In a decision of 6 October 2021 The Court of Appeal had filed by the trademark owners, declaring the nullity of the first-instance acquittal judgment that:
classified the facts of the case as a misdemeanour (and not as a criminal offence); and
considered that the statute of limitations had lapsed.
Background
The case started with the seizure of garments illegally reproducing several well-known trademarks in a stall at the Outlet Fair, which took place in the Glass Pavilion of the Casa de Campo in Madrid. The defendants were responsible for the stall and one of them was the manager of a company that dealt with the storage, distribution and commercialisation of the garments.
The Trial Court No 18 of Madrid declared as proven the facts that the defendants had deliberately carried out the commercialisation of products infringing the trademark rights of others with the aim of seeking profits. However, it declared that those facts constituted a misdemeanour, rather than a criminal offence, and acquitted the defendants, determining that the statute of limitations for misdemeanours had lapsed.
In coming to this conclusion, the Trial Court did not take into account the cumulative requirements set forth in Article 274.2 of the Criminal Code (in force at the time of the events), considering that the occurrence of only one of these requirements (ie, the profits obtained by the infringer must not exceed €400) justified the application of the attenuated offence.
The defendants still appealed the sentence, alleging infringement of the right of presumption of innocence (with regard to the facts declared proven by the first-instance decision), claiming that they were not aware of the counterfeit nature of the garments and that such garments could not be confused with the originals.
The trademark owners also appealed the sentence, arguing that the first-instance court had incorrectly applied the attenuated offence set out in the criminal offences against intellectual property, thus making the case into a misdemeanour (resulting in lower penalties and a much shorter statute of limitations than for criminal offences). The trademark owners requested that the decision be annulled and that a new judgment be issued.
The Madrid Court of Appeal dismissed the appeal filed by the defendants by means of a judgment dated 2 February 2021 and upheld the appeal filed by the trademark owners. It declared the nullity of the first-instance court’s acquittal so that the Trial Court could issue a new decision without modifying the proven facts and without the need to hold a new trial hearing, but taking into account the guidelines set forth by the Madrid Court of Appeal regarding how Article 274 of the Criminal Code should be interpreted to assess whether the infringement at issue was a criminal offence or a misdemeanour.
Second Trial Court decision
The Trial Court No 18 of Madrid issued a new decision on 22 April 2021, sentencing the defendants - as perpetrators of a trademark infringement criminal offence - to:
· four months of imprisonment; and
· pay compensation, jointly and severally, to the trademark holders in amounts to be determined during the enforcement phase of proceedings.
This new decision was once again appealed by the defendants.
Second Court of Appeal decision
In its new judgment dated 6 October 2021, the Court of Appeal held firstly, and contrary to what the defendants alleged, that the proven facts established in the original sentence remained unchanged in the second judgment issued by the Trial Court. The Court of Appeal pointed out that the judgment now considered that the proven facts constituted a criminal offence, and not a misdemeanour. It also highlighted that, this time around, the Trial Court had correctly assessed whether all had been met cumulatively, and not just one of them. The first-instance court had wrongly considered in its first judgment that the facts constituted a misdemeanour based on an erroneous assessment of these requirements.
The defence also alleged that the facts of the case fitted with the “retail distribution” scenario of minor importance referred to in the second paragraph of Article 274.2, and that “the characteristics of the culprit” also referred to in that article had not been correctly assessed. The Court of Appeal responded that the defendants carried out a commercial activity through a company whose managing director was one of the defendants. The other defendant was a collaborator of said company, registered with the Trade Registry with a corporate purpose corresponding to the wholesale trade of clothing, with international projection and annual accounts deposited with the Trade Registry that amounted to millions of euros in 2013, 2014 and 2015.
In this sense, the Madrid Court of Appeal also reiterated that the total number of garments seized during the Outlet Fair was 383, evidencing:
· on the one hand, the professionalisation of a commercial activity conducted through a company; and
· on the other, that the defendants were not in a situation of destitution or poverty, or in a special state of need.
Finally, the Court of Appeal also responded to the allegation that the seized products could not be confused with the originals. The defendants raised this argument to demonstrate the atypical nature of the conduct at issue - an argument that the Court of Appeal had already rejected in its first decision handed down within the framework of the present procedure.
In this regard, the Court of Appeal insisted in its second decision that the legal right protected by recognition, even where this may have indirect repercussions on consumers and on the market itself. It was evident, according to the court, that