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Changes to Offences and Penalties under the Trade Marks Act 1995

Date: 08 August 2013
Author: Joanne Martin
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What’s New?

Of the various changes to trade mark law introduced by the Raising the Bar legislation this year, the least talked about is the increase in penalties for offences under the Trade Marks Act 1995.  This is important to trade mark owners as it is expected to be a deterrent to counterfeiters.  It also provides the opportunity for greater damages paid to trade mark owners who undertake enforcement proceedings.
 

Policy behind the changes

These changes reflect the government view that strong IP rights are a key contributor to a robust economy and that criminal offences and civil remedies, as well as appropriate penalties, can have a significant effect on protection and effective enforcement of IP. Ease of enforcement and significant penalties are seen as having deterrent value, counteracting a perception by counterfeiters that penalties are merely the cost of doing business.  The increase in penalties brings the Act in line with similar provisions in the patents and copyright legislation.  
 

Offences under the Act

Offences fall into two categories:
CIVIL - these are the remedies for infringement which are available to a trade mark owner
CRIMINAL - these provide penalties for falsifying, removing or defacing a registered trade mark and these actions are bought by the Federal Police (FP) or the Department of Public Prosecutions (DPP).
 

TRADE MARK INFRINGEMENT

Elements of Infringement

  • use of a sign as a trade mark,
  • which sign is substantially identical with or deceptively similar to a registered trade mark ,
  • and is used in relation to goods or services which are the same or closely related to the goods or services covered by the registered mark.

Remedies for Infringement

The penalties that a court may impose for infringement :
  • (a) an injunction and
  • (b) at the option of the plaintiff, damages or an account of profits
Account of Profits requires the infringer to give the profits made from the infringing activity to the trade mark owner.
Damages requires the infringer to compensate the trade mark owner for the loss suffered.
 
Other orders a court may make include:
  • seizure or recall of product from marketplace 
  • destruction of infringing products
  • delivery up to trade mark owner
  • corrections and apologies in public media

NEW REMEDY: ADDITIONAL DAMAGES

These are exemplary or punitive damages over and above those necessary to compensate the TM owner, awarded to:
  • punish the infringer and provide retribution
  • act as a deterrent to the infringer and others
  • demonstrate the court’s disapproval

Reasoning for Additional Damages

  • the flagrancy of the infringement -counterfeiters regard nominal damages awards as a cost of doing business that is more than compensated for by the rewards of counterfeiting
  • to deter similar infringements by increasing the  “cost of doing criminal business” 
  • greater financial penalties should increase legal actions being taken against infringers 
  • conduct of the infringer after the infringement may attract additional damages
  • Additional damages may compensate trade mark owner when damages or account of profits is difficult to establish –often infringers do not keep records and  ‘loss of opportunity’ or ‘damage to potential market’ difficult to value
  • allows court to send a clear signal about financial consequences of infringements
  • TM owners with limited resources have increased prospects of obtaining an award of damages
  • creates consistency between TM Act and copyright and patent Acts

CRIMINAL OFFENCES

NEW : SIGNIFICANT INCREASES IN PENALTIES

Penalties in Australia were lower than in other developed or developing economies. Increasing penalties should prevent Australia being attractive for counterfeiters.  Actions for criminal offences under the Trade Marks Act 1995 are bought by FP or DPP when:
  • there are public health and safety issues
  • there is involvement of organised crime
Prosecutions by DPP over past 8 years have been between 4 to 16 cases per year.  These have included seizure of counterfeit goods from Customs involving:
  • sub-standard car spare parts including brake pads and timing belts
  • personal cleaning products that had high pH levels
  • sunglasses not meeting safety requirement
  • cosmetics washing powder that contained high levels of salt
  • pharmaceuticals
  • counterfeit toothpastes that could be damaging
  • sub-standard personal razors and shampoos
Elements of a Criminal Offence - counterfeiting or defacing trade marks
  • falsifying or removing registered trade marks
  • falsely applying registered trade marks
  • creating or possessing apparatus for committing the above 
  • possessing, importing, selling or exposing for sale goods where a registered trade mark has been removed, falsified or falsely applied

The Offences: SUMMARY or INDICTABLE

Summary offence

  • a summary offence is tried by a judge alone
  • has  lower fault element of negligence  (rather than recklessness)
  • has lower maximum penalty of 12 months imprisonment and/or 60 penalty units - $6000 for an individual and $30,000 for a company

Indictable offences

  • an indictable offence requires a trial by a judge and jury
  • have the higher fault test of recklessness (intention or flagrant disregard)
  • penalties are increased from 2 years to a maximum of 5 years imprisonment and 550 penalty units – $55,000 for an individual and $275,000 for a company

Other penalties

  • forfeiture provisions apply for offences under the Act
  • that is, the products as well as the proceeds of the crime are forfeited to the Crown

Who is liable?

Anyone who commits a crime or aids, abets, counsels or procures the commission of a summary or indictable offence.  For a corporation
  • if the conduct was engaged in by an employee or agent within the scope of authority
  • the employee/agent had the intention to commit the act
  • the conduct is taken to be by both the corporation and its employee unless either can prove reasonable precaution and due diligence to avoid the commission of the offences

Take home message for trade mark owners

To avoid risk of infringement

  • conduct clearance searches before adopting a new mark  
  • file early 
  • use mark as it is registered
  • educate your employees and agents on offences and penalties and put appropriate policies in place

To guard against infringement of your marks

  • audit your IP rights portfolio and take any remedial action necessary to keep your IP portfolio up to date
  • monitor TM uses of competitors
  • report concerns to your legal department or advisors promptly
  • if infringement is located, act swiftly  to put infringer on notice and to obtain appropriate remedies
  • for breaches of Summary and Indictable Offences, report to DPP and/or FP.
Tags:  Trade Marks Act 1995
 
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