Dealing with fakes

Article  \  14 Jun 2012

Does your business involve selling imported goods? If it does, you may face having to deal on an occasional basis with fake goods. 

Counterfeit goods are fakes.  There is no other direct way to describe them.

If your business has been built up over many years by importing goods that are not made locally, like luxury goods and cosmetics for example, you will have invested a lot of time, energy and money in establishing and maintaining your share of that market.

The ease with which consumers can buy goods overseas will have undoubtedly affected your business.  Consumers are always keen to secure a bargain so if they believe that buying online with save them dollars they will.  But many consumers do not consider what they are buying even if the price is too good to be true.

Coupled with increasing online sales is an increase in counterfeit goods. For some goods, like luxury high end designer goods, cosmetics, toys and dvd's, the growth in the importation of counterfeit goods has been huge over the years. 

But you do not have to sit quietly and take this assault on your business.  You have choices as explained below.

What can you do to protect your business?

Filing of Customs Notices

Customs Notices are an effective first line of defence against the import of counterfeit goods. We encourage the use of Customs Notices as they are efficient, cost-effective and can often help in identifying significant counterfeiters in New Zealand, and elsewhere in the world.

What is a Customs Notice?

A Customs Notice is a formal request lodged with the New Zealand Customs Service (Customs).  The Custom Notice requests that Customs detain any imported goods that infringe specific intellectual property rights.

Customs Notices can be filed to protect a registered trade mark. This means that Customs will detain any counterfeit goods that use an identical or confusingly similar trade mark on the same or similar goods covered by the relevant trade mark registration specified in the Customs Notice.

Without Customs Notices being filed, Customs are not able to seise and detain goods even if they suspect they are counterfeit.

Customs Notices can also be filed to protect a copyright work.  This means that Customs will detain any counterfeit goods that feature the same copyright work, or are substantially similar to the copyright work mentioned in the Customs Notice. Often this will be packaging but can include other copyright works like catalogues, brochures, manuals, product drawings and logos. 

Would-be importers of counterfeit goods, check the list of Customs Notices filed on the website and target trade marks and copyright rights not covered by a notice.

Who can file a Customs Notice?

The Customs Notice must be filed in the name of the owner of the trade mark. This is an important point to note.  If you are an importer of goods, you will not  be the owner of the trade marks for the goods that you retail in New Zealand.  This means that you will need to work closely with and get authority from the owners of the trade marks to file the Customs Notices (unless the owners decide to file themselves).

Copyright notices  also need to be filed in the name of the copyright owner.

Procedure for lodging Customs Notices

To lodge a Customs Notice, you must provide Customs with the following documents and information:

  • a notice requesting detention of infringing goods
  • a security document and NZ$5000 bond
  • an authorisation of agent
  • details of trade mark registration or copyright work
  • copies of the trade mark certificate of registration or the copyright work.  

The security bond is a one-off payment, and can be applied to all Customs Notices filed by one company.

Sometimes, Customs will allow one bond to be used by a family of companies.

The bond is held by Customs in an interest bearing trust account, and is refundable at the end of the notice period, less any costs incurred.

Renewing Customs Notices

A Customs Notice remains in force for up to five years or until the expiry of the relevant trade mark registration or copyright term, whichever comes first.

A Customs Notice can be renewed unendingly if the relevant trade mark registration or copyright work is in force.

Enforcing a Customs Notice

Once a Customs Notice has been lodged with Customs, any imported goods that infringe the Customs Notice will be detained by Customs.

Once Customs has detained any infringing goods, rapid and effective enforcement must follow to stop further infringing activity.

The Customs detention procedure is outlined below:

Customs notice

How effective is a Customs Notice?

Roughly 90% of the goods seised are forfeited  by the importers upon receiving a notice of detention.  The value of putting in place a customs notice is therefore real.

Concluding thoughts

Think strategically about how best to target importers of counterfeit product who are affecting your business.  Filing a customs notice can be an effective and efficient way of responding to fakes hitting your market share.  Also working  with the owner of the trade mark and copyright will no doubt strengthen your relationship as they will be pleased you are taking an active interest in assisting deal with the 'fake' issue they are confront.

An edited version of this column was published in NZRetail magazine, issue 707.