House of Representatives

Explanatory Memorandum

(Circulated by authority of the Assistant Minister for Citizenship, Customs and Multicultural Affairs, the Hon Julian Hill MP)

NOTES ON CLAUSES

Clause 1 Short title

1. This clause provides for the Customs Legislation Amendment (Infringement Notices in relation to Trade Marks) Bill 2026 (Bill), when enacted, to be the Customs Legislation Amendment (False Trade Marks Infringement Notices) Act 2026.

Clause 2 Commencement

2. This clause sets out, in a table, the date on which provisions of the Bill, when enacted, will commence. It provides that information in column 3 of this table is not part of the Act, and that the information in this column or information in it may be edited, in any published version of the Act.

3. Table item 1 provides for the whole of the Bill to commence on a single day to be fixed by Proclamation. However, if the provisions do not commence within the period of six months beginning on the day the Bill receives the Royal Assent, they commence on the day after the end of that period.

Clause 3 Schedules

4. This clause enables the Schedules to the Bill, when enacted, to amend or repeal provisions of legislation specified in the Schedules, in accordance with the applicable items. Both the CTD Act and the Customs Regulation are being amended by the Bill.

5. The clause also provides that other items of a Schedule to the Bill have effect according to their terms. This is a standard enabling clause for transitional, savings and application items in amending legislation.

Schedule 1–Amendments

Commerce (Trade Descriptions) Act 1905

Introductory comments

6. Registered trademarks, and consequently the intellectual property in them, are a valuable form of personal property that individuals and businesses may have invested significant money in creating. Accordingly, intellectual property owners have a legitimate interest in deterring those who seek to 'free ride' off their investment by selling or importing counterfeit goods.

7. This Bill establishes a financial deterrent that complements the existing legislative framework in relation to the importation of counterfeit goods. The purpose of the amendments is to make counterfeit importers' business model unprofitable, because the value of the seized goods, together with the amount of a penalty specified in an infringement notice, may exceed the profits realised from the consignments of infringing goods that escape detection.

8. Although subsection 9(1) of the CTD Act contains offences for the importation of certain infringing goods, the primary deterrents against importation are the forfeiture of goods or the commencement of court proceedings by the holder of the relevant trade mark rights.

9. The new offence provision is designed to complement the existing Notice of Objection scheme. Part 13 of the Trade Marks Act allows the ABF to seize and deal with goods that are imported into Australia if the importation infringes, or appears to infringe, a registered trade mark. Creating an offence in the CTD Act facilitates the creation of a financial deterrent through leveraging the customs infringement notice scheme.

10. This financial deterrent would complement the existing Notice of Objection schemes in the Trade Marks Act and the Copyright Act by leveraging existing statutory and enforcement frameworks. The infringement action will only occur after the counterfeits have been identified through the existing compliance process, including through the Notice of Objection schemes. There will be no new regulatory impact on lawful importers or the border industry.

11. While the Copyright Act and Customs legislation have infringement notice schemes, no such scheme exists in the Trade Marks Act for importations of counterfeit goods. The Copyright Act and the Trade Marks Act both already empower the Comptroller-General of Customs to seize and deal with goods infringing intellectual property rights. The Comptroller-General of Customs' powers under the Trade Marks Act and Copyright Act are also delegated the Australian Border Force officers, as Immigration and Border Protection workers, under subsection 54(1) of the Australian Border Force Act 2015.

12. Australian Border Force officers are similarly delegated powers with respect to the administration of imports and exports with false trade descriptions under the CTD Act. Australian Border Force officers also administer the Infringement Notice Scheme as 'infringement officers' under subsection 134(1) of the Customs Regulation in their capacity as "officers of Customs" as defined in subsection 4(1) of the Customs Act.

13. This Bill leverages the existing enforcement framework for intellectual property rights and the enforcement framework under customs legislation to create a complementary financial deterrent. Section 2 of the CTD Act incorporates that Act into the Customs Act and, by extension, the Infringement Notice Scheme under Customs legislation.

14. The Infringement Notice Scheme is established under Division 5 of Part XIII of the Customs Act. Section 243X of the Customs Act provides that a regulation may make provision enabling a person who is alleged to have committed an offence of strict liability or of absolute liability against the Act to pay to the Commonwealth a penalty specified in a notice. Regulation 135 of the Customs Regulation sets out that Schedule 8 prescribes provisions of the Act that are subject to an infringement notice. The Bill inserts a new strict liability offence into the CTD Act and then amends sections 135 and the table in Schedule 8 to the Customs Regulation to prescribe that offence as being subject to an infringement notice.

15. The amendments in this Bill supports Australian businesses by protecting their legitimate rights, while also protecting the community from potentially harmful counterfeit products, such as fake pharmaceuticals and electronics.

Item 1 Before section 17

16. Item 2 of the Bill inserts a new Division 2 at the end of Part III of the CTD Act, creating a new offence for importing goods with a false trade mark. An effect of the amendments made by item 2 of the Bill is that the provisions of Part III of the CTD Act will be separated by provisions contained in either Division 1 or the new Division 2.

17. Item 1 of the Bill makes a consequential amendment for the purposes of item 2, and inserts a new heading titled 'Division 1—General' before section 7 of the CTD Act. The purpose of this amendment is to separate sections 7, 8, 9, 9A, 10 and 10A contained in Part III of the CTD Act from the new provision contained in new Division 2, as inserted by item 2.

Item 2 At the end of Part III

18. This item amends Part III of the CTD Act to insert a new 'Division 2—Goods with false trade marks' at the end of that Part. New Division 2 contains new section 10AB, which creates an offence of strict liability for importing goods with false trade marks.

New subsection 10AB(1)

19. New subsection 10AB(1) is a strict liability offence provision that has two elements that must be satisfied.

First element of the offence

20. The first element of the offence is set out in paragraph 10AB(1)(a), which provides that the offence applies in circumstances where the person imports goods into Australia.

21. For the first element of the offence, by operation of new subsection 10AB(4), the term 'person' has the same meaning as in the Trade Marks Act. The definition is set out in the notes following new subsection 10AB(4).

Second element of the offence

22. The second element is set out in paragraph 10AB(1)(b), which operates to provide that the offence mentioned in paragraph 10AB(1)(a) is attracted if any of the following applies:

•

there is a registered trade mark on the goods (subparagraph 10AB(1)(b)(i));

•

there is a mark or sign on the goods that is substantially identical to a registered trade mark (subparagraph 10AB(1)(b)(ii)); or

•

a registered trade mark on the goods has been altered, defaced, added to, wholly or partly removed, erased or obliterated (subparagraph 10AB(1)(b)(iii)).

23. For this element, 'trade mark' has the same meaning as in the Trade Marks Act. As noted above, a reference to the Trade Marks Act definition is set out in the notes following new subsection 10AB(4), see discussion of those definitions following new subsection 10AB(4).

Penalty

24. The pecuniary penalty following new subsection 10AB(1) offence is expressed in penalty units, rather than dollar amounts, consistent with Principle 3.2.1 of the Attorney-General's Department Guide to Framing Commonwealth Offences, Civil Penalties and Enforcement Powers (Guide) to facilitate the uniform adjustment of penalties across legislation from time to time, to reflect changes in the value of the dollar. Section 4AA of the Crimes Act 1914 (Crimes Act) specifies the monetary value of a penalty unit at any particular time, and at the time this explanatory memorandum was prepared, a penalty unit was $330.

25. The penalty following new subsection 10AB(1) operates to provide that a person who commits an offence under subsection 10AB(1) is punishable by a maximum penalty of 60 penalty units.

26. This penalty is intended to act as a deterrent for the importation of certain infringing goods because the value of seized counterfeit goods, together with the amount of the penalty handed down, may exceed the profits realised from any consignments of infringing goods that escape detection.

27. This penalty is lower than the existing maximum 100 penalty unit penalty for a similar provision relating to the importation of goods to which a false trade description is applied (section 9 of the CTD Act) and is also lower than a similar provision for an offence of similar seriousness in the Copyright Act 1968. The penalty is consistent with other penalties in the CTD Act and is consistent with existing penalties that may be prescribed in relation to offences concerning the importation of such goods under the Customs Act.

28. By providing a maximum penalty, new subsection 10AB(1) provides for discretion to be applied in making regulations that impose penalties. It takes into consideration the need to provide an appropriate level of deterrence for offenders.

Infringement notice scheme in the Customs Act

29. Specifying the maximum pecuniary penalty amount of 60 penalty units for subsection 10AB(1) also allows for the exercise of the discretion to prescribe a lower penalty. For example, it would permit a lower penalty to be applied in an infringement notice issued under section 243X of the Customs Act, noting that the CTD Act is intended to be incorporated and read as one with the Customs Act (see section 2 of the CTD Act).

30. Relevantly, subsection 243X(2) of the Customs Act provides that the penalty specified in an infringement notice must not exceed either:

•

one-quarter of the maximum fine that a court could impose on the person as a penalty for that offence (paragraph 243X(2)(a)); or

•

15 penalty units if the person is an individual or 75 penalty units if the person is a body corporate, under paragraph 243X(2)(b).

31. If an infringement notice is issued under the Customs Act infringement notice scheme to a body corporate, the amount of the penalty specified in the infringement notice can be 5 times higher (the 'corporate multiplier rule'), consistent with the requirements of subsection 4B(3) of the Crimes Act 1914, section 243X of the Customs Act, and with Principle 3.1.4 of the Guide.

32. It is appropriate to have this maximum penalty because of the benefit to criminal enterprises to facilitate the movement of illicit goods and the strong financial incentive criminal enterprises have to commit the offence.

33. It is also noted that the penalty would apply to a limited number of persons, being importers to whom subsection 10AB(1) applies, and not to the public more generally. This means that the deterrence is tailored specifically to an appropriate cohort of persons, and not the public at large.

Nature of the offence

34. The offence is a summary offence, as distinct from an indictable offence, as it is punishable by a fine only and not by a term of imprisonment. This is consistent with the distinction made in section 4G of the Crimes Act and the discussion of the indictable/summary offence distinction Principle at 3.2.2 of the Guide.

35. The offence is also an offence of strict liability, which is necessary in order to bring the offence for importing goods with false trade marks within the scope of the infringement notice scheme under the subsection 243X(1) Customs Act. Strict liability attaching to this offence is appropriate to enable a more comprehensive deterrent to the importation of counterfeit goods.

36. When strict liability applies to an offence, the prosecution is only required to prove the physical elements of an offence. They are not required to prove fault elements (intention, knowledge, recklessness and negligence), in order for the defendant to be found guilty. Strict liability is used in circumstances where there is public interest in ensuring that regulatory schemes are observed and it can reasonably be expected that the person was aware of their duties and obligations.

37. Subsection 10AB(1) inserts a new strict liability offence for importing counterfeit goods. This offence has been added as there is a strong public interest in managing public health and safety risks appropriately and preventing serious damage to legitimate industries, consumer confidence and the economy.

38. In addition, registered trade marks are a valuable form of personal property that individuals and businesses may have invested significant money in creating. Counterfeiters seek to trade off the investment made and the goodwill developed by a trade mark owner in their brand. They also seek to deceive consumers, who may rely on a trade mark as a guarantee that the product they are purchasing is genuine. As the mere existence of counterfeit goods in the Australian economy causes substantial reputational and financial damage to trade mark owners, the offence is appropriately one of strict liability.

39. This offence is intended to support existing offences for the importation of certain infringing goods by making the importers' business model unprofitable, because the value of seized counterfeit goods, together with the amount of a penalty specified in an infringement notice, may exceed the profits realised from the consignments of infringing goods that escape detection.

40. To ensure that the strict liability offence only targets appropriate conduct, the defence of honest and reasonable mistake of fact is available to the defendant (see section 9.2 of the Criminal Code). This means that if a person has considered the relevant facts and is under a mistaken, but reasonable, belief about those facts, they are not liable for an offence.

41. The application of strict liability to this offence is appropriate and consistent with the Guide. The offence is not punishable by imprisonment, and the punishment of this offence without a fault element is likely to significantly enhance the effectiveness of the enforcement regime in deterring the importation of counterfeit goods. Additionally, there are legitimate grounds for penalising persons lacking fault including mitigating risk to public health and safety from the domestic circulation of faulty counterfeit goods and protecting the intellectual property rights of trade mark owners.

42. The nature of the offence means that, in proceedings, the prosecution will have to prove the two elements of new subsection 10AB(1), and not elements such as intention, knowledge, recklessness or negligence. However, the accused person will still be able to rely on the defence, in section 9.2 of the Criminal Code of honest and reasonable mistake of fact.

New subsection 10AB(2)

43. New subsection 10AB(2) provides a defence that new subsection 10AB(1) does not apply if the registered trade mark, or mark or sign, was applied, altered, defaced, added to, wholly or partly removed, erased or obliterated with the permission of the registered owner, or an authorised user, of the trade mark. This subsection substantially replicates subparagraph 148(1)(c)(i) of the Trade Marks Act.

44. Generally, this information would need to be provided by the trade mark owner. This defence allows for importers to provide evidence of the legitimacy of their goods and have any infringement notices revoked, while allowing the ABF to respond to the immediate threat of suspected counterfeit goods.

45. The note following new subsection 10AB(2) reminds the reader that a defendant bears an evidential burden in relation to the matter in subsection (2) and refers to section 13.3 of the Criminal Code.

Reversal of the evidential burden of proof

46. As a matter of law, any person seeking to rely on any exception, exemption, excuse, qualification or justification provided by the law creating an offence bears an evidential burden in relation to that matter (section 13.3 of the Criminal Code, noting that the legal burden of proof remains with the prosecution). This is referred to as a 'reversal of the evidential burden', which means that the defendant, rather than the prosecution, is responsible for presenting evidence to a court about a particular fact. It is then up to the prosecution to establish that this evidence is incorrect or does not apply.

47. Reversal of the evidential burden is justified in circumstances where the facts in question are peculiarly within the knowledge of the defendant, and therefore evidence that is sufficient to discharge the burden is readily and cheaply available for them. This is particularly the case where it would be difficult for the prosecution to assert that no burden-discharging evidence exists or to provide evidence negativing or disproving evidence that had not already been adduced by the person seeking to rely on it.

48. The reversal of the evidential burden is justified in this instance because the relevant information is known peculiarly by the defendant and it would be significantly more difficult for the prosecution to disprove.

49. For example, a person might have modified a trade mark on the imported goods at the request of the registered owner of the trade mark and seek to rely on the exception that they have permission to do so under new subsection 10AB(2). This person should easily be able to provide relevant identification and further information about the circumstances and the law that authorised them to remove, modify, alter or remove the trade mark. This information is peculiarly within the knowledge of the defendant; it would be more difficult and time-consuming for the prosecution to provide evidence of this.

New subsection 10AB(3)

50. New subsection 10AB(3) provides a defence that new subsection 10AB(1) does not apply if the application of the registered trade mark, or mark or sign, was required or authorised by the Trade Marks Act, a direction of the Registrar, or an order of a court.

51. This subsection substantially replicates subparagraph 148(1)(c)(ii) of the Trade Marks Act. The 'Registrar' in this section refers to the Registrar of Trade Marks, in accordance with the application of new subsection 10AB(4).

52. The note following new subsection 10AB(3) reminds the reader that a defendant bears an evidential burden in relation to the matter in subsection (3) and refers to subsection 13.3 of the Criminal Code.

53. The reversal of the evidential burden for a person seeking to rely on this defence is substantially the same as that described in relation to new subsection 10AB(2), above.

New subsection 10AB(4)

54. New subsection 10AB(4) provides that an expression used in this section has the same meaning as in the Trade Marks Act. A number of definitions in the Trade Marks Act apply to the new offence provision to ensure that the new offence provision aligns with related provisions in the Trade Marks Act.

55. Terms and expressions, which appear in new section 10AB, are defined in section 6 of the Trade Marks Act as follows:

(a)

person includes a body of persons, whether incorporated or not;

(b)

registered owner, in relation to a registered trade mark, means the person in whose name the trade mark is registered;

(c)

registered trade mark means a trade mark whose particulars are entered in the Register under the Trade Marks Act;

(d)

Registrar means the Registrar of Trade Marks;

(e)

sign includes the following or any combination of the following, namely, any letter, word, name, signature, numeral, device, brand, heading, label, ticket, aspect of packaging, shape, colour, sound or scent;

(f)

word includes an abbreviation of a word.

56. The terms authorised user and authorised use are defined in section 8 of the Trade Marks Act as follows:

•

A person is an authorised user of a trade mark in relation to goods or services under the control of the trade mark.

•

The use of a trade mark by an authorised user of the trade mark is an authorised use of the trade mark to the extent only that the user uses the trade mark under the control of the owner of the trade mark. The phrase 'under the control of' is not limited under the Trade Marks Act.

57. The terms covering and label are defined in subsection 9(2) of the Trade Marks Act as follows:

•

covering includes packaging, frame, wrapper, container, stopper, lid or cap; and

•

label includes a band or ticket.

58. The term deceptively similar is defined in section 10 of the Trade Marks Act. For the purposes of that Act, and new section 10AB of the CTD Act, a trade mark is taken to be deceptively similar to another trade mark if it so nearly resembles that other trade mark that it is likely to deceive or cause confusion.

The term trade mark has the meaning given by section 17 of the Trade Marks Act. A trade mark is a sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person.

Customs Regulation 2015

59. The purpose of this amendment is to include new strict liability offence in the CTD Act in the infringement notice scheme administered under customs legislation.

60. Section 2 of the CTD Act provides for that Act to be incorporated and read as one with the Customs Act. This is relevant to the extent that the framework for establishing an infringement notice scheme is provided for in Division 5 of Part XIII of the Customs Act.

61. Subsection 243X(1) of Division 5 of Part XIII of the Customs Act provides that a regulation may make provision enabling a person who is alleged to have committed an offence of strict liability or of absolute liability against the Act to pay to the Commonwealth a penalty specified in a notice (an infringement notice ) as an alternative to prosecution.

Item 3 Section 135

62. Item 3 amends section 135 of the Customs Regulation by inserting the words "or the Commerce (Trade Descriptions) Act 1905" after "of the Act". Regulation 135 currently provides that Schedule 8 prescribes provisions of the Customs Act that are subject to an infringement notice under Division 2. Following the amendment, section 135 would read 'Schedule 8 prescribes provisions of the Act or the Commerce (Trade Descriptions) Act 1905 that are subject to an infringement notice under this Division'.

63. This provides clarity on the application of the Customs Regulation as regards infringement notices, considering the interrelated operation of the CTD Act and the Customs Act.

Item 4 Clause 1 of Schedule 8 (heading)

64. Item 4 amends the first heading in Schedule 8 of the Customs Regulation, which currently reads 'Provisions subject to infringement notices'. This item inserts the words "of the Act" after "Provisions", so that it would read 'Provisions of the Act subject to infringement notices'. This adds clarify to the scope of Schedule 8 by placing the subject matter of Clause 1 in contrast with that of the new Clause 2.

Item 5 At the end of Schedule 8

65. Item 5 creates Clause 2 of Schedule 8, which reads as follows:

2 Provision of the Commerce (Trade Descriptions) Act 1905 subject to infringement notices

For the purposes of section 135, subsection 10AB(1) of the Commerce (Trade Descriptions) Act 1905 is subject to an infringement notice under Division 2 of Part 15.

66. For the purposes of regulation 135, Item 5 amends Schedule 8 to add the new strict liability offence in the CTD Act to the list of offences subject to an infringement notice under Division 2 of Part 15. This has the effect of activating the availability of infringement notices for contraventions of the new subsection 10AB(1), with consequential operational alignment under regulations 136-141.

Item 6 Application provision

67. Item 6 puts beyond doubt that the amendments apply to goods imported into Australia on or after the commencement (regardless of whether the registered trade mark, or mark, or sign was applied, altered, defaced, added to, wholly or partly removed, erased or obliterated before commencement).