A company has been handed a $2.3 million fine by the Federal Court for selling thousands of pieces of fake Aboriginal art.

The court found Birubi Art breached Australian consumer law and misled customers by promoting its products as genuine Aboriginal art, when in fact they were painted in Indonesia.

The company sold more than 18,000 boomerangs, bullroarers, digeridoos and message stones over 2.5 years.

In a landmark ruling, Justice Melissa Perry imposed a $2.3 million penalty, saying the fine aimed to deter other operators from undercutting the genuine Aboriginal art industry.

Director of the National Indigenous Art Fair Peter Cooley said the ruling was a "great start" in the campaign to protect the genuine Indigenous art industry from counterfeit products.

"We need those consumers to be confident when they are out there … that the piece they're buying is actually authentic and it's made by Aboriginal people," he said.

"It's lessening the value of that authentic art and it's swaying people to be nervous about purchasing and ultimately they stay away from buying and that's not what we need as Aboriginal artists and businesses."

Peter Cooley from the National Indigenous Art Fair said the ruling was a "great start". ( ABC News: Sarah Collard )

Gabrielle Sullivan from the Indigenous Art Code said the penalty was "some deterrence," but it did not mean better protection for artists.

"I don't want to downplay it, but I don't think we should be confident it will address the real issues: there is still no protection around Indigenous culture and intellectual property," she said.

She said this judgement was a win for consumers, who were less likely to be misled in the sale of Indigenous art.

"This is about Birubi being misleading and deceptive on their packaging and labelling and presentation of products, it wasn't about fake art or unfair licensing agreements," Ms Sullivan said.

"We'd like to see some amendment to the Australian Consumer Law so that there's a prohibition on selling fake art or producing products under unfair licensing arrangements, because we see that as a big issue."

Justice Perry said there was "powerful" evidence Birubi's conduct caused great social, economic and cultural harm to Indigenous communities and artists.

In her judgement, she said while it was unlikely the company would ever pay such a fine, it was in the interest of general deterrence that such a hefty penalty be handed down.

"The duration of the conduct, the number of outlets across the country to which the products were supplied, and the number of products sold, it is clear that the objective seriousness of the conduct is considerable," she said in her judgement.

"There was is a need for robust penalties to strongly discourage conduct of this kind."

Company unlikely to pay fine

Birubi Art is now in liquidation and the ABC understands it is unable to pay the fine.

The Australian Competition and Consumer Commission (ACCC) commissioner Sarah Court said the company's actions were "extremely serious".

"This penalty sends a strong message to anyone considering selling fake Australian Aboriginal-style art as the genuine article," she said.

"Birubi's actions were extremely serious. Not only did they mislead consumers, they were liable to cause offence and distress to Australian Aboriginal people."

She said the consumer watchdog would go after any other dodgy operators.

"The ACCC took this action because the misleading conduct has the potential to undermine the integrity of the industry and reduce opportunities for Australian Aboriginal peoples," Ms Court said.

"The ACCC will be monitoring traders of Indigenous Australian-style art and souvenirs to ensure confidence in the Indigenous Australian art industry."