Counterfeiters face five years in prison

The government is cracking down on fake brands through the introduction of a new law providing tough penalties for companies and individuals caught counterfeiting products and services.

The Intellectual Property Laws Amendment (Raising the Bar) Act 2012 reportedly raises the penalty for ‘rip offs’ of registered brands, from two to five years imprisonment for scammers.

Under the Act, courts will also have the power to impose exemplary damages against counterfeiters who might otherwise treat penalties as the ‘cost of doing business’.

The reforms were passed into law on 15 April 2012 and will reportedly come into force on 15 April next year.

Parliamentary Secretary for Industry and Innovation, Mark Dreyfus, said Australian manufacturers will soon have greater protection from fake brands masquerading as the real thing.

These new measures bring the enforcement of trade mark law in line with other intellectual property rights, such as patents, and will apply to businesses of all sizes, he said.

“This is good news for business and good news for Australian jobs as phony imports can undercut local products and employment. Its takes a lot of work to build strong brands, and Australian consumers appreciate knowing exactly what it is they are buying,” said Dreyfus.

“The Act also sharpens up the process for seizure of counterfeit imports. Until now, importers bringing in counterfeit products have been able to play a game of cat-and-mouse by remaining anonymous – undercutting iconic Australian brands by bringing in cheap imports. Now Customs has the power to give trademark owners the information they need to commence prosecution.

"Trademark owners range from a one man mowing service right up to iconic Australian brands like GM Holden, Fosters and Weet-Bix. These new rules are good for all trade mark owners, regardless of their size.”

Through the Act, businesses that suspect third-party products are being fraudulently marketed as their own, can take the case to the Federal Magistrates’ Court – which is said to be cheaper than the Federal Court, which was the only option previously.

Facing product piracy is a reality for Australian firms in today's increasingly global manufacturing industry.

Piracy of intellectual property and the copying of products, particularly emanating from China, is a continuing issue for many manufacturers.

Such products are often of inferior quality, may not be sold with the standard manufacturers’ warranty, and technical support can be lacking.

One Melbourne-based company that faced piracy issues recently is FCR Motion Technology, an Australian distributor of Motovario industrial gearboxes, which last year released a new NMRV Power series of worm and heli cal-worm Motovario gearboxes onto the Australian market.

According to the company’s director, Larry Rigoni, the new gearboxes have a distinctive patented angular shape which differs from the traditional square look to differentiate the latest range from unauthorised copies that have been introduced into the market in recent times.

“About 15 years ago Motivario sought to have the aluminium gearbox housings made in China. Their co-operation with the local supplier did not last long, and it was after this ended that the copies began to appear on the market. Some carried the origi nal Motivario name, others were rebranded,” Rigoni told Manufacturers’ Monthly last year.

“Over the last seven years, copying of Motivario products has become very prevalent and patents appear to be ineffective in China. These pirated products are sometimes hard to pick and come onto the market some 30% cheaper that the original product.

“The quality of these products can be inconsistent as the cost savings are often achieved by the use if inferior materials and quality control is not always automated. Problems include leaking oil seals, noisy bearings, porous casings, and premature failure of the bronze crown wheel.”

With intellectual capital forming an increasing part of company balance sheets, more awareness is needed to protect this valuable asset from the threat of product piracy and counterfeiting.

The Advanced Manufacturing CRC, based at Swinburne University in Melbourne, has developed a comprehensive training program designed to develop, protect and commercialise technology. The Innovativity program, which is delivered over four days, covers the full spectrum of innovation from idea generation to product launch, and there is a strong focus on the protection of intellectual property (IP).