Supreme Court confirm that selling 'grey market' goods can be a criminal offence

The Supreme Court has recently given a boost to brand owners by confirming that selling ’grey market’ goods can attract criminal penalties under UK trade mark law. Grey market goods are products that trade mark holders authorise third parties to manufacture, but not sell.

In the decision in R v M & Ors, it was unanimously held that the sale of grey market goods not only provides for a claim for civil liability, but also criminal liability.

In the case, clothes bearing trade marks belonging to famous brands were imported into the UK. Some of the goods were actually counterfeit, while others were grey market. The Court had to decide whether it was only sale of the counterfeit items which incurred criminal liability, or whether it was also incurred by the sale of the grey market goods.

It was argued that criminal liability could not arise in the case of the grey goods, as permission had been given for their manufacture. However, this line of argumentation was rejected.

This clarifies the position in law that it is a criminal offence to sell goods which bear a trade mark holder's mark without its consent, even if permission to manufacture has been given. However, the new provisions do put the burden of proof on the trade mark holders to prove beyond reasonable doubt that the alleged infringer is guilty of acting without the trade mark holder's consent.

The penalties for the sale of grey goods would now include a fine or imprisonment of up to 10 years.

If you are working with a third party manufacturer, it is important to ensure your trade marks are protected and that you have clear legal agreements in place. For further advice on this matter, please get in touch with one of our trade mark attorneys.

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