Customs restrained from releasing fake Chanel goods

In Chanel Limited v Kim ([2007] FCA 2076, December 20 2007), Chanel Limited has obtained an order pursuant to Section 137(5) of the Trademarks Act 1995 restraining the chief executive officer of Customs from releasing a consignment of 100 scarves bearing the CHANEL trademark or Chanel's device mark (two crossed Cs). The goods had been seized pursuant to Section 133, which requires the chief executive officer of Customs to take custody of imported goods that appear to infringe registered trademarks in respect of which a notice of objection has been lodged.

The Federal Court was required to consider the provisions of the act that deal with the progress of infringement actions in respect of goods seized pursuant to Section 133. The provisions impose a strict timetable which must be followed if the trademark objector wishes to prevent the goods from being released.

Under Section 136(1), goods must be released to their owner unless the trademark objector brings an action for infringement pursuant to Section 137(1) within either:

• 10 working days of receiving notice of the seizure from the chief executive officer of Customs; or
  
  
• an extended period granted by the chief executive officer and applied for within the 10-day period.

Chanel had applied for an extension within the initial 10 days and commenced proceedings seeking remedies for infringement of its trademark within the extended period.

Under Section 137(5), the chief executive officer of Customs is required to release the goods to the designated owner if:

"after 20 working days from the day on which the [infringement] action was brought, there is not in force at any time an order of the court directed at the chief executive officer of Customs preventing the goods from being released."

Chanel did not obtain an order restraining the release of the goods within 20 days of the commencement of the proceedings. In seeking such an order after the expiration of the 20-day period, Chanel raised a question on the construction of Section 137(5), which, as the court observed, contains an "internal inconsistency, or at least infelicity". While it seems to impose a duty on the chief executive officer of Customs to release the goods if an order restraining their release is not obtained within 20 days, the words "at any time" suggest that an order may be made after this period, thus ending the chief executive officer's duty to release the goods.

Applying the relevant principles of statutory construction, the court held that it retained the power to make an order restraining the release of the goods after the expiration of the 20-day period and granted the order sought by Chanel.

While Chanel was successful in restraining the release of the consignment of scarves in this case, the outcome depended as much on the fact that the goods had not yet been released as it did on the court's construction of the relevant statutory provision. As the court remarked, an order made after the expiration of the 20-day period will be futile if the chief executive officer of Customs has already complied with the statutory duty to release the goods at the end of the period.

The case is an important reminder that trademark objectors that wish to restrain Customs from releasing infringing goods should be mindful of and observe the strict time limitations involved in the seizure process - namely:

• An infringement action must be brought, or an application for an extension made, within 10 working days of receipt of the notice from the chief executive officer of Customs; and
  
  
• An order restraining the release of the goods should be obtained within 20 days of commencing proceedings, as although the court may make an order after this time, compliance with the prescribed period is the only sure way to prevent the goods from being released onto the market.

Miriam Stiel and Rebecca Smith, Allens Arthur Robinson, Sydney