Legal Eye: A zł.50 Chanel handbag?

Looking for that special gift, but don't want to pay an arm and a leg for it? I know just the place. And so does at least one member of the Polish Parliament, who was recently spotted with a Chanel handbag purchased for zł.50 (to avoid a libel suit, I'll just refer to her as Ola). Ola, it turns out, shops at the 10th Anniversary Stadium, the largest outdoor flea market in Central Europe, located just across the Wisła in Warsaw's Praga District.

Off to the stadium

When my wife read the story this past summer about the zł.50 Chanel bag, she headed straight to the stadium to buy one for herself. I tagged along to make sure she didn't find too many bargains. By the time we arrived at the stadium, however, the price had risen to zł.75. Apparently a lot of women had the same idea as my wife. Put off by the outrageous price increase, we left empty handed - my wife was not going to pay more than Ola.

The innocent purchaser

It turns out, of course, that the zł.50 Chanel handbag was in fact counterfeit. Out of all the EU member countries, Poland has one of the toughest anti-counterfeiting laws on the books. Poland's Copyright Act imposes stiff prison sentences of up to five years on vendors engaged in the sale of counterfeit goods. Moreover, the same law permits the owner of the counterfeited copyright to sue the vendor for up to three times the amount of any lost profits. Lucky for Ola, these penalties do not apply to the "innocent" purchaser.

EU encroaching on national law

Recent estimates indicate that the sale of counterfeit goods, ranging from music to handbags, has risen by a factor of 1,600 percent over the past decade, resulting in the loss of some 125,000 jobs in the EU. The EU Parliament, in an effort to clamp down on this growing trade, adopted new legislation earlier this year, that if ratified by the member states, will impose a minimum set of criminal penalties throughout the EU. This legislation marks a watershed not only in the fight against the trade in counterfeit goods, but also in the expansion of EU law in relation to national law. To date, criminal law has remained in the exclusive jurisdiction of the member states.

EU-mandated penalties

The new legislation, if ratified, will require each member state to amend its respective penal code to comply with the new minimum set of penalties, including the imposition of fines of up to E300,000 (zł.1,132,092) per offence and up to four years imprisonment against the most egregious counterfeiters. Poland's current laws, which already provide for up to five years imprisonment in case of large-scale counterfeiting, will remain intact. EU regulations will serve as a minimum set of penalties but each member state is free to impose stiffer penalties. Similar to Polish law, the EU law will not apply to individual purchasers, provided that they do not generate a profit from the counterfeit product.

In case any of you are wondering whether Ola is still using her Chanel bag, the answer is no. I could be wrong, but I think she was spotted recently with a new Gucci bag. As for my wife, she has given up on her quest to buy a Chanel bag, authentic or otherwise. Her husband is too cheap.

Paul Fogo is a senior attorney with Miller, Canfield, Babicki, Chelchowski & Partners. fogo@pl.millercanfield.com