In January 2024, the EU Intellectual Property Office (EUIPO) released a robust study to assess the economic impact of counterfeiting in sales and employment in the clothing (including footwear), cosmetics and toys industries. Among the staggering statistics, it highlights that the clothing industry alone suffers an annual loss of almost €12 billion, accounting for 5.2% of the sector's overall turnover. This rises to 8.7% for the toy industry and 4.8% for cosmetics.
In the global economy, estimated consumer goods losses are in the trillions. And with online shopping now the norm, the proliferation of counterfeit goods poses severe risks not only to businesses, but also to consumers.
Such enormous financial losses also lead to significant job losses and fuel organised crime while also harming the environment. Further, counterfeit goods like electronics, food, personal care, pharmaceuticals, and toys can pose harmful health risks and safety hazards.
Recent research by the World Intellectual Property Organisation (WIPO) Advisory Committee on Enforcement, "Practices Used by Online Marketplaces to Tackle the Trade in Counterfeits", also highlights the inadequacies in anti-counterfeiting practices across various online platforms.
After scrutinising 50 online marketplaces, including search engines and social media platforms, only 8 were found to have effective anti-counterfeiting practices. Of the remaining 42, WIPO considered they were indifferent to the counterfeit problem, or that their strategies fell significantly short of what was required, and recommended increased self-regulation and coherent ethical programs.
Underscoring the necessity for robust mechanisms to safeguard intellectual property (IP) rights online, the overall message is that industry is struggling to contain the counterfeit problem.
Customs Watch Notices
Customs Watch Notices are a useful monitoring tool that rights holders can utilise to enhance their enforcement strategies.
In Australia, import provisions under the Trade Marks Act 1995 (Cth), the Copyright Act 1968 (Cth), Olympic Insignia Protection Act 1987 (Cth), and the Major Sporting Events (Indicia and Images) Protection Act 2014 (Cth), empower Australian Customs to seize goods suspected of infringing registered trademarks or copyrights, protected Olympic expressions or indicia and images related to major sporting events when they are imported into Australia and are for commercial purposes.
This process is called the "Notice of Objection Scheme" and can be summarised as follows:
- Filing a Notice: a rights holder, or an
authorised user, or the owner's exclusive licensee can lodge a
Notice of Objection with the Australian Customs and Border
Protection Service, detailing their registered trademarks,
copyrighted works, protected Olympic expressions or major sporting
events indicia and images.
For trade marks, copyrights and Olympic expressions, a Notice of Objection is valid for four years and can be updated, and/or re-lodged to ensure ongoing protection. A Notice of Objection for major sporting events indicia and images is generally valid for one year or less. A Notice of Objection can be withdrawn at any time if no longer required. Several domestic and global brands have lodged Notices of Objection with the Australian Border Force including Adidas AG, Australian Football League, Bose Corporation, Disney Enterprises, Inc., and Louis Vuitton Malletier. - Seizure and Notification: If suspected
counterfeit goods are identified, Australian Customs seize the
items and notify both the Importer and the IP rights holder
(Objector).
The Importer must make a Claim for Release of seized goods within 10 working days of notification or voluntarily forfeit the goods. If a Claim for Release is not requested, the goods are forfeited. - Legal Action or Forfeiture: If a claim for
release is made, the Objector will be notified and will have 10
working days (extendable to 20 working days in certain
circumstances) to commence legal action (Action
Period).
Before the end of the Action Period the Objector has the option to commence legal action; or they can consent to the release of the goods to the Importer. If legal action is not commenced within the Action Period, Customs must release the goods back to the Importer unless they have been voluntarily forfeited.
At the conclusion of any legal action on whether the goods infringe a rights holders IP rights, the Court will make an order about the goods, i.e., that the goods be released to the Importer or forfeited to the Commonwealth. When goods are forfeited, the Australian Border Force will dispose of the goods as directed by the relevant delegate, usually by destruction or donation.
The benefits of implementing Customs Watch Notices, include:
- Preventative Action: Stopping counterfeit goods before they are distributed in the market, significantly reducing potential economic and reputational damage to brands.
- Cost-Effective: Engaging with customs authorities is relatively inexpensive compared to the potential losses from the sale of counterfeit goods.
- Legal Leverage: In Australia, the Notice of Objection provides a legal basis for immediate action, enhancing the ability to swiftly address IP infringements.
- Supports Broader Anti-Fraud Measures: They complement other anti-fraud activities by agencies, creating a multi-layered defence against counterfeiting.
How Spruson & Ferguson can assist
The use of Customs Watch Notices can play a crucial role in combatting counterfeit goods in the domestic and global marketplace. As demonstrated by the Australian model, these notices serve as a critical defence mechanism, protecting both the economic interests of businesses and the safety of consumers.
For IP rights holders, engaging proactively with customs authorities and leveraging these tools is an essential part of a comprehensive anti-counterfeiting strategy. This proactive approach not only safeguards a business' IP and reputation, it also curtails the influx of counterfeit goods into legitimate markets and serves as a deterrent to counterfeiters, contributing to a more robust global trade environment.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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