Hon Nanaia Mahuta
Minister of Customs

6 March 2008 Media Statement

Customs destroys fake Ab King Pro machines

Customs Minister Nanaia Mahuta today lent Customs officers a helping hand in sending 748 counterfeit Ab King Pro machines - a popular brand of exercise machine – off for destruction in Auckland.

Customs has detained 4,734 counterfeit machines across the country with an estimated value of around $1.41 million and 448 of those machines have been approved for destruction in Christchurch.

"The rights holders, Brand Developers, filed a border protection notice in October 2007 and because of this, Customs was able to intercept these fake goods at the border," says Nanaia Mahuta.

“There is also the added advantage to the consumer, who is protected against faulty workmanship from faulty goods. There’s nothing worse than paying out a lot of money only to find some defect.

“It’s also important for the rights holders to protect the integrity of their brand. I congratulate rights holders like Brand Developers for filing their border notice,” says Nanaia Mahuta.

"Today's destruction shows that Customs' border protection notice system is working to protect New Zealand businesses and the New Zealand public."

Nanaia Mahuta says the Labour-led government is committed to ensuring intellectual property rights (IPR) are safeguarded.

"The government takes IPR crime very seriously and Cabinet has agreed to amend the Copyright and Trademarks Acts to give Customs and the Ministry of Economic Development further powers to investigate and prosecute IPR crime," says Nanaia Mahuta.
Managing Director of Brand Developers Paul Meier applauds Customs’ response.

"I'm grateful for Customs' swift action; New Zealand faces an orchestrated counterfeit industry that is fuelled by easy access to Trade Me and similar websites. We are going to prosecute every importer of counterfeit Ab King Pros,” says Paul Meier.

Customs Acting Manager Investigations Dave Meredith says counterfeit goods like this are usually sold in New Zealand shops and over the internet.

The rights holder has issued civil proceedings against four importers. To date Customs has 1,196 machines where the importers have consented to forfeit the goods to the Crown. The fate of the other 3,538 machines detained by Customs will be decided after the civil proceedings.

"It's also important to note that these fake goods are poorly constructed and could harm unwitting users," says Dave Meredith. "Counterfeit products can pose a real danger to the New Zealand public, as well as damaging the reputations of legitimate businesses."

"We've seen a shift in IPR crime over the last ten years from being focused mainly on fashion goods to now finding fake pharmaceutical goods and electrical equipment, such as hair straightners, which put the New Zealand public at real risk. It's buyer beware: if you see a deal that's too good to be true, it probably is."

Nanaia Mahuta hopes today’s exercise will give legitimate rights holders confidence.

“Legitimate businesses deserve a level playing field. It’s encouraging to know that Customs are working with rights holders to achieve a positive outcome, and I congratulate all those involved in ensuring that legitimate businesses are protected against counterfeit goods,” says Nanaia Mahuta.

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Background information
* The border protection notice system was introduced in 1995, as a result of New Zealand signing the World Trade Organisation's Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement.

* Lodging a border protection notice with Customs gives officers the right to detain suspected counterfeit goods crossing the border.

* 232 border protection notices have been filed with Customs since 1995.

* New Zealand Customs Service has removed 1.21 million counterfeit items from the New Zealand marketplace since 1995.

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AB-KING PRO - Q & As

How much was the consignment of fake machines worth on the New Zealand market?
Full price Ab King Pro machines retail for $299. As at today, Customs has detained 4,734 machines, which could have fetched around $1,415,466 if sold for full price.
The 748 machines destroyed today here in Auckland could have been sold for around $223,652 and a further 448 machines approved for destruction in Christchurch could be worth up to $133,952

How did Customs officers find the fake machines?
Customs officers found the first shipment of fake machines during a routine cargo inspection at Lyttleton Port. Other interceptions were made at ports around the country – Tauranga, Auckland, Wellington and Dunedin.

When were the counterfeit machines intercepted?
Customs has intercepted 17 shipments between October 2007 and March 2008.

Which country did the fake machines come from?
To date, all the intercepted counterfeit exercise machines came from China.

Any idea of the number of Ab-King Pro machines that have come through un-detected?
Customs runs on a risk management basis – when the counterfeit goods were intercepted, an alert was placed on the system for imports declared as fitness machines. Customs is not aware of any shipments of counterfeit goods going through to the marketplace. The fact that Customs has intercepted 17 shipments of the fakes shows the system working to protect the border.

How many importers forfeited their goods to the Crown?
Six importers have consented to their goods being forfeit to the Crown, under section 151 of the Trade Marks Act 2002, and a further importer is awaiting court orders

How will the counterfeit goods be destroyed?
The counterfeit goods will be taken to a scrap metal yard and crushed in specialised machinery.

Who pays for the destruction?
The rights holder is liable for the cost of destroying the counterfeit goods.

Has Customs stopped other counterfeit exercise equipment from entering the country?
No – Ab King Pro is the only exercise machine with a Customs border protection notice.

Can you give other examples of counterfeit goods stopped at the border through the border protection notice system?
Customs intercepts large quantities of counterfeit clothing and footwear through the border protection notice system. Counterfeit electrical goods are a growing problem and Customs has intercepted fake mobile phone, complete with fake chargers and batteries; hair straighteners; memory cards; and computer entertainment products.
Examples of brands covered by notices include Adidas, DC Comics, Eveready Battery Company, Harry Potter, Pumpkin Patch and Sony Computer Entertainment Inc.

What volume of goods was stopped at the border through the border protection notice system for 2007, 2006 and 2005?

Stats for goods forfeited to the Crown
July 04 – June 05 200,670
July 05 - June 06 275,675
July 06 – June 07 117,135
The drop in goods forfeited to the Crown in 06-07 is not a reflection of the workload, but indicates a change to smaller shipments of counterfeit goods. The earlier stats also included interceptions of large quantities of small toys and trading cards that skewed those figures.
The exercise machine shipments are a good example of how the statistics can alter with the type of good intercepted. A full shipping container of these exercise machines only contains, say, 270 machines, while 270 memory cards can fit into a small carton.

Does Customs always destroy counterfeit goods?
Where goods are covered by a notice and the importer voluntarily forfeits the counterfeit items to Customs, Customs then destroys the goods to keep them out of the New Zealand marketplace.

ENDS

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