Shipper cleared of trademark infringement

Freight forwarder not importer of fake goods, nor did it act in concert with importers: Court

The companies behind glitzy brand names such as Louis Vuitton, Gucci, Burberry and Hermes have failed in their lawsuits against a Singapore freight forwarder involved in shipping fake goods from China via Singapore to Batam.

The goods could have fetched over $1 million.

In a landmark case, the High Court last month ruled that freight forwarder Megastar Shipping was not liable as it was not the importer nor did it act in concert with the importers under the Trade Marks Act (TMA).

"The fact that (Megastar) as freight forwarder... was required to submit or make declarations under Singapore Customs rules and regulations does not mean Megastar is to be treated as an importer or exporter for the purposes of the TMA," Justice George Wei wrote, in judgment grounds issued last month.

"This is so even though some of the Customs permits and declarations may name (Megastar) as the importer," he added.

The case goes back to April 2013, when Singapore Customs inspected two 40-foot containers, and seized nearly 31,000 items, including China-made bags, shoes, belts and other fashion accessories - all fakes.

They were shipped from two ports in China to Singapore for onward shipment to Batam in smaller vessels. The court heard that the goods could not be be shipped directly to Batam - the large container vessels could not enter Batam port because the water there was too shallow.

So, the goods had to be unloaded here, and the containers reshipped on smaller "feeder" vessels.

The trademark owners of the four brands, and Sanrio Company, which is behind the Hello Kitty line of goods, then sued Megastar for trademark infringement, alleging Megastar had imported the fakes here.

The five plaintiffs, represented by three sets of lawyers, including Mr M. Ravindran, Mr Dedar Singh Gill and Mr Andy Leck, argued that the only issue was, who should be liable as an "importer" under the TMA, and Megastar as the local consignee was the importer.

They added that it was "irrelevant" whether Megastar knew if the containers carried counterfeit goods, among other things.

Megastar, defended by lawyers Leonard Chia and Ng Liu Qing in all five suits, denied the claims and said that even if the fake goods had been imported into Singapore, Megastar was not involved in the shipment from China to Singapore, and so could not be the importer.

Megastar served as a "mere freight forwarder", having been notified in March 2013 by a third party in Batam about the incoming shipments to Singapore, and to arrange their transfer to Batam with the details of the vessel that it was given.

Justice Wei said although the fakes were not meant to be released into the Singapore market, they were deemed to be imported into Singapore based on the provisions of the TMA. He ruled that the importer was not Megastar but either the firm that shipped the goods from China or the third party in Batam.

He added that Megastar was not the would-be exporter from Singapore to Batam, and found that it did not share a "common design" with them to commit the infringement.

Justice Wei said Megastar was "engaged as a freight forwarder by the third party" for a limited purpose.

He dismissed the case and ordered costs to be paid to Megastar. The fakes have since been destroyed.

Said the judge: "There is no basis for the court to find that just because the goods were properly inspected and detained by Singapore Customs, Parliament must have intended there to be a local defendant against whom the intellectual property rights owner could claim and hold liable for the substantive act of infringement by importation."

Intellectual property law expert Martin Schweiger, who operates here and in Munich, lauded the court's decision that the freight forwarder is not at fault.

"This saves an entire industry in Singapore," he said.

A version of this article appeared in the print edition of The Straits Times on December 05, 2017, with the headline 'Shipper cleared of trademark infringement'. Subscribe