Recent Developments to Address the Trade in Counterfeit Goods

George Wardle, Ministry of Economic Development

Two significant milestones were reached by Government in recent months to address the growing illegal trade in counterfeit goods.  The Trade Marks (International Treaties and Enforcement) Amendment Bill 2008 was enacted in September by Parliament.  Japan hosted a signing ceremony on 1 October where New Zealand became one of eight countries to sign the recently concluded Anti-Counterfeiting Trade Agreement (ACTA).  While the two events were not directly related to each other, they both demonstrate the Government’s on-going domestic and international commitments to take action against the trade in counterfeit goods.

The Copyright Act 1994 and the Trade Marks Act 2002 provide criminal offences for making, distributing, importing and selling pirated copyright works and counterfeit goods.  Convicted offenders can be fined up to $150,000 or imprisoned for up to five years.  While there have been a small number of criminal prosecutions under the Copyright Act in recent years, there have been no criminal prosecutions under the Trade Marks Act since the offences where introduced in 2002.  The mere existence of an offence, therefore, has not been sufficient to act as a deterrent to the trade in counterfeit goods.

The enactment of the Trade Marks Amendment Bill is expected to facilitate greater enforcement of these criminal offences and, therefore, assist to deter the trade in counterfeit goods.  The Bill introduced into the Copyright and Trade Marks Acts new investigative powers for the Ministry of Economic Development (MED) and the New Zealand Customs Service.  These new powers are intended to augment existing powers available to the Police to enforce these offences.

Enforcement officers from the MED have been provided with both warranted and limited non-warranted search and seizure powers to gather evidence of criminal offences being committed by traders of counterfeit goods.  The non-warrant powers allow an enforcement officer to enter any area open to the public, including fairs, markets and retail outlets, to seize counterfeit goods being displayed for sale.  Provisions also include the return of any seized goods that are genuine.

The majority of counterfeit goods being sold in New Zealand are being sourced from suppliers overseas.  Customs are now in a position to play a more active role in preventing commercial shipments of counterfeit goods from entering into New Zealand.  The Bill has given Customs the power to seize counterfeit goods at the border without a warrant.  In addition, Customs also have the power to require a person connected to the importation of goods that have been seized to produce specified documents and appear before a Customs officer to answer questions in relation to the seized goods.  

The Customs powers to seize counterfeit goods is not, however, linked to the border protection regime whereby right holders are able to lodge a notice with Customs to detain shipments of suspected infringing goods for the purpose of a civil prosecution.

The Minister of Commerce, Hon Simon Power, in announcing the enactment of the Trade Marks Amendment Bill made it very clear, however, that criminal enforcement by MED and Customs was not a substitute for civil enforcement by right holders.  The onus and responsibility for enforcement of intellectual property rights (IPRs) still lies with right holders.  Criminal prosecutions are to be the last resort, rather than a first response, to infringement of copyright and trade mark rights.

New Zealand was one of 11 participants that commenced negotiations in 2008 to develop ACTA.  ACTA established a comprehensive, first-time, international framework that will assist Parties to the agreement in their efforts to effectively combat the infringement of IPRs, in particular the proliferation of counterfeiting and piracy.

ACTA provides state-of-the-art provisions for the enforcement of IPRs.  It includes provisions on civil, criminal, and border enforcement measures, robust cooperation mechanisms among ACTA Parties, especially for Customs authorities, to assist in their enforcement efforts, and establishes best practices for effective IPR enforcement.

Countries that signed ACTA on 1 October along with New Zealand were Canada, Japan, Korea, Morocco, Singapore, and the US.  It is anticipated that other countries, including the European Union and Switzerland, will sign the agreement in 2012.