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Freight Forwarders Not Liable for Trademark Infringement

10

MAR

2020

This is a landmark case in Singapore as it questioned whether the “conduit” between importer and exporter can be found liable for trademark infringement.

In the case of Burberry Ltd and another v Megastar Shipping Pte Ltd [2019] SGCA 1 at the Singapore Court of Appeal, the respondent, Megastar was a freight forwarder providing transhipment services in Singapore, for goods originating from China to Batam (Indonesia) on this particular occasion. Upon inspection of the cargo in Singapore, Singapore Customs discovered and seized over 15,000 counterfeit goods. The appellant trademark proprietors, Burberry and others (referred to as “Brand Owners” here) subsequently took action against Megastar under section 27 of the Trade Marks Act (“TMA”).

Section 27 of the TMA stipulates that a person infringes a registered trademark if he/she uses, in the course of trade, a sign which is identical with the trademark in relation to goods which are identical with those for which it is registered, without the consent of the trademark proprietor. Under this section, “use” is taken to include import or export of the goods under the sign.

In the High Court decision, the Judge held that Megastar was not liable for trademark infringement under section 27 of the TMA and dismissed the Brand Owners’ claims.

Out of the Brand Owners, only Burberry Limited and Louis Vuitton Malletier appealed against the High Court’s decision. The Court of Appeal agreed with the High Court’s decision that an importer or exporter is a person who brings or causes the goods to be brought into or out of Singapore respectively, even in cases such as these, where goods are only on transit in Singapore. The Court of Appeal also held that the importer/exporter must have the intent to carry out the act constituting the infringing use with knowledge or reason to believe that there was a sign present on the goods. So, mere intention to export is insufficient to find liability under section 27 of the TMA.

This was a very interesting case as it determines that Megastar was engaged as a freight forwarder by the third party for the limited purpose of arranging for the transhipments, but all the preparations and instructions for onward shipment of the counterfeit goods came from third parties.

Furthermore, for freight forwarders to be liable for trademark infringement, trademark proprietors must show that the freight forwarder has knowledge that there were signs on the goods being shipped. As there was no reason to believe that Megastar was aware of any such signs on the goods, the Court of Appeal concluded that Megastar did not “use” the signs and was therefore not liable for infringement of the trademarks under section 27.

Trademark proprietors should therefore take note that knowledge of the infringing goods and intent to commit the act of infringement is required to support trademark infringement actions under section 27 of the TMA, and will have to prove that either of these are present or risk being disappointed with the outcome of their trademark infringement actions.

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