Mastercigars Direct Ltd v Hunters & Frankau Ltd
| Jurisdiction | England & Wales |
| Judge | His Honour Judge Fysh QC |
| Judgment Date | 10 March 2006 |
| Neutral Citation | [2006] EWHC 410 (Ch) |
| Docket Number | Case No: HC 04 C 03805 |
| Court | Chancery Division |
| Date | 10 March 2006 |
[2006] EWHC 410 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Field House, Breams Buildings
London, EC4A 1DZ
His Honour Judge Fysh Qc
(sitting As A Judge Of The Chancery Division)
Case No: HC 04 C 03805
Geoffrey Hobbs QC and Ashley Roughton (instructed by Withers LLP) for MasterCigars Direct Ltd and Christopher Kenyon
Mark Vanhegan (instructed by Mishcon de Reya) for Hunters & Frankau Ltd and Corporacion Habanos SA
Hearing dates: 7,8,11�15,18�22 July, 9 and 13 September, 27 and 28 October 2005, 10 March 2006.
I direct that pursuant to CPR PD39A no official shorthand note shall be taken of this judgment and that copies of this version as handed down may be treated as authentic.
Contents:
Part A Introduction and General matters 3
The Consignment: Arrival and Detention 7
Part B The Parties 12
Part C The Proceedings and Allied Topics 18
The 'Historic' Consignments 21
Interlocutory Events 23
Negative Declarations 25
Burden of Proof 30
Part D Trade Mark Infringement: Statutes 35
Part E Customs Topics 39
Part F The Parallel Imports Case 45
'Economic Linkage' 50
The $ 25,000 Limit 61
Part G Seals, Holograms and Facturas 63
Part H The Counterfeit Case 68
Sampling the Consignment 71
Mr. Craggs Sends off the Consignment 78
Rogue Customs Officers? 81
The 'Indicia of Inauthenticity' 82
Part I Conclusion 86
Acknowledgement 86
Part A Introduction and General Matters
Introduction
1. This is a trade mark dispute concerning the import into the UK of many well-known brands of hand-rolled Cuban cigars (also known as 'habanos'). UK and Community registered trade marks subsist for these brands some of them dating I believe, from Victorian times. The dispute is the upshot of ongoing concern by the single Cuban proprietor of these trade marks (together with its sole and exclusive UK distributor) as to the legitimacy of importing habanos so trademarked which have been purchased from official sales outlets in Cuba and thereafter imported (duty paid) into the UK by persons other than the UK distributor for sale here. A core issue is whether such importation has the implied consent of the trade mark proprietor.
2. In fact, the action has two aspects: first, there is a declaratory action by the claimant, MasterCigars Direct Ltd (hereafter 'MDL'), the importer (and owner) of a particular consignment of habanos (hereafter 'the Consignment) which seeks its release from its present detention under powers vested in HM Customs and Excise ('HMCE'). The declaratory relief sought is broadly based upon the legitimacy claimed for the importation of the Consignment which is said to be neither counterfeit nor infringing within the meaning of the relevant UK statute and Council Regulation (EU). This action (which I shall call 'the declaratory action'), is against the trade mark proprietor's UK distributor which instigated the detention by the Customs. MDL's claim is traversed on the basis that some of the material in the Consignment is indeed counterfeit being made in infringement of certain registered trade marks owned by the proprietor. Then there is a Part 20 claim for infringement of the same trade marks by the Cuban trade mark proprietor against inter alia MDL. I shall refer to this as the 'the infringement action'. The infringement action in fact has two strands �which are not spelt out as such in the Part 20 claim. First, infringement is said to have arisen on the basis of MDL's 'parallel importation' of habanos bearing these trade marks and this has provoked the well-known defence of 'exhaustion of rights'. I have called this 'the parallel imports' case intending thereby to incorporate the defence of exhaustion of rights. As I have said, there is also an allegation in response to the declaratory action that certain cigars in the Consignment (and their associated packaging) are actually counterfeit goods. This is denied by MDL as a matter of fact. I have called this for convenience 'the counterfeit case' and to the best of my recollection, this occupied the longest time at trial. It is simply a regular trade mark infringement action, albeit with some unusual features. Though the two strands of the infringement action therefore have a different procedural genesis, I have not sought to differentiate them on that basis. I would also mention at this juncture that the parallel imports case is irrelevant to the detention of the cigars by HMCE, whose powers may only be exercised in relation to goods which are actually counterfeit.
3. The action has greater complexity than the above brief summary might suggest. It is evidently a test case which, as will be seen, bristles with points of law and bitter disputes of fact; it also involves inter alia questions of customs law and procedure, the legal implications of a command economy in the context of 'economic linkage', statutory offences incidental to the importation of goods which infringe IP rights � and not least, Article 6 ECHR.
4. The owner of most (if not all) of the trade marks in question is Corporacion Habanos SA of Havana, a Cuban company, which, as I have said, is the Part 20 Claimant. I shall henceforth refer to this company as 'HSA'. The defendant to the declaratory action is a UK company, Hunters & Frankau Ltd (hereafter 'H & F'), who have been involved in the Cuban cigar trade in this country since 1790. They are HSA's sole and exclusive distributors in the UK.
Some General Matters
5. Prior to the opening of the case, I informed Mr Mark Vanhegan (who appeared for both H & F and HSA), that from time to time I enjoyed smoking habanos, enquiring whether this might disqualify me from hearing the case. Both he and Mr Geoffrey Hobbs QC (who appeared with Mr Ashley Roughton for MDL and its managing director, a Mr Christopher Kenyon, the second defendant in the Part 20 proceedings) took instructions. Having distanced themselves from any personal attraction to tobacco smoking, counsel told me that their respective clients raised no objection to my continuing to hear the case despite my inevitable experience as an occasional habano smoker.
6. I have said that habanos are hand-rolled cigars. Included in the Consignment were a number of machine-made Cuban cigars known as Cohiba Mini Cigarillos. None of these are alleged to be counterfeit but as I understand it, their import does form part of HSA's 'parallel import' case. An agreed schedule setting out the make-up of the Consignment is found at X/11 and forms Annex 1 to MDL's closing skeleton of argument. A glance at the schedule shows the Consignment to include various shapes and sizes of habano representing a selection from all the better known brands. In all there were about 3300 cigars, all of them packaged. In the counterfeit case, as much turns on the packaging as on the authenticity of the cigars themselves.
7. A number of witnesses of Spanish and Cuban nationality have given evidence and there has been some confusion about the correct way to address them. The tradition of both sexes in both Castilian and Cuban Spanish is to add to one's surname, one's mother's maiden name. Thus for example, the name of the Legal Director of HSA was Sr. Adargelio Garrido de la Grana. I refer to him (for he gave evidence) simply as Sr Garrido.
8. Unfortunately, the parties' solicitors became personally involved in the evidence relating to the sampling of the Consignment at Gatwick and elsewhere and they were cross-examined (twice in the case of MDL's solicitors) about this. Mr Gallagher of Mishcon de Reya gave evidence on behalf of his clients HSA and H & F. For the reasons which I shall give later, I did not find his evidence relating to the sampling to be satisfactory. For MDL, Mr John Maycock and his assistant Miss Elizabeth Harding of Messrs Withers, gave evidence for MDL. I found them both to be witnesses who provided valuable and credible evidence which was of assistance to the Court.
9. Bundle references are given thus: A3/123 viz. Bundle A, tab 3, page 123. Transcript references are given thus: D1/123.viz Day 1, page 123
The Consignment: Arrival and Detention
10. I shall have to re-visit the circumstances which have given rise to this action in more detail, but what occurred was essentially this. On 28 August 2004, the Consignment arrived at Gatwick airport as freight on a Cubana flight from Havana, the consignee being according to the air waybill 'Mr Peter Craggs Masters Cigars' (sic) 1. The cigars in the Consignment had been paid for in US dollars 2 on 30 June 2004 and picked up on 24 August 2004 at an official sales outlet for habanos called Casa del Habanos at 5ta Avenida in Havana, an establishment of which I shall have more to say in due course. I have called it the 'Quinta Avenida Casa', there being other such 'Casas' in Cuba (and indeed elsewhere). On arrival at Gatwick, as I have said, the Consignment was deemed by HMCE to contain cigars that were 'counterfeit' and was detained by HMCE. This occurred as a result of information supplied to it by H&F and was based, I believe, on suspicions passed on to HMCE arising from previous importations of habanos by MDL. Though a 'parallel imports' problem had been brewing for some time between MDL, HSA and
11. HMCE's powers relating to the seizure and detention of imported goods which are suspected of being counterfeit arise on foot of Council Regulation (EC) 1383/2003 of 23 July 2003 (OJ L 196, 2 Aug 2003, pp7�14). This has been re-printed as Appendix 25 of Kerly on Trade Marks 14th Edn, A25�001. I...
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