Jordi Camó November 8 2021 Supreme Court rejects consumer error theory Grau & Angulo | Intellectual Property - Spain Jordi Camó Intellectual Property FactsBackgroundDecisionCommentOn 16 September 2021, the Second Chamber of the Supreme Court dismissed for consideration the cassation appeal filed by the defendant against the judgment issued by the Superior Court of Justice of Madrid, which had rejected the appeal filed against the condemnatory judgment handed down in the first instance by the Provincial Court of Madrid. The Provincial Court of Madrid had sentenced the infringer to a prison sentence, a fine, the payment of civil liability in favour of Adidas and costs (for further details, please see "Superior Court of Justice confirms criminal conviction for wholesale and retail sale of fake garments").FactsThis article discusses the cassation appeal filed by the defendant that gave rise to the recent Supreme Court ruling. The defendant repeated the allegations made in his previous appeal. In particular, he insisted again on a legal question of interpretation of the law for a purported improper application of articles 273 and 274 of the Criminal Code relating to crimes against intellectual property for infringement of registered industrial designs and registered trademarks, respectively.The defence argued once again that the facts declared as proven did not constitute a crime against intellectual property since the seized products did not create any risk of confusion for potential consumers.BackgroundThe so-called "consumer error theory" and its progressive abandonment in the case law of the provincial courts(1) was a jurisprudential trend that held that for a crime to be committed it was necessary for the characteristics of the illicit products to sufficiently mislead the potential purchaser as to their authenticity. The theory led to the issuance of acquittals in cases where the low quality of the infringing products, the low price at which they were marketed or the place where they were sold could not lead to this deception.This consumer error theory originated in certain Supreme Court judgments issued in application of the former Criminal Code 1973 in which an assessment was made as to whether there had been "fraud" of the type described in the Code. In such assessments, it was relevant to consider whether the consumer had been misled when buying a product with a counterfeit brand.However, the new Criminal Code 1995 represented a paradigm shift for this type of crime. It was intended to protect the trademark right for what it was – namely, a property right, and not for the protection of consumers (as was the case for "fraud" under the previous Code). The only legally protected right in the current article 274 of the Criminal Code is the right to sole and exclusive use or exploitation of an IP right. It is irrelevant whether the use of another's trademark may mislead the consumer, as long as there is no unauthorised use of the trademark by a third party.Despite this reform, some provincial courts have continued to embrace the consumer error theory.Subsequent amendments to the Criminal Code and the Criminal Procedure Act in 2015 have led to an increase in prison penalties for these crimes and a reform of the cassation appeal procedure in the criminal jurisdiction that allows the Supreme Court to be approached for reasons of interpretation of the law. Previously, this was not possible and there was therefore an inconsistency in case law criteria for the same type of crime.DecisionIn this case, both the public prosecutor and the private prosecutor objected to the admission of the cassation appeal, requesting, as a subsidiary petition, its dismissal.As far as the consumer error theory is concerned, the Supreme Court ratified and endorsed the conclusions of the Provincial Court of Madrid and the Superior Court of Justice of Madrid, stating that consumer error is not a requirement for a crime and that its concurrence is irrelevant, given that "the legal protected right in article 274 of the Criminal Code is the exclusive use of the trademark, to which the prestige or commercial reputation of its owner is inextricably linked".The Supreme Court also argued that:the circumstances that would allow the consumer –at least potentially– to have knowledge that the product was not genuine (price and place of commercialization), disappeared as soon as the goods were purchased and, therefore, they could not be seen by other potential consumers. The Supreme Court confirmed that "it is not that the confusion has to occur between the products, but rather between the registered trademark and the imitated sign", as well as that "the circumstances in which the customer buys the product and that could lead him to consider that the product is not genuine are irrelevant" because said crime "does not punish a fraud against end consumers, but rather a detriment to the owner of the intellectual property right".CommentSince 1995, few Supreme Court resolutions have been able to address this matter. Never before have two paragraphs been so clearly and forcefully issued by the Supreme Court in its dismantling of this theory.This Supreme Court ruling will certainly have a huge impact on the practice of anti-counterfeiting and criminal litigation in the field of crimes against intellectual property, in which the unfortunate consumer error theory has been one of the main areas of conflict for years.For further information on this topic please contact Jordi Camó at Grau & Angulo by telephone (+34 93 202 34 56) or email ([email protected]). The Grau & Angulo website can be accessed at www.gba-ip.com.Endnotes(1) For further details, please see:"Is Tarragona Court of Appeal abandoning consumer error theory?";"Progressive abandonment of consumer error theory in criminal jurisprudence";"Criminal sentence for importers of counterfeit t-shirts";"Appeal court confirms criminal conviction for commercialisation of infringing products"; and"Second-instance court nullifies acquittal due to incorrect interpretation of IP crime".