Honest Commercial Practice Can Be A Defense In A Trademark Infringement Suit

A Singapore freight forwarder, Megastar Shipping won a lawsuit against various well-known and famous brands namely Louis Vuitton, Gucci, Burberry, and Hermes. These brands had filed a lawsuit against the said freight forwarder in Singapore High Court in March 2013 for trans-shipping fake and trademark infringing goods.

These goods were inspected by Singapore Customs on-duty officers during its route from China to Batan via Singapore, wherein the concerned officers found and seized 40-foot containers, 436 cartons containing fake fashion accessories such as

China-made bags, shoes, belts, and other fashion accessories.

During court proceedings, it was heard that goods could not be shipped directly to Batam due to shallow water which could not sustain big containers and hence, these goods were unloaded in Singapore, where it is reloaded in smaller feeder vessels to be transferred to Batam.

In March 2013 Third-party in Batam PT Alvenindo Sukses Ekspress notified Megastar regarding its incoming shipments and asked to take goods from a Chinese company then ship the same to Batam via Singapore. They were told to arrange transfer to Batam with details of the vessel.

After the seizure of goods, Plaintiffs (Louis Vuitton, Gucci, Burberry, Hermes, and Sanrio) commenced proceedings for trademark infringement against Megastar Shipping Pvt Ltd and sued Megastar stating Freight company had imported the Counterfeit Goods into Singapore and are liable for infringing their respective trademarks under Section 27(1) read with Section 27(4)(c) of the Trade Marks Act.

Counsel for Megastar stated that they are solely engaged with transportation of goods/ freight services and did not misuse or use any of the trademarks in their businesses.

After hearing Plaintiff and defendant, Singapore High Court judge, Justice George Wei J, render his decision that freight forwarder Megastar Shipping Pte Ltd was not liable for trademark infringement in respect of counterfeit goods which were imported to Singapore to be delivered in Batam, Indonesia and also concluded that the defendant did not have any intention or knowledge of such fake/counterfeit products to be carried by defendants. He also added, fakes were not meant to be released and sold in the Singapore market, they were deemed to be imported into Singapore based on the provisions of TMA.”Megastar was hired as a freight forwarder by the third party for the limited purpose of arranging transshipments, but all the preparations and instructions for onward shipment of the counterfeit goods came from the third party,” said Justice Wei in dismissing the case and ordering costs to be paid to Megastar. He also ordered to destroy fake goods.

Megastar was described as an honest commercial company merely providing commercial services in course of business, which cannot be held liable for trademark infringement. In the present case, the court determined the knowledge of Megastar shipment and found that it was unaware of the goods that they were carrying and thus, it cannot be said to have committed an infringement of trademark and thus, it concluded that it would be contrary to the policy of the Trade Marks Act.

The Court drew a reasonable line to highlight the degree of liability of trademark infringement by commercial freight services if the goods are not opened by them in order to determine their knowledge.

Author: Ms. Deepika Sharma, Sr. Patent Associate at IP and Legal Filings, and can be reached at support@ipandlegalfilings.com.

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