Criminality and IP Infringement

When it comes to intellectual property (IP) infringement, time is most likely to be of the essence as matters can progress very quickly. A matter of hours can make a difference to a brand, design or copyright owner in protecting against the damage and loss that may be caused by an infringers actions.

As soon as rights holders become aware of potential infringement they need to consider how best to take swift action.  This may involve seeking relief through the criminal court system as well as via the 'normal' route through the civil courts.

Civil Court System

To very briefly re-cap as to some of the benefits of enforcement using the civil court system arguably the most important is that there is a better understanding of intellectual property rights and the laws governing it.  There is even a specialised court, the Intellectual Property Enterprise Court.  As a result, there is a history of case law, statutory procedures and guidance when cases are brought this way.

The benefit of this background to claimants is that it gives a greater degree of confidence and clarity as to whether a claim will succeed.  An established precedent can also pressurise defendants to cease infringing and settle more quickly.

The other most important benefit to pursing a claim in the civil courts is that the burden of proof in the civil system which is on the 'balance of probabilities' rather than 'beyond reasonable doubt' as is used in the criminal system.

Criminal System

There various offences and they are wide ranging covering various types of infringement of IP rights (for further details see below).  Furthermore, sanctions include fines and potential jail terms meaning that the threat of a criminal prosecution can have an enormously effect on a defendant's willingness to settle.

It is often the case that IP owners are not aware of or do not consider using the criminal route to enforce their rights but where such action is available it should be seriously considered.

Trademarks

The Trade Marks Act 1994 (TMA 1994) sets out offences to protect against unauthorised use of a registered trade mark (i.e. counterfeiting), including where a person applies a registered trade mark to goods, or distributes or offers for sale or hire goods which bears a registered trade mark (section 92(1) to 92(4)). The offences carry a penalty of up to 10 years' imprisonment for those selling items which are likely to mistaken for genuine branded products.

The only defence available would be for the defendant to prove that they had made enquiries with the holder of the registered trade mark to ascertain whether the product they intended to sell was genuine and they had obtained consent of the proprietor to sell that product. The onus is also on an infringer to ascertain whether a registered trade mark exists in the first place.

Copyright

The Copyright, Designs and Patens Act 1988 (CDPA 1988) contains a broad range of criminal liabilities, including, for example, making or dealing in infringing articles or making or dealing with or using illicit recordings.

Most of the offences in the CDPA 1988 have no specific defence and those that are available are limited. Furthermore, the penalties can be extremely onerous. For example, selling, importing and/or distributing infringing articles carries a penalty of up to 10 years' imprisonment and/or a fine.

In the case of R v Lin (Xiaobing) [2016] EWCA Crim 862, the Court of Appeal recently allowed an appeal against the sentence of a defendant for making for sale or hire articles infringing copyright contrary to section 107(1)(a) CDPA 1988. The defendant also offered and exposed for sale articles infringing copyright, contrary to section 107(1)(d).

The defendant in the case was found to have possession of counterfeit DVDs. After his home was searched, 2389 counterfeit DVDs were seized in total as well as the defendant's IT equipment. The Court of Appeal reduced the sentence to 16 months' imprisonment to take into consideration the guilty plea entered however this is clearly still a substantial penalty and shows that the courts will not tolerate such behaviour.

Registered Designs

The Intellectual Property Act 2014 introduced new criminal offences to the Registered Designs Act 1949 relating to the unauthorised copying of registered designs. Briefly, a person will commit an offence if, in the course of a business, they intentionally copy a registered design, so as to make a product exactly, or identical to that former design, and they do so knowingly, or have reason to believe that the design is a registered one and without the consent of the registered proprietor.

It is also an offence if, in the course of a business, a person imports, offer to sell, or sell them, where they know or have reason to believe that a registered design has been intentionally copied without the consent of the owner.

The accused will have a defence if they can show they did not reasonably believe the registered design was validly or that they did not infringe the design. However, if found guilty then an offender could be fined and/or imprisoned for up to 10 years.

As yet there is no analogous right to bring criminal proceeding for unregistered design right infringement although this may only be a matter of time.

Conclusion

Claimants and their advisors should seriously consider what criminal action may be available alongside any civil action when they become aware of infringement of their IP rights.  The reality at present is that most disputes are dealt with via the civil procedure.  In such circumstances the matter often settles long before proceedings get to trial.  Nevertheless, even starting civil proceedings can be costly and the onus and cost burden is heavy on the claimant. The advantages of pursuing an infringer via the criminal system, most notably due to the potential for a jail term, gives IP rights owners another string to their bow.