It is established law that the parallel importation of original goods is permitted in Australia, subject to certain conditions. Two of those conditions are that the goods must be genuine, and the trade mark must have been applied by or with the consent of the registered owner of the mark. Now counterfeiters have the skills and technology to produce picture perfect product replicas, the process of determining if a product is genuine is not easy, but it is of utmost importance to importers that wish to avoid hefty fines and jail time.
Parallel importation of goods is becoming more common in Australia, with many local importers able to purchase authentic, quality goods at far lower prices than those offered locally when they order goods direct from the manufacturer or via other, legitimate overseas, routes. In these circumstances, the goods are likely to be genuine and the parallel importation of these products is generally permitted under the Trade Marks Act 1995 ("Act"). But what if the product is not in fact genuine? And how can you tell?
The exceptions in the Act by which parallel importation is permitted only apply to genuine products, carrying a trade mark that has been applied by or with the consent of the registered owner of the mark. Therefore, if a person sells goods, possesses goods or imports goods with a trade mark that has not been applied with the consent of the owner of that mark in Australia, that person will be guilty of an offence. It will come as a surprise to many to find the penalty for such an infringement under the Act is not only a fine, but can also include imprisonment for up to two years.
The Act states that the offending person must have "intentionally" sold the product, or possessed or imported it for the purpose of trade or manufacture. A recent case from the Court of Appeal of the Victorian Supreme Court1 has confirmed that the offending person need not be aware that his or her conduct is unlawful or wrong, it must only be proved that he or she has committed the act either intentionally or recklessly. Therefore, if the importer was aware, or should have been aware (recklessly, for example “turned a blind eye”) that the product carried a falsely applied trade mark, that person can be fined up to $55,000, jailed for up to two years or both. The recent case concerned three shipping containers imported into Australia from China, containing thousands of counterfeit goods.
This decision sounds a warning to parallel importers who do not diligently check the origin of their imported products. Counterfeits can be almost indistinguishable from their original counterparts and if the importer even suspects they may not be genuine, they may be guilty of an offence. When purchasing goods, importers should ensure the seller is able to provide them with sufficient evidence to be sure of the authenticity and origin of the goods.
IP Australia recently completed a review of the penalty provisions in the Act and found Australia’s maximum imprisonment period for trade mark offences was low when compared with other countries, and it considers there is scope to raise penalties so Australia is not seen as an attractive target for counterfeiters2. Other options include establishing lesser summary offences of the existing indictable offences under the Act, thereby having offences with a lower fault element. Remember, if a deal seems too good to be true, it probably is.
If you have any queries about parallel importing, please contact Nicole Stevens-Warton on 03 9608 2264 or n.stevens.warton@cornwalls.com.au or Anna Smits on 03 9608 2103 or a.smits@cornwalls.com.au
