House of Representatives

Explanatory Memorandum

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

Attachment A Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Customs Legislation Amendment (False Trade Marks Infringement Notices) Bill 2026

The Bill is compatible with human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Bill

The Customs Legislation Amendment (False Trade Marks Infringement Notices) Bill 2026 (the Bill) amends both the Commerce (Trade Descriptions) Act 1905 (CTD Act) and the Customs Regulation 2015 (Customs Regulation) in order to:

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establish a new strict liability offence under the CTD Act applying to the importation of goods bearing false trade marks; and,

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prescribe the new offence within the Customs Infringement Notice Scheme (Division 5 of Part XIII of the Customs Act 1901 (Customs Act) and Division 2 of Part 15 of the Customs Regulation), enabling Australian Border Force (ABF) officers as delegates of the Comptroller-General of Customs to issue infringement notices as an alternative to prosecution.

Together, this amendment package will bring the importation of goods suspected of infringing a registered trade mark (counterfeits) within the scope of the Infringement Notice Scheme (Infringement Notice Scheme) under the Customs Act as administered by the ABF.

Section 2 of the CTD Act provides that "this Act shall be incorporated and read as one" with the Customs Act. The introduction of the new strict liability offence is accompanied with amendments to the Customs Regulation to prescribe the offence as one to which the Infringement Notice Scheme applies under Division 5 of Part XIII of the Customs Act. As a consequence, the practical application of the Bill is to enable a person who is alleged to have committed a strict liability offence under the CTD Act to pay the Commonwealth a penalty specified in an infringement notice as an alternative to prosecution.

Under the current system, the ABF enforces intellectual property rights through the Notice of Objection Scheme. A Notice of Objection is a form filled in by holders of registered intellectual property rights, providing legal authority for ABF officers to seize suspected counterfeit and pirated goods. All Australian registered intellectual property rights holders can apply to the ABF for a Notice of Objection, and once the Notice of Objection is in place, the ABF may then detain any imported goods suspected of infringing on that holder's intellectual property rights. In the majority of cases where counterfeit and pirated goods are seized the importer will forfeit or abandon the goods.

Bringing these offences within the Infringement Notice Scheme will supplement the Notice of Objection scheme, by allowing ABF officers at the point at which the importer has forfeited the goods, to issue an infringement notice. The issuing of an infringement notice by the ABF, will enable a person who is alleged to have committed the offence of importing goods with false trade marks to pay the Commonwealth a penalty specified in the infringement notice, as an alternative to being prosecuted for the offence.

The maximum financial penalty of the new offence is 60 penalty units for an individual, or 300 penalty units for a body corporate. By operation of section 243X of the Customs Act, the maximum penalty specified in an infringement notice may be either by 15 penalty units for an individual or 75 penalty units for a body corporate. Specifying the maximum pecuniary penalty amount of 60 penalty units for subsection 10AB(1) is authority 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.

The Law Council of Australia has indicated its support for measures imposing an additional penalty on importers of counterfeit goods besides the loss of those goods. Consultation with industry legal stakeholders has indicated that the average cost for full IP legal proceedings would be between $200,000 and $500,000. Awards of damages insufficiently impact the business model of counterfeiters and a stronger deterrent at the border has been requested by Australian IP owners. Making the importation of counterfeit goods an infringeable offence will allow the Australian Government to directly impact the profits of counterfeiters and provide an additional deterrent to the practice alongside the current deterrent of seizure of the goods and potential civil litigation by IP owners.

It is envisioned the measures will result in fewer counterfeit goods entering Australia, as importers will no longer view the trade as having a viable business model. This will mean a reduction of potentially harmful counterfeit products, such as fake pharmaceuticals and electronics in the community, a more prosperous and reputable retail sector, and the additional benefit of a potential decrease in the number of expensive civil litigation suits for IP owners.

The ABF will have responsibility for issuing infringement notices and will take a graduated and flexible approach in relation to the measures. ABF officers will have a great deal of flexibility as to whether or not they levy an infringement notice, as the power to issue an infringement notice is discretionary. Considerations such as first-time offences, genuine mistake of fact, quantity of goods, and type of goods with regard to community safety can all be taken into account. The range of actions available includes 'no penalty', a formal warning, the infringement notice or prosecution.

The infringement action will only occur after the counterfeits have been identified through the existing compliance process and where the new offence is prescribed for the purposes of the Infringement Notice Scheme under the Customs Act. There will be no new regulatory impact on lawful importers or the border industry.

Human rights implications

The Bill engages the right to the presumption of innocence in Article 14 of the International Covenant on Civil and Political Rights (ICCPR).

Right to presumption of innocence

Article 14(2) of the ICCPR states that everyone charged with a criminal offence shall have the right to be presumed innocent until proven guilty according to law. The right to presumption of innocence is also a fundamental common law principle. Consistency with the presumption of innocence requires that the prosecution prove each element of a criminal offence beyond reasonable doubt.

Strict liability offence

The application of strict liability to an element of an offence may engage and limit the right to be presumed innocent as it allows for the imposition of criminal liability without the need for the prosecution to prove fault. 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.

Strict liability offences will not necessarily be inconsistent with the presumption of innocence provided that the limitation on the presumption of innocence pursues a legitimate objective and is reasonable, necessary and proportionate to achieving that objective. Whether a strict liability provision impermissibly limits the right to the presumption of innocence will depend on the circumstances of the case and the particular justification for an offence being a strict liability offence.

The Bill inserts new subsection 10AB(1), which creates the offence of importing goods into Australia with false trade marks. Applying strict liability is appropriate in these circumstances as persons engaged in the importation of branded goods would be expected to be aware of, and comply with, Australia's IP regime. There is also a strong public interest in managing public health and safety risks and preventing serious damage to legitimate industries, consumer confidence and the economy associated with the importation of counterfeit goods into Australia. Establishing this offence is also necessary to achieve the legitimate objective of deterring conduct which infringes on the intellectual property rights of trade mark owners.

It is envisioned the measures will result in fewer counterfeit goods entering Australia, as importers will no longer view the trade as having a viable business model. This will mean a reduction of potentially harmful counterfeit products, such as fake pharmaceuticals and electronics in the community, a more prosperous and reputable retail sector, and the additional benefit of a potential decrease in the number of expensive civil litigation suits for IP owners.

The impact of the offence on this right is also reasonable and proportionate to these objectives as the offence is not punishable by imprisonment and imposes a maximum penalty of 60 penalty units (and 15 penalty units should the penalty be prescribed for the purposes of Infringement Notice Scheme), which is at the lower end of the scale. 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 Act 1995 (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.

The application of strict liability in the Bill and the offence to which it relates has been developed in line with the Senate Standing Committee for the Scrutiny of Bills Sixth Report of 2002 on Application of Absolute and Strict Liability Offences in Commonwealth Legislation and the Australian Government Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers (the Guide).

Reverse burden of proof

Laws which shift the burden of proof to a defendant, commonly known as 'reverse burden provisions', can also be considered a limitation of the presumption of innocence. This is because a defendant's failure to discharge a burden of proof or prove an absence of fault may permit their conviction despite reasonable doubt as to their guilt. This includes where an evidential or legal burden of proof is placed on a defendant.

When a defendant bears an evidential burden in relation to an exception it means that the defendant bears the burden of adducing or pointing to evidence that suggests a reasonable possibility that the exception has been met. It is then up to the prosecution to establish that this exception does not apply. This can be justified in circumstances where the facts in question are peculiarly within the knowledge of the defendant.

Reverse burden offences will not necessarily be inconsistent with the presumption of innocence provided that the reverse burden pursues a legitimate objective and is reasonable, necessary and proportionate to achieving that objective. Whether a reverse burden provision impermissibly limits the right to the presumption of innocence will depend on the circumstances of the case and the particular justification for the reverse burden.

The Guide notes that placing the burden of proof on the defendant should be limited to where the matter is peculiarly within the knowledge of the defendant and where it is significantly more difficult and costly for the prosecution to disprove than for the defendant to establish the matter. The Guide also notes that a reverse burden provision is more readily justified if:

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the matter in question is not central to the question of culpability for the offence

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the penalties are at the lower end of the scale, and

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the conduct proscribed by the offence poses a grave danger to public health or safety.

An additional factor to consider is whether the offences only impose an evidential burden (as the prosecution must still disprove the matters beyond reasonable doubt if the defendant discharges the evidential burden).

The Bill may limit the right to be presumed innocent through imposing an evidential burden on the defendant in relation to proving whether an exception (defence) applies to the new offence in subsection 10AB(1). Chapter 4 of the Guide was considered in the development of these exceptions and is considered consistent with the reverse burden of proof.

New subsections 10AB(2) and (3) create the following exceptions to the offence in subsection 10AB(1):

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the use of the registered trade mark was permitted by the registered owner, or an authorised user, of a trade mark (subsection 10AB(2)); or

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the application of the registered trade mark was required or authorised by the Trade Marks Act 1995 (Trade Marks Act), a direction of the Registrar of Trade Marks or an order of a court (subsection 10AB(3)).

An evidential burden is created by reason of subsection 13.3(3) of the Criminal Code, which provides that a defendant who wishes to rely on any exception provided for by law creating an offence bears an evidential burden in relation to that matter. This is confirmed by the insertion of a note to the relevant exceptions, to ensure that persons who are potentially subject to this offence are aware of this matter.

New subsection 10AB(2) places an evidential burden on the defendant in relation to proving that the application, alteration, defacement, added of, whole or part removal, erasure or obliteration, as the case requires, of the trade mark was done with the permission of the registered owner, or an authorised user, of the trade mark. New subsection 10AB(3) places an evidential burden on the defendant in relation to proving that 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 of Trade Marks or an order of a court.

In accordance with the Guide, the amendments place an evidential burden on the defendant because the matter is peculiarly within the defendant's knowledge. Evidence of whether the use of the trade mark was permitted, required or authorised per the exceptions is readily available to the defendant. It would be difficult for the prosecution to provide evidence that the person has received permission when this evidence can only be known by that person and the trade mark owner or authorised user. It would also be significantly more difficult and costly for the prosecution to provide evidence that the use of the trade mark was permitted or required by law than for a defendant to provide evidence of the matter themselves.

These provisions are necessary to achieve the legitimate objectives of preventing unlawful infringement of IP rights of individuals and businesses in Australia and ensuring the effective management of public health and safety risks posed by counterfeit goods at the border. These provisions are reasonable and proportionate to these objectives as the prosecution would still be required to prove the physical elements of the offence beyond reasonable doubt.

Accordingly, to the extent that the Bill limits the right to presumption of innocence for affected individuals, that limitation is reasonable, necessary and proportionate and pursues a legitimate objective.

Conclusion

This Bill is compatible with human rights because to the extent that it may limit human rights, those limitations are reasonable, necessary and proportionate.