(05/05/2023) FAKE INVOICES

FENCER is pleased to report that it successfully represented the interests of the Benelux association for Trademark- and Design law (‘BMM’) in a criminal case before the Brussels Court of Appeal involving misleading invoices for trade mark renewals. In a judgment of 23 March 2023, the Court of Appeal sentenced a Finnish individual to 3 years of (suspended) imprisonment for participating in a European criminal network that generated huge profits. Such practices “have a seriously disruptive influence on commercial trade and demonstrate a selfish and lethargic attitude of the defendant” the Court ruled.

The Facts

In 2011, the BMM lodged a criminal complaint after being alerted by its members – trade mark agents and attorneys – that several trade mark owners had received letters from fictitious companies named “ECTO” and “EPTO”. The documents  indicated that EU trade mark registrations were allegedly nearing the end of their 10 year registration term and were up for renewal. The letters included invoices requesting payment of a renewal fee.

These letters obviously mimicked the notifications sent by the European Union Intellectual Property Office (EUIPO) to trade mark owners or their trade mark attorneys for renewals and fees due. Part of ECTO and EPTO’s strategy was to use a logo on the letterhead and the invoices that strongly resembles EUIPO’s logo, creating the false impression that trade mark owners or agents were dealing with an official body.

Although in most cases ECTO and EPTO actually proceeded with the actual renewal of the trade marks, the companies charged exorbitant fees of several thousand euros per trade mark renewal, whereas the basic fee for a renewal of a Union trade mark is EUR 850. In addition, the companies also charged VAT where those rates are exempt from VAT. The payment had to be made in a Belgian bank account. The amounts were subsequently transferred to Danish and Swiss bank accounts or even to Hong Kong. The criminal file showed that these practices had been going on for several years and that ECTO and EPTO were part of a large structured criminal network of companies in different European countries all using the same modus operandi. The network’s illicit profits were estimated at over EUR 1,000,000.00. As part of the criminal investigation, investigators were able to block bank accounts holding significant amounts of suspected profits.

The ruling

The court rejected the defendant’s defense that BMM had no legal and personal stance to file the criminal complaint, allegedly resulting in the dismissal of the entire criminal file. The appeal court did not upheld the argument. As the BMM is an association with legal personality according to Dutch law, the Court of Appeal acknowledged that it is entitled to defend its members’ interests in Belgium. Therefore, BMM’s criminal complaint was admissible. This creates an important precedent, as this is the first decision to recognize BMM’s stance to represent its individual members, paving the way for future litigation.

The defendant further claimed that he was nothing but a pawn in the bigger scheme of things. Likewise, these defenses were in vain. The appeal court confirmed the criminal offence in the light of the following:

  • the defendant used obvious surreptitious tricks, i.e. false invoices;
  • which were unsolicited; and
  • unnecessary, as there is no need to contact the trade mark owners in the first place as they will receive a renewal reminder from the trade mark office concerned or from their chosen trade mark agents; and
  • due to the excessive amounts of the demanded fees.

Therefore, the defendant was sentenced to 3 years of (suspended) imprisonment and a fine of 3,000 EUR. Moreover, all blocked monies in the amount of 250,000 EUR were confiscated by the State.

This judgment of the Brussels Court of Appeal is an important signal in the ongoing fight against fake invoices.

For more information on the judgment or to obtain a copy, please contact Andreas Reygaert Caro Van Wichelen or Paul Maeyaert.