Singapore/Battam case transhipment concludes

The case of Burberry Ltd v Megastar Shipping Pte Ltd has reached the Singapore High Court. The case arose because counterfeit Burberry, Louis Vuitton and other luxury goods were shipped from China to Singapore, in two containers, for onward shipment to Batam, Indonesia.  The crux of the Singapore litigation was about how the goods were transhipped through Singapore. 

The Singapore Court of Appeal has held that “goods in transit” are still imported so illegal under the Trademarks Act. However, the freight forwarder importer the goods, but it did not 'use' trade mark. Instead as a commercial freight forwarder it was unfair to impose liability for trade mark infringement as they are a mere conduit.  

The first thing to say about this is that transhipment is increasingly now viewed as something customs authorities must deal with from an IP perspective. The Singapore EU FTA ought to have covered it, but it did not include goods in transit. Singapore likes to defend its position as a transhipment hub, so not be obliged to check all shipments (despite earning money from each container that passes through its port). So it is positive that the court did find the goods imported in principle. In this case there were facts that showed the shipments passed through Singapore’s Portnet IT system. 

However the other issue is the use of the nearby Indonesian port, Batam. The problem there is that Indonesia has no effective border protection system, despite one being introduced last year. See here. So there remains a major issue whether Indonesian customs could stop the goods. Secondly Batam is a Free Trade Zone. It is often used for export processing, and illicit goods pass through it frequently. The region of Riau was historically known for smuggling - see here.  Indonesian customs generally do not interfere and it is not clear if the new IP border protection system could intervene at all. The IP owners suspect that such a huge volume of fakes cannot actually have been bound for Batam itself, that port being relatively remote from the major markets in Indonesia. 

So although important, the case probably doesn’t help in deterrence. Freight forwarders are not liable, and Indonesia’s Batam is still going to be used to handle illicit goods freely. The loss of the fake goods was the only deterrent to whomever the ultimate owners were, a fact which will never be known along with their ultimate destination.