Essex Trading Standards v Singh

Under section 92(5) of the Trade Marks Act 1994, a defendant must establish both an honest belief that goods are genuine and objectively reasonable grounds for that belief. Good character may assist in assessing honesty, but it cannot make unreasonable grounds reasonable. A bare assurance from another person, without independent inquiry into the goods’ provenance, will generally be insufficient where circumstances raise suspicion. The appellate court may allow an appeal by stated case where no reasonable magistrates’ court could have found the statutory defence proved.

The respondent was acquitted by magistrates of possessing counterfeit trainers in the course of business, contrary to section 92(1)(c) of the Trade Marks Act 1994. The magistrates accepted that he had custody and control of the goods but found, on the balance of probabilities, that he believed they were genuine on reasonable grounds.

The prosecution appealed by stated case. The questions concerned the proper application of section 92(5), the relevance of the respondent’s good character, and whether the evidence permitted the acquittal.

1. Appeal allowed. The magistrates had been entitled to consider the respondent’s good character when assessing whether he acted honestly. His character was irrelevant, however, to whether the grounds for his belief were objectively reasonable.
2. Section 92(5) imposed a legal persuasive burden on the respondent. He had to show that he believed on objectively reasonable grounds that the trainers were genuine. The statutory defence therefore required both honesty and reasonableness.
3. The respondent’s evidence fell far short of discharging that burden. He relied principally on the assurance of a long-standing acquaintance who was a drug addict and was unwell. The goods had been transported in a van that was not owned by that acquaintance, the respondent knew the price was low, and he made no independent inquiry or attempt to obtain documentation concerning the goods’ provenance.
4. The magistrates were bound to conclude that the belief was not based on reasonable grounds. No reasonable bench could have reached the contrary conclusion. Their reliance on the principle in R v Johnstone [2003] 3 All ER 884 was incomplete because honest conduct alone was insufficient.
5. The acquittal was set aside and the case was remitted to the Magistrates’ Court with a direction that the respondent be convicted. The appellant was awarded costs limited to £2,750.

1. High Court (Administrative Court): allowed the prosecution’s appeal by stated case, set aside the acquittal and remitted the case to the Magistrates’ Court with a direction to convict.
2. Magistrates’ Court: acquitted the respondent after accepting the statutory defence under section 92(5) of the Trade Marks Act 1994.