Businesses: Stop Losing Money to Sellers of Infringing Goods. Here’s How to Bring Criminal Charges against Them.

Last updated on January 9, 2024

Featured image for the "Businesses: Stop Losing Money to Sellers of Infringing Goods. Here’s How to Bring Criminal Charges against Them." article. It is a picture of fake handbags put out for sale.

There may be occasions where you come across or have been informed of a store selling goods that infringe your business’ copyright or trade mark(s). The sale of such goods is likely to divert sales away from your business and/or deprive your business of an opportunity to earn licensing revenue, thereby affecting your profits.

In this situation, you may consider initiating civil proceedings against the store owner to claim damages. Further, you may also consider the option of private prosecution, where a private party initiates criminal charges on the Public Prosecutor’s behalf against another party alleged to have committed an offence.

This article sets out the advantages of initiating private prosecution as well as the stages of this process.

Advantages of Initiating Private Prosecution

As compared to public prosecution, private prosecution is potentially quicker and more efficient. This is because your business has an incentive to prosecute the alleged infringer expeditiously so as to:

  • Punish the alleged infringer for its actions
  • Stem your business’ loss of sales revenue and/or licensing revenue arising from the alleged infringer’s sale of infringing goods
  • Deter third-parties from infringing your copyright and/or trade marks in future, thereby protecting your future revenue streams.

Also, note that your business may still initiate civil proceedings against the alleged infringer even after the private prosecution has concluded. Therefore, the findings in the private prosecution may be used as a basis to negotiate a settlement with the infringer instead of having to initiate civil action.

Stages of the Private Prosecution Process

First, having chanced upon or been notified that a store is allegedly selling goods that infringe on your intellectual property, your business should commence investigations by gathering the relevant evidence.

This can be done by engaging private investigators (PIs) to make “trap purchases” – i.e. to purchase the alleged infringing goods to serve as evidence that the seller has committed an offence.

After making these purchases, the PIs will submit a report to you. The report could contain information such as:

  • Date and time of the trap purchase
  • Name of the PI who had conducted the trap purchase
  • The PI’s observations outside and inside the store (with photos of any advertisements and displays of the alleged infringing goods)
  • Conversations between the PI and the store owner (in verbatim where possible, especially when the store owner replies to questions on whether he knows that the goods are of an infringing nature)
  • Photos of the alleged infringing good(s) purchased
  • Receipt(s) of the purchase

Second, your business should inspect the good to determine if it is of an infringing nature. It could check, for instance, whether the serial number on an article or a label of the article matches the serial numbers issued by your business.

If the good is of an infringing nature, a representative of your business (of preferably medium- to high- seniority) should confirm in writing that he has inspected the good and that the good is of an infringing nature. This will come in useful for the next stage.

Third, your business should apply to the State Courts for a search warrant to conduct a raid on the store premises. This application can be made either online or in person through the assistance of a representative of your business.

In this regard, it is advisable to engage an intellectual property lawyer that is familiar with private prosecution for intellectual property matters to assist with the filing of such an application and the subsequent conduct of the matter.

The application may comprise, amongst others, affidavits:

  • By your business stating its grounds for applying for a search warrant
  • By the PI summarising its key findings in the PI report, appended with the PI report itself
  • By your business confirming that the purchased good is of an infringing nature

Additionally, to satisfy the court that a search warrant should be granted, it is important to show in the application that there is an article and/or document in the store premises that can serve as evidence that one of the following offences has been committed:

Trade marks

Copyright

  • Section 444 of the Copyright Act (CA): Making for sale or hire an article, dealing commercially in an article, importing or possessing an article for the purpose of commercial dealing, knowing that the article is an infringing copy of a copyrighted work
  • Section 445 of the CA: Wilfully infringing copyright for commercial advantage
  • Section 446 of the CA: Making or possessing an article capable of making infringing copies knowing that it will be used for the purpose of commercial dealing
  • Section 448 of the CA: Distributing an article which is an infringing copy of a copyrighted work or subject matter
  • Section 449 of the CA: Wilfully infringing copyright to a significant extent
  • Section 450 of the CA: Performing a literary, dramatic or musical work, or screening a film, for private profit, while knowing that this would infringe the copyright in the work or film

After filing the search warrant application, your business’ lawyers will attend the search warrant hearing at the State Court’s Crime Registry.

Should the Magistrate Judge grant your business a search warrant, your business’ lawyers will then coordinate with police officers from the Intellectual Property Rights Branch (IPRB) of the Criminal Investigations Department as to when to conduct the raid.

The raid will be spearheaded by the IPRB, but may be attended by your lawyers as well as your business’ representative(s). During the raid, only items that fall within the scope of the raid, as stated in the search warrant, may be seized.

Subsequently, your lawyers will attend a return date hearing to update the court on the outcome of the search, e.g. how many items were seized. During the hearing, the alleged infringer may also challenge the conduct of the raid. For instance, whether items outside the scope of the search warrant had been seized during the raid.

After the return date hearing, your business should apply for a fiat to prosecute the alleged infringer for a CA or TMA offence. Once your business obtains the fiat, it may prosecute the infringer in the Public Prosecutor’s name, though it is advisable that you obtain your lawyers’ assistance for this, given their expertise.

During the hearing, the infringer may argue, among other things, that the goods are not of an infringing nature or that it was unaware of the goods’ infringing nature. After hearing both parties’ arguments, the court will decide whether your business has proven its case against the alleged infringer beyond a reasonable doubt.

If your business has done so, the court will convict the infringer and sentence it to a fine and/or imprisonment allowable under the relevant CA or TMA offence. If not, the court has to acquit the alleged infringer.

While private prosecution may appear to be a good way of exerting pressure on alleged infringers, any prosecution without sufficient substantiating grounds may result in the other party initiating civil proceedings against your business for malicious prosecution. Therefore, it is important to use the option of private prosecution judiciously.