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Counterfeiting – a global problem


Counterfeiting is rife in Australia and many people who would consider themselves law-abiding are involved.

We’re not talking counterfeit currency here, but the manufacturing, importation and sale of items infringing the intellectual property of others.

The International AntiCounterfeiting Coalition estimates that the problem has grown over 10,000 percent in the past two decades, with counterfeit goods now accounting for an estimated five-to-seven percent of global trade.

Many individuals consider that buying a counterfeit DVD or brand-name shirt is not really hurting anyone.

In fact, some counterfeits can directly harm the buyer – counterfeit aircraft parts or pharmaceuticals can kill and counterfeit lighters have been known to explode under normal operating conditions – while the general trade in counterfeits has the impact of causing financial damage to legitimate companies and unacceptable conditions for workers in the counterfeit industry.

Beneficiaries of counterfeiting include organised crime and terrorist organisations.

Even at the personal end of the scale, purchasers of counterfeit items are providing the demand that fuels the supply.

Merely downloading a song on the internet and burning it to a CD or loading it onto your MP3 player is akin to the theft of someone else’s intellectual property, unless you do so through an authorised site.

Are you a thief?

Quantum research conducted in 2003 found that around 3.4 million Australians had illegally downloaded music files via file sharing services. This number has, no doubt, risen since then. According to the Australian Recording Industry Association, file sharing and CD burning results in a loss to the songwriter who originally composed the work, the artist who performed the music, the music company that invested both time and money in bringing the product to market and, of course, the retailer.

“Ultimately the consumer is the loser. With copying rampant, there is diminishing motive to invest in music production or risk supporting new talent. File-sharing and CD burning contributes to the slow but steady weakening of the local and international music industry,” said ARIA Chief Executive, Stephen Peach.

Proposed changes to the Copyright Act have generated significant publicity recently, with new criminal sanctions proposed for copyright infringement. However, under the current act, most infringements involving commercial dealings are already criminal offences.

Similarly, intentionally importing or selling goods with falsified trade marks is a criminal offence, with steep fines and imprisonment possible.

While most action against trade mark infringers is civil, criminal charges are occasionally laid. Earlier this year, nine traders were arrested and charged in a raid on Melbourne’s Queen Victoria Market, which seized more than 4,800 counterfeit items.

Long Term of the Law

Many IP owners have a zero-tolerance approach to infringement of their IP. Strategies include the use of investigators to find traders in counterfeit goods (often in markets).

Investigators will usually make test purchases of infringing goods and will provide evidence in subsequent court actions. With a large number of counterfeit goods manufactured in Asia, copyright and registered trade mark owners can register their IP with Customs. Infringing items may be seized by Customs before they hit the Australian market and ultimately forfeited. The IP owner may take action against the infringer ranging from seeking enforceable undertakings not to infringe again, to seeking financial damages.

In addition to steep fines, the Federal Court has imposed suspended jail terms against persistent infringers, who after breaching undertakings, have been found guilty of contempt of court.

Owners of registered designs may take similar action to owners of trade marks, but designs cannot be registered with Customs. Nor can common law trade marks.

Eliza Saunders is a Lawyer and Trade Mark Attorney with Phillips Ormonde & Fitzpatrick Lawyers. Kristine Baird is a Researcher with IP Organisers. She may be the only person who is both a registered private investigator and a registered trade mark attorney.