R v Johnstone

This appeal concerned the meaning and scope of section 92 of the Trade Marks Act 1994 and, in particular, whether a person is guilty of a criminal offence under section 92 where the complained-of use of a sign does not amount to a civil infringement under sections 9 to 11 of the 1994 Act. The House held that an essential ingredient of the offences in section 92 is that the sign must be used as an indication of trade origin (trade mark use). Section 92 therefore falls, for the most part, within the same or a narrower compass than the civil infringement provisions in sections 9 to 11. The court also held that the defence in section 92(5) (that the defendant believed on reasonable grounds that the use did not infringe a registered trade mark) requires the defendant to prove the defence on the balance of probabilities and that this reverse burden is compatible with article 6(2) ECHR in the circumstances of the offence.

Background and facts:

• Mr Robert Johnstone imported compact discs consisting of bootleg recordings of live performances. His activities came to light after a misdirected parcel containing some 519 compact discs was delivered to a third party. Police seized about 500 compact discs and cassettes. Mr Johnstone was indicted on specimen counts under section 92(1)(c) of the Trade Marks Act 1994, each count relating to possession in the course of a business of a compact disc bearing a performer's name that was a registered trade mark (for example, 'Bon Jovi').

Procedural history:

• At trial Judge Mitchell refused a preliminary submission that the Crown must prove civil infringement under sections 9 to 11 and disallowed reliance on section 11(2)(b); Mr Johnstone pleaded guilty and was sentenced to six months' imprisonment and subject to confiscation and forfeiture orders.
• The Court of Appeal ([2002] EWCA Crim 194) allowed Mr Johnstone's appeal, holding that the criminal offences under section 92 require proof of civil infringement if the defendant raises a defence under sections 10 to 12, and that Mr Johnstone should have been permitted to have his section 11(2)(b) defence considered by a jury.
• The Crown appealed to the House of Lords. The certified question was whether use which does not amount to civil infringement can nevertheless attract criminal liability under section 92.

Issues framed by the court:

• Whether criminal liability under section 92 requires that the sign be used as an indication of trade origin (trade mark use).
• The scope and relationship of section 92 to the civil infringement provisions (sections 9–11 of the Trade Marks Act 1994) and the trade mark directive (Council Directive 89/104/EEC).
• The meaning and burden of proof under section 92(5): whether a defendant must merely raise an evidential issue or must prove on the balance of probabilities that he reasonably believed the use was not infringing, and whether any reverse burden is compatible with article 6(2) ECHR.

Court’s reasoning (concise):

• The House concluded that the essential function of a trade mark is to indicate trade origin and that section 92 must be interpreted consistently with that function and with the trade mark directive. Non-trade-mark use (for example purely descriptive use indicating the performer whose work appears on a disc) does not fall within section 92.
• The wording of section 92 (notably the requirement that acts be done "without the consent of the proprietor" and the defence in section 92(5) referencing "infringement") supports construing the criminal offences as limited to use as a trade mark.
• Whether use is trade mark use is a question of fact judged by how the average consumer would perceive the sign on the goods and packaging; disputed borderline cases (for example bootleg discs bearing performer names) require factual inquiry.
• Section 92(5) imposes on the defendant a persuasive (legal) burden to prove the defence on the balance of probabilities. Given the seriousness and scale of counterfeiting, the near-absolute nature of the offences and that the matters relevant to the defence (state of mind, sources of supply) are generally within the defendant's knowledge, that reverse burden is compatible with article 6(2) ECHR.

Appeal dismissed. The House held that the offences created by section 92 of the Trade Marks Act 1994 require that the sign be used as an indication of trade origin (trade mark use); that this is a question of fact for the tribunal; and that the section 92(5) defence places on the defendant the burden of proving on the balance of probabilities that he reasonably believed his use did not infringe a registered trade mark, a burden compatible with article 6(2) ECHR. The Court of Appeal’s result in favour of Mr Johnstone was upheld on the correct legal basis that he should have been permitted to run his defences at trial.

Trial at Crown Court at Kingston: preliminary ruling by Judge Mitchell rejecting defence that non-trade-mark use is non-criminal; defendant pleaded guilty and was sentenced. Court of Appeal allowed Mr Johnstone's appeal ([2002] EWCA Crim 194). Crown appealed to the House of Lords and the appeal was dismissed by the House ([2003] UKHL 28).