Clements, R. v (Rev 1)

An offence under section 92(1) of the Trade Marks Act 1994 requires deliberate unauthorised use of an infringing registered mark for gain or with intent to cause loss. The statutory mens rea is not defined as dishonesty, although it entails deliberate financial wrongdoing.

In sentencing, the custody threshold may be crossed for trade mark offending. Relevant, non-exhaustive considerations include the value and volume of goods, duration and profitability, sophistication, and whether a legitimate business became unlawful. A judge may treat the commercial and corporate context as aggravating where it forms part of the offending. That does not amount to sentencing for an unproved fraud. The same context may support director disqualification.

The appellant was convicted by a jury at the Crown Court at Southwark of unauthorised use of a registered trade mark contrary to section 92(1) of the Trade Marks Act 1994. The prosecution arose from his use of the marks of a French insulation-materials company after its distribution agreement with KDB UK had ended.

On 3 May 2019, the judge imposed two years’ imprisonment suspended for two years and disqualified the appellant from acting as a director for five years. The appellant had been acquitted of a fraud count, while other counts had not proceeded or had been dismissed.

His sentence appeal contended that the judge had wrongly treated the trade mark offence as dishonest conduct, that custody was not justified, and that the director-disqualification order was wrong in principle.

1. Appeal dismissed. The two-year suspended sentence and five-year director-disqualification order were not wrong in principle.

2. Section 92(1) of the Trade Marks Act 1994 does not define its mens rea as dishonesty. It requires proof that the defendant deliberately used an infringing mark without the proprietor’s consent, with a view to gain or intent to cause loss. The jury had necessarily been sure of those elements. The sentencing judge did not add a dishonesty finding or sentence the appellant for the fraud of which he had been acquitted.

3. The court confirmed that trade mark offending can pass the custody threshold. The non-exhaustive sentencing considerations drawn from comparable cases included the value and volume of goods, duration and profitability, sophistication, and whether a business began legitimately before becoming unlawful. R v Gill [2010] EWCA Crim 324 concerned materially different and more sophisticated offending, but it demonstrated the seriousness which such offending can reach. Here, the volume of trading supported the judge’s conclusion that custody was justified, although suspension was appropriate.

4. The judge was entitled to regard the corporate setting as aggravating. The appellant deliberately exploited the respondent’s goodwill shortly after the company through which he traded had failed to pay the respondent and had entered liquidation following a judgment debt. That was relevant context for the trade mark offence. It did not transform the sentencing exercise into punishment for dishonesty or for the company’s liquidation.

5. The same matters could properly be considered in exercising the power under section 2 of the Company Directors Disqualification Act 1986. There was no error in imposing disqualification for five years.

• Court of Appeal (Criminal Division) — dismissed the sentence appeal in [2019] EWCA Crim 2253.
• Crown Court at Southwark — convicted the appellant on 29 January 2019 and, on 3 May 2019, imposed two years’ imprisonment suspended for two years and a five-year director disqualification.