Author Tom Cordiner KC, Melissa Marcus, Clare Cunliffe, Marcus Fleming & Amy Surkis |
21st November, 2023
Trademark cancellation based on likelihood of deception - packaging logo and trademark dispute - section 120 and 122 defences
This was an appeal by the appellant (Halal CA) from a judgment of the primary judge dismissing Halal CA’s claim against the respondents for infringement of Halal CA’s registered trade mark (the Trade Mark) and partially allowing the respondents’ cross-claim by cancelling the Trade Mark.
The Trade Mark is in the following form:
The Trade Mark covers services in class 42 (Scientific and technical services; issuing halal certification to businesses and individuals for goods and services if religious and technical requirements are met), and in class 45 (Personal and social services rendered by others to meet the needs of individuals).
By way of recap, the respondents admitted before the primary judge that their marks (referred to as the Packaging Logo) were substantially identical to the Trade Mark, however, the primary judge found that none of the respondents used their marks as a trade mark within the meaning of s 120 of the Trade Marks Act 1995 (Cth) (the TMA) and that, even if they had, they were entitled to the benefit of the defence under s 122(1)(b)(i) of the TMA on the basis that the marks were used in good faith to indicate that the respondents’ products had a particular quality or characteristic, namely, that they were “halal” (that is, they had been prepared, processed and managed in conformity with Islamic rites).
On the cross claim, the primary judge concluded that the use of the Trade Mark was likely to deceive or cause confusion and that Halal CA’s registration should be cancelled pursuant to s 88(1) and (2)(c) of the TMA. His Honour also concluded that the Trade Mark was not capable of distinguishing Halal CA’s services from the services of other persons contrary to s 41(2) of the TMA (as it stood at the date of registration) and that Halal CA’s registration should be cancelled pursuant to s 88(1) and (2)(a) of the TMA. His Honour decided not to exercise his discretion under s 88(1) and s 89 of the TMA not to rectify the Register.
By ground 1 of the appeal, Halal CA submitted that the primary judge erred in concluding that the use of the Packaging Logo on the respondents’ products was not use “as a trade mark” within the meaning of s 120 of the TMA. Halal CA relied upon six factors in support of this ground, namely, that the primary judge:
(a) failed to consider the respondents’ subjective intention; (b) erred in his consideration of the context in which the Packaging Logo was used on the respondents’ products; (c) failed to have regard to the Trade Mark as a whole; (d) did not give sufficient weight to the fact that the Packaging Logo was used on a food product for human consumption; (e) gave excessive weight to the size of the Packaging Logo; and (f) gave undue weight to the appearance of the Natvia and Raw Earth brands on the packaging of the respondents’ products.
For context, examples of the Packaging Logo as it appeared on the respondents’ products are included at the end of this note (referred to by the primary judge as the Natvia Products and the Raw Earth Products).
On the question of intention, citing a number of cases (at ), the Full Court stated that whether or not a mark has been used as a trade mark for the purpose of (inter alia) s 120 of the TMA requires a consideration of the way in which the mark has been used. The question is to be determined objectively without reference to the subjective intentions of the user and from the perspective of a person looking at the relevant packaging. There was no error by the primary judge in giving no weight to the subjective intention of the respondents and their officers on the question of trade mark use. Comments by Katzmann J in In-N-Out Burgers, Inc v Hashtag Burgers Pty Ltd  FCA 193; (2020) 150 IPR 73 at  relied upon by Halal CA, that an alleged infringer’s intentions are not irrelevant, were directed to deceptive similarity.
Halal CA next submitted that the primary judge failed to have regard to the Packaging Logo as a whole. The Full Court noted (at ) that the primary judge had regard to each of the elements of the Packaging Logo in the course of his analysis – the Arabic lettering, the words Halal Certification Authority and the annulus. At , the Full Court concluded that there was no error by the primary judge, stating that when deciding what effect the use of a sign is likely to have on the mind of consumers and whether it would be likely to function as a badge of origin, the sign as a whole must be considered in the context in which it has been used. As the Full Court observed, it follows that it is wrong in principle to dismember the sign into its constitute elements disregarding the presence of some, and only having regard to others. However, significantly, the Court noted that the constituent elements of a sign may make different contributions to the message conveyed by the sign as a whole and it is not only permissible, but necessary, to consider what contribution is made to that message by the constituent elements.
Halal CA also contended that the primary judge should have concluded that the Packaging Logo was being used to denote a trade source connection between Halal CA and the respondents’ products or that a service had been performed in respect of them, not merely that the goods were halal. The Full Court concluded that the Packaging Logo as used on the respondents’ products was small in appearance (relative to the Natvia brand), but its various features were all discernible by a consumer interested to know whether the goods are halal. On this basis, the Court did not consider that there was anything about the size or location of the Packaging Logo on the respondents’ goods which suggested that it would not be perceived as a badge of origin in the relevant sense. Citing Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd  Halal CA 8, the Full Court noted the fact that a mark considered as a whole is largely or predominantly descriptive does not preclude a finding that it is also acting as a brand. Similarly, the fact that a product may bear more than one brand does not mean that only one of them is used as a trade mark.
The Full Court therefore accepted that the primary judge fell into error by overlooking the second purpose for which the Packaging Logo was used, which was to signify that the products were certified by Halal Certification Authority Australia. The Full Court concluded that the Packaging Logo was performing a dual function, which includes, firstly, describing that the goods are halal and secondly, conveying a branding function. The Court stated that the Packaging Logo was performing a branding function as it is likely to signify to a significant number of consumers that the goods on which it appears were certified as halal by the entity that has applied, or authorised the application of, the Packaging Logo, who they would infer is the Halal Certification Authority Australia. In this way, the Packaging Logo indicates a connection between the goods that have been dealt with in the course of trade by a person (ie. by the certifier) from goods dealt with by another person (eg. whose goods have not been so certified).
Having found that the Packing Logo was used as a trade mark, the Full Court next considered whether there was use in relation to the services in respect of which the Trade Mark is registered, or services of the same description or goods that are closely related to registered services.
Relevantly, the Trade Mark was registered only in respect of services including “issuing halal certification to businesses and individuals for goods and services”. The registration did not extend to goods of any kind. Halal CA argued that given the respondents admitted in their defence that they used the Packaging Logo to indicate that their goods, the Natvia Products and the Raw Earth Products, had the quality of being certified as halal by Halal CA, any finding that the Packaging Logo had been used as a trade mark should lead to a finding that all elements of s 120(1) were satisfied. The Full Court disagreed. The Court concluded that the Packaging Logo was used in relation to the goods to which it was applied rather than any services provided in connection with their preparation and packaging. It was used as a trade mark on the relevant goods to convey a message about those goods, namely, that the goods were halal and were certified as such by Halal CA. Halal CA had failed to obtain a registration covering goods. Similarly, s 120(2)(c) (use in relation to services of the same description) did not apply as the Packaging Logo on the respondents’ goods was not use in relation to services.
Halal CA submitted that s 120(2)(d) ought to apply, namely use in relation to goods that are closely related to registered services. Halal CA’s argument was that the Court should find that when a mark is registered in respect of a service of performing a particular operation on goods, then goods that are specifically identified as having had that service performed on them are closely related to the services in respect of which the mark is registered. The Full Court examined the various authorities in this area (at -), noting that the class of relevant goods must be capable of some reasonable definition since it is an element of the monopoly right conferred on the registered owner. One of the difficulties with Halal CA’s case based on s 120(2)(d) was that the class of goods to which the section might be applied if Halal CA’s argument was correct could not be confined to either halal or non-halal goods. The Court noted that the very same goods could be halal or non-halal depending on the ingredients and how they had been prepared.
In any event, s 120(2)(d) requires the registered services as specified in the Register of Trade Marks to be compared to the goods in relation to which the relevant mark has been used for the purpose of determining whether such goods are closely related to the registered services. The Full Court noted that the limitations imposed by the words “closely related” is deprived of all effect if any goods to which the mark is applied are ipso facto considered to be closely related to the registered services. In the present case, the Packaging Logo was applied to sweeteners. There was no evidence directed to the question of whether sweeteners as a class of goods are closely related to the registered services. The Court noted that there may well be particular goods that might be considered closely related to the registered services (eg. meat products) but, if there are, the Court was not persuaded that sweeteners were among them. The infringement case under s 120(2)(d) therefore failed.
While not strictly necessary, the Full Court also considered the good faith exception (s 122(1)(b)(i) of the TMA) and the primary judge’s finding of good faith use of the Trade Mark. The Full Court accepted that a representation conveyed by a trade mark that a product has been certified by a particular body or authority that goods are of a particular quality, may itself be a representation as to a characteristic of the goods and the defence under s 122(1)(b)(i) could be open to such a defendant. However, whether the use of the mark for that purpose was in good faith remained open. For particular reasons dependant on the facts in this case, the good faith defence was open to the respondents for a period until they received a letter of demand. After that date, the defence was not open to them, as the respondents were aware that Halal CA did not approve of their use of the Packaging Logo on their respective products.
In relation to the rectification action, there was some controversy between the parties about the way the respondents had put their case on s 88(1) and (2)(a) of the TMA based on the word “Authority” in the registered mark and the alleged resultant error by the primary judge. There had been a shift between how the respondents opened their case (Halal CA was the only person that provided halal certification, and this was false), and how they advanced their case (Halal CA is the Authority with respect to halal certification). The latter position was not pleaded but it was engaged with fully by Halal CA and was therefore regarded by the Full Court as fairly contested.
The Full Court had regard to the relevant statutory provisions concerning certification of goods as halal, concluding that while it may be correct to say that Halal CA had an official status or role in the certification of halal products, that official status or role was closely prescribed and applied only to red meat and meat products. The evidence established that Halal CA used its Trade Mark in relation to a wide range of goods that were outside the statutory scheme governing the issue of halal certificates for red meat and meat products. The Court therefore concluded that the use of the Trade Mark in relation to the halal certification by Halal CA of non-meat products was likely to deceive or cause confusion. At the very least, it would cause a significant number of consumers to wonder whether the Trade Mark was that of an official or authoritative body authorised by government (whether by statute, regulation or otherwise) to certify as halal non-meat products. The existence of the statutory scheme with respect to red meat and meat products would not negative or diminish the misleading impression likely to be conveyed by the Trade Mark when used in relation to the certification of other food products.
The authors observe that, while not an issue arising in this proceeding, the Full Court’s observations regarding the misleading impression conveyed by use of the Trade Mark in connection with goods outside the ambit of the statutory scheme suggests that use of the Trade Mark by traders (or a similar certificate symbol) would be regarded as conveying the same misleading impression. Whether that rises to the level of being misleading and deceptive for the purposes of the Australian Consumer Law, as opposed to likely to deceive or cause confusion for the purposes of s 88(2)(c) of the TMA, was not in issue.
The Full Court also considered the removal application based on s 41 of the TMA, in this case considering a composite mark, involving consideration of the Arabic letters comprising part of the mark. The Court concluded that both the English and Arabic in the Trade Mark referred directly to a relevant characteristic of the goods to which the Trade Mark was applied and the certification services provided by the owner of the Trade Mark in respect of such goods and services. The other component of the Trade Mark, which the primary judge described as a non-distinctive annulus of a kind in common use, did not either alone or in combination with the other elements contribute significantly to the distinctiveness of the Trade Mark as a whole. Therefore, the Full Court concluded that other traders acting honestly and not actuated by any improper motive, may well desire to use both the English and Arabic words in the stylised form of an annulus of the Trade Mark to indicate that the goods had been certified as Halal by that person. The Full Court did not see a need to revisit the primary judge’s refusal to exercise his discretion and not remove the mark.