Let me say that again, counterfeiting is a serious problem. The OECD think so, the Australian government think so – plenty of people think so. I think so. Counterfeiting, at least as it occurs within Australia, has no social value that I’m aware of, and has costs including (a) losses to the trade mark owner (lost sales), (b) the costs entailed by the deception of consumers, (c) indirect losses to the trade mark owner (for example, loss of reputation for quality, loss of ‘prestige’ value), (d) the costs of enforcement incurred by trade mark owners and governments alike, and (e) the ‘social losses’ – lost jobs, lost tax revenue, and lost investment in research and development that may arise as a result of the lost revenue.

I have a great deal of sympathy for trade mark owners who reach levels of desperation, and use hardball tactics, against counterfeiters, particularly ‘repeat offenders’. It must be incredibly frustrating dealing with parties that have little or no respect for the law or the orders of the court. It is clear, from various judgments by the Federal Court judges, that they too have little sympathy, in general, with counterfeiters and importers/sellers of counterfeit goods.

In this context, however, this judgment is a timely reminder to lawyers that they cannot play too hardball in dealing with counterfeiters, particularly counterfeiters who are unrepresented by lawyers themselves – even where the counterfeiter has displayed contempt for the orders of the court.

The letter that was sent to the counterfeits importer in this case was described in the following terms by the judge:

[The] letter … is indefensible. It plainly failed to meet the [legal] requirements discussed earlier in that its demands went far beyond any demands [the trade mark owner] had a legal right to make. Indeed, it made demands far beyond any remedy known to law. …

A further disturbing aspect of the letter is that its demands were unreasonable. In order to avoid the threatened proceedings, [the respondent] was required to undertake in writing that the information provided by her will lead to [seizure of infringing goods or delivery up of infringing goods, or damages of] a value of $250 000. There was no basis for [the applicant’s lawyers] to expect that [the respondent] had the capacity to achieve any of those outcomes. Further, but more importantly, the demands were for remedies not known to the law. While that may not be unconscionable in a commercial bargain between equals, a quite different situation arises when such a demand is made in the context of a threat to prosecute an unrepresented litigant for contempt.

In my view, the conduct of [the applicant and its lawyers] outlined above is a serious misuse of the entitlement of [the trade mark owner] to threaten and bring contempt proceedings in respect of the respondents’ conduct in breach of the consent orders. That conduct does not in any way excuse the respondents’ contempt of court, which I have found has been established. It is also not relevant to the penalties I regard as appropriate in respect of that contempt. However, it is appropriate that the Court express its disapproval of the conduct by refusing to make orders for the payment by the respondents of [the applicant’s] costs of its contempt proceeding.’

Lawyers beware!