 1994 in relation to copies of bootleg recordings made of performances by a number of well-known performers. Johnstone's home was searched and some 500 compact discs and cassettes seized. Count 1 read as follows:

'Robert Alexander JOHNSTONE on or before the 24th day of October 1997 with a view to gain for himself or another or with intent to cause loss to another and without the lawful consent of the proprietor had in his possession, custody or control in the course of a business, a compact disc entitled "The B Sides Collection - Volumes One and Two" bearing the trademark Bon Jovi, with a view to the commission of an act by himself or another which would be an offence under Section 92 (1)(b) of the Trade Marks Act 1994.'

At trial it was argued by Johnstone in his defence that use of the trade marks was not as an indication of trade origin - it was merely to indicate who was the performer of the CD in question. In the alternative Johnstone wanted to rely on the honest and reasonable belief defence under s92(5).

The Court of Appeal said that to establish an offence under section 92(1) the prosecution need not prove the defendant's conduct constituted a civil infringement unless the defence raises a defence under sections 10 to 12. Then it will be for the prosecution to disprove such a defence. The court allowed Mr Johnstone's appeal because the judge's ruling had denied him the opportunity to have his defence under section 11(2)(b) considered by the jury. The court did not order a re-trial. Mr Johnstone had served his sentence of imprisonment, and the alleged offences occurred 4 years ago.

It was held by Lord Nicholls that the essential essence of a trade mark has always been that it is a badge of origin. Hence the exclusive rights granted to the proprietor of a registered trade mark are limited to use of a mark likely to be taken as an indication of trade origin - use of this character is an essential prerequisite to infringement. Lord Nicholls then reviewed the findings of the ECJ in the Arsenal v Reed case and concluded that non-trade mark use does not constitute an infringement within section 10(1) to (3) of the Trade Marks Act 1994. It is also implicit in s92 that the offending use must be use as a trade mark. He held that of these words in their descriptive sense must be, in terms of trade mark law, unobjectionable. For example, the registration of the word 'Alabaster' as a trade mark would not preclude others from lawfully stating that their product was 'made from alabaster'. It must be that section 92 cannot have been intended to criminalise such conduct. Moreover if section 92 were to be interpreted as applying in circumstances beyond those within sections 9 to 11, there might well be inconsistency with the trade mark directive. It was also held that the difference in wording between ss92 and 10 concerning 'in the course of business' with 'in the course of trade' is unlikely in practice to cause any difficulties.

What Johnstone did was to include on the CD labels and in the accompanying packaging, the name of the group or artist whose performance was recorded on the CD in question: Bon Jovi in the case of count 1, U2 in the case of count 2, Rolling Stones in the case of count 3, and so on. Lord Nicholls held that if the name of the artist or group affixed to the compact disc and displayed on the packaging is exclusively an indication of the name of the performer whose performance is recorded on the compact disc, and if this use of the name of the performer is not likely to be understood as indicating any other connection between the performer and the compact disc, then such use would be descriptive only. By identifying the performer it would be descriptive of the contents of the disc and nothing more. It would not be an indication of the trade 'origin' of the disc itself. Whether particular labelling and packaging satisfy this test, and consequently are innocuous for trade mark purposes, is a question of fact in each case.

In relation to the defence under s92(5) Lord Nicholls held that the interpretation adopted in the Satnam Singh case draws a distinction Parliament cannot have intended. The language of the subsection gives no support to this distinction. Section 92(5) is concerned to provide a defence where the person charged has a reasonable belief in the lawfulness of what he did. Those who act honestly and reasonably are not to be visited with criminal sanctions. It makes no sense to confine this defence to cases where the defendant is aware of the existence of the registered trade mark and exclude altogether those cases where the defendant is not. Section 92(5) provides a defence where the defendant believes on reasonable grounds his use of the sign does not infringe a registered trade mark of whose existence he is aware. It would be extraordinary if the subsection does not equally furnish a defence in the stronger case where the reason why the defendant believes his use of the sign does not infringe a registered trade mark is that he reasonably believes no relevant trade mark is registered. Section 92(5) is to be interpreted as including the latter case as well as the former.

In relation to the issue of burden of proof for the defence under s92(5), Lord Nicholls held that unless this interpretation is incompatible with article 6(2) of the Convention, section 92(5) should be interpreted as imposing on the accused person the burden of proving the relevant facts on the balance of probability. Unless the defendant proves these facts he does not make good the defence provided by section 92(5).

Lord Walker of Gestingthorpe held that "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. It is easy to recognise those cases which fall squarely on one side or other of the line. If a counterfeiter sells a cheap imitation watch under the trade mark OMEGA, he is fraudulently engaging in trade mark use (as he is, as Mr Hobbs suggested, if he uses the mark HOMEGAS but prints the first and last letters very faintly). But if a publisher publishes a book named "Mother Care/Other Care" (a serious study of the upbringing of young children of working mothers) there is no infringement of the registered trade mark of Mothercare UK Limited, despite the fact that the trade mark is registered for many classes of goods, including books: see Mothercare UK Limited v Penguin Books Limited [1988] RPC 113. Lord Walker agreed with Lord Nicholls that trade mark use is a requirement for liability to be made out under s92. It seemed likely to Lord Walker that Mr Johnstone would have had a difficult task in making good the defences on which he wished to rely. However, he should have been permitted to run them. He agreed with the Court of Appeal that Johnstone's conviction (on his pleading guilty after not being allowed to put forward the defences on which he wished to rely) must be regarded as unsafe.

Decision:

Accordingly the appeal of the Crown Prosecution Service was dismissed.