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Protecting Your IP: How to Prevent Counterfeits

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Businesses invest a lot into building their brand and protecting their intellectual property (IP) assets. The downside to becoming a successful and popular brand is that this can lead to the production of cheap knock-offs and counterfeit items from copycat businesses. Counterfeit products can be significantly damaging to a brand in two ways. First, they can take business and profits away from the IP owner when consumers purchase the counterfeits rather than their items. Second, poor quality counterfeits can cheapen the brand and affect the brand’s reputation. 

It is the responsibility of IP rights owners to take action to stop the production and sale of counterfeits. It is important to have a strategy in place to prevent brand dilution and losses of revenue that arise from counterfeiting. Below, we set out some steps you can take to prevent counterfeits.

Monitor Infringement 

Registering your IP the first step in protecting your assets from counterfeits. However, once you have registered it, it is up to you to regularly monitor infringement and take action if necessary. You should ensure you have a policy in place for conducting regular searches online and in the market. This will allow you to keep track of any counterfeit goods that may become available. 

Seize Counterfeit Goods

If an imported product infringes on your copyright or trade mark rights, you can lodge a notice of objection with the Australian Department of Immigration and Border Protection. If the Department approves your notice of objection, customs temporarily seizes the goods, stopping their importation and distribution.

The importer of the goods is notified. They then have ten business days to make a claim for the release of the seized goods. If the importer makes no claim for the goods, the goods are disposed of. However, if the importer makes a claim for the release of the goods within those ten business days, you (the objector) will then have ten days to commence court proceedings to block the importation of goods permanently. Otherwise, the goods will be released to the importer.

There is no cost to lodge a notice of objection, but the party who lodges the notice must undertake to bear any costs they subsequently incur. Accordingly, a notice of objection is a simple and cost-effective step you can take to help protect your brand. It gives customs the power to identify and seize counterfeit goods and notify you, thereafter putting the onus on the importer to prove that they have the right to sell the goods. 

This can also be an effective pre-emptive measure, which stops the sale of counterfeit goods before they hit the market.

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Send a Letter of Demand or Cease and Desist Letter

In the event that counterfeits are already being produced and sold in the Australian market, you should send the person infringing your IP a formal letter setting out your rights to the intellectual property and advising them of their infringing conduct. The letter should:

  • identify the infringement; 
  • outline your intellectual property rights;
  • provide an opportunity to rectify the infringement (for example, by requiring them to take certain action); and 
  • inform them of the next steps in the event that they do not comply with your demands (typically, legal action). 

It is usually a legal requirement to take genuine steps to resolve a legal dispute before commencing litigation. Therefore, unless you require urgent relief, it is important to send a formal letter of this nature. Often, you can resolve the matter by exchanging letters, which saves you the significant cost of trying to resolve a matter in court. However, where you require urgent intervention, for example where there is a risk that evidence may be destroyed or there is an urgent deadline involved, you may need to take action with the court at a sooner date. 

Commence Litigation

Litigation may be required to enforce your rights where you cannot reach a resolution with the other side. However, court proceedings can be time consuming and expensive. That said, if you are successful, the court has broad powers in granting relief.

For example, the court may award you:

  • damages;
  • a share of the infringer’s wrongful profit;
  • an order for the destruction of all infringing material; or
  • an injunction restraining the infringer from selling and producing the infringing goods.

Whether you will obtain the above relief will depend on the strengths of your case. Accordingly, it is always important to weigh up whether it is in your commercial and personal interests to proceed with litigation before going ahead. 

Key Takeaways

All of your options to prevent counterfeit goods depend on you taking pre-emptive action and vigilantly identifying when someone is selling counterfeit versions of your goods. This requires you to monitor and enforce your rights effectively. It is your responsibility to notify customs of your rights when you become aware of counterfeit goods by lodging a notice of objection. Further, it is your responsibility  to notify infringers of your rights and demand that they cease their infringing conduct, failing which you will need to decide whether it is in your interests to proceed to litigation. If you need help with protecting your IP, contact LegalVision’s IP lawyers on 1300 544 755 or fill out the form on this page.

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