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Violation of EUTM or RCD is not IP offence - Finnish Supreme Court

Marjut Alhonnoro reports on a precedent from the Finnish Supreme Court that violation of a European Union trade mark or design right is not punishable as an intellectual property offence in Finland

In its judgment of 26 April 2018 (case KKO:2018:36), the Finnish Supreme Court has confirmed that a violation of a Union regulation based trade mark or design right is not punishable as an intellectual property offence in Finland, because the wording of the intellectual property offence in the Criminal Code of Finland only covers a violation of national laws.

Criminal penalties in Finland

According to Chapter 49, Section 2 of the Criminal Code of Finland, a person who, in violation of the Trade Mark Act, the Registered Designs Act, the Act of the Protection of Semiconductor Topographies, the Utility Models Act or the Plant Variety Rights Act and in a manner conducive to causing considerable financial loss to a person holding a right, breaches the right to a trade mark, the exclusive right conferred by a patent, the right to a registered design, the right to a semiconductor topography, the right to a utility model or a plant variety right shall be sentenced for an intellectual property offence to a fine or to imprisonment for at most two years.

The statutory definition does not mention the breach of Community Trade Mark Regulation 207/2009 (hereinafter CTMR, which was still applicable to the case at hand) or Community Design Regulation 6/2002 (CDR) as grounds for an intellectual property offence, and the Finnish Supreme Court has now confirmed what that means for a violation of rights based on the CTMR or CDR.

Facts of the case

A and B were charged with two intellectual property offences for importing 1000 steam mops and 1320 choppers that were copies of C Inc’s H2O MOP mops and D GmbH’s Nicer Dicer choppers and infringed the complainants’ trade mark and design rights according to CTMR and CDR.

The infringed rights were EUTM registrations numbers 1063367, 6379581, 005305529, 011166171 and 1199152 and RCD registrations numbers 001791898-0001 – 0009 and 001931213-0001 – 0009, and the Helsinki District Court deemed it proven that the infringements were intentional. The District Court considered that CTMR and CDR are comparable to the Finnish Trade Mark Act and Registered Designs Act, so it regarded CTMR and CDR as falling within the scope of the criminal provision. Consequently, the District Court sentenced A and B to pay a fine for two intellectual property offences and ordered the confiscated infringing products forfeit to the State.

RCD 001791898-0002     RCD 001931213-0009

A and B appealed the District Court's decision before the Helsinki Court of Appeal which overruled the District Court’s decision and dismissed charges on the grounds that the CTMR and CDR did not contain any criminal provisions, wherefore a Community trade mark (CTM) and a registered Community design (RCD) could not be considered comparable to the national rights in relation to criminal sanctions. In consideration of the principle of legality, the Court of Appeal held that it was not possible to interpret Chapter 49, Section 2 of the Criminal Code to cover a violation of the CTMR and CDR.

Supreme Court appeal

The public prosecutor appealed the decision before the Supreme Court claiming that an intentional violation of the CTMR and CDR should be punishable under the Criminal Code. A leave of appeal was granted, and the Supreme Court reasoned as follows:

According to Chapter 3 Section 1.1 of the Criminal Code of Finland, a person may be found guilty of an offence only on the basis of an act that has been specifically criminalised in law at the time of its commission. According to the preparatory legislative materials, the principle of legality means, inter alia, that a Court cannot interpret the letter of the law beyond its literal meaning when applying penal provisions, because the outcome of interpretation must always remain foreseeable.

The Supreme Court found that the wording of the provision on intellectual property offence in the Criminal Code is clearly narrowed down to the violation of certain national laws, so the violation of the CTMR and CDR cannot be punishable on the basis of the Criminal Code per se. Furthermore, the Trade Mark Act and Registered Designs Act do not contain any such provision on the grounds of which they could be applicable to the CTM and RCD in a manner relevant for criminal liability. Therefore, the potential criminal liability for a violation of a CTM or RCD should be based on other provisions, if there are any.

The Supreme Court took note of the fact that the European Court of Justice has ruled that Member States are obligated to make sure that a violation of a “Union right” is sanctioned on the same conditions as the violation of a national right (judgment of 20 December 2017, Vaditrans, C-102/16, EU:C:2017:1012, paragraph 55 and judgment of 10 July 1990, Hansen, C-326/88, EU:C:1990:291, paragraph 17). Nevertheless, the Supreme Court noted that, according to established case law of the CJEU, a Union directive or regulation cannot, of itself and independently of national legislation, have the effect of determining or aggravating criminal liability (Vaditrans, paragraphs 56 and 57). Therefore, the Court concluded that criminal liability cannot follow from the CTMR and CDR alone.

Consequently, the Supreme Court found that a violation of the CTMR and CDR cannot constitute an intellectual property offence in accordance with Chapter 49 Section 2 of the Criminal Code and concluded that A and B could not be punished for an intellectual property offence. The decision in Finnish can be found here.

Amendments expected

It has been widely acknowledged in Finland that the Criminal Code is inadequate in this respect, and it is expected to be amended in the context of the Finnish Trade Mark Law reform currently in progress. The draft proposal for a Government Bill to the Parliament for a new Trade Mark Act has already been prepared, and the proposal also addresses the need to amend the Criminal Code as far as a violation of EUTMR is concerned.

The current proposal still fails to address the violation of CDR, but this deficiency has been raised in statements given on account of the proposal, so hopefully the deficiency will be corrected before the amendment enters into force.

Thanks to Marjut Alhonnoro of Roschier, Finland for contributing this post!

Posted by: Blog Administrator @ 17.07
Tags: EUTM, RCD, Finnish Supreme Court, KKO:2018:36,
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MARQUES does not guarantee the accuracy of the information in this blog. The views are those of the individual contributors and do not necessarily reflect those of MARQUES. Seek professional advice before action on any information included here.

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