Intellectual Property Law

Counterfeiters beware! Court of Appeal rules on criminal provisions of the Trade Marks Act

By IBLS Editor

Overview
A recent decision of the Court of Appeal of the Supreme Court of Victoria will bring good news to owners and licensees of trade marks in Australia, particularly trade marks that are well known and often targeted by counterfeiters.1

The decision has clarified the tests to be applied in determining whether there has been a contravention of the criminal offence provisions of the Trade Marks Act 1995 (Cth) (Act). The decision confirms that it is not necessary to prove that the accused knew that his or her conduct was unlawful or wrong. Instead, it must be proved only that the accused committed the relevant acts either intentionally or recklessly.

As a result, it should now be easier to successfully prosecute persons involved in the importation and sale of commercial-scale quantities of counterfeit products.

The criminal offence provisions of the Act
Counterfeit products are those to which a trade mark has been applied without the permission of the owner or licensee of the trade mark. Counterfeit products typically involve well known brand names applied to ?look alike' fashion or luxury goods.

Part 14 of the Act sets out a number of criminal offences which are aimed at those engaged in the production, importation or supply of counterfeit products, and related activities.2 The penalty for each of these offences can include a substantial fine (up to $55,000) and imprisonment (for up to two years).

These offences should provide a greater deterrent to dealing in counterfeit goods than the trade mark infringement provisions in the Act?the remedies for which are limited to injunctions and damages or account of profits. However, the effectiveness of these provisions has been called into question in recent years following several unsuccessful attempts to prosecute people for these offences.

A particularly problematic issue in these cases has been that courts have interpreted the provisions as requiring that the accused person knew that, or at least was reckless about whether, his or her conduct was a criminal act or contravened the law. The difficulty of establishing this beyond reasonable doubt has limited the effectiveness of these provisions.

Facts of this case
In 2004, the Australian Customs Service intercepted three shipping containers imported into Australia from China and found thousands of suspected counterfeit goods. Following investigations conducted by the Australian Federal Police, the directors of the company that had imported the goods were charged under section 148 of the Act with importing goods and exposing them for sale knowing that, or reckless of whether or not, a registered trade mark is falsely applied to them or in relation to them.

During the trial in the County Court of Victoria, the judge ruled that, in order to make out the offences charged, it was necessary for the Crown to prove that the accused knew that what he was doing was wrong. For example, the judge directed the jury as follows:

[T]he Crown would need to prove beyond reasonable doubt that assuming those matters (ie that the accused had imported and exposed the goods for sale and that the goods were counterfeit) were proved, that each accused individually was aware that it was wrong. That is, unlawful in a criminal sense. If you like, as opposed to a potential for a civil liability. They have to know it is a criminal offence.  The jury returned verdicts of not guilty on each count.

The Commonwealth Director of Public Prosecutions (DPP) appealed to the Court of Appeal of the Supreme Court of Victoria, seeking clarification as to the elements of an offence under section 148 of the Act and, in particular, whether those elements include that the accused had knowledge, awareness or a belief that the conduct was unlawful in a criminal sense or wrong according to the ordinary standards of men.

Decision by the Court of Appeal
The Court of Appeal found in favour of the DPP. It held that the offences under section 148 of the Act, with which the accused had been charged, do not require proof that the accused knew his or her conduct was unlawful or wrong.

The Court of Appeal stated the elements of the offences as follows:

the accused must have intentionally exposed the goods for sale or imported the goods (as the case may be), and the accused must have known that, or been reckless about whether, a registered trade mark had been falsely applied to the goods, or in other words that the goods are counterfeit.
The Court of Appeal cited longstanding High Court authority in support of its conclusion that it is not an element of ?criminal responsibility' that the accused person knew that what he or she was doing was unlawful.

The decision should pave the way for more straightforward prosecutions of those dealing in counterfeit products and hence restore the full deterrent effect of the provisions in Part 14 of the Act.

Endnotes
1. Commonwealth Director of Public Prosecutions Reference No 1 of 2008 [2008] [VSCA] 214.
2. The relevant provisions are sections 145, 146, 147, 148 and 150 of the Act.

Full post as published by IBLS Internet Law Blog on November 10, 2008 (boomark / email).