House of Representatives

Explanatory Memorandum

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

GENERAL OUTLINE

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

•

establish a new strict liability offence under the CTD Act for the importation of goods bearing false trade marks;

•

prescribe the new offence in the Customs Infringement Notice Scheme, by amendments of the Customs Regulation, enabling the Comptroller-General of Customs (and delegates in the Australian Border Force) to issue infringement notices as an alternative to prosecution for the offence.

These amendments will bring the importation of goods that infringe a registered trade mark (counterfeits) within scope of the Infringement Notice Scheme under the Customs Act 1901 (Customs Act) administered by the Australian Border Force (ABF). The amendment of the Customs Regulation enables the enforcement of that offence through the issuing of infringement notices to persons by the ABF.

The Customs Regulation allows an infringement notice to be issued where an infringement officer believes on reasonable grounds that a person has contravened a provision that is made subject to an infringement notice under subsection 243X(1) of the Customs Act and Division 2 of Part 15 of the Customs Regulation. The Bill inserts a reference to the new strict liability offence into Schedule 8 to the Customs Regulation (via Regulation 135) to activate the availability of infringement notices.

BACKGROUND

The protection of intellectual property rights from the importation of counterfeit goods is regulated through the CTD Act, the Trade Marks Act 1995 and the Copyright Act 1968 (Copyright Act). Under this legislation, the Australian Border Force has certain powers to seize imported counterfeit goods and goods with false trade descriptions.

The CTD Act imposes certain labelling requirements in relation to goods imported into Australia. It contains offences relating to importing or exporting of goods marked with a 'false trade description'. The Trade Marks Act and the Copyright Act contain measures protecting intellectual property rights from importations of counterfeit goods, including goods which infringe registered trade marks.

The Trade Marks Act and the Copyright Act allow intellectual property rights owners to bring court proceedings and to make written requests to the Comptroller-General of Customs to seize imported goods that allegedly infringe on their IP rights. This is done through a Notice of Objection scheme, whereby the registered owner of a registered trade mark may give to the Comptroller General of Customs a notice in writing objecting to the importation after the date of the notice of goods that infringe the trade mark.

All Australian registered trade mark holders can apply to the ABF for a Notice of Objection. Once a Notice of Objection is in place, the ABF may detain any imported goods suspected of infringing that holder's intellectual property rights. The intellectual property rights holder remains responsible for any subsequent legal action against the importer under civil prosecution. Once the ABF refers the matter to the intellectual property rights holder, it no longer has authority to take action against the importer.

In the majority of cases where counterfeit and pirated goods are seized, the importer forfeits or abandons the goods. When this occurs, the Commonwealth is unable to pursue the importer through fines or prosecution. The only consequence to the importer is the financial loss of the value of the seized counterfeit goods.

Access to the customs infringement notice scheme adds an added financial deterrent against the importation of counterfeit goods. These amendments do not alter or change the existing Notice of Objection process, rather, these amendments complement the existing framework. At the point when the importer forfeits the goods, and the Notice of Objection process concludes, the Infringement Notice Scheme can commence through an ABF officer issuing an infringement notice.

THE CASE FOR CHANGE

The business model used by importers of infringing goods involves sending multiple consignments of goods to overwhelm the ABF's border screening arrangements. Importers accept that a proportion of their consignments will be identified and seized by the ABF and rely on the profits from consignments that escape detection to cover the losses of the consignments that are seized.

The compounded cost of an infringement notice, possible civil litigation and the loss of the seized goods will have a greater impact upon the counterfeiting business model by cutting into importers' profits.

Deterring counterfeit importers through ABF-led financial penalties provides a deregulation benefit by offering a deterrence measure for importing counterfeits that avoids complex and expensive legal processes for Australian intellectual property rights holders.

FINANCIAL IMPACT STATEMENT

The Department of Home Affairs and the Department of Finance have agreed projected costs of an additional $0.2 million each year over the forward estimates, collected through the payment of infringement notices by importers of counterfeit goods.

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

A Statement of Compatibility with Human rights in respect of the amendments contained in the Bill is at Attachment A. The Statement assesses the amendments to be compatible with Australia's human rights obligations.