Not only the devil wears Prada: illegal street vending following Criminal Code reform

It is an easily established fact that luxury products, once reserved for the wealthiest classes, are now within the reach of less privileged sectors. This process began several decades ago when the small independent and artisanal businesses that produced these products gave way to international conglomerates (LVMH, PPR, Richemont). Since then, the underlying logic of the luxury world has been the result of the dynamic between traditional savoir faire and the obligations of productivity and turnover. The need for accounts to balance has forced this market to open itself up to most people and not just a privileged few. This requires making the inaccessible accessible (Lipovetsky). Luxury giants have created new consumer needs, and counterfeits are a spurious way of satisfying them. This is not a new phenomenon. Since the appearance of organized trade, people have tried to pass lower quality goods off as higher value products. However, in the case of luxury products, consumers are often aware of or have a strong suspicion that they are buying a counterfeit. It is not the aim of this article to explain what motivates buyers to acquire such items despite knowing that they are fake, which is usually evident. Perhaps it is the feeling that the price of the genuine product is overestimated, or an elaborate self-deception in which the buyer, understanding that the brand is a means of social inclusion, gaining status and social recognition, aims to achieve these goals through the acquisition of a fake product. Whatever the reason, illegal street vending is currently the most effective way of distributing counterfeits (if we set aside online sales). In Spain, this is commonly known as top manta, referring to the practice of displaying the items to be sold, generally counterfeits, on a blanket (manta in Spanish) so that they can quickly be collected if the police appear. Such items were formerly sold in the popular mercadillos (street markets), but the strictness of municipal ordinances and ease of finding those who distributed them has led counterfeiters to look for other ways to sell their products that aren’t as easily supervised. Top manta is ideal in this sense, since the vendors (known as manteros in Spanish) are undocumented immigrants who are almost impossible to track down if they aren’t detained at the time of the transaction, while also being able to freely move from one place to another. It only takes a couple of seconds to pick up the blanket with the merchandise and disappear into the streets, thus eliminating all evidence of the crime.
But what do we mean by “counterfeit products”? First of all, although they seem to be synonyms, we must distinguish between counterfeit and imitation. The former is a crime, while the latter is a business strategy. Not every company has the resources to innovate, so they opt to release an imitation or copy of the original product to the market, be it by lowering their price or offering a superior product. In an article for The New York Times Magazine, Suzy Hansen explained that this is the strategy that has made Inditex the world’s largest fashion retailer. If we want a definition of “counterfeit trademark goods”, we must turn to the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Article 51 tells us that they are “any goods, including packaging, bearing without authorization a trademark which is identical to the trademark validly registered in respect of such goods, or which cannot be distinguished in its essential aspects from such a trademark, and which thereby infringes the rights of the owner of the trademark in question under the law of the country of importation”.
Spain’s Criminal Code echoed this definition in Book II, Chapter XI, Section 2 (articles 273-277), but the legislative response to the top manta phenomenon was much more recent. It was Organic Law 5/2010 of 22 June which expressly contemplated retail distribution cases by imposing fines or community service as penalties. In addition, if the profit did not exceed 400 euros, the conduct was punished as a misdemeanor. Following the reforms made by Organic Law 1/2015 of 30 March, article 274.3 also expressly punishes the street or occasional vending of products which usurp trademark rights. But it does so as a special class, thus allowing the vendors, the weakest links in the counterfeit distribution chain, to be punished with prison sentences, where before there were only fines or community service.
While some readers may find it trivial following the reforms to resume the debate on how this behavior does not conform to a legal class, what is true is that some authors (Morón Lerma) feel that nothing would prevent the courts from continuing to acquit based on the argument that has always been the warhorse of acquittal advocates. By this we mean the absence of risk created by the counterfeit products, considering that the consumer, as we pointed out above, is aware that they are buying a counterfeit. The same indicators used to determine the existence of fraud by the perpetrator (i.e. whether or not they know that the product they are selling is counterfeit) may be used weigh the absence of risk to the buyer; or in other words, to determine whether or not they are aware they are buying a counterfeit. Such indicators are: the crude nature of the imitation, a price significantly lower than that of the genuine item, the absence of receipts, and the absence of the trademark of the official provider of the merchandise.
Despite the validity of such arguments, the fact is that express mention of street vending in article 274.3 makes it difficult to acquit the vendor. However, this same article offers a lesser classification by considering the offender’s characteristics and the low amount of the profit that was or could have been obtained, which allows the judge to impose fines or community service as penalties. There is no doubt that the criminal prosecution of industrial property crimes has intensified following the latest reforms. However, it is not as clear whether the legislature has achieved the deterrent affect it desired. Illegal street vendors continue to sell their counterfeit items, even under threat of imprisonment.
Luis Ramírez
Partner at ICN LEGAL