Bayerische Motoren Werke AG (BMW) v Premier Alloy Wheels (UK) Ltd & Ors

In this application for a search order, interim injunction and related relief, the claimant, BMW, contends that the respondents, (Premier, Mr Thompson, DGT Wheels and Mr Layzell) have been instrumental in a business involving the importation of: counterfeit alloy car wheels from the Far East made to designs which are virtually identical with those for which BMW holds Community registered designs; and counterfeit wheel centre badges bearing signs identical to BMW’s trade marks and designs. The badges are applied to counterfeit wheels to enhance the impression that they are genuine. They also complain of the storage and resale of such items.

This is a very serious case, because the second respondent, Mr Thompson, has already given undertakings not to deal in such items, having previously been caught doing so by BMW when he was running a different company, now in liquidation. Therefore, BMW submit, with justification, that he must know the consequences of what he is doing, and that in respect of trade marks he is, arguably, committing a very serious criminal offence.

More specifically, the first respondent, Premier, runs a website with its contact name, and Mr Thompson is Premier’s sole director and listed as Premier’s manager on its Linked In page. Mr Thompson also owns all of the issued shares in Premier and 100 non-voting shares in the third respondent, DGT Wheels. He was also named as the addressee of a consignment of counterfeit badges which was detained by the UK Border Force in July 2017, approximately 3 years after he had given an undertaking not to deal in such items.

DGT Wheels owns a long lease of warehouse premises which are used by the DGT business. DGT also fulfils customer orders placed on an eBay page which it operates. The fourth respondent, Mr Layzell, is the sole director of and shareholder in DGT Wheels. His service address at Companies House is the retail premises which appears to be operated by that company.

BMW’s legal counsel, Bettina May, has summarised in detail the history of this matter. A brief synopsis is as follows. In 2012 business was operated in the name of a company called DGT Corporation Limited from an eBay page and from the same retail premises as are now being used by the DGT business. Infringing and counterfeit wheels and badges were sold. Mrs Thompson, who BMW believe was Mr Thompson’s wife, was the sole director of and shareholder in that company. However, BMW believes that the business was controlled on a day-to-day basis by Mr Thompson and Mr Layzell.

BMW sent a letter before action to DGT Corporation and to Mr Thompson, Mrs Thompson and Mr Layzell. On 3 November 2014 Mr Thompson, Mrs Thompson and DGT Corporation acknowledged that they had infringed 14 of BMW’s Community registered designs, one UK registered design and 12 of BMW’s registered trade marks. The registered trade marks included 3 EU trade marks which are the subject of this potential action. Mr Thompson undertook, in effect, not to infringe any of the listed rights or any other Community registered designs, EU or UK trade marks registered in BMW’s name, nor to pass off goods as goods of BMW.

It follows from this episode that although Mr Layzell did not give that undertaking, both of these individuals have been on notice since at least November 2014 that BMW owns these registered rights and that selling wheels made to those designs, and badges bearing BMW’s trade marks, without BMW’s consent, infringes BMW’s rights and amounts to passing off. So far as the trade marks are concerned, both of those individuals have known since that date that such activities may be criminal and carry a maximum penalty of 10 years’ imprisonment. That was expressly referred to in a letter sent to them on 30 July 2012. Furthermore, Mr Thompson has at all times since 2014 been under a contractual obligation not to infringe BMW’s registered designs and registered trade marks, nor to pass off goods not being goods of BMW as such goods.

Since those undertakings were given, there is substantial evidence that the trade in counterfeit goods of the DGT business has continued, and continued on a substantial scale. In particular, in March 2016, in the course of investigating a separate business, a Mr Mogg, an investigator, purchased a set of wheels which are advertised on eBay as fitting various BMW models. The wheels were supplied by DGT Wheels, the third respondent, which gave its address as the retail premises which are sought now to be searched. The wheels, in my view, are an obvious infringement of one of BMW’s registered designs. The wheels were found by BMW’s verification team not to have been manufactured with the consent of BMW. This is clearly the case, because BMW does not offer wheels in the sizes and offsets purchased.

In May 2016 an investigator visited the retail premises and spoke to a member of staff, who stated that DGT imports container loads of its own alloy wheels, which it sells both wholesale and retail. He also said that DGT could offer replica BMW wheels in various sizes, and that replicas were not shown on the business’s online accounts, by which it is likely that he meant its website. Notes of this conversation are exhibited to an affidavit because of the need to anonymise the identity of the investigator. This provides clear evidence that the DGT business is not just a retail business, and that the respondents were not advertising online that replica BMW wheels were for sale, because they wanted to conceal that fact.

Further, significant evidence emerged on 21 July 2017, when HM Border Force detained 255 plastic badges bearing signs identical to the BMW roundel marks, a BMW “M” mark and the Mini mark and various other of BMW’s registered trade marks. The consignment was sent from Taiwan and was addressed to Mr Thompson at the retail premises. The badges had been made without BMW’s consent and were counterfeit. There is a very strong inference that they were intended to be affixed to the alloy wheels in the possession of the respondents.

In December 2017 Mr Mogg purchased a set of alloy wheels from the Ebay page, where they were advertised as fitting BMW and other car makes. The wheels produce the same impression as, and infringe, one of BMW’s registered designs, and they have not been manufactured with the consent of BMW. Then in January 2018 Mr Smith (the anonymised name of the investigator) attended the warehouse premises and photographed a van labelled DGT Wheels and Tyres, boxes with labels indicating that they contained alloy wheels, a sign on the wall stating “Badging station”, and tubs containing BMW wheel centre badges. I was also shown (which will be made the subject of an affidavit) a photograph where the words “Badging station” are visible in the premises of the respondents. That is significant because it appears that the respondents are conducting a mechanised operation, the inference being to place counterfeit badges on counterfeit wheels.

Finally, in April 2018 Mr Mogg telephoned the retail premises and asked to buy a set of wheels. He was told that BMW badges for the wheels were not available, but when he collected the wheels from the retail premises badges bearing signs identical to the BMW roundel mark and the “M” logo were applied to wheels by members of staff. Again the evidence is that these were counterfeit wheels and counterfeit badges. Mr Mogg also photographed other BMW labelled wheels which were on display at the retail premises, which may well be counterfeits, and there is strong prima facie evidence that they were.

In summary, it appears that in spite of having been apprehended in the past when dealing in counterfeit goods, the respondents are continuing to do so on a substantial scale.

A search and seizure order is an exceptional form of relief. The conditions that need to be satisfied are as follows. First, there must be a strong prima facie case of a civil cause of action. Suspicion is not enough; nor is it enough that there is a serious question to be tried. Second, the danger to the applicant to be avoided by the grant of the order must be serious, and if the order is to forestall the destruction of evidence, the evidence must be of major importance. Third, there must be clear evidence that the respondent has incriminating documents or articles in its possession. Fourth, there must be a real possibility of the destruction or removal of evidence. Fifth, the harm likely to be caused by the execution of the order on the respondent and his business affairs must not be out of proportion to the legitimate object of the order.

In the present case, I am satisfied that these criteria are fulfilled. My main concerns in deciding whether to grant the order are as follows. First, there has been substantial delay in seeking this order on the part of BMW. I have already set out the history of obtaining evidence of infringement which spans a 2-year period. Even if the evidence obtained in 2016 was insufficient to seek an order from the court, there is little doubt that by July 2017 this application could have been made. Even the delay from April 2018 until now is of itself significant. As against that, I have to weigh the fact that this is a case where BMW are plainly suffering irreparable damage by the sale of counterfeit goods. The quality of the goods is not under the control of BMW, and there is some evidence of complaints from the public as to the safety of wheels sold by the DGT business; not necessarily counterfeit wheels, but it is likely that they were. In any event, whether or not that evidence specifically relates to those wheels, there is a clear possibility of a danger to public safety.

Furthermore, I do not consider, at least on the information before me, that it can be said that any of the respondents have been prejudiced by the delay. They have merely been allowed to continue to make money from selling counterfeit goods.

So, for those reasons, I have decided in this case that the delay is not such as to prevent the grant of relief. However, BMW will be well advised in the future when seeking an order of this exceptional nature to get on with it much more quickly than they have done in the present case.

The second concern is whether sufficient information of infringement has already been obtained by BMW so that the grant of a search and seizure order would be unnecessary. However, there are at least two aspects in which the evidence is as yet incomplete. First, as to the scale of the operation, how many counterfeit goods have been sold. Since the respondents appear to be conducting a dishonest activity, this evidence is likely to be destroyed if the order is not granted. Second, the identities and addresses of suppliers and other persons who have been involved in this trade. It appears to me, if this search and seizure order is not made, this evidence well be destroyed.

So, for those reasons I consider that, in the unusual circumstances of this case, this exceptional order is justified and I shall grant it.