As IP practitioners, you have probably noticed counterfeit watches being sold at local markets, sometimes hidden from immediate view by the seller. Over the past ~30 years, growth in online retailing (including third party retailers) has allowed counterfeiters to flourish and expand into goods such as footwear, leather goods, perfumes, jewellery and even pharmaceuticals. A 2019 OECD Report puts the value of counterfeit and pirated goods at US$509 Billion which corresponds to approximately 3.3% of global trade.
Criminal Offences under Trade Marks Act 1995
So what can brand owners do to combat the counterfeiters in Australia? Apart from commencing trade mark infringement proceedings, Part 14 of Australia’s Trade Marks Act 1995 also outlines a series of criminal offences in relation to registered trade marks, including:
- Section 145 ‒ Falsifying or removing a registered trade mark;
- Section 146 ‒ Falsely applying a registered trade mark;
- Section 147 ‒ Manufacturing a die, etc. for use in a trade marks offence.
- Section 147A – Drawing etc. trade mark for use in offence;
- Section 147B – Possessing or disposing of things for use in trade mark offence
- Section 148 ‒ Goods with false trademarks.
Each of these criminal provisions feature both summary and indictable offences with differing fault elements (intention, knowledge, recklessness or negligence) which must be proven depending on the offence. If there is a prosecution for an offence under Part 14, Section 160 establishes the criteria to be used in determining a natural person’s state of mind and his/her responsibility for the conduct of employees and agents.
Any person may institute proceedings to commit a person for trial for an indictable offence under the Trade Marks Act 1995. While private prosecutions for trade mark offences are possible, they are extremely rare as the costs involved are generally considered to outweigh the benefits. In practice, criminal proceedings for offences under the Trade Marks Act would most likely be brought by the Australian Federal Police or the Department of Public Prosecutions. Unfortunately for brand owners, such prosecutions are rarely brought in Australia (presumably on the basis that such actions are insufficiently “important”) and are typically confined to cases which primarily involve organised crime or public health and safety issues. The penalties for such offences range from a term of imprisonment (12 months for summary offence or 5 years for indictable offence) and/or fines (60 units for summary offence or 550 units for indictable offence) or both. On 1 July 2020, the value of one (1) penalty unit was increased to AU$222 (~US$160). Given the enormity of the counterfeit goods market, we think that such penalties are likely to be regarded as insignificant and simply “the cost of doing (counterfeit) business”.
Section 150 to 157 also establish a number of other miscellaneous offences, namely:
- Section 150 – Aiding and abetting offences;
- Section 151 – False representations regarding trade marks;
- Section 152 – False entries in Register etc.;
- Section 153 – Disobeying summons etc.;
- Section 154 – Refusing to give evidence etc.;
- Section 156 – Acting or holding out without being registered;
- Section 157 – False representation about Trade Marks Office;
The penalties for such offences range from a term of imprisonment (up to 2 years) or fines (up to 150 units) depending on the particular offence. Section 150 relates to aiding and abetting conduct including doing “an act outside Australia which, if it were done in Australia, would be an offence against this Act”. In such circumstances “the person is taken to have committed that offence and is punishable accordingly”.
Sections 151 – 157 are largely directed toward “administrative” offences such as the use of the ® symbol on or in relation to goods or services when the relevant trade mark is not currently registered in Australia. While brand owners should be aware of how to avoid such offences (for example, by utilising the TM symbol rather than ® or by specifying the country in which the mark is actually registered), these provisions are unlikely to offer brand owners any significant assistance with the prevention of counterfeit goods being sold in Australia.
Customs Notices and ACL
Apart from the actions outlined above, brand owners should also lodge a “Notice of Objection” which allows Australian Customs to seize potentially infringing goods when being imported into Australia. Under Australian legislation, the importer of the seized goods must make a claim for their return, otherwise they will be forfeited to the Commonwealth. This claim must include information which will assist the brand owner in contacting the importer and prevent further importations.
As China is a global manufacturing centre, it is also a significant source of counterfeit goods. In this regard, Chinese Customs also has the power to seize infringing goods including those being either imported to or exported from China. Brand owners should consider recording their trade marks with Chinese Customs, in an attempt to reduce the prevalence of counterfeit goods in other parts of the world.
An action could also potentially be brought against counterfeiters (by the Australian Competition and Consumer Commission) under Australia’s consumer protection law the Australian Consumer Law (ACL) which relates to conduct that is misleading and deceptive (or is likely to mislead or deceive) but again such actions would be rare.
Remedies and options are available to brand owners, however, active policing of the marketplace is required to protect brand value and minimise the trade in counterfeit goods being sold in Australia.
Authored by Nathan Sinclair and Sean McManis