UK body unveils draft guidance on trademark offence sentencing

Proposed guidelines on sentencing for those who are convicted of trademark offences like possession or sale of counterfeit goods have been opened for comment in the UK.

The consultation paper from the Sentencing Council – the independent body responsible for developing sentencing guidelines for courts in England and Wales – will replace the current guidance published in 2008 which is now considered to be out of date.

The document says the offence of unauthorised use of a trademark “can be committed by possessing or selling counterfeit goods or by counterfeiting or possessing the means of counterfeiting goods with a view to making a gain or causing a loss and without the consent of the owner of the trademark.”

The current guidance applies to individuals in magistrate courts only, but the new version has been extended to include a separate guideline covering offences committed by organisations, as well as Crown Court cases.

The Sentencing Council also describes unauthorised trademark use as a “relatively low volume” offence – with 420 adults and 32 organisations sentenced in 2018 – so one for which sentencers “are unlikely to have much experience.”

The cases the guidelines will cover vary from the very unsophisticated such as selling a few obviously fake items on a market stall or online, to highly organised and profitable businesses manufacturing or importing a large quantity of high-quality counterfeit ‘designer’ goods.

Most of the organisations prosecuted for trademark offences are relatively small businesses usually with only one or two director/owners, with an estimated annual turnover not more than £2m ($2.5m).

For individuals, the guidance introduces sentences such as a fine, community order or custody to a maximum of 10 years. The court may also order the counterfeit goods to be forfeited and make orders for confiscation (to remove the proceeds of crime) and compensation.

Sentencing is based on the degree of culpability, the harm caused to the trademark owner or purchaser of the counterfeit item, and any mitigating or aggravating factors.

For organisations, the draft guideline seeks to ensure that the financial penalties imposed for the offence, including confiscation and compensation, remove all gain from the offending as well as achieving appropriate additional punishment and deterrence.

The maximum penalty allowed by law for this offence is an unlimited fine, and the fines in the draft guideline range from £250 to £450,000.

“The proposed guidelines will provide a clear structure for courts when sentencing this offence, which can bring financial and reputational loss to companies and can put purchasers at risk from substandard goods,” says the Council.

It is seeking views on the draft guidelines from judges, magistrates and others with an interest in this area by September 30.

Trading Standards – which is on the front line in the fight against counterfeiting – welcomed the new guidance, saying it will “ensure a consistency of approach in sentencing these often complex cases.”

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