Decriminalisation of parallel imports of trademarked goods

Background
The protection of trademark rights with regard to parallel imports is a contentious issue in Spain.

Before the European Court of Justice (ECJ) issued its Silhouette judgment (Case C-355/96), the Spanish courts seemed to favour the principle of international exhaustion, thus preventing a trademark owner from invoking its trademark rights to prevent the import and/or further commercialisation in Spain by third parties of original products bearing the trademark originating from outside Spain. 

However, since the Silhouette judgment, Spanish case law has been uncertain. Although some first instance and appeal courts expressly followed the Silhouette doctrine, several other courts were reluctant to apply it by considering that the principle of exhaustion of rights extended worldwide. Even the Supreme Court followed this line in a judgment of 28th September 2001, considering that a trademark owner could not prevent the commercialisation in Spain of products from outside the European Economic Area (EEA) when those products were commercialised in the country of origin (a third EEA country) by it or with its consent.

Afterwards, and further to the ECJ's decisions in Sebago (Case C-173/98) and Zino Davidoff (Cases C-414/99 to C-416/99), which confirmed and clarified the position adopted in Silhouette, the Spanish civil courts – including the Supreme Court – amended their previous case law, entitling trademark holders to prevent the import and commercialisation in Spain of original goods from outside the EEA. The current Spanish position seems clear: a trademark holder is entitled to invoke its trademark rights before the civil courts in order to prevent the import and commercialisation in Spain of original goods from outside the EEA.

This greater awareness on the part of the civil courts of the fact that parallel imports of products from third countries to the EEA constitutes trademark infringement may also have been influenced by the 2003 reform of the Criminal Code, through Act 15/2003 (which entered into force on 1st October 2004). Among other matters, the reform considerably amended the regulation on offences against intellectual property with the aim of enhancing protection. One of the most important changes made the parallel import of trademarked products an offence. Article 274, which before the reform punished only counterfeiting, was amended in order to apply the same penalties to parallel imports and the commercialisation of original goods coming from third countries of the EEA which were introduced onto the Spanish market without the consent of the trademark owner.

Other amendments relating to intellectual property included:

• The application of higher penalties.
• The adjustment of criminal definitions to social reality. 
• The adoption of mechanisms to facilitate the prosecution of offences, such as the elimination of the need for a previous complaint by the offended party in order for the offence to be prosecuted.

Thus, Article 274 of the Criminal Code read as follows:

“1. Will be punished with imprisonment from 6 months to 2 years and a fine from 12 to 24 months the person who, with industrial or commercial aims and without the consent of the owner of a registered distinctive sign and with knowledge of this registered right, reproduces, imitates, modifies or otherwise uses, an identical or confusable distinctive sign to distinguish identical or similar goods or services. The same penalties are imposed on those that intentionally import these products without such consent, both if they have a legal or illegal origin. However, the import of these products from a State member of the EU will not be punished when they have been acquired directly from the owner or with its consent.

2. The same penalties will be imposed on those who, knowingly, possess for their commercialisation or introduce products or services into the market that, according to the previous paragraph, constitute an infringement of the owner’s exclusive rights, even if the products are imported from abroad.”

Therefore, the introduction of a new definition of the offence into Article 274, penalising those who “knowingly import these products without such consent”, aimed to reinforce through the criminal law a civil law infringement (parallel imports of products coming from third countries of the EEA).

Adoption of Act 5/2010
Seven years after that reform, the legislature has now approved a new reform of the Criminal Code through the adoption on 23rd June 2010 of Act 5/2010 (which entered into force on 23rd December 2010).

The reform amends the provisions relating to offences against registered distinctive signs in two ways.

First, it provides for the possibility to apply lower penalties and creates a new fault for cases of retail distribution. According to the preliminary recitals, the higher penalties for offenders implemented by the 2003 reform were disproportionate in cases of low-scale sales of counterfeit copies. As a result, the reform provides only for fines or community service in cases of minor retail sales. Furthermore, such conduct is qualified as a mere fault when the benefit does not exceed €400. 

Second, it eliminates any reference to parallel imports, thus decriminalising such conduct. The qualification as an offence was considered to be “unnecessary” and “disproportionate”, as qualification as a civil trademark infringement is sufficient to protect the rights holder. Thus, Article 274 of the Criminal Code now states as follows:

“1. Will be punished with an imprisonment from 6 months to 2 years and a fine from 12 to 24 months the person who, with industrial or commercial aims and without consent of the owner of a registered distinctive sign and with knowledge of this registered right, reproduces, imitates, modifies or otherwise usurps, an identical or confusable distinctive sign to distinguish identical or similar goods, services, activities or establishments. The same penalties are imposed on those that import these products.

2. The same penalties will be imposed on those who, knowingly, possess for their commercialisation or put in commerce products or services that, according to the previous paragraph, constitute an infringement of the owner’s exclusive rights, even if the products are imported from abroad.

3. Notwithstanding the above, in cases of retail distribution, taking into account the characteristics of the culprit and the reduced amount of the economic benefit, as long as none of the characteristics of Article 276 are met, the Judge could impose a fine of three to six months or labours in benefit of the community from 31 to 60 days. In the same cases, when the benefit does not exceed 400€, the fact will be punished as a fault provided for in Article 623.5.”

The last article establishes the new IP fault, imposing detention of four to 12 days or a fine of between one and two months' earnings where the benefit does not exceed €400 and none of the circumstances of Article 276 apply. 

The reform also required the amendment of Article 282.4bis of the Criminal Procedural Act in order to consider as organised crime the cooperation of three or more persons in order to carry out, in a permanent and ongoing way, conduct intended to commit offences against intellectual property, as set down in Articles 270 to 277 of the Criminal Code.