Is a five-year criminal sentence for trade mark infringement too harsh?
The EU Court of Justice has addressed questions concerning criminal penalties for unauthorised use of trade marks, in a case referred from the courts in Bulgaria.
In addition to providing for a fine and confiscation/destruction of infringing goods, Bulgaria’s criminal code stipulates a minimum sentence of five years for the act of use of a mark in the course of trade without consent where that act has been committed repeatedly or has caused significant harmful effects.
Howevr, the EU Court ruled that this provision is precluded by Article 49(3) of the Charter of Fundamental Rights of the EU, which states: “The severity of penalties must not be disproportionate to the criminal offence.”
The EU Court’s reasoning
The Court found that Article 49(3) of the Charter applied because the Bulgarian provisions were implementing Article 61 of the TRIPs Agreement, and therefore EU law.
It said that while the five-year minimum term “is not necessarily disproportionate in certain instances of trade mark infringements”, the specific provision at issue:
“which links an especially broad description of an offence to a custodial sentence of a minimum of five years, does not guarantee that the competent authorities are able to ensure in each individual case … that the severity of the penalties imposed does not exceed the seriousness of the offence identified.”
It added that the effect of unauthorised use of a trade mark may be limited, “even where those acts have been committed wilfully and repeatedly” and said the application of the five-year minimum term in all cases gave the competent authorities an “excessively difficult” task.
In response to another question referred, the Court ruled that national legislation can provide for both criminal and administrative remedies for trade mark infringement without a distinction being made between them.
But it said that two questions regarding the interpretation of the IP Enforcement Directive were not admissible as that directive does not apply to national rules relating to criminal procedures and criminal penalties.
How does this affect anti-counterfeiting?
On the face of it, this judgment appears to be bad news for trade mark owners who rely on criminal enforcement to tackle counterfeits.
However, there are many varieties of trade mark infringement and the Court’s decision directs national courts to consider carefully the circumstances of each. This means that serious cases of counterfeiting may still be punished harshly. However, less serious cases where infringement is not obvious and careful analysis is required may be treated differently. This seems like a balanced and proportionate approach.
The referring court had noted that, in the circumstances of this case, where the infringing goods had a street value of some BGN80,201 (€41,000), the five-year minimum term was “extremely long” particularly when added to a large fine, and that under the relevant Bulgarian law there were limited possibilities to reduce or suspend the sentence.