Executive Summary
2. There is a growing problem around the world relating to the manufacture, distribution and sale of counterfeited goods and pirated works ("counterfeits"). New Zealand is experiencing a similar steady growth in the sale of counterfeits; most being sourced from overseas.
3. The illegitimate sale of counterfeits deprives legitimate trade mark owners and copyright holders ("right holders") of potential income and can lead to an entrenchment in society of the acceptance and consumption of counterfeits, which is likely to result in health and safety risks, a disregard for the law and have a wider negative economic impact.
4. Consistent with our international obligations under Article 61 of the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights ("the TRIPS Agreement), both the Trade Marks Act 2002 and Copyright Act 1994 include criminal offences for cases of wilful counterfeiting or piracy on a commercial scale. Penalties for a person convicted of manufacturing, importing and/or selling counterfeited goods consist of fines of up to $150,000 or imprisonment for a term not exceeding five years. The New Zealand Police ("Police") are considered to be the only government agency with the necessary investigative and prosecutorial powers to undertake enforcement of the criminal offences. The Police, however, are often required to give such prosecutions a low emphasis because of other competing priorities.
5. On 28 August 2006 Cabinet agreed in principle that the National Enforcement Unit ("NEU"), a business unit of the Ministry of Economic Development, should be responsible for the prosecution of these criminal offences, subject to consultation and establishing the feasibility of such a role for the NEU, and directed officials to report back to the Cabinet Economic Development Committee by 30 November 2006 [CAB Min (06) 32/12 refers]. The NEU currently investigates and, where appropriate, prosecutes offences under a number of Acts that are the responsibility of the Ministry of Economic Development.
6. This paper proposes that the both the Trade Marks and Copyright Acts be amended to provide the NEU with suitable investigation and prosecutional powers that would enable it to enforce the criminal offences contained in those Acts.
7. It is estimated that the total cost to the NEU for enforcement during year one will be $664,050 and increasing by year three and outyears to $964,465. Options for funding the NEU, including the option of third party funding, will be examined as part of the 2007 Budget process. Regardless of the outcome of that process, it is important to make the legislative changes now while there is a legislative vehicle available. Enforcement activity could be picked up in the future years if funding is not obtained for 2007/2008.
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