Decision
Consumer error theory
Comment


Decision

In a recent criminal case Section 2 of the Tarragona Court of Appeal issued a ruling which marks a radical departure from its former jurisprudence on the consumer error theory.

The ruling stemmed from an appeal filed against a decision of Valls Criminal Court No 2, which ordered the provisional discontinuation and shelving of proceedings because the seized products, despite infringing several well-known trademarks (by reproducing these trademarks without the holders' consent), did not mislead consumers about their authenticity. The court reached this conclusion based on:

  • the inferior quality of the unauthorised products compared to the quality of the genuine products;
  • the lower price of such products; and
  • the fact that the seized goods were intended to be sold on the street or at flea markets.

Consumer error theory

Although outdated, the consumer error theory has been upheld by several Spanish appeal courts. It was developed by the Supreme Court under the former Criminal Code 1973, where it was relevant in assessing whether a consumer had been deceived while purchasing a product with a counterfeit trademark.

The Criminal Code provided that IP crimes constituted fraud in such a way that consumer deception was relevant. Indeed, Article 534 of the code was included in Chapter IV, "About fraud".

However, Article 274 of the existing Criminal Code is included under the heading "Crimes against intellectual property" – also in Title VIII, but in a different chapter and section from those concerning fraud (Chapter IV) and crimes against the market and consumers (Chapter XI, Section 3).

A consumer's lack of awareness that he or she is buying an infringing product is not an element of the crime under Article 274 of the Criminal Code, because the only legally protected right is the exclusive right to use or exploit an IP right derived from its registration with the relevant agencies.

The crime set out in Article 274 does not feature the word 'consumer'; nor does the article refer to the protection of consumers' assets, as other criminal provisions relating specifically to the market and consumers do. It is not the consumer who is the victim of the IP crime, but the holder of the infringed trademark.

Moreover, Article 274 of the Criminal Code does not provide that the 'products' as such must be confused with each other. According to the wording of Article 274, only the signs illegally reproduced in the seized products and the registered trademarks are relevant with regard to confusion. Further, the only reference made in the article regarding the products is that those to which the trademark is applied be "the same or similar products for which the intellectual property right is registered".

If consumers are deceived, cheated or scammed, then in addition to Article 274, other criminal provisions relating to fraud and consumer protection could apply. However, deception is not required to apply the criminal offence provided for in Article 274, which relates only to crimes against intellectual property.

Comment

Previously, the Tarragona Court of Appeal – along with those of Girona, Asturias, Cantabria, Pontevedra and Salamanca – had held that consumer error should exist in order for intentional counterfeiting to merit criminal penalty. Those seeking to defend IP rights and enforce anti-counterfeiting measures have struggled against this theory. Therefore, this ruling could mark the start of a move towards the abandonment of this theory by the Tarragona Court of Appeal; in time, fewer Spanish appeal courts may support it.

For further information on this topic please contact Jordi Camó at Grau & Angulo by telephone (+34 93 202 34 56), fax (+34 93 240 53 83) or email ([email protected]). The Grau & Angulo website can be accessed at www.gba-ip.com.