In a landmark New Zealand case, two distributors of counterfeit fashion merchandise have been sentenced for their roles in what is believed to be New Zealand's first criminal prosecution for clothing counterfeiting.
Guru Denim, which manufactures 'True Religion' jeans, experiences problems with counterfeiting all over the world. While genuine True Religion jeans are considered high end, and can retail for up to $450, counterfeit True Religion jeans are sold for as little as $100. This price difference means that there is a strong global market for the counterfeit products.
It came to Guru Denim's attention that hundreds and possibly thousands of pairs of counterfeit True Religion jeans were being sold in New Zealand, mainly from 'pop-up' stores in Auckland and on daily deal websites. The importing and sale of the counterfeit goods (which were passed off as being genuine) breached the copyright of Guru Denim and infringed on its trade marks, and also breached various aspect of the Fair Trading Act, which prohibits misleading and deceptive conduct in trade.
While Guru Denim could have taken action in the civil courts, it was decided that rather than going down the potentially drawn out route of suing the importers and distributors for these breaches, they would instead approach the police about laying criminal charges. Knowingly importing counterfeit goods for the purposes of trade is a crime under the Copyright Act 1994, the Trade Marks Act 2002 and the Crimes Act 1961. The police decided to lay forgery charges under section 257 of the Crimes Act, as this offence had the greatest maximum penalty available (10 years' imprisonment).
Two individuals who were involved in the counterfeiting, Dean Gibbs and Dawn Lomas, pleaded guilty to the charges, and were sentenced on 5 September 2012 to community detention for three months, 300 hours of community work, and reparation payments of $20,000 each.
The fact that these individuals were found to be guilty of criminal offences shows that counterfeiting and forging products and documents is something that the police are prepared to take seriously. Counterfeiting causes significant damage to well-known brands, both from loss of sales to customers who would have purchased the genuine product, and through a weakening of the brand due to cheap and shoddy knock-offs being put into the market under the same name as the genuine brand. It is a positive step for New Zealand's reputation internationally that we can be seen as a country that upholds the rights of producers not to have their goods knowingly copied or their reputations traded on in a misleading way.
This case also shows that there are a variety of legal ways to approach the issue of what to do when you believe your goods may be being copied, or what to do when you see counterfeit products in the market.
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This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.