Combating Counterfeiting - A Practical Approach
The problems experienced by brand owners due to counterfeiting are well known in the fashion industry. Now is the time to fight back, writes Middletons' partner Tony Watson.
A recent report by the Organisation for Economic Co-operation and Development (OECD) found that international trade in counterfeit and pirated products currently stands well in excess of USD$200 billion. This figure is increased by several hundred billion dollars more if counterfeit product produced and consumed domestically and digital piracy involving counterfeit product being distributed via the internet is also included.
While this problem remains something which international and national law enforcement agencies are concentrating on, in order to stem the tide, it is businesses and brand owners themselves who must take action in order to combat the counterfeiting of their brands. There are a number of tools at the disposal of businesses to fight back.
Cut 'em off at the pass - The Australia Customs Program
Brand owners can register their trade marks and brands so that unauthorised importations of goods bearing the trade marks or brands are seized by Customs at the border. Recent changes to the relevant law have made this program more accessible. The name of the importer and the quantities and types of products are identified and may be inspected.
The Customs program is very effective at identifying a lot of shipments and even very small shipments of products. Substantial volumes of counterfeit products are seized and destroyed through this program every day. To take part in the Customs Program:
1. A trade mark owner has to give to Customs a Notice of Objection which lists each of its registered trade marks and a list of persons authorised to import goods;
2. The registered brand owner must provide an undertaking to Customs that they are willing to pay Customs for any storage or destruction costs that Customs may incur on the trade mark owners behalf in carrying out the seizing of their goods (this is an important change as previously a $10,000 bond had to be paid).
3. A notice of objection remains in place for 4 years.
Court Proceedings
In rare cases, an importer may refuse to forfeit the goods seized by customs and court proceedings must be issued to stop these seized goods from being released to the importer. The Federal Magistrates Court of Australia provides brand owners with an affordable and relatively fast moving jurisdiction for these types of actions. Most cases settle quickly with the importer agreeing to destruction and paying the costs.
The law allows a further speeding up of this process in some circumstances as brand owners can seek "summary judgment" against an importer, ie. the trade mark owner satisfies the Court that the importer/counterfeiter has no reasonable prospect of successfully defending the proceeding without the need to go to trial.
Judgment can therefore be obtained quickly without the need to go through the usually protracted trial process in the few instances that cases need to go that far.
Conclusion
There are practical effective and low cost steps you can take to ensure that your brand is not counterfeited in Australia:
(a) seek to eliminate the influx of counterfeit goods into Australia through use of a Customs Program; and
(b) litigating against those traders that are selling counterfeit goods in the Federal Magistrates Court of Australia.
Once a hard line is taken by a brand owner in relation to counterfeiting then word of mouth quickly spreads about the actions taken by the brand owner and counterfeiters are less likely to trade in this brand again. An active approach must be taken by brand owners in order to protect their brands and to combat the counterfeiting of their brands.
Tony Watson is a partner at Middletons law firm. He has over 16 years legal experience. He practices in the areas of IP, trade marks, technology & eCommerce.
By Tony Watson