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Singapore – Offence Of Abetment By Intentionally Aiding Commission Of Counterfeiting Offences.

17 November, 2014

 

Legal News & Analysis – Asia Pacific – Singapore – Intellectual Property

 

The accused in PP v Koh Peng Kiat and another Appeal [2014] SGHC 174 was operating an optical shop in Singapore known as Eye Cottage Pte Ltd, which sold glasses and contact lenses.

 
The accused was introduced to an acquaintance (who was not the subject of the prosecution) who offered to supply him contact lenses, which were subsequently found to be counterfeit. The accused introduced his business partner, Neo Teck Soon (“Neo“), and friend, Andy Wong Chow Fatt (“Wong”), to the acquaintance informed them of the business opportunity to purchase the counterfeit contact lenses. In respect of Wong, the accused even allowed one of his shops to be used to store the counterfeit contact lenses until they were collected. It was therefore held that Neo and Wong were only able to purchase the contact lenses with the accused’s assistance and support.

 
For that, the accused was charged with, amongst others, two charges under section 49(c) of the Trade Marks Act (“TMA“) read with section 107(c) of the Penal Code, for abetting by intentionally aiding persons to have in their possession for the purpose of trade, boxes of counterfeit “FRESHLOOK COLORBLENDS” contact lenses.

 
The offences emerged when the shops that bought the counterfeit contact lenses from Neo and Wong (following their purchase of the same from the accused’s acquaintance) returned most of them to Ciba Vision Singapore (the registered owners of the trade mark “FRESHLOOK COLORBLENDS”), for an exchange of lenses of different colours or degrees. Tests later confirmed they were counterfeit.

 
After a 10-day trial, the District Judge convicted the accused on the charges. This was subsequently overturned on an appeal to the High Court.

 
The High Court concluded that: (1) the accused did not abet by intentionally aiding his business partner and associate in committing an offence under s 49(c) of the TMA; and (2) the accused had a valid defence under proviso (i) to section 49 of the TMA.

 
In considering the Prosecution’s argument that the accused was abetting by intentionally aiding, the High Court observed that there was no evidence that the accused knew that the contact lenses in question were counterfeit. In the court’s view, intention or knowledge on the part of the abettor that the offence will be committed is a necessary ingredient of the offence of abetment (even if the maincounterfeiting offence under section 49(c) of the TMA, which is strict in liability, does not require it).

 
Accordingly, the offence of abetment was not made out on the facts. Although the accused facilitated the purchases of the contact lenses, there was no evidence that he knew the lenses, which were supplied by another person, were counterfeit.

 
In addition, the High Court found that the accused raised a valid defence under proviso (i) to section 49 of the TMA. This proviso basically states that a person would not be liable for an offence under section 49 if he can prove that:

 

“having taken all reasonable precautions against committing an offence under this section, he had, at the time of the commission of the alleged offence, no reason to suspect the genuineness of the mark and on demand made by or on behalf of the prosecution, he gave all the information in his power with respect to the persons from whom he obtained the good”

 
It was held that in the present case, given that no demand for information had been made, there were only two main elements of the defence under proviso (i) to section 49 of the TMA which had to be established: (1) the accused had taken all reasonable precautions against committing an offence under section 49 of the TMA; and (2) that at the time of the offence, the accused had no reason to suspect the genuineness of the mark.

 
The High Court decided that whilst the accused only knew the third party supplier for a short time and did not know much about him, there was no reason to suspect that the contact lenses were counterfeit. The Court therefore disagreed with the prosecution that the accused ought to have contacted the rights owner to verify whether the lenses in question were genuine. With respect to the issue that the contact lenses were being sold at a price well below the market price, the Court held that it was not useful to set a base price to determine whether the contact lenses were counterfeit as the prices of contact lenses vary and large discounts are given for bulk purchases. As such, the Court was of the view that it was “unsafe to convict [the accused] on the evidence before the Court“.

 
In light of the above, the Court acquitted the infringer of the charges of abetment.

 
Comments

 
The High Court’s decision provides some useful guidance in the case of the offence of abetment of trade mark infringement. In particular, it clarified that an accused must have knowledge to be convicted of a charge of abetment. Therefore, where an accused was charged with abetment by intentionally aiding persons to commit an offence under section 49 of the TMA, the prosecution will have to prove that the accused had knowledge that the goods or services which are the subject of the charge are counterfeit, even though such knowledge is not an element of an offence under section 49 of the TMA.

 
However, what is disconcerting is the manner by which the Court applied proviso (i) to section 49. This proviso requires an accused to prove that despite “having taken all reasonable precautions against the committing of an offence … he had at the time of the commission of the alleged offence, no reason to suspect the genuineness of the mark” [emphasis added]. Even so, the High Court appears to have decided that proviso (i) to section 49 applied because the prosecution did not manage to adduce evidence to show that there was reason for the accused to suspect that the contact lenses in question were counterfeit.

 

 

This apparent shift of the burden, from requiring an accused who is relying on the proviso to prove that he has taken all reasonable precautions, to requiring the prosecution to adduce evidence to show why precautions should have been taken, is troubling.

 
In a time where counterfeit products are becoming increasingly sophisticated, the case suggests that infringers can choose to turn a blind eye and rely on the proviso solely on the basis that they had no reason to suspect that any particular batch of products might be counterfeit and hence had no reason to take any precautions. Nevertheless, we understand that the case is presently on appeal and we hope that the Court of Appeal will reconsider the position taken by the High Court to clarify the issue.

 

Baker McKenzie

 

For further information, please contact:

 

Andy Leck, Principal, Baker & McKenzie.Wong & Leow

andy.leck@bakermckenzie.com

 

Celeste Ang, Associate Principal, Baker & McKenzie.Wong & Leow

celeste.ang@bakermckenzie.com

 

Angeline Lee, Associate Principal, Baker & McKenzie.Wong & Leow

angeline.m.lee@Bakermckenzie.com

 

Yew Kuin Cheah, Baker & McKenzie.Wong & Leow

yew.kuin.cheah@Bakermckenzie.com

 

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