Now Grey Goods Are Not So Grey
The recent Court of Appeal decision in R v C and Others  EWCA Crim 1617 has confirmed that sale of grey goods can be met by criminal sanctions under Section 92 of the Trade Marks Act 1994 (‘the Act’), which can amount to a maximum of 10 years imprisonment.
Grey goods are goods to which a trade mark proprietor has authorised the application of their trade mark, but has not authorised the subsequent disposition of those marked goods. Examples of how this may arise are provided in the judgment and include, where goods had been part of an order placed with an authorised manufacturer by the trade mark proprietor but then cancelled; part of a batch of goods whose manufacture had been authorised but were subsequently rejected as not being of sufficient standard; or goods manufactured, pursuant to order, with authority but in excess amount. The issue of grey goods and their interaction with their supply chains is often of particular concern to retailers.
In this case it appears that the offending goods consisted of a mixture of genuine grey goods and counterfeit products, all sourced from outside the European Economic Area (‘EEA’). This is a common scenario faced by many brand owners and the question was whether all these classes of goods could fall within the provisions of s. 92 of the Act. The decision was in favour of trade mark proprietors, based on three factors: (1) the wording of Section 92; (2) earlier legal authority; (3) public policy.
The decision is of importance because it provides brand owners with an additional means whereby they can control their supply chain with respect to grey goods. Given that these acts can be deemed as falling under the criminal provisions of the Act, brand owners can now encourage Trading Standards to take enforcement action or launch private prosecutions under the Act. The decision also raises the issue that parallel importation from outside the EEA, and following BREXIT, outside the UK, might be deemed a criminal act – a prospect some retailers and brand owners might view with glee, but others with fear.