Dealing in Fake Goods, Counterfeit Money and Related Offences
Counterfeit money and fake goods will always be an issue in society. For as long as items have been prized for their beauty or agreed intrinsic value, attempts have been made to manufacture and pass as genuine an inferior or deficient version to turn a profit.
In today’s world, designer items and DVDs are priced out of all proportion with the costs of their manufacture, as the companies who own the brands make massive profits. The pressure in society to buy these things is huge. At the same time, ordinary people are facing the worst economic times since the War. Maybe this means that it is not such a surprise that the counterfeiting of goods and currency has rocketed.
This area is a big priority for the government. The counterfeiting industry is regarded as a threat to its ability to collect legitimate retail tax, and counterfeit money is disruptive to the economy.
To face an investigation by the police, Trading Standards, or another government agency can be a terrifying experience. Mary Monson Solicitors are recognised as specialists in this area, and recently acted successfully in one of the biggest counterfeit goods conspiracy cases in UK legal history.
We have included a case study of a recent case we have acted in below. We have also written below a free basic guide to offences involving fake copyright material (such as DVDs), fake goods (such as clothing), and counterfeit money.
Our fraud solicitors’ case studies
Any fraud lawyer can claim to have expertise in different types of fraud or business crime cases. We have included here some case studies to give some idea of how our fraud solicitors prepare cases.
Our client was a female recent university graduate. She was one of fifteen defendants accused of conspiracy to sell fake goods. The prosecution case was that designer fashion items had been sold on eBay. The gang had used the eBay accounts of local university students to sell the goods. The total criminal operation was estimated to be in the millions. Result | Not Guilty
We have explained three main categories of counterfeit case below
The types of offence explained are: Designer and Trademarked Goods, Copyright Goods (inc. DVDs), and Counterfeit Money.
Counterfeiting of Designer and Trademark Goods
This offence is sometimes referred to as €œpassing off€ and is very prevalent in outdoor markets. It involves a representation that an article is a genuine product of a particular manufacturer or designer. It does not have to apply only to designer goods. It can apply to groceries, hardware, or anything with a known manufacturer’s logo.
The main offences that are prosecuted are under s.92 of the Trade Marks Act 1994, although offences could also be dealt with under the Fraud Act. Large scale criminal operations can be charged as conspiracy to defraud (for information on each of these fraud offences, see the section on the left hand toolbar).
The Trade Marks Act offences split into 3 types of offence. The first relates to applying trademark signs to fake goods and their packaging. The second offence involves applying the trademark to other documentation such as brochures or advertising material. The third offence involves articles used to make trademarks. This could include a computer or printer set up to make copy labels of trademark labels.
These offences only apply to registered trade marks in respect of goods but do not apply to infringement of trade marks in respect of services.
An offence can be committed only when the trademark sign is used as a ‘badge of origin’. A defence team may argue that the average customer would not view a trademark as a guarantee of provenance; an example might be where counterfeit copies of a product are so prevalent and so variable in quality that a market arises for the counterfeit article itself. On the other hand, courts have also decided that just because the quality of counterfeiting is so poor that a buyer is unlikely to be deceived, this does not amount to a defence.
The prosecution have to prove that the defendant’s aim was either gain or loss on the part of someone else.
It is a defence for defendant to show that he or she reasonably believed that the use of the trade sign was not an infringement of the registered trademark.
These offences can be heard in the Magistrates or the Crown Court. The maximum sentence in the Magistrates is 6 months imprisonment. The maximum in the Crown Court is 10 years, although sentences of this length are very rare.
The court may order that fake goods be destroyed or that they be released only on condition that the false trade signs are removed.
Fake DVDs DVD, Computer Game and Music Counterfeiting
These offences are covered by the Copyright, Designs and Patents Act 1988. The offences include:
- Making copyright infringing items
- Importing infringing copies
- Selling, hiring, or advertising items
- Distributing a large enough number of copies to have a noticeable effect on the business of the copyright owner
- Making or possessing equipment for making copies
- Having public performances of the material (including illegal showings of unlicensed films)
- Communicating copies or infringing the right to €œmake available€ copies to the public (this may include owners or users of websites who distribute copyright material online)
- Offences involving devices for circumventing a copyright protection measure (this could relate to items such as a chip which, as an aftermarket Playstation add-on, allows pirate games to be used)
These offences can result in a maximum sentence in the Crown Court of 10 years, although sentences of this length are very rare. In fact, for less serious, one off offences, community based penalties may be more likely.
Often, the cases will be charged as conspiracy. Conspiracy means an offence which relates to a plan to commit offences with one or more other people. Conspiracy offences can be charged as conspiracy to contravene copyright or conspiracy to contravene the Trade Marks Act (see section on Designer and Trademark Goods above).
If fake goods are alleged to have been sold as part of a conspiracy, the defence legal team should look in detail at the links and relationships between defendants. Evidence linking defendants through telephone traffic, the goods themselves, and the trail of money and other assets can be particularly important. The defence must conduct a detailed analysis of this work before the trial. In conspiracy cases the prosecution may seek to lump all the defendants together by association. The jury have to be shown that association is not enough. For example, if some or all of the defendants are from the same ethnic community or social group, this should not mean that they are all treated as of they are in a criminal gang together.
Counterfeiting Money Offences
There are a number of different offences involving counterfeit currency. This area of law is covered by the Forgery and Counterfeiting Act 1981.
The offences are: Making, tending, and control offences; offences relating to implements and materials for counterfeiting; and importation and exportation.
Making Counterfeit Currency
The first type of offence is making counterfeit currency. It is a criminal offence to make the currency intending it to be used in place of the genuine version; and also, to merely make the currency, without any intention at all. This means that someone who just makes a copy of a banknote for their own personal amusement is committing an offence. Currency includes notes and coins used as money in the UK or any other country.
Offences of making counterfeit currency can be dealt with in either the Magistrates Court or the Crown Court.
Where the defendant is convicted under s.14(1), which involves intending the currency to be used as genuine, the maximum penalty in the Crown Court is 10 years imprisonment.
Where the person is charged under s.14(2), which is just making the currency, with no intent to pass as genuine, the maximum in the Crown Court is 2 years imprisonment. These less serious cases may be dealt with in the magistrates court, and community based punishments may be more likely, although the starting point for even minor counterfeit currency cases will be the consideration of a prison sentence, often of around 12 months in the Crown Court.
Passing, Tending or Delivering Notes or Coins
By the Forgery and Counterfeiting Act 1981, s. 15
Passing, tending, or delivering counterfeit money is an offence. Passing can mean giving or, of course, spending. Where the delivering of the currency is done with no intent that someone else is using it, i.e. by someone who is simply carrying it for someone else to a destination, the offence is less serious and can only result in a maximum of two years imprisonment, although the sentence may not even be a prison sentence. Where there is an intent that someone else should use the currency afterwards, the maximum sentence in the Crown Court is ten years.
For these offences to be proven,the defendant must know or believe that the item is counterfeit. Suspicion that it may be fake is not enough for a conviction to happen.
‘Custody or Control’ of Counterfeit Notes or Coins
These offences relate to having counterfeit currency. Custody means having something in your possession, and control means having access to it or being able to dispose of it, even if you do not physically hold it.
If the holder of the currency intends it to be used, the maximum sentence is 10 years. If there is no intention for it to be used, the maximum is 2 years.
Whether the note or coin is ‘finished’ or ready to be used is irrelevant. Even having a half-finished note is an offence.
Offences Relating to Materials and Implements for Counterfeiting
It is also an offence to make or have any materials or implements designed for making counterfeit money. Where the person who has or makes the implement intends that he or she or someone else will use it, the maximum sentence in the Crown Court is ten years imprisonment. Where there is no intent for the implement or materials to be used, having or making them is still an offence, resulting in a maximum of two years imprisonment.
The implements covered by this law include anything capable of duplicating the image or patterns found on a genuine coin.
Where the holder of the implement has it with the consent of the Treasury, or with lawful excuse, he or she will be entitled to a defence against the allegation.
Importation and Exportation of Counterfeit Notes and Coins
It is illegal to import or export counterfeit currency without the permission of the Treasury. The importation offence includes landing and unloading of the currency.
Sentence for importation/exportation of currency can be dealt with under the Customs and Excise Management Act 1979. The maximum penalty in the Crown Court is seven years imprisonment and a fine.