Draft sentencing guidelines for unauthorised use of a trade mark offence published today

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Draft guidelines for sentencing individuals and organisations for selling or possessing counterfeit goods intended for sale were published for consultation by the Sentencing Council today.

The two separate guidelines apply to the single offence of using a trade mark without the owner’s consent, which can include possessing or selling counterfeit goods, or counterfeiting or possessing the means of counterfeiting goods, with a view to making a gain or causing a loss.

The ‘Unauthorised use of a trade mark guidelines’, which will apply to all courts across England and Wales, will replace the current guideline published in 2008, which is used in magistrates’ courts and applies to individuals only. 

The proposed guidelines will provide a clear structure for courts when sentencing this offence, which can bring financial and reputational loss to companies and can put purchasers at risk from substandard goods. 

The Council is seeking views on the draft guidelines from judges, magistrates and others with an interest in this area. The consultation will run from 8 July 2020 to 30 September 2020.

The cases the guidelines will cover vary from the very unsophisticated such as selling a few obviously fake items on a market stall or online, to highly organised and profitable businesses manufacturing or importing a large quantity of high-quality counterfeit ‘designer’ goods. 

Typical prosecutions relate to clothing, footwear or accessories (such as handbags), but also include computer games, toys, cosmetics, cigarettes and tobacco, car parts and electrical equipment. They may also relate to the possession of labels or packaging bearing trade marks rather than the counterfeit goods themselves.

Sentencing Council member District Judge Mike Fanning said: “People or organisations that trade in counterfeit goods undermine the profitability and reputation of legitimate businesses. There is also a risk to purchasers from shoddy or sometimes dangerous goods.

“The new guidelines will assist courts in sentencing these offences, which can be complicated and may not be familiar to many sentencers.”

Director of National Trading Standards Wendy Martin said. “We welcome the decision to provide comprehensive sentencing guidelines for the offence of unauthorised use of a trade mark which will ensure a consistency of approach in sentencing these often complex cases.” 

Under the draft guideline for individuals, a person found guilty of trade mark offences faces sentences such as a fine, community order or custody. The court may also order the counterfeit goods to be forfeited and make orders for confiscation (to remove the proceeds of crime) and compensation.

As with all sentencing guidelines the seriousness of the offence is assessed by considering culpability and harm. The level of culpability is determined by identifying the offender’s role and the extent to which the offending was planned and the sophistication with which it was carried out. 

The assessment of harm involves putting a monetary figure on the offending with reference to the value of equivalent genuine goods and assessing any significant additional harm, both reputational and financial, suffered by the trade mark owner or purchasers of the counterfeit goods.

For offences committed by organisations, the draft guideline seeks to ensure that the financial penalties imposed for the offence, including confiscation and compensation, remove all gain from the offending as well as achieving appropriate additional punishment and deterrence.  

Confiscation and compensation are dealt with before other financial orders are considered. The maximum penalty allowed by law for this offence is an unlimited fine, and the fines in the draft guideline range from £250 to £450,000. 

The seriousness of the offence is assessed in a similar way to the guideline for individuals because it is not uncommon for an individual director or manager to be prosecuted alongside an organisation.

Most of the organisations prosecuted for trade mark offences are relatively small businesses usually with only one or two director / owners, with an estimated annual turnover not more than £2 million.