On 13 October 2016 Designers Revolt and involved persons were sentenced for copyright and trademark infringement and were adjudicated, with Swedish standards, a historically severe sentence in the form of both imprisonment, high damages and fines.
WHAT HAS HAPPENED?
DR International Ltd (“Designers Revolt”) is a company registered on the Isle of Man. The company’s business concept has been to sell copies, mainly of Danish designer furniture and designer lamps at a significantly lower price than that of the original. Designers Revolt manufactured the furniture in China. The furniture was then delivered to Great Britain and cleared by customs there. Subsequently the furniture was sold to other EU countries, primarily Sweden. The main reason for Designers Revolt choosing this business arrangement was to exploit the fact that the copyright of the original furniture had elapsed in Great Britain which, at the time of the import, had significantly shorter copyright protection than most other EU countries. Thus the copies were sold to countries including Sweden, where the original furniture was still protected by copyright. Designers Revolt claimed that the business arrangement was legal as the goods took a “detour” through Great Britain. However, the prosecutor and the rights holders of the original furniture were of the opinion that Designers Revolt was guilty of both copyright and trademark infringement. As support for their argumentation, they claimed that Swedish law should be applied as Designers Revolt targeted the Swedish market.
THE COURT’S ASSESSMENT
First of all the Swedish court asserted that the original designer furniture had copyright and trademark protection in Sweden. In addition, the court referred to the previous judgments of the Court of Justice of the European Union (“CJEU”) concerning the issue of cross-border sales from a country where copyright of sold products was lacking. According to these judgments, it is not sufficient that the copyright protection of a product has elapsed in a certain member state to entitle anyone to sell and deliver this product to a person who is in another member state where the product still has copyright protection. In addition to this, the CJEU has clarified that it is prohibited to target advertising to customers in a certain member state where goods are still covered by copyright if the advertisement in question attracts customers in the member state to purchase the goods. It is also prohibited to create a specific delivery and payment system to enable delivery to a country where the goods are still covered by copyright protection.
In the light of the CJEU’s previous judgments and the fact that Designers Revolt primarily targeted Swedish consumers, the Swedish court asserted that the actual operations of Designers Revolt took place in Sweden, despite the fact that the company was registered on the Isle of Man. The court bases this on, among other things, that Designers Revolt has marketed the copies through a website which offered a currency converter to Swedish krona, that the advertising appeared in Swedish magazines and that the products were stored in Swedish warehouses until delivery took place.
The court therefore declared that the sales entailed an infringement of the sole rights which the holders of the rights to original furniture have in Sweden and sentenced the involved persons to damages and fines at record levels. The involved persons shall, jointly liable with Designers Revolt, pay approximately SEK 27 million as compensation to the rights holders of the original furniture. In addition, one of the persons shall pay SEK 7 million to the Swedish state, and Designers Revolt shall pay roughly SEK 15 million to the Swedish state. Two persons, including the founder of Designers Revolt, were also sentenced to imprisonment for 1.5 years. It shall however be noted that the case has not yet been closed as the judgement has been appealed and will be tried by the Patent and Market Court of Appeal.
Swedish Patent and Market Court: B 6871-14.
Court of Justice of the European Union: C-5/11, Donner, C-98/13, Blomqvist and C-516/13, Dimensione.
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CAROLINE YGGE
Partner, Advokat
Telephone: +46 10 722 36 10
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E-mail: caroline.ygge@morrislaw.se
KARIN ODKRANS
Associate
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E-mail: karin.odkrans@morrislaw.se
