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Q and A On Theft of Intellectual Property

Some Questions and Answers on Theft of Intellectual Property - Piracy and Counterfeiting

1. What actions has the Government taken to address this issue?

The Government requested further work on preventing the trade in pirate and counterfeit goods last year. The Ministry of Commerce then commissioned a consultant's report on this issue by AJ Park & Son, a firm of patent attorneys. Submissions were invited on its findings and were received by January this year. Officials have since developed recommendations to the Government.

2. How much piracy and counterfeiting is there in New Zealand?

There is no clear evidence that New Zealand has a significant problem in respect of piracy and counterfeiting. A study by the Business Software Alliance and the Software Publishers Association included in the AJ Park Report, placed New Zealand in the bottom 10% of countries for software piracy rates and also showed that the rate of piracy had fallen in each of the three years to 1997.

These statistics are also reflected in the views of Police and Customs that there has been no significant increase in piracy and counterfeiting of goods protected by intellectual property rights since the decision to remove the prohibition on parallel importing last year.

The government nevertheless views this issue as serious and is committed to deterring piracy and counterfeiting of goods protected by intellectual property rights.

3. What measures has the Government adopted that were recommended in the AJ Park report?

The Government has adopted some of the principal recommendations of the AJ Park Report and will:

· make criminal provisions, penalties and remedies in the Trade Marks Act correspond to those in the Copyright Act;
· increase the maximum penalties for copyright piracy to five years and set penalty levels under the Trade Marks Act at the same level;
· allow forfeiture of goods by consent under the Copyright Act 1994;
· extend Customs powers to detain goods in goods in transit subject to copyright and trade mark notices; and
· allow affidavit evidence in cases of criminal copyright infringement.

However, this Report was just one of a number of considerations that the Government took into account when developing policy. Other considerations included other legislation such as the Bill of Rights Act 1990 and other policy considerations such as promoting competition and trade by not impeding parallel importing of genuine goods.

4. What are these measures expected to achieve?

Intellectual property rights are part of the Government's wider policy framework to encourage innovation and creativity in New Zealand. The Government is committed to the protection of core intellectual property rights. It will provide criminal penalties for piracy and counterfeiting of goods protected by intellectual property rights.

While the situation in New Zealand in respect of piracy and counterfeiting is not serious by international standards this does not mean that we should be complacent. If our laws are to be effective then it is important that:

· The law provides the means for intellectual property rights to be effectively enforced; and

· Penalties are sufficient to promote general deterrence.

Piracy and counterfeiting tends to take time to plan and commit. This means that those committing these crimes are more likely to weigh up the costs and benefits of the crime, and are likely to be deterred by increases in penalties.

New Zealand law already provides significant measures to ensure intellectual property rights are enforced. However, where inconsistencies have been identified the Government has adopted proposals to address these. For example, the option to forfeit goods voluntarily under the Copyright Act will be provided to make it consistent with the Trade Marks Act.

5. Will these measures adversely affect trade in genuine goods protected by intellectual property rights?

The Government considers that these measures will not deter trade in genuine goods protected by intellectual property rights. These changes will only affect those engaged in criminal copyright or criminal trade mark infringement under the proposed new offence provision.

The Government has not adopted the recommendation in the AJ Park Report that the onus of proof be placed on defendants in copyright infringement cases. The Government considers that this recommendation would be contrary to the public policy principle that a party is to be presumed innocent until proven guilty and that the extent of the counterfeiting and piracy problem is not such that it requires a change to this principle. Such a change could also undermine entrepreneurial activity and frustrate legitimate parallel importing activity.

6. What measures exist for intellectual property rights holders to take action themselves?

New Zealand has an extensive set of laws designed to allow intellectual property right holders to take action. These include:

· Border protection measures - New Zealand Customs Services can suspend the release into circulation of infringing trade mark or pirated copyright goods where the right holder has lodged a notice and security requiring Customs to detain pirated or infringing copies of the items that are in or at any time come into the control of Customs.

· Civil infringement actions for trade mark and copyright infringement and remedies (for example, damages).

· A range of statutory and common law orders to help rights holders secure evidence and seize infringing articles, property and assets (for example, section 122 of the Copyright Act that provides for "delivery up" of infringing copies and Anton Piller orders that provide for access to premises to secure evidence).

7. Why has the Government not provided for Customs to be able to prosecute for importing or attempting to import pirate or counterfeit copies?

Making Customs responsible for prosecution of importers would transfer the burden of proving infringement of a trade mark or copyright from the right holder to Customs. The Government considers that Customs does not have the same technical ability to prove ownership and authenticity of goods as the right-holder.

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