Singapore freight forwarder handling fake goods not liable for trade mark infringements: High Court

The High Court has ruled that a freight forwarder that was involved in the transshipment of fake goods was not liable in lawsuits filed against it.
The High Court has ruled that a freight forwarder that was involved in the transshipment of fake goods was not liable in lawsuits filed against it.PHOTO: ST FILE

The companies behind glitzy brand names such as Louis Vuitton, Gucci, Burberry and Hermes failed in their lawsuits against a Singapore freight forwarder involved in the transshipment of fake goods from China via Singapore to Batam that could have sold for over $1 million.

In a landmark case, the High Court ruled that freight forwarder Megastar Shipping was not liable as it was neither 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 named as the consignee... and 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," ruled Justice George Wei.

"This is so even though some of the customs permits and declarations may name (Megastar) as the importer," he added in judgment grounds issued last month (Nov 24).

The case goes back to April 2013, when Singapore Customs inspected two 40-foot containers, found 436 cartons of fashion fakes and seized more than 30,900 China-made bags, shoes, belts and other fashion accessories.

They had been shipped here from two ports in China to Singapore for onward shipment to Batam in smaller vessels. The court heard the goods could not be be shipped directly to Batam as the large container vessels could not enter Batam port because the water was too shallow. Hence the goods had to be unloaded here and the containers reshipped on smaller "feeder" vessels.

The trade mark owners of the four brands and Sanrio Company, which is behind the Hello Kitty line of goods, then sued Megastar for trade mark 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 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 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 countered 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 the third party in Batam of the incoming shipments to Singapore and to arrange their transfer to Batam with details of the vessel to be used for Batam given.

Justice Wei held that 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 the importer was not Megastar but either the shippers from China or the third party in Batam and explained that Megastar was not the would-be exporter from Singapore to Batam, finding it did not share a "common design" with them to commit the infringements.

"It was engaged as a freight forwarder by the third party for the limited purpose of arranging for the transshipments, but all the preparations and instructions for onward shipment of the counterfeit goods came from the third party," said Justice Wei in dismissing the case and ordering costs to be paid to Megastar.

The fakes have since been destroyed.

"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," he added in the 83-page judgment.

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.