Production and sale of counterfeit goods results in harsh sentences

Date 25 feb. 2010

On December 4, 2009, the court in Viborg issued the harshest sentences in Danish history for the production and sale of counterfeit goods. Among other things, the historic judgment resulted in one unconditional two-year prison sentence, combined with the confiscation of DKK 6.4 million from the accused in question.


Additional damage claims had been made during the proceedings totalling more than DKK 60 million, of which a claim of DKK 53 million had been made by Louis Poulsen Lightning A/S, manufacturer of the famous PH-lamps. It was decided, however, to deal with the damage claims in a separate civil suit that has yet to reach a conclusion. 


The Case in Brief

The case involved a company, as well as a number of persons, that attracted the police’s attention after the police received a complaint from Louis Poulsen Lightning A/S. During the investigation that followed, the police discovered that, in addition to counterfeit pendants for use with PH-lamps, the persons involved had also produced a substantial number of counterfeit Global knives in China, with the intent to sell these goods in Denmark and other countries. The people involved managed to sell part of the counterfeit goods, prior to being apprehended by the police in 2005, and charged with the illegal production and sale of counterfeit goods. At the time of the arrests, the police also seized a container weighing several ton, containing more than 1000 boxes of counterfeit Global goods.

 

The Legal Basis

Pursuant to Section 2 of the Copyright Act, the creator owns the exclusive right to use a copyright protected creation commercially. According to Section 76(1) of the Copyright Act, violations of the creator’s rights result in a fine, but may also, in aggravating circumstances, result in a jail sentence of up to six years. See Section 76(2) of the Copyright Act and Section 299b of the Penal Code. Aggravating circumstances are present if, for example, the violations of the creator’s right are done commercially for profit, or if a number of counterfeit goods are produced or reach the public.

 

The Court’s Verdict

The court concluded that the copied goods closely resembled the originals, and that the minor differences between the two did not change the fact that it was almost impossible for a layperson to tell the difference between the two types of products. Consequently, there was a risk of confusion between the originals and the copies. Thus, the court concluded that the copied goods violated the copyright of both Global and Louis Poulsen Lightning A/S.


In its sentencing, the court explicitly noted the amount of goods produced, that had an estimated market value of DKK 105 million, as well as the systematic and commercial approach, through which the goods had been produced. These were aggravating circumstances pursuant to Section 76(2) of the Copyright Act Section § 76(2) and the Penal Code, Section 299b.


One of the accused was given a two-year unconditional prison sentence and approximately DKK 6.4 million was confiscated from him. This was his estimated gain on the sale of the goods. Another person was given an unconditional sentence of one year and six months, while a third was given a conditional sentence of six months.


Consequences

The case has received a lot of attention, primarily due to the harsh sentences. These sentences are, however, merely a result of the professionalism with which the accused manufactured the counterfeit goods. The manufacturing was unusually well organized and vast, with substantial financial gains for the people involved.


During the proceedings, the accused had explained that the Chinese producer had informed them that it had the necessary licenses to produce the goods in question. The court, however, rejected this explanation, in that Global goods are only produced in Japan. Moreover, the court emphasized the low price the accused paid for the goods.


It must be concluded, that companies and individuals, when entering into transactions that do not involve the creator or licensee, has a duty to exercise special care. Additionally, they must conduct a rational and objective assessment of the information and circumstances present at the time they enter into the transaction.


The judgment has been appealed.


If you have questions regarding the above or require additional information about the the case, please contact attorney Dan Moalem (dmo@mwblaw.dk) or, senior associate Pernille Nørkær (pno@mwblaw.dk).

 

The above does not constitute legal counselling and Moalem Weitemeyer Bendtsen does not warrant the accuracy of the information. With the above text, Moalem Weitemeyer Bendtsen has not assumed responsibility of any kind as a consequence of a reader’s use of the above as a basis of decisions of considerations.