Judgments - Regina v. Johnstone (Respondent) (On appeal from the Court of Appeal (Criminal Division))

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    33. It will be seen, therefore, that I have reached much the same conclusion as the Court of Appeal although by a more confined process of interpretation. On the interpretation of section 92 which commends itself to me the pieces of this little jigsaw, some home-grown, such as section 92, and others imported from the trade marks directive, although not fitting perfectly, fit together tolerably well. In particular, on this interpretation the circumstances in which criminal liability arises are for the most part either the same as, or narrower than, the circumstances in which civil liability arises under sections 9 to 11. This is as one would expect. Consistently with this, the section 92(5) defence can operate according to its tenor, with infringement bearing the meaning defined in section 104.

    34. I should mention one possible exception. Civil liability under section 10(1) to (3) arises only in respect of use of a sign 'in the course of trade'. The equivalent phrase 'in the course of a business' appears in section 92 in respect of some, but not all, of the alternative sets of factual ingredients of the offences. For instance, this equivalent phrase appears in section 92(1)(c) and (2)(b) and (c). But it is not stated as a necessary ingredient in, for example, section 92(1)(a) or (2)(a). I doubt whether this dissonance between section 10(1) to (3) and section 92(1) to (3) is of practical importance. An essential ingredient of all the criminal offences created by section 92(1) to (3) is that a person commits an offence where 'with a view to gain for himself or another, or with intent to cause loss to another' he does the act in question. With this in mind it is hard to think of a realistic example of conduct which would attract criminal liability and yet be excluded from civil liability because it would not be 'in the course of trade'.

    A question of fact

    35. I turn to apply section 92(1)(c) to the facts of the present case, taking count 1 for ease of reference. 'Bon Jovi' is, it seems, registered as a trade mark for compact discs. Clearly Mr Johnstone would commit an offence under section 92(1) if he sold compact discs under the brand name 'Bon Jovi'. Used in this way the sign 'Bon Jovi' would be an indication of trade origin, in the same way as household names such as EMI or Sony are used to indicate the trade origin of compact discs marketed under those brand names. This use of the sign 'Bon Jovi' would be as an indication that the discs themselves all came from a source known as 'Bon Jovi'.

    36. That is not what Mr Johnstone did. What he did was to include on the CD labels and, I assume, the accompanying packaging, the name of the group or artist whose performance was recorded on the CD in question: Bon Jovi in the case of count 1, U2 in the case of count 2, Rolling Stones in the case of count 3, and so on. Considered as a matter of principle, the position in this type of case is as follows. If the name of the artist or group affixed to the compact disc and displayed on the packaging is exclusively an indication of the name of the performer whose performance is recorded on the compact disc, and if this use of the name of the performer is not likely to be understood as indicating any other connection between the performer and the compact disc, then such use would be descriptive only. By identifying the performer it would be descriptive of the contents of the disc and nothing more. It would not be an indication of the trade 'origin' of the disc itself. Whether particular labelling and packaging satisfy this test, and consequently are innocuous for trade mark purposes, is a question of fact in each case.

    37. On this question of fact different minds may sometimes reach different conclusions. This is illustrated by the decision of the Federal Court of Australia, sitting as a Full Court, in Musidor BV v Tansing (t/as Apple Music House) (1994) 123 ALR 593. Tansing manufactured and sold compact discs bearing bootleg recordings of live performances by the Rolling Stones group in the 1960s. The packaging bore a photograph of the Rolling Stones and the name Rolling Stones in prominent lettering. The compact discs also bore the name Rolling Stones. 'Rolling Stones' was registered as a trade mark for compact discs. The majority of the court, comprising Gummow and Heerey JJ, held that this use did not infringe the trade mark because it was not use as a trade mark. Use of the words 'Rolling Stones' on the packaging and discs would convey to the prospective purchaser that if he bought the disc and played it there would emerge music of the well known group Rolling Stones. There is no other way of readily identifying the group whose performance was recorded on the disc.

    38. In his dissenting judgment Davies J reached a different conclusion on how this use of the words Rolling Stones would be understood. He expressed himself in quite general terms. If a trade mark is used in relation to sound recordings, and the name is that of a musical group, 'the use of the mark will ordinarily inform the public that the article is a recording of a performance by the group and that its release has been authorised by them or their organisation' [my emphasis]: see p 594.

    39. In the present case the Court of Appeal preferred the minority opinion of Davies J, while emphasising that whether a mark is used as a trade mark is a question of fact in every case. I do not understand the Court of Appeal to have been saying that the test applicable when deciding this question of fact is different from what I have set out above. If they were, I respectfully disagree.

    40. The crucial issue here, as I have said, is one of fact. I add a general comment. Difficulties can be expected to arise if trade mark law is utilised as a means of enforcing performers' rights in respect of recordings of their performances. Trade mark law, as already emphasised, is concerned essentially with the trade origin of goods. Protection for the rights of performers as such is properly found elsewhere: nowadays, in Part II of the Copyright, Designs and Patents Act 1988, as amended by the Duration of Copyright and Rights in Performers Regulations 1995 (SI 1995 no 3297), the Copyright and Related Rights Regulations 1996 (SI 1996 no 2967) and the Copyright, etc. and Trade Marks (Offences and Enforcement) Act 2002. This legislation contains an elaborate code concerning the rights of performers, together with remedies and criminal sanctions for infringements of performers' rights by making, possessing or selling illicit recordings. The code includes like provision for persons having recording rights. I recognise that, given the control performers have over recordings of their performances, a buyer of a compact disc may expect the recording has been approved by or on behalf of the performer. But that expectation, where it exists, is not necessarily indicative that the performer's name is being used on the compact disc as a trade mark or that the average buyer so understands.

    41. For completeness I add that the decision of the European Court in Arsenal Football Club plc v Reed [2003] RPC 144, already mentioned, does not assist either way on this point in the present case. There the defendant sold football club souvenirs and memorabilia, including scarves bearing the name 'Arsenal'. The plaintiff football club had registered the trade mark 'Arsenal' for classes of goods which included scarves. The club claimed the defendant's activities infringed its registered trade marks. Having stated the applicable legal principles as quoted above, the European Court expressed its view on the facts of the case. Use of the Arsenal logo was not intended for purely descriptive purposes. The use was such as to create the impression 'that there is a material link in the course of trade between the goods concerned and the trade mark proprietor': see para 56. Whether it was open to the European Court to reach this factual conclusion has proved controversial: see [2002] All E R (D) 180. The rights and wrongs of this particular controversy are not material to the outcome of the present case.

The reasonable belief defence:section 92(5)

    42. Mr Johnstone's alternative defence was based on section 92(5). His case was that he relied upon advice given by a reputable trade marks attorney that possession of the goods in question was lawful. Two points arise here. The first concerns the availability of the section 92(5) defence where the defendant does not know of the existence of the registered trade mark in question. In Torbay Council v Satnam Singh [1999] 2 Cr App R 451 the Divisional Court of the Queen's Bench Division held that the defence was not available in such a case. The court noted that section 92(5) speaks of a reasonable belief that the 'manner' of use of the sign did not infringe 'the registered trade mark'. Auld LJ held that this presupposes an awareness by the defendant of the existence of the registration against which he can match his manner of use of the allegedly infringing sign. The Court of Appeal followed this interpretation in R v Keane [2001] FSR 63. More recently, a differently constituted Court of Appeal, comprising Kay LJ and Andrew Smith J, doubted the correctness of this interpretation: see R v Rhodes [2002] EWCA 1390, [2003] FSR 147, 153, paras 21 and 22.

    43. I share these doubts. The interpretation adopted in the Satnam Singh case draws a distinction Parliament cannot have intended. The language of the subsection gives no support to this distinction. Section 92(5) is concerned to provide a defence where the person charged has a reasonable belief in the lawfulness of what he did. Those who act honestly and reasonably are not to be visited with criminal sanctions. It makes no sense to confine this defence to cases where the defendant is aware of the existence of the registered trade mark and exclude altogether those cases where the defendant is not. Section 92(5) provides a defence where the defendant believes on reasonable grounds his use of the sign does not infringe a registered trade mark of whose existence he is aware. It would be extraordinary if the subsection does not equally furnish a defence in the stronger case where the reason why the defendant believes his use of the sign does not infringe a registered trade mark is that he reasonably believes no relevant trade mark is registered. Section 92(5) is to be interpreted as including the latter case as well as the former.

    Burden of proof

    44. The opening words of section 92(5) are that it 'is a defence for a person charged with an offence under this section to show that he believed …'. This wording gives rise to the second point arising in respect of the section 92(5) defence. It concerns the burden of proof. On this there are conflicting decisions of the Court of Appeal. In the present case the Court of Appeal held that, having regard to the presumption of innocence in article 6(2) of the European Convention on Human Rights, the burden cast upon the accused is what is often called an evidentiary burden. He must raise an issue sufficient to require the prosecution to disprove it as part of the burden of proof resting on the prosecution. If the accused raises such an issue, and the prosecution fails to disprove the facts raised by the issue, the defence succeeds. It is not necessary for the accused person himself to prove the facts set out in section 92(5).

    45. In the present case the prosecution did not argue the contrary view in the Court of Appeal. In the later case of R v S (Trade mark defence) [2002] EWCA Crim 2558 the prosecution took a different line. There the point was not conceded. After what was clearly a much fuller citation of authority and examination of the issue, the Court of Appeal, comprising Rose LJ and Hughes and Davis JJ, reached the contrary conclusion on the proper interpretation of section 92(5). Before your Lordships' House the prosecution submitted that the decision of the Court of Appeal in the present case was wrong and the views expressed in R v S (Trade mark defence) [2002] EWCA Crim 2558 were to be preferred.

    46. In the events which have happened this issue does not call for decision in the present case. But the House should not leave the law on this point in its present state, with differing views expressed by the Court of Appeal. I shall, therefore, state my views as shortly as may be. First, I entertain no doubt that, unless this interpretation is incompatible with article 6(2) of the Convention, section 92(5) should be interpreted as imposing on the accused person the burden of proving the relevant facts on the balance of probability. Unless he proves these facts he does not make good the defence provided by section 92(5). The contrary interpretation of section 92(5) involves substantial re-writing of the subsection. It would not be sufficient to read the subsection as meaning that it is a defence for a person charged to raise an issue on the facts in question. That would not be sufficient, because raising an issue does not provide the person charged with a defence. It provides him with a defence only if, he having raised an issue, the prosecution then fails to disprove the relevant facts beyond reasonable doubt. I do not believe section 92(5) can be so read. I do not believe that is what Parliament intended.

    47. The question which next arises is whether this interpretation, namely, that section 92(5) imposes a 'legal' or 'persuasive' onus on the person charged, is compatible with the presumption of innocence contained in article 6(2) of the European Convention on Human Rights. Prima facie this interpretation derogates from that principle. That much is clear. On this interpretation section 92(5) sets out facts a defendant must establish if he is to avoid conviction. These facts are presumed against him unless he establishes the contrary.

    48. That is not the end of the matter. The European Court of Human Rights has recognised that the Convention does not, in principle, prohibit presumptions of fact or law. What article 6(2) requires is that they must be confined within reasonable limits which take into account the importance of what is at stake and maintain the rights of the defence: Salabiaku v France (1988) 13 EHRR 379, 388, para 28. Thus, as elsewhere in the Convention, a reasonable balance has to be held between the public interest and the interests of the individual. In each case it is for the state to show that the balance held in the legislation is reasonable. The derogation from the presumption of innocence requires justification.

    49. Identifying the requirements of a reasonable balance is not as easy as might seem. One is seeking to balance incommensurables. At the heart of the difficulty is the paradox noted by Sachs J in State v Coetzee [1997] 2 LRC 593, 677, para 220: the more serious the crime and the greater the public interest in securing convictions of the guilty, the more important the constitutional protection of the accused becomes. In the face of this paradox all that can be said is that for a reverse burden of proof to be acceptable there must be a compelling reason why it is fair and reasonable to deny the accused person the protection normally guaranteed to everyone by the presumption of innocence.

    50. The relevant factors to be take into account when considering whether such a reason exists have been considered in several recent authorities, in particular the decisions of the House in R v Director of Public Prosecutions, ex parte Kebilene [2000] 2 AC 326 and R v Lambert [2001] UKHL 37, [2002] 2 AC 545. And there is now a lengthening list of decisions of the Court of Appeal and other courts in respect of particular statutory provisions. A sound starting point is to remember that if an accused is required to prove a fact on the balance of probability to avoid conviction, this permits a conviction in spite of the fact-finding tribunal having a reasonable doubt as to the guilt of the accused: see Dickson CJ in R v Whyte (1988) 51 DLR (4th) 481, 493. This consequence of a reverse burden of proof should colour one's approach when evaluating the reasons why it is said that, in the absence of a persuasive burden on the accused, the public interest will be prejudiced to an extent which justifies placing a persuasive burden on the accused. The more serious the punishment which may flow from conviction, the more compelling must be the reasons. The extent and nature of the factual matters required to be proved by the accused, and their importance relative to the matters required to be proved by the prosecution, have to be taken into account. So also does the extent to which the burden on the accused relates to facts which, if they exist, are readily provable by him as matters within his own knowledge or to which he has ready access.

    51. In evaluating these factors the court's role is one of review. Parliament, not the court, is charged with the primary responsibility for deciding, as a matter of policy, what should be the constituent elements of a criminal offence. I echo the words of Lord Woolf in Attorney-General of Hong Kong v Lee Kwong-kut [1993] AC 951, 975:

    'In order to maintain the balance between the individual and the society as a whole, rigid and inflexible standards should not be imposed on the legislature's attempts to resolve the difficult and intransigent problems with which society is faced when seeking to deal with serious crime.'

    The court will reach a different conclusion from the legislature only when it is apparent the legislature has attached insufficient importance to the fundamental right of an individual to be presumed innocent until proved guilty.

    52. I turn to section 92. (1) Counterfeiting is fraudulent trading. It is a serious contemporary problem. Counterfeiting has adverse economic effects on genuine trade. It also has adverse effects on consumers, in terms of quality of goods and, sometimes, on the health or safety of consumers. The Commission of the European Communities has noted the scale of this 'widespread phenomenon with a global impact'. Urgent steps are needed to combat counterfeiting and piracy: see the Green Paper, Combating Counterfeiting and Piracy in the Single Market, COM (98) 569 final, and its follow up, COM (2000) 789 final. Protection of consumers and honest manufacturers and traders from counterfeiting is an important policy consideration. (2) The offences created by section 92 have rightly been described as offences of 'near absolute liability'. The prosecution is not required to prove intent to infringe a registered trade mark. (3) The offences attract a serious level of punishment: a maximum penalty on indictment of an unlimited fine or imprisonment for up to ten years or both, together with the possibility of confiscation and deprivation orders. (4) Those who trade in brand products are aware of the need to be on guard against counterfeit goods. They are aware of the need to deal with reputable suppliers and keep records and of the risks they take if they do not. (5) The section 92(5) defence relates to facts within the accused person's own knowledge: his state of mind, and the reasons why he held the belief in question. His sources of supply are known to him. (6) Conversely, by and large it is to be expected that those who supply traders with counterfeit products, if traceable at all by outside investigators, are unlikely to be co-operative. So, in practice, if the prosecution must prove that a trader acted dishonestly, fewer investigations will be undertaken and fewer prosecutions will take place.

    53. In my view factors (4) and (6) constitute compelling reasons why the section 92(5) defence should place a persuasive burden on the accused person. Taking all the factors mentioned above into account, these reasons justify the loss of protection which will be suffered by the individual. Given the importance and difficulty of combating counterfeiting, and given the comparative ease with which an accused can raise an issue about his honesty, overall it is fair and reasonable to require a trader, should need arise, to prove on the balance of probability that he honestly and reasonably believed the goods were genuine.

    54. For these reasons, which are substantially the same as those given by Rose LJ in R v S (Trade mark defence) [2002] EWCA Crim 2558, I consider the persuasive burden placed on an accused person by the section 92(5) defence is compatible with article 6(2). This being so, it becomes unnecessary to consider whether, if this interpretation of section 92(5) were incompatible with article 6(2), section 92(5) might be open to a different interpretation pursuant to section 3(1) of the Human Rights Act 1998.

    55. I would dismiss this appeal. The answer to the certified question is that use of the offending sign as an indication of trade origin is an ingredient of the offences created by section 92 of the 1994 Act.


My Lords,

    56. I have had the advantage of reading in draft the speeches of my noble and learned friends Lord Nicholls of Birkenhead and Lord Walker of Gestingthorpe. I agree with them, and for the reasons which they give I too would dismiss this appeal.


My Lords,

    57. I have had the advantage of reading in draft the speeches of my noble and learned friends Lord Nicholls of Birkenhead and Lord Walker of Gestingthorpe. I agree with them and for the reasons which they give I too would dismiss this appeal.


My Lords,

    58. I have had the privilege of reading in draft the speech delivered by my noble and learned friend Lord Nicholls of Birkenhead, as well as the speech to be delivered by my noble and learned friend Lord Walker of Gestingthorpe. I respectfully agree with both of them and, for the reasons that they give, I too would dismiss the appeal.


My Lords,

    59. Counterfeiting, piracy and bootlegging of consumer goods (including video and audio recordings, computer equipment, toys and perfume) are big business and have a significant effect on the economies of many countries. A recent (1998) Green Paper from the Commission of the European Communities estimated that counterfeiting and piracy accounted for between 5 percent and 7 percent of world trade, with the estimated figure being as high as 25 percent in the audio-visual industry. Counterfeiting, piracy and bootlegging are not exact terms but all involve deliberate, and generally fraudulent, infringement of various intellectual property rights—notably trade marks, copyright, design right and performing rights. Counterfeiting is generally used to include unauthorised sale, under a well-known trade mark, of goods not made or authorised by the proprietor of the trade mark. Piracy is generally used to include infringement of copyright (including copyright in computer software). Bootlegging is generally used to describe the sale of sound recordings made, without authority, either at live concerts or from broadcasts. Typically, bootleg sound recordings are sold under a manufacturer's name which is unobjectionable but with unauthorised use, on the compact disc and its packaging, of the name of the performers (for instance, the Rolling Stones) despite the fact that their name may be a registered trade mark.

    60. The international community has a strong interest in suppressing these dishonest activities by both civil and criminal sanctions. This case is concerned with this country's criminal sanctions against misuse of trade marks used in the popular music industry. Your Lordships have in a sense been looking at only a small part of the total picture of sanctions against these activities, since your Lordships have not been concerned with civil or criminal sanctions against copyright infringements, or with the far-reaching civil and criminal sanctions provided under the Trade Descriptions Act 1968 and the Consumer Protection Act 1987.

    61. Section 92 of the Trade Marks Act 1994 ("the 1994 Act") creates a number of criminal offences punishable (on conviction on indictment) by up to ten years' imprisonment. The principal issue raised on this appeal is whether a person can be convicted of an offence under section 92 for acts which do not amount to a civil infringement of a registered trade mark. There are also some subsidiary and related issues. In order to explain how they arise it is necessary to say something about the background to the 1994 Act and its legislative scheme and purpose.

    62. The law of trade marks has ancient origins which are preserved in the non-statutory law of passing off. Statutory regulation of trade marks, including a system of registration, was introduced by the Trade Marks Act 1875 and the Trade Marks Registration Act 1875. For much of the 20th century the operative statute was the Trade Marks Act 1938 ("the 1938 Act"). In recent times the whole of trade mark law has been re-shaped by the 1994 Act, which was enacted (as its long title states),

    "to make new provision for registered trade marks, implementing Council Directive No. 89/104/EEC of 21 December 1988 ['the Directive'] to approximate the laws of the Member States relating to trade marks; to make provision in connection with Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark; to give effect to the Madrid Protocol Relating to the International Registration of Marks of 27 June 1989, and to certain provisions of the Paris Convention for the Protection of Industrial Property of 20 March 1883, as revised and amended; and for connected purposes".

    63. In construing the 1994 Act your Lordships have to approach it as a new statute, the main purpose of which is to implement the Directive. The Directive aims at the partial approximation (but not the complete harmonisation) of the trade mark laws of the member states. The 1994 Act must be construed accordingly (see Marleasing SA v La Comercial Internacional de Alimentación SA [1990] ECR I - 4135, para 8). But many of the basic concepts in the Directive appear to be the same as, or closely similar to, those which have informed the previous domestic law. That is natural enough, since the basic purpose of a trade mark is the same in any national economic system. The purpose is as a guarantee of commercial origin. As it was recently put by the European Court of Justice in Philips Electronics NV v Remington Consumer Products Limited [2003] RPC 14, 22, para 30,

    "according to the case-law of the Court, the essential function of a trade mark is to guarantee the identity of the origin of the marked product to the consumer or end-user by enabling him, without any possibility of confusion, to distinguish the product or service from others which have another origin, and for the trade mark to be able to fulfil its essential role in the system of undistorted competition which the Treaty seeks to establish, it must offer a guarantee that all the goods or services bearing it have originated under the control of a single undertaking which is responsible for their quality".

    64. In order to fulfil this function, a trade mark must be distinctive. That has always been a requirement under English law (although under the 1938 Act two levels of distinctiveness were required for so-called Part A and Part B registrations, a complication which has now disappeared). Distinctiveness is in this context to be contrasted with descriptiveness. Words which would be absurdly inappropriate as a description (such as North Pole for bananas: see British Sugar plc v James Robertson & Sons Limited [1996] RPC 281, 306) may for precisely that reason be particularly distinctive. The contrast is closely connected with the issue of trade mark use (that is, use of a registered trade mark for its statutory purpose, rather than for some other purpose) to which it will be necessary to return.

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