Changes to offences and penalties under the Trade Marks Act 1995 | FB Rice

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 onfringement

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.