In a decision rendered by George Wei J, the Singapore High Court held that a freight forwarder was not liable for trade mark infringement in respect of counterfeit goods that were imported into Singapore and meant to be sent to a third party in Batam.
(A) Who are the parties involved in this case?
1. Louis Vuitton Malletier (“LV”), Guccio Gucci SPA (“Gucci”), Burberry Limited (“Burberry”), Hermes International (“Hermes”), Sanrio Company Ltd (“Sanrio”) (collectively known as the “Plaintiffs”)
- The Plaintiffs are the registered proprietors of numerous trade marks in Singapore. These comprise word and device marks registered under multiple classes under the Trade Marks Act.
- The Plaintiffs produce a wide variety of goods including bags, wallets, purses, leather accessories and toys in respect of which the registered trade marks are used.
2. Megastar Shipping Pte Ltd (Defendant)
- A Singapore company which carries on the business of a freight forwarder.
3. PT Alvenindo Sukses Ekspress (Third Party)
- Indonesian company based in Batam.
(B) What actually happened?
Claims for trade mark infringement were made against the Defendant. The claims were brought by five registered trade mark proprietors, the Plaintiffs, in various suits commenced against the Defendant. The Defendant in turn brought third party proceedings against the Third Party.
These claims arose out of two shipments by which two containers (“the Containers”) loaded with counterfeit goods were shipped from two ports in China to Singapore, with the intention for them to be sent to the Third Party in Batam. The Containers were intercepted by Singapore Customs and detained, inspected and seized under the “assistance by border authorities” provisions set out in Part X of the Trade Marks Act (Cap. 332). Upon examination, the Containers were discovered to contain merchandise bearing infringing trade marks (“the Counterfeit Goods”).
After seizure by Singapore Customs, the Plaintiffs commenced proceedings for trade mark infringement against the Defendant, alleging that the Defendant had imported the Counterfeit Goods into Singapore.
The Plaintiffs’ position was that the Defendant was liable for infringing their respective trade marks under Section 27(1) read with Section 27(4)(c) of the Trade Marks Act. Section 27 provides that infringement arises if a person without consent of the proprietor uses in the course of trade, inter alia, a sign identical or similar to the registered trade marks in relation to identical or similar goods for which the trade mark is registered. Section 27(4)(c) then provides that a person uses a sign if, in particular, he “imports or exports goods under the sign”.
In particular, the Plaintiffs argued that transhipment of the Counterfeit Goods amounting to “import[ing]” them, based on the definition of “import” in Section 2 of the Interpretation Act (Cap. 1). It was argued that under Section 93A of the Trade Marks Act, where goods in transit are consigned to a local consignee, the local consignee is the importer. As the local consignee, the Defendant had imported and/or intended to export the Counterfeit Goods under the sign, and was thereby liable for trade mark infringement. The Plaintiff further argued that whether the Defendant had knowledge that the Containers contained counterfeit items was irrelevant, and it did not matter whether the Defendant was actively involved or just a passive forwarding agent.
The Defendant denied importing the Counterfeit Goods into Singapore, and asserted that even if the Counterfeit Goods had been imported into Singapore, the Defendant was, in any case, not the importer. It strenuously denied knowledge of the Counterfeit Goods, and argued that it was acting as a “mere freight forwarder”, and not a trader of the Counterfeit Goods.
It was also argued that the true importers of the Counterfeit Goods were either American President Lines or Orient Overseas Container Line Limited (collectively known as the “Shippers”) or the Third Party and that the Defendant could not be the importer. It was not involved in the shipment of the goods from China to Singapore and thus had not caused the entry of the Counterfeit Goods into Singapore.
The Defendant also maintained that it had not imported the goods under the sign within the meaning of Section 27 because Section 27 required a bringing of goods bearing the marks into the territory for the “purpose of releasing those goods into free circulation” within the jurisdiction.
(C) What are the issues in dispute?
At the heart of the dispute between the parties was the question of whether the Defendant was liable for importing or exporting the Counterfeit Goods within the meaning of Section 27(1) read with Section 27(4)(c) of the Trade Marks Act. This in turn involved the determination of several legal issues:
- Whether the Counterfeit Goods had been imported into Singapore within the meaning of Section 27(4)(c) of the Trade Marks Act.
- Whether the Defendant was the importer and was thereby liable for infringement under Section 27(1) and Section 27(4)(c) of the Trade Marks Act.
- Whether the Defendant was liable for exporting the Counterfeit Goods under the sign.
(D) Holding
(a) Whether the Counterfeit Goods had been imported into Singapore within the meaning of Section 27(4)(c) of the Trade Marks Act.
(i) The meaning of import
The Trade Marks Act does not set out a general definition of either “import” or “export”. That being so, the High Court looked at Section 2(1) of the Interpretation Act, which provides that “’import’, with its grammatical variations and cognate expressions, means to bring or cause to be brought into Singapore by land, sea or air”.
The High Court, referring to Yong Pung How CJ’s decision in Trade Facilities Pte Ltd and others v PP [1995] 2 SLR(R) 7 (“Trade Facilities”), found that there was no reason to read into Section 27 the definitions of “import” in other legislations, i.e. Customs Act or the Regulation of Imports and Exports Act 1995 (“RIEA”). As reasoned in the Trade Facilities case, this was a matter for Parliament to deal with, and in absence of express incorporation of a narrower definition of “import” (as is the case with regard the definition of “import” in the Customs Act), there was no reason to construct “import” in accordance with other legislations.
As such, it was held that the term “import” should be understood broadly in accordance with Section 2(1) of the Interpretation Act, but subject to the following qualifier: Section 27(1) of the Trade Marks Act deals with unauthorised use of a sign in the course of trade.
(ii) Whether “importing” under Section 27(4) of the Trade Marks Act require that the goods be intended for release for free circulation in the Singaporean market
The High Court held that the term “import” in Section 27(4) of the Trade Marks Act does not require that the goods must be intended for free circulation in the Singapore market. It reiterated that the leading decision in Singapore on the meaning of “import” under trade mark legislation remains in Trade Facilities.
The High Court reasoned that the structure and language of Section 27(4) of the Trade Marks Act militates against reading into the term “import” any requirement that goods be intended for free circulation in the Singapore market. It was pointed out that Section 27(4)(b) provides that “a person uses a sign if, in particular, he … offers or exposes goods for sale, puts them on the market or stocks them for those purposes under the sign”. Since Section 27(4)(c) merely provides that “a person uses a sign if, in particular, he … imports or exports goods under the sign”, without any express words to the effect that the term “import” should require not only a physical bringing of goods into Singapore but also that they be intended for sale or circulation in the Singapore market, it cannot be the intention of Parliament for it to be so intended. Should Parliament have intended so, it could have easily included express words to that effect, as was done in Section 27(4)(b).
Further, the ECJ’s position (which was advanced by the Defendant in support of its case) that goods are only imported into a Member State of the EU if they were intended for release into free circulation in that Member State or another Member State was heavily driven by considerations concerning the free movement of goods and the exhaustion of rights. There are also English decisions involving patents and trademarks where goods brought into the UK for transhipment to other destinations were nevertheless treated as having been imported into the UK.
As such, the High Court established that the Counterfeit Goods were indeed imported into Singapore within the meaning of Section 27(4)(c) of the Trade Marks Act. The High Court highlighted that that did not however, mean that the Defendant was liable for infringement. The question was whether the Defendant was the importer of the Counterfeit Goods.
(b) Whether the Defendant was the importer and was thereby liable for infringement under Section 27(1) and Section 27(4)(c) of the Trade Marks Act.
(i) The relevance of the terminology used in the relevant permit declarations
The High Court held that the fact that the Defendant would have been named as the importer or exporter in the relevant permits and declarations required by customs or port authorities said nothing about whether the Defendant was liable for trade mark infringement under Section 27 of the Trade Marks Act. Further, the High Court pointed out that the definition of terms such as “import” and “export” varies across various statutes, including the Customs Act and RIEA.
(ii) The argument based on Section 93A(5)(b)(v) of the Trade Marks Act
The Plaintiffs had argued that since Section 93A(5)(b)(v) of the Trade Marks Act provides that, in the case of goods in transit consigned to a local consignee, references to import or importation are to be read as a reference to the import, importation or export of the goods by the consignee for the purposes of ss 86, 87 and 89-93 of the Trade Marks Act, this supports the case that the Defendant is the importer and would have been the exporter but for the seizure and detention by Singapore Customs.
The High Court however rejected the Plaintiffs’ argument. It opined that the effect of Section 93A(5)(b)(v) is that the local consignee of goods in transit is to be regarded for the purposes of applying those provisions as the importer. It does not mean that he must be regarded as the importer for all purposes, such as for deciding whether he is the importer in an infringement action under Section 27.
The High Court reasoned that it’s view was supported by Section 93A(2) of the Trade Marks Act, under which notice must be given to the importer, exporter or consignee of the goods. The reference to “importer, exporter or consignee, as the case may be, of the detained goods” suggests that a consignee is not necessarily the importer or exporter.
(iii) Case law
The High Court then reviewed a number of English and European authorities. The decision of Smith, Kline and French Laboratories Ltd v R.D. Harbottle (Mercantile) Ltd and others [1980] RPC 363 (“SKF”) was looked at. The High Court found that SKF demonstrates that care must be taken when identifying the importer. A carrier, as a mere transporter and bailee in possession, is not the “importer” at least for the purposes of the substantive rights. The High Court considered that, if a carrier is held to be an importer or a joint importer simply because the goods were transitorily under their control in circumstances when he has no knowledge of the relevant intellectual property rights and the consignment, the consequences would be far reaching. The same was true of freight forwarders, the High Court opined. A freight forwarder who deals with a number of agents or many agents worldwide will not know who the agents’ importers (clients/customers) are. It is well-known the volume of container traffic in Singapore is very substantial. SKF was thus found by the High Court to provide persuasive support for the view that the Defendant, in the case at hand, was not liable as the importer under Section 27.
The High Court further reasoned that in the present case, the Shippers were both the shippers and consignors. The goods were destined for Batam where the Third party was named as the consignee in the invoices. Based on the documents and evidence, it is apparent that the only persons who were interested in the property in the goods were the Shippers and the Third Party.
The High Court further cited the case of Nobel’s Explosives Company v Jones, Scott & Co (1881) 17 Ch D 721 (CA), (1882) 8 App Cas 5 (HL) (“Nobel’s Explosives”). In that case, the Court of Appeal decided that it could not be said that the defendants had as customs house agents assisted in such a manner as to be liable on the basis that they had enabled a foreign manufacturer of the infringing goods to commit patent infringement. James LJ held that it would be “a most injurious encouragement to idle and vexatious litigation” if any person who had anything to do either directly or indirectly with the means by which infringing goods get from one place to another was liable in an action at law. The High Court found this case significant for two reasons: (1) It accepts that where goods enter UK for purposes of transhipment to a third country, the goods can be treated as “imported” for patent and trade mark purposes even if they were not intended for release into the UK market; (2) an agent for the importer who provides some services in UK in respect of transhipment process such as filling out the necessary customs forms does not thereby become a joint importer.
Acknowledging that the question as to who the importer or exporter is in each case is highly fact-sensitive, the High Court went on to consider the nature of the Defendant’s role in the present transaction.
(iv) The nature of the Defendant’s role in the transaction
The High Court found that the Defendant had no part in making the shipping arrangements, packing, or loading the Containers on board the inbound vessels. These arrangements and acts were done by the shippers in China and/or by the Third Party. The instructions to the Defendant to declare transhipment status also came from the Third party. By the time the Defendants received instructions from the Third Party, there was nothing the Defendant could have done to prevent the Counterfeit Goods from being brought into Singapore.
Hence, in the circumstances, the High Court held that it could not be said that the Defendant was the “importer”. It had not “brought” or “caused to be brought” the Counterfeit Goods into Singapore. If anyone was the importer, it was either the Shippers or the Third Party. The Defendant did not acquire any property in the Counterfeit Goods simply by virtue of being named as the consignee in the sea waybills. The Defendant was never in physical possession of the Containers as well.
(c) Whether the Defendant was liable for exporting the Counterfeit Goods under the sign.
(i) Is a mere intention to export sufficient
The Plaintiffs argued that even if the Defendant did not “import” the Counterfeit Goods into Singapore, it was nevertheless liable for infringement under Section 27(1) read with Section 27(4)(c) of the Trade Marks Act because it had the intention to export the Counterfeit Goods.
The High Court however was of the view that having a mere intention to export is insufficient to amount to “use” within the meaning of Section 27(4)(c) of the Trade Marks Act. It reasoned that the plain wording of Section 27(4)(c) does not suggest that a mere intention is sufficient. It instead provides that there is “use” if a person “imports or exports goods under the sign”.
For completeness, the High Court went on to consider if the Defendant could be made liable for infringement solely on the basis that it was the would-be exporter. Since there was no definition of “export” in the Trade Marks Act, it should be understood in accordance with Section 2(1) of the Interpretation Act. The question therefore, was whether the Defendant is the party who would have “taken or caused to be taken out of Singapore by land, sea or air” the Counterfeit Goods. The High Court opined that the Defendant was not the party who would have “taken” the Counterfeit Goods or caused them to be taken out of Singapore. Based on the information available, the Defendant was a freight forwarder and not a trader of goods. There was no indication that the goods were intended for the Defendant’s use or consumption.
The High Court found that the Defendant’s engagement by the Third Party was for the limited purpose of arranging for transhipment of the inbound Containers. It acted as agent for the Third Party in taking the action and steps that it took. It was the Third Party who engaged the Defendant to declare the goods for transhipment, and instructed the Defendant on which vessels were engaged to perform the transhipment to Batam. Commercial invoices supplied by the Third Party made clear that the Containers’ final destination was Batam and that the Third Party were the ultimate consignees. All the preparations were made by the Third Party and carried out by the Defendant as the Singapore freight forwarder. Hence, if any party was the exporter of the Counterfeit Goods, it was the Third Party and not the Defendant.
Hence, the claims against the Defendant were dismissed. The High Court found that the Defendant was not the importer nor was it liable as joint tortfeasor for the importation (since it did not act in concert with or shared a common design with either the Shippers or Third Party to infringement).
Commentary:
The question as to who the importer or exporter is in each case is highly fact-sensitive, as recognised by the High Court.
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This article is written by Renee Xavier from Alpha & Omega and edited by Rishika Pundrik of Asia Law Network.
This legal update was originally published on Alpha and Omega’s website.
This article does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area. If you require any advice or information, please speak to a practicing lawyer in your jurisdiction. No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of Interstellar Group Pte. Ltd. accepts or assumes responsibility, or has any liability, to any person in respect of this article.