If the Australian Customs’ Twitter feed is anything to go by, our border protection officers are keeping busy. If they haven’t just seized a record haul of narcotics hidden in a shipment of sandwich grills, they’ve impounded a family of exotic snakes or arrested a gang of scammers.
What you don’t often hear about is the work Australian Customs performs in intercepting and seizing counterfeit shipments of Australian and international clothing and footwear brands.
The counterfeiting problem
Globally, the counterfeit apparel and footwear market is substantial. In Australia, it is estimated that breaches of copyright (ie copying original fabric prints, art work in the form of graphic logos and the like) causes estimated losses to businesses in the Textile, Clothing and Footwear Industry of $300 million per year.(1) The US Customs and Border Protection office (CBP) estimates that the value of lost sales due to inadvertent purchases of counterfeit goods was $1,110 million in 2011 and rose to $1,262 million in 2012.(2) While an estimated 40 per cent of the 2012 figure was made up of sales of fake handbags and wallets, a staggering 11 per cent related to sales of counterfeit apparel and accessories.(3) CBP estimates that three quarters of counterfeit and pirated goods seized originate from China.(4)Counterfeit products don’t just rob the fashion industry of legitimate sales – they carry the risk of devaluing customer perceptions of the quality and desirability of fashion brands.
The good news is that recent changes to the regime for identifying and seizing counterfeit goods at Australia’s border will make it easier for brand owners to identify and stop counterfeiters from importing fake goods in Australia.
Taking action: Customs programs
Under Australian copyright and trade mark law, brand owners can register their intellectual property rights with the Australian Customs and Border Protection Service (Customs).
To establish a Customs program, a brand owner simply has to lodge a document called a “Notice of Objection” with Customs authorising the seizure of imported goods that infringe that brand owner’s trade marks or copyright works. There is a specific Notice of Objection for trade marks and another for copyright works. Each Notice of Objection however should set out a list of the registered trade marks or copyright works to be covered by the notices, and should be accompanied by a list of authorised importers to ensure that goods legitimately imported are not incorrectly seized at the border by Customs officers. A bond is also required, to cover any potential costs incurred by Customs in the storage or destruction of counterfeit goods.
On the ground: how Customs works
Customs officers undertake random searches of shipments of goods imported into Australia. Once a Notice is active, Customs officers who discover goods bearing a brand owner’s trade mark or copyright works being imported into Australia without authority of the rights’ owner, will seize and impound the suspected fakes. Customs will then notify the importer and the brand owner that the goods have been intercepted and seized.
Establishing a Customs program is particularly important for brand owners whose goods are manufactured overseas.
Recent changes: what are they?
Until recently, if a brand owner did not commence legal proceedings against the importer of the counterfeit goods within the required timeframe, the goods would be released to the importer. In practice, this meant that importers of counterfeit goods could avoid being served with court documents by using a false name or address, or by “lying low” and making themselves impossible to serve. These importers could wait for the time period to elapse, then claim and sell the counterfeit goods. Under the new system, goods will only be released to an importer if they apply to Customs and provide the details required for commencing legal action. If an importer does not apply for the release of the goods, the goods are forfeited to the Commonwealth and can be destroyed.
Before the changes to the law, brand owners who were notified that suspected counterfeit goods had been seized weren’t able to access information about the person or company that had imported the counterfeit products without obtaining a court order (a relatively expensive and time consuming process). Under the new laws, brand owners will receive information about both the importer and exporter of the counterfeit goods, including their name, address, and any other information considered relevant for identifying and locating the alleged counterfeiters.
While previously brand owners were only permitted to access a single sample of the seized goods, the new laws also allow Customs to provide the brand owner with multiple copies or samples of the goods. This means that owners will be able to make a more accurate assessment of whether the shipment contains counterfeit items, and take swift action accordingly.
Protecting your brand at every stage
Counterfeit goods that make it through Customs undetected typically end up in markets around the country. An example of the damage that can be caused by the sale of counterfeit goods at markets in Australia is demonstrated by the Von Dutch experience in 2005. It was reported in the media that the popular clothing label’s Australian distributor stopped importing products from the label to sell in Australia as it simply could not compete with the bargain basement prices being asked for fakes sold at markets around the country.(5) At the time, Von Dutch did not own a registered trade mark for its name, and so it was unable to take advantage of a Customs program.(6)
The lesson for brand owners is this: you can only enforce the rights you own! Once your trade marks and copyright rights are in order, register these rights with Customs to take advantage of the new and improved Customs program. It may be the difference between your brand sinking or swimming (or at least enjoying a thriving trade in the Australian marketplace for years to come). ?
For more information about legal issues affecting the fashion industry, including how to establish a Customs program, contact Lisa Egan, partner at K&L Gates – lisa.egan@klgates.com (Contributing author Jacqui Pitt – jacqui.pitt@klgates.com)
