New efforts to curtail the import of counterfeit goods infringing trade marks

The Explanatory Memorandum outlines that the impetus for the Bill was in recognition of the unsatisfactory remedies currently available for intellectual property owners from imports of counterfeit goods. The existing legislative regime, including the Trade Marks Act 1995 (Cth) and the Copyright Act 1968 (Cth), allow intellectual property rights owners to bring court proceedings and to make written requests to the ABF to seize imported goods that allegedly infringe IP rights. 

The first step is for a Notice of Objection to be lodged with the ABF by the owner of a registered trade mark. All Australian registered trade mark holders can apply to the ABF for a Notice of Objection.

Once a Notice of Objection is in place, the ABF may detain (or seize) imported goods suspected of infringing intellectual property rights. However, the intellectual property rights holder remains responsible for any subsequent legal action against the importer under civil proceedings. Once the ABF refers the matter to the intellectual property rights holder, it no longer has authority to take action against the importer.

It is apparent from the existing regime that the recourse available to IP holders from counterfeit imports (ie commencing proceedings against the importer themselves) relies on an ability to fund such proceedings. The Explanatory Memorandum refers to consultation with industry stakeholders who estimated that the average cost for full IP legal proceedings are between $200,000 and $500,000. For small business IP holders, this can be entirely prohibitive. Further, even if a trade mark holder could fund such civil proceedings, the view of industry was that the damages awards from the Court insufficiently impacted the business model of counterfeiters. For the importers of counterfeit goods in this scenario, they can simply forfeit (abandon) the goods that have been seized by ABF without other repercussions. It appears from the Explanatory Memorandum that ABF readily acknowledge that detection across consignments is imperfect, and therefore importers of counterfeit goods may be building a business model on the basis that some consignments may be seized and ultimately forfeited. 

Accordingly, this Bill seeks to establish a financial deterrent by making counterfeit importers’ business model unprofitable, because the value of the seized goods, together with the amount of a penalty specified in an infringement notice, may exceed the profits realised from the consignments of infringing goods that escape detection.

The Explanatory Memorandum also makes clear that the measures will benefit the community more broadly by limiting potentially harmful counterfeit products, such as fake pharmaceuticals and electronics flooding the Australian market.

If passed, the new provision will provide a criminal offence for importers who import goods that infringe a registered trade mark. It will be a ‘strict liability’ offence, meaning that there does not need to be evidence that there was an intent to import goods that infringe a trade mark. 

The new provision, s 10AB, will be inserted into the Commerce (Trade Descriptions) Act 1905:

10AB Offence of importing goods with false trade marks

1. A person commits an offence of strict liability if:
   1. the person imports goods into Australia; and
   2. any of the following applies:
      1. there is a registered trade mark on the goods;
      2. there is a mark or sign on the goods that is substantially identical to a registered trade mark;
      3. a registered trade mark on the goods has been altered, defaced, added to, wholly or partly removed, erased or obliterated.

If ABF prosecute, the maximum penalty will be 60 penalty units for individuals. If the importer is a body corporate, a Court may impose a fine of up to five times the amount of the fine that could be imposed on a natural person. The current Commonwealth penalty unit is $330. If passed, this would equal a maximum of $19,800 for individuals and $99,000 for body corporates for each offence based on the current value of the Commonwealth penalty unit. 

As an alternative to ABF commencing prosecution proceedings, the proposed amendments will expand ABF’s current infringement notice regime to cover s 10AB(1). The maximum penalty specified in an infringement notice, for each import, may be either by 15 penalty units for an individual ($4950) or 75 penalty units for a body corporate ($24,750).

All registered trade mark owners can lodge a ‘Notice of Objection’ with the ABF, a prescribed form that notifies the ABF of the existence of the trade mark. That initiating process is not changing if these penalty provisions are passed. Once a Notice of Objection is in place, the ABF may then detain any imported goods suspected of infringing that owner’s intellectual property rights. Even with the new changes outlined above, it is important for any trade mark owners to complete a Notice of Objection so that the offending goods may be seized and any subsequent prosecution or infringement notice may commence.

Objectors should seek advice about lodgement of the Notice of Objection and the obligations that are assumed by doing so, which may include agreeing to repay the costs resulting from any seizures made (ie transportation, storage and destruction costs).