As an IP investigator and protection specialist, I was intrigued by a recent court decision in Singapore to not hold a freight forwarder responsible at all for (albeit) unknowingly facilitating the transport of counterfeit goods.
The court did not appear to find it necessary to make a point of advising the freight forwarder to take more of an interest in “Knowing Their Customer” in the future.
I am not an attorney and will not attempt to analyze the merits of the case.
However, there are two areas I want to raise in two consecutive posts:
- What investigative steps could plaintiffs take to gather evidence of a freight forwarder’s prior knowledge of a container’s counterfeit content, and;
- Consider the trend to hold transport and storage intermediaries accountable even when there’s no proof they had direct knowledge of their services being used to facilitate trademark infringement
Two shipping containers arrived in Singapore from China en route to Indonesia. Customs uncovered counterfeit luxury goods in the containers. Freight forwarders (as per procedure) are never permitted to inspect the contents of containers. (The containers are “sealed” at the point of export and the seal is not broken until received by the consignee.) In this case, Singapore customs broke the seal and discovered the luxury counterfeits.
So, there was no opportunity for the defendant to see what was in the containers. And, the bill of lading indicated the containers had “household goods.”
Here’s a quote from an article titled, Louis Vuitton, Burberry Shut Down (Again) in Case Over $1 Million in Fakes, published in The Fashion Law on January 11, 2019,
“…the brands fell short, with the court holding that “the documents
Moreover, the Court of Appeal stated, “There was also no evidence of any intention to import trademarked products. The facts surrounding the transactions showed that the respondent was merely providing a commercial service as freight forwarders in its ordinary course of business and nothing more.”
As a result, “imposing liability for infringement of trademarks on [Megastar] in this factual situation would be against the letter and the spirit [of Singapore’s Trade Marks Act].”
The Singapore court essentially felt
If you want a complete overview of the case, read IP attorney Martin Schweiger’s article posted on his law firm’s website on January 8, 2019 titled, “The Megastar Case – Enforcing IP Rights Against Innocent Freight Forwarders In Singapore Does Not Work.”
INVESTIGATIVE STRATEGIES TO ESTABLISH AN INTERMEDIARY’S KNOWLEDGE
So, what would it have taken to prove a hypothetical freight forwarder knew they were about to assist in transporting counterfeit goods?
It would have taken inside information. For example, it would have taken somebody inside or close to the defendant’s business operations who had an opportunity to witness/overhear conversations or had access to documents or notes that indicated the forwarder had knowledge of the counterfeits.
Best case scenario would be for somebody on the inside of a defendant’s company (informant or undercover operative) to record (video or audio) a representative of the freight forwarder making incriminating statements that prove the forwarder’s prior knowledge.
If our IP investigative team was retained by plaintiffs under similar circumstances (before trying to identify an inside informant or attempting to place an undercover operative inside) we would have started with a background investigation of the accused freight forwarder.
We would want to know:
- How long has the freight forwarder been in business?
- Any registered complaints against the forwarder?
- Outcome of those complaints?
- Have the forwarders done business with the shippers in the past?
- If so, how often and over what period of time?
- If not, did they take any steps to learn who the shippers were?
- Or are they just not interested?
- Have the shippers been involved or suspected of prior trademark infringement activities?
Of course, there are opportunities to develop information about the shippers and the consignees’, but the above is focused on trying to determine the true extent of a hypothetical freight forwarder’s intentions and knowledge.
NEXT WEEK’S POST…
In next week’s post, we will explore how transport and storage intermediaries are being required more and more to “Know Their Customer”, especially when it cannot be established they had direct knowledge their services were being used to facilitate the transport/storage of counterfeit goods.
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