The Counterfeit Goods Act, No. 37 of 1997, is a measure intended to enable owners of certain forms of intellectual property, including copyright, to take action against the counterfeiting of their products, i.e. the cloning or impersonation of their products, and to provide for streamlined and effective enforcement measures in achieving this end. It is also designed to bring South Africa into compliance with certain of the provisions of the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) to which South Africa is a party. It is in many respects complementary to the Copyright Act in particular to the criminal provisions of that Act and to those provisions dealing with the seizure of goods by the customs authorities. 

The enactment of the Counterfeit Goods Act has gone hand in hand with substantive amendments made to the Merchandise Marks Act, 1941 (Act No 17 of 1941), the legislation which has in the main, together with the Copyright Act, been the weapon used in the past to deal with the problem of counterfeit goods. The amendments to the Merchandise Marks Act have been made in the Intellectual Property Laws Amendment Act, No. 38 of 1997, more particularly in Sections 1 to 18. All provisions of the Merchandise Marks Act dealing with essentially counterfeiting of goods have been stripped out of that Act. They now find the counterparts in the Counterfeit Goods Act. It has become the manual for dealing with the problem of counterfeit goods. The Counterfeit Goods Act and the Intellectual Property Laws Amendment Act were promulgated on 1 October 1997. The Counterfeit Goods Act and the relevant sections of the Intellectual Property Laws Amendment Act amending the Merchandise Marks Act come into operation on a date proclaimed in the Government Gazette. 

Dealing in Counterfeit Goods 

Section 2 creates an offence called "dealing in counterfeit goods". The term "counterfeit goods" is defined in Section 1 to mean goods that are the result of counterfeiting and includes any means used for purposes of counterfeiting. The goods protected against counterfeiting by the Act ("protected goods") are goods featuring, bearing, embodying or incorporating the subject of an intellectual property right, or to which such subject matter has been applied, by or with the authority of the owner of that intellectual property right, and goods which may legitimately embody or incorporate, or have applied to them, the subject matter of an intellectual property right only by or with the authority of the owner of that right. 

The term "intellectual property right", to which reference is made above, means the rights in respect of a trade mark conferred by the Trade Marks Act, 1993, the copyright in any work in terms of the Copyright Act, 1978, or an exclusive right of use in relation to goods conferred by a notice published in terms of Section 15 of the Merchandise Marks Act. This meaning of the term "intellectual property" is narrower than the normal meaning given to the term. "Intellectual property" normally embraces in addition patents and designs. For the purposes of the Act, however, these two forms of intellectual property are not in contention. 

"Counterfeiting" is defined in Section 1 to mean:

• without the authority of the owner of any intellectual property right subsisting in the Republic in respect of protected goods, manufacturing, producing or making, whether in the Republic or elsewhere, any goods whereby those protected goods are imitated in such manner and to such a degree that the derivative goods are substantially identical copies of the protected goods;
• without the authority of the owner of any intellectual property right subsisting in the Republic in respect of protected goods, manufacturing, producing or making, or applying to goods, whether in the Republic or elsewhere, the subject matter of that intellectual property right, or a colourable imitation thereof, so that the other goods are calculated to be confused with or to be taken as being goods manufactured, produced or made by the said owner or under his licence; or
• where, by a notice under section 15 of the Merchandise Marks Act, 1941, the use of a particular mark in relation to goods, besides by a person specified in the notice, has been prohibited, without the authority of the specified person, making or applying that mark to goods, whether in the Republic or elsewhere. 

If such act constituted an infringement of the intellectual property right in question. 

In essence, therefore, counterfeit goods are imitations of goods embodying an intellectual property right, or goods bearing spurious marks, being infringing articles in respect of an intellectual property right. In other words the person manufacturing, producing or making goods, or applying the subject matter of an intellectual property right to them, must in so doing commit an act of copyright infringement, trade mark infringement or an act of contravention of Section 15 of the Merchandise Marks Act. In a copyright context this means that reproducing a work within the parameters of an exemption from infringement (for instance reverse engineering a product as permitted in Section 15(3A) of the Copyright Act) will not render the reproduction an item of counterfeit goods even through such reproduction otherwise would in principle be caught up in the definition of counterfeit goods. 

The offence of dealing in counterfeit goods entails doing any of the following in relation to counterfeit goods:

• Possessing them or having them under control in the course of business for the purpose of dealing in them;
• Manufacturing, making or producing them for a purpose other than for private and domestic use;
• Selling, hiring, bartering or exchanging them or offering or exposing them to this end;
• Exhibiting them in public for purposes of trade;
• Distributing them for purposes of trade or for any other purpose to such an extent that the owner of the intellectual property right embodied in them suffers prejudice; 
• Importing them into or through South Africa, or exporting them from or through South Africa, except for the private and domestic use of the importer or exporter, respectively. 

In addition the doer of the act either must know or must have had reason to suspect that the goods in question were counterfeit goods or must have failed to take all reasonable steps to avoid performing or being engaged in one of the restricted acts with reference to counterfeit goods. In effect the State is required to show mens rea in the form of "culpa" as an element of the offence. 

Apart from what one normally understands by the description "counterfeit goods", the Act encompasses for example the following as counterfeit goods: Pirate records, compact discs and tapes; pirate video tapes; pirate computer programs and computer games; pirate copies of books; goods bearing marks which are blatant infringements of registered trade marks; and goods bearing marks prohibited under the Merchandise Marks Act used without authority. 

The act of possession of counterfeit goods referred to in paragraph (a) above effectively extends the ambit of Section 27(1) of the Copyright act (the section dealing with criminal offences under that Act) to include possession of infringing copies. For the rest Section 2(1) of the Counterfeit Goods Act largely reiterates Section 27(1) of the Copyright Act save that it lays down mens rea in the form of culpa, whereas Section 27 has been interpreted to lay down mens rea in the form of dolus. 

Procedure for Initiating Action in Respect of Counterfeit Goods 

Provision is made for the appointment of "inspectors". These inspectors include any police official as defined in Section 1(1) of the Criminal Procedure Act having the rank of Sergeant or higher, certain Customs and Excise officials and any person designated as an inspector by the Minister of Trade and Industry in a notice published in the Government Gazette. In other words, the Minister is free to designate whosoever, or whatever categories of persons, he considers fit as inspectors under the Act. These categories of persons could include officials of the Department of Trade and Industries, court messengers and sheriffs, attorneys and even private investigators. Inspectors have wide ranging powers to search for, seize and detain goods suspected to be counterfeit goods. 

A person having an interest in protected goods (including the attorney, agent or representative of such a person) whether as the owner or licensee of an intellectual property right or as an importer, exporter or distributor of protected goods, has locus standi to lodge a complaint in respect of counterfeit goods under the Act. A complainant in respect of counterfeit goods can lay a complaint of dealing in counterfeit goods with an inspector and such a complaint can refer to the activities of an individual or of persons in general or to a multiplicity of acts. The complainant must allege that an act of dealing in counterfeit goods has been, or is being, committed, or is likely to be committed, and such allegation must be based on a reasonable suspicion. The complainant must furnish information and particulars to the satisfaction of the inspector to the effect that the alleged counterfeit goods are prima facie counterfeit goods and he can do so by showing the inspector a specimen of the genuine protected goods (if they exist) and the counterfeit goods. If it is not reasonably possible to produce a specimen of the counterfeit goods, he can furnish sufficient information and particulars from which the essential physical and other distinctive features, elements and characteristics of the alleged counterfeit goods may be ascertained. In addition the complainant must furnish sufficient information and particulars as to the subsistence and extent of the relevant intellectual property right and his title to or interest in that right. 

An inspector who is reasonably satisfied that the person laying the complaint prima facie qualifies as a complainant, that the intellectual property right in question prima facie subsists, and that the goods claimed to be protected goods are prima facie protected goods, is entitled to take various steps if the suspicions of the complainant appear to be reasonable in the circumstances. An inspector who suspects that an act of dealing in counterfeit goods has taken place, is taking place, or is likely to take place, can of his own initiative also take these steps provided the aforegoing requirements are met. 

Warrants

Save in certain exceptional circumstances, when a warrant is not necessary, before an inspector can take action in respect of counterfeit goods, he must seek a warrant entitling him to conduct a search and seizure raid. A warrant may be issued by a Magistrate who has jurisdiction where the offence of dealing in counterfeit goods occurs or by a Judge of the High Court in chambers, including a Judge having jurisdiction in an area besides that within which the offence occurs. 

Before a judicial officer can issue a warrant it must appear to him from information on oath or affirmation that there are reasonable grounds for believing that an act of dealing in counterfeit goods is taking place or is likely to take place. An inspector seeking a warrant may be asked to specify which of the powers vested in him in the Act are likely to be exercised. A warrant may be issued either with reference to one separate suspected act dealing in counterfeit goods, or with reference to any number of such acts, whether any such act involves only one alleged offender or any number of alleged offenders, irrespective of whether such offender or number of offenders is identified specifically by name or by reference to any particular place or circumstances, and any point in time. A warrant may be issued on any day of the week and it will remain in force until it has been executed, it is cancelled by a judicial authority, the expiry of three months from the date of issue, or the purpose for which it was issued no longer exists, whichever happens first. 

A warrant may be executed only by day unless the person issuing it authorises its execution by night at times which must be reasonable. Entry authorised in terms of a warrant into any place, premises or vehicle specified in the warrant must be conducted with strict regard to decency and order and, in particular, must have regard to a person’s right to, and respect and protection for, his dignity, and the right of a person to freedom and security of his person and to his personal privacy. When executing a warrant an inspector must before the commencement of the procedure identify himself to the person in control of the place or the like to be entered, if he is present, and must hand him a copy of the warrant; if that person is not present he must affix a copy of the warrant to a prominent spot at the place or the like. Upon request the inspector must furnish the said person with his authority to execute the warrant. He may be requested to produce his certificate of appointment issued by the Minister in terms of Section 22(3). 

Subject to certain conditions, an inspector may during the day without a warrant enter any place, premises or vehicle, after having identified himself, and exercise those powers of seizure, removal, detention, collecting evidence and search which he has when acting under a warrant (except the power to search any person). This may be done in the following circumstances: (i) when a person who is competent to consent to the entry and search, seizure, removal, detention and the like gives that consent, or (ii) when the inspector on reasonable grounds believes that a warrant would be issued to him if he were to apply for it and the delay which would ensue by first obtaining the warrant would defeat the object or purpose of the entry, search, seizure, removal, detention, collection of evidence and the like. These powers to act without a warrant do not, save where the inspector acts with consent as mentioned above, entitle an inspector to enter and search any private dwelling nor to seize and remove suspected goods or collect evidence at such place. 

Where an inspector acts without a warrant any steps taken by him will cease to have any legal effect unless the complainant or the inspector applies to the court for confirmation of the action taken, either formally or pendente lite, within ten days and the court grants such application. 

The constraints, directions and procedures applicable to an inspector acting in terms of a warrant apply mutatis mutandis to an inspector acting mero motu. 

Powers and Duties of Inspector

The primary function of an inspector is to carry out search and seizure raids on suspected counterfeiters and operations concerned with counterfeit goods. He may take action where he has reasonable grounds to suspect that the offence of dealing in counterfeit goods has been, or is being, committed, or is likely to be committed, or to believe that an act of dealing in counterfeit goods has taken, or is taking, place, or is likely to take place. He can make his decision on the grounds of a complaint laid with him or on the strength of any other information at his disposal. 

In general an inspector is empowered to enter any place, premises or vehicle in order to inspect any relevant goods and to seize any suspected counterfeit goods and may seize and detain such goods and, where applicable, remove them for the purposes of detention. He may also collect or obtain evidence relating to the suspected counterfeit goods or an act of dealing in such goods. He may conduct whatever search (including of a person) may be necessary at the place, premises or vehicle in question in order to give effect to his aforementioned powers. In addition he is entitled to take whatever steps may be reasonably necessary in order to terminate the relevant act of dealing in counterfeit goods. These powers may be executed wherever the suspected act of dealing in counterfeit goods takes place or may take place. 

In exercising his powers an inspector must take action at a reasonable time. He may enter or inspect any place, premises or vehicle on, or in, which goods that are reasonably suspected of being counterfeit goods are to be found, or on reasonable grounds, are suspected to be manufactured, produced or made, and he may search such place, premises or vehicle for such goods and for any other evidence of the suspected act of dealing in counterfeit goods. An inspector who is a police official may stop a vehicle, if necessary by force, for purposes of entering, inspecting and searching it wherever it may be found, including on any public road or, at any other public place. In taking steps reasonably necessary to prevent or terminate the unlawful activity at, on or in the place, premises or vehicle in question and to prevent the recurrence of any such act in the future the inspector may exercise the powers discussed in the next following paragraph but he may not destroy or alienate the relevant goods unless authorised by the court in terms of the Act. 

The inspector may seize and detain and where applicable remove all goods found at, on, or in a place, premises or vehicle which he has entered or inspected. He may seal off any place, premises or vehicle where those goods are found or are manufactured, produced or made, either wholly or in part, or where any trade mark or prohibited mark or work which is the subject matter of copyright is applied to such goods, or the packaging of such goods is prepared or is undertaken. The tools which may be used in the manufacture, production, making or packaging of goods, or in applying a trade mark or prohibited mark to them, may be seized, detained or removed for detention. 

An inspector who is entitled to enter and search any place, premises or vehicle or person there present may use such force as may reasonably be necessary to overcome any resistance to the entry and search. Before entering an inspector must audibly first demand access to the place, premises or vehicle and must notify the purpose of the entry unless on reasonable grounds he is of the opinion that any goods, document, article or item may be destroyed or be lost by taking these steps. 

In undertaking any search for inspection and seizure of suspected counterfeit goods an inspector may be assisted by the complainant or any other knowledgeable person in identifying goods as suspected counterfeit goods. 

Any person at, in or on, a place, premises or vehicle being inspected by an inspector, and who is reasonably suspected by him to be in a position to furnish any information with reference to any act of dealing in counterfeit goods, may be questioned by him and a statement obtained from him. He may also demand and procure from any such person any book, document, article, item or object which may be relevant to the nature, quantity, location, source or destination of the goods in question, or to the identity and address of anyone involved, or ostensibly involved, as a supplier, manufacturer, producer, maker, distributor, wholesaler, retailer, importer, exporter or forwarding agent, or in some other capacity, in dealing in, the goods in question. No answer given or statement made by any person interrogated by an inspector will, if self-incriminating, be admissible as evidence against that person in criminal proceedings initiated in any court against him except in proceedings where that person is arraigned for an offence under the Act for giving information or an explanation knowing it to be false or misleading in terms of Section 18(d)(ii) and then only to the extent that such answer or statement is relevant to prove the offence charged. 

Save for his powers of seizure, detention and removal of tools, and of interrogating persons who may furnish information relevant to an act of dealing in counterfeit goods, which are unqualified, the exercise of an inspector’s other aforementioned powers is qualified to the extent that any action taken in that regard falls away and is of no force or effect unless the court confirms such steps, either finally or pendente lite, on the application of the inspector or the relevant complainant brought within ten court days of the day on which those steps were taken. 

When during a search by an inspector a person claims that any goods, document, article or item, present contains privileged information and refuses the inspection or removal thereof, the inspector must act in a circumscribed manner. If he is of the opinion that the goods, document, article or item may be relevant to, and necessary for, the investigation of any complaint or any alleged or suspected act of dealing in counterfeit goods, he must request the Registrar or Deputy Registrar of the High Court having jurisdiction to seize and remove the contentious material for safe custody until the court has made a ruling on the question of whether or not the information in question is privileged. 

Post Raid Procedure 

Once an inspector has undertaken a search and seizure raid he must immediately give written notice of the seizure to the dispossessed person and to the complainant, where the raid has taken place at his request, or to a person entitled to be a complainant, where the raid has taken place on the inspector’s own initiative. Such notice must specify the address of the place, termed a "counterfeit goods depot", where the seized goods are located. "Counterfeit goods depot" is defined in Section 1, read together with section 23, to mean a place designated by the Minister by notice in the Government Gazette for storing suspected counterfeit goods, or if suspected counterfeit goods are not transportable, the place where they are found and attached. An inspector may require a complainant to disclose any information which may be relevant to the action that he has taken. 

The notice issued to the complainant must notify him of his right to lay a criminal charge against the dispossessed person (referred to as "the suspect") within three days after the date of the notice. Where an inspector acts on his own initiative in conducting a search and seizure raid the notice to a prospective complainant must invite that person to lay a complaint with him and to lay a criminal charge with the South African Police service, such action to be taken not later than three days after the date of the notice. 

An inspector who has seized any suspected counterfeit goods must forthwith seal those goods and make an inventory of them, in quadruplicate, which inventory must be certified as correct by the dispossessed person on each original version of that inventory. One original version of the inventory must be furnished to the dispossessed person and another to the complainant, if any, within 72 hours after the seizure. Thereafter the inspector must as soon as possible remove the goods, if transportable, to a counterfeit goods depot for safe storage, or if not capable of being removed or transported, declare the goods to have been seized and secure them at the place where they were found, where after that place is deemed to be a counterfeit goods depot. 

Any person prejudiced by seizure of goods by an inspector may at any time apply to the court on Notice of Motion for a determination that the seized goods are not counterfeit goods and for an order that they be returned to him. The court may refuse or grant the relief applied for and make such an order as it deems just and appropriate in the circumstances, including an order as to the payment of damages and costs. Where the court refuses an order sought in these circumstances it may direct that the complainant furnishes security to the applicant in respect of these goods in an amount and manner determined by the court. This facility is only available where the inspector has acted pursuant to a complaint. 

Any person suffering injury or prejudice caused by the wrongful seizure of goods alleged to be counterfeit goods, or by any action taken by an inspector in effecting the seizure, is entitled to claim compensation. The compensation must be claimed against the complainant and, subject to what follows, not against the inspector, the person in charge of the counterfeit goods depot, or the State. An inspector, the person in charge of the counterfeit goods depot and/or the State can be liable in respect of such a claim only in the following circumstances:

• If the inspector, or person in charge of the counterfeit depot (or any person acting on the instruction or under the supervision of such person), or any servant of the State has been grossly negligent in the execution of the seizure or removal of the goods or in the detention or storage of them;
• Where the person in question has acted in bad faith in performing functions empowered under the Act. 

Detention and Release of Seized Goods 

Goods that have been seized by an inspector acting in terms of the Act must be stored and kept in safe custody at a counterfeit goods depot until the person in charge of that depot is ordered by the court to return, release, destroy or otherwise dispose of those goods as specified in that order, or is instructed by the inspector concerned in the matter in the circumstances discussed below to release those goods to the suspect. 

If, following upon the seizure of goods, the complainant or a prospective complainant wishes to lay a criminal charge against the suspect with the South African Police service for having committed an act of dealing in counterfeit goods and to request that a criminal investigation into the matter be undertaken, he must do so within three days after the date of the notice given by the inspector reporting on his seizure action. If no charge has been laid by the expiry of the three day period the relevant seized goods must be released to the suspect unless the complainant exercises his right to institute civil proceedings against the suspect in accordance with the procedure discussed below. 

Where a criminal charge is laid against a suspect, the State must, within ten working days of the inspector’s original written notice, inform the suspect by written notice of its intention to institute a criminal prosecution against him for having committed an act of dealing in counterfeit goods. If this notice is not given the seized goods must be returned to the suspect. If a complainant or a prospective complainant wishes to institute civil proceedings against a suspect he must likewise give written notice, within ten days of the original notice of his intention to do so, and if he fails to do so, the seized goods must be returned to the suspect. Having given the aforementioned written notice to the suspect, the State, or the prospective plaintiff in civil proceedings, must actually commence the threatened proceedings within ten court days after having given the said written notice. If this notice is not given the seized goods must be returned to the suspect. 

The complainant may in writing instruct an inspector to release seized goods to a suspect provided that such an instruction may not be given, and the relevant seized goods may not be released, after a criminal prosecution involving those goods has been instituted against the suspect. 

Where counterfeit goods bearing an infringing trade mark or a mark which violates a prohibition issued under Section 15 of the Merchandise Marks Act are ordered by the court to be delivered-up to any person, those goods may not be released into the channels of commerce after merely removing the infringing mark, or if imported, may not be exported in an unaltered state, unless the court on good cause shown has ordered otherwise. 

Save where seized goods are to be released pursuant to an order of the court, the release must be effected by the inspector who seized the goods. He must do so by giving notice to the person in charge of the counterfeit goods depot where the goods are stored directing that the relevant goods, as specified in the copy of the inventory attached to that notice, be released to the person specified therein. The person in control of the counterfeit goods depot must thereupon release the goods in accordance with the notice on the fourth day after the date of the notice unless the court has ordered otherwise. 

Goods which have been seized and are being stored in a counterfeit goods depot are available for inspection by the complainant or prospective complainant, the suspect and any other interested person on any working day during normal office hours. When a request that the goods be made available for testing or analysis is made, the person in charge of the counterfeit goods depot must comply if, having taken account of (i) the nature of the seized goods, (ii) the nature of the tests or analyses to be conducted, and (iii) the competence and suitability of the person by whom the tests or analysis are to be conducted, he is satisfied that the request is reasonable. In the event that the person in charge of the counterfeit goods depot is not willing to comply with such a request, he must refer the matter to the complainant or prospective complainant who must either confirm or reverse that decision within forty-eight hours. If the complainant confirms the decision he must convey his decision in writing to the suspect and the suspect may thereupon apply to the court for an order rescinding that decision and allowing those goods to be made available as requested. The court must grant such an application if it finds the decision to refuse the analysis for testing of the goods to be unreasonable in the circumstances. 

Orders that may be Issued by Court 

The court is given powers to issue certain specific orders in relation to counterfeit goods and matters ancillary thereto. The court has the power to order the release of seized goods at any time. It may order that goods found to be counterfeit goods, be delivered up to the owner of the relevant intellectual property right or to a complainant deriving title from such owner, irrespective of the outcome of the proceedings. It may also order that the goods be released to any specified person. The complainant may be ordered to pay damages in an amount determined by the courts and costs to the dispossessed person. The accused or the defendant may be ordered to disclose the source from which counterfeit goods have been obtained as well as the identity of the persons involved, or ostensibly involved, in the importation, exportation, manufacture, production or distribution, of the counterfeit goods, and the channels of distribution of those goods. 

A court convicting a person of an offence of dealing in counterfeit goods may order the destruction of counterfeit goods and their packaging and, where applicable, any tools used by the convicted person for the manufacture, production or making of those or any other counterfeit goods, or for the unlawful application to goods of the subject matter of any intellectual property right. Alternatively, the court may declare the counterfeit goods in question to be forfeited to the State. 

Evidence and Presumptions 

There are certain special provisions regarding matters of evidence in proceedings brought under the Act and presumptions which facilitate the proof of various essential factual issues. 

While an inspector will generally play a limited role in litigation in respect of counterfeit goods, he may be called as a witness by any party to any proceedings, or by the court, when his conduct, the manner of the exercise of his powers or functions, or the nature of the circumstances or activities in relation to which he has exercised his powers, is in issue. Where a statement is taken or other documentary evidence is procured by an inspector in the course of carrying out his duties, upon request by a complainant, that statement or evidence may be made available to him and he may make and retain copies of it but must return the originals to the inspector. 

A statement in the prescribed from, made under oath or affirmation by an inspector, to the effect that the goods specified in an annexed inventory are goods seized by him from a specified person at a specified place and on a specified date is admissible in evidence and is sufficient proof of the facts stated therein provided, the inventory has been prepared by the inspector and has been certified by him to be correct. Nevertheless, the court may at its discretion order that the inspector making the statement be directed or subpoenaed to appear before the court to give oral evidence concerning any matter dealt with in the statement. 

The subsistence of an intellectual property right and proof of title to it can be proved in proceedings under the Act as follows:

• In the case of a registered trade mark a certified extract from the Register of Trade Marks can be adduced in accordance with the provisions of Sections 49, 50 and 51 of the Trade Marks Act, 1993.
• In the case of copyright in a work the relevant facts can be adduced by way of affidavit in accordance with the provisions of Section 26(12) of the Copyright Act, 1978, which apply mutatis mutandis. The mere production of such affidavit in those proceedings will be prima facie proof of the facts stated therein.
• In the case of a prohibited mark under Section 15 of the Merchandise Marks Act, 1941, evidence may be adduced by producing to the court a copy of the Government Gazette in which the prohibition on the use of the mark was published accompanied by a statement made under oath or affirmation by the Minister of Trade and Industries or any official of that department designated by the Minister, to the effect that the notice has not been withdrawn or amended in its essence. 

Notwithstanding the aforegoing provisions, the court may require oral evidence to be given in relation to any such facts or, in the case of a High Court, may order that the evidence of a person who resides, or is for the time being, outside the area of jurisdiction of the court be taken by means of interrogatories. 

In order to facilitate proof of the issue, any person who conducts business in protected goods relative to a particular intellectual property right and who is found in possession of suspected relevant counterfeit goods, is presumed, until the contrary is proved, to have been in possession of such goods for the purposes of dealing therein. This provision is subject to the proviso that the quantity of those goods must be greater than that which may be reasonably required for the suspect’s private and domestic use. This presumption applies to both criminal and civil proceedings but in regard to criminal proceedings it is specifically provided that the presumption will only be rebutted if credible evidence in rebuttal is tendered. 

Where a person has been convicted of a criminal offence for dealing in counterfeit goods and civil proceedings are subsequently instituted on the same set of facts, the plaintiff may lead evidence concerning the conviction for the criminal offence. 

Offences and Penalties 

The Act creates various subordinate offences in addition to the principal offence. More particularly, it is an offence to fail to comply with any request, directive, demand or order made or given by an inspector in carrying out his functions under the Act or to obstruct or hinder him in carrying out his functions. It is also an offence for a person to refuse or fail to give information or an explanation relating to a matter within his knowledge, or to furnish information or an explanation in the knowledge that it is false or misleading, when asked by an inspector to do so. Any person who without authority breaks, damages or tampers with a seal applied by an inspector, or who removes goods, documents, articles, items, objects or things sealed-off or sealed by an inspector or detained or stored at a counterfeit depot, commits an offence. 

In imposing penalties upon conviction for an offence of dealing in counterfeit goods, the court must take account of any risks to human or animal life, health, safety or danger to property that the presence or the use of, the counterfeit goods may cause. 

A person convicted of the offence of dealing in counterfeit goods is liable, in the case of a first conviction, to a maximum fine of R5 000 or to imprisonment for a period of up to 3 years, or to both such fine and such imprisonment, for each article to which the offence relates. In the case of a subsequent offence the maximum fine increases to R10 000, and the maximum period of imprisonment increases to a period not exceeding 5 years. A person convicted of a subordinate offence is liable to a fine of up to R1 000, or to imprisonment for a period of up to 6 months. 

The amounts of the aforementioned penalties may be increased by the Minister of Trade and Industries by notice in the Government Gazette. Such notice must be tabled in the House of Assembly for its consideration and approval within 14 days of publication, or if it is not in session, within 14 days of the commencement of the next session. 

A court convicting a person of an offence of dealing in counterfeit goods may take the following into account in mitigation of sentence: The fact that such person fully, truthfully and to the best of his or her ability disclosed to an inspector acting against him in carrying out a search and seizure action, or to a member of the South African Police service investigating the offence in question, all information and particulars available to that person in relation to:

• the source from which the relevant counterfeit goods were obtained,
• the identity of the persons involved in the importation, exportation, manufacture, production or making thereof,
• the identity and, if reasonably demanded, the addresses or whereabouts of the persons involved in the distribution of those goods, and/or
• the channels of distribution of those goods. 

In addition to the conventional penalties, the Act makes provision for an unusual system of rewarding persons who have purchased counterfeit goods and who assist in a conviction being obtained against the seller of the goods. Any person who purchased and paid for counterfeit goods (referred to as an "aggrieved person") can submit the counterfeit goods purchased by him, together with proof of the price paid, to an inspector and, provided he co-operates fully in the prosecution of the seller, the court is obliged to issue an order making a monetary award in his favour:

• upon the seller’s conviction for the offence of dealing in those particular counterfeit goods, or
• the making of an order that such goods be delivered up to the owner of the intellectual property right or to a complainant deriving title from him. This reward consists of a sum of money three times the amount of the price paid by him for the counterfeit goods. The payment of the reward must be made by the seller to the aggrieved person and it is in addition to any conventional fine imposed on him by the court. The aforegoing applies mutatis mutandis to any transactions other than sale and purchase of counterfeit goods where counterfeit goods are given to an aggrieved person in consideration for value. 

This reward system in effect can make "bounty hunters" out of members of the public and it can be a very effective anti-counterfeiting measure. Ample incentive is provided to members of the public to seek out and purchase counterfeit goods and then to collaborate with the police or inspectors to secure a conviction for dealing in counterfeit goods and obtain a generous reward. It should be a considerable disincentive to a dealer in counterfeit goods to know that he might in due course have to pay to each purchaser of goods three times the amount of the purchase price in addition to any other penalties which may be imposed upon him if he is convicted of an offence. 

Civil Remedies 

Statutory "Anton Piller" Order 

Apart from creating the offence of dealing in counterfeit goods and providing for effective search and seizure proceedings for the purpose of criminal prosecutions, the Act also has provisions relating to civil proceedings. An extraordinary procedural remedy is available in proceedings for the infringement of an intellectual property right which amounts to a statutory procedure for obtaining what is in effect a so called "Anton Piller" order, i.e. a civil law procedure for search and seizure of evidence and other items. 

The owner of an intellectual property right who is aware or has reasonable grounds to believe that an act of dealing in counterfeit goods has taken place, is taking place, or is about to take place, may apply ex parte to a Judge in chambers for an order:

• directing the sheriff or another person designated by the court (referred to as a "designated person"), accompanied by such other persons as the court may specify, to enter a specified place or premises and there (i) such premises search for and seize documents, (ii) remove records or other materials specified by the court and specified goods alleged to be counterfeit goods (referred to as "subject goods") and (iii) attach such materials and goods;
• directing the respondent to point out to the sheriff or designated person executing the order all subject goods and to disclose and make available to him all documents and materials relevant to the determination of whether the goods in question are counterfeit goods or to any dealings in such goods (referred to as "ancillary materials") at the place or premises or elsewhere , and permitting the person executing the order to attach such items and to remove them for detention in safe custody;
• restraining the respondent from interfering with the state of the subject goods or ancillary materials during the search, seizure, attachment or removal and carrying out or continuing with the relevant act of dealing in counterfeit goods;
• granting any further or alternative relief which the court considers appropriate. 

This statutory version of an Anton Piller order is additional to any other remedy which the applicant may have at his disposal, for instance the common law Anton Piller order. 

Before a court grants the order it must be satisfied (i) that the applicant has a prima facie claim against the respondent for the infringement of an intellectual property right, and (ii) that, whether on account of the nature of the goods with which the application is concerned, or other circumstances, the applicant’s right to discovery of documents in proceedings to be instituted is likely to be frustrated, or the goods in issue in such proceedings, or evidence pertaining to dealings in such goods, are likely to be altered or destroyed, disposed of or otherwise placed beyond the access of the applicant if the normal court procedure is implemented or followed. 

The court hearing such an application has a general discretion to refuse it, grant it subject to such terms and conditions as it considers appropriate, or to make any other appropriate order. Without derogating from these general powers, the court may order the following:

• the sheriff or designated person is authorised to rely on the assistance of specified knowledgeable persons in identifying the subject goods and the ancillary material;
• the applicant must furnish security to the respondent in an appropriate amount equal to a specified percentage of the value of goods attached;
• the respondent is restrained pendente lite from infringing the applicant’s intellectual property right;
• issue a rule nisi calling upon the respondent to show cause on a specified day within 20 court days of the granting of the order why an interdict restraining the respondent from the infringing of the applicant’s intellectual property right and further relief, including delivery up of the subject goods to the applicant, should not be granted or confirmed;
• should he wish to pursue the matter further, the applicant must institute an action against the respondent based on the infringement of his intellectual property right not later than the date specified in the order, or if no such date is specified, within 20 court days of the date of such order. 

If the applicant does not timeously institute proceedings against the respondent for the infringement of his intellectual property right or if his claim is ultimately dismissed by the court, the court may on the application of the respondent or some other interested person claiming entitlement to the seized materials, order that such materials be released to such person. 

An application for this statutory Anton Piller order should be heard in camera unless the court is satisfied that the attendance of the proceedings by members of the public, or any class or group of such members, will not cause the applicant to suffer any prejudice, or to be prejudiced, when seeking to protect or enforce his intellectual property right, and that such attendance will not impair or detract from the efficacy of the order or its execution should it be granted. 

When the statutory Anton Piller order is executed the respondent is entitled to have his attorney present during the search and further execution of the order if the attorney can be present with due speed after the Sheriff or designated person has arrived at the place of execution of the order in order to proceed with the execution. For the purpose of conducting the search the sheriff or designated person must be accompanied by the applicant’s attorney who, after service of the court papers, must explain the terms of the order to the respondent or the person upon whom service takes place at the premises to be searched, and he must inform him as to the respondent’s right to have his attorney present provided his presence can be secured with due speed. 

The Sheriff or designated person conducting the search must prepare an inventory of the subject goods and ancillary materials attached by him on the authority of the order and must furnish a copy of the inventory to the applicant and to the respondent. He must allow the parties to peruse the ancillary materials that have been attached and to make copies thereof or excerpts therefrom. He must also allow the parties to inspect the subject goods and to have those goods tested or analysed. 

After the completion of the search the applicant’s attorney must without delay make a statement under oath or affirmation reporting full