Federal Court of Australia Judge: BROMWICH J Date of Judgment: 12 November 2021
In Halal Certification Authority Pty Ltd v Flujo Sanguineo Holdings Pty Ltd [2021] FCA 1399, the dispute was between two parties who never had any direct agreement. Stevia Sweetener Co Pty Ltd (formerly known as Natvia Pty Ltd), Raw Earth Sweetener Co Pty Ltd, Natvia IP Pty Ltd and Flujo Sanguineo (“Flujo”) (collectively known as “respondents”) engaged contract/toll manufacturers to manufacture their sweetener products for sale in Australia and overseas. The contract/toll manufacturers obtained halal certification for Flujo’s sweetener products at various times at Flujo’s instructions through Halal Certification Authority Pty Ltd (“HCA”). The halal certification was provided to the contract[1] manufacturer in the form of certificate for display at the contract manufacturer’s premises. Subsequently, Flujo applied the halal certification trade mark (“Packaging Logo”) on packaging of NATVIA and RAW EARTH Products. Flujo never sought permission before applying the Packaging Logo on their product packaging.
HCA owns the “Trade Mark” TM 1005647 for “
” for services “scientific and technical services; issuing halal certification to businesses and individuals for goods and services if religious and technical requirements are met” in class 42 and for services “personal and social services rendered by others to meet the needs of individuals” in class 45. The Trade Mark was not registered as a certification trade mark for those services.
The Court noted that the Packaging Logo and Trade Mark were substantially identical, if not identical.
On the 3 August 2018, some 8 years after the first halal certification by HCA for respondents’ products, HCA demanded that the respondents cease using the Packaging Logo on their products, deliver up for destruction all packaging under the possession or control of Flujo bearing the Packaging Logo or any deceptively similar logos, gave undertaking not to use the Packaging Logo without permission and pay damages in the sum of $500,000 for trade mark infringement by 10 August 2018.
Trade Mark Infringement, Misleading and Deceptive Conduct and/or Passing Off Claims
The demands were not met and HCA commenced proceedings against the respondents in September 2018 claiming trade mark infringement under s 120 of the Trade Marks Act 1995 (Cth)(“TMA”), misleading and deceptive conduct under s 18 and/or 29 of the Australian Consumer Law (“ACL”) and tort of passing off.
The respondents denied any trade mark infringement under s 120 of the TMA and claimed that the Packaging Logo was used to indicate to consumers that the contents were halal and fell short of conveying any trade source information. The Court held that the words “Halal Certification Authority Australia” was purely descriptive and together with the Arabic lettering, would have indicated to consumers that the contents of the products were halal or certified halal by someone. The Court then went on to consider whether a member of the general public, or an ordinary or reasonable reader, would consider that there was any practical difference in using the Packaging Logo as part of a registered trade mark to signify that the products were halal. The Court then considered the Kosher Logo which appeared on the relevant Natvia Products and Raw Earth Products for Jewish faith beside the Packaging Logo and inferred that the Packaging Logo in its obscure placement on the packaging (often near nutritional information), in contrast to the dominant NATVIA and RAW EARTH trade marks, could not have met the threshold of it being used as badge of origin for services for the purposes of s 120(1) of the TMA. The same reasoning applied in relation to Natvia Products and Raw Earth Products which were closely related to those services for the purposes of s 120(2)(c) or (d).
Good Faith Exception under s 122(1)(b)(i)
Just in case his Honour was wrong in his earlier conclusion about the finding of use as a trade mark insofar as the Packaging Logo was concerned, his Honour went further to determine if the defence under s 122(1)(b)(i) could be relied upon by the respondents.
HCA argued that there was no implied permission given to any retailer to use the Packaging Logo on product packaging. The Court also found that there was no permission granted by HCA to the contract manufacturers or retailers (given the absence of direct contact).
The Court was satisfied that the respondents had genuinely used the Packaging Logo to indicate quality and characteristic that the Natvia and Raw Earth Products were certified as halal.
During the transition between contract manufacturers, there were two periods of time in which the halal certification lapsed and the respondents continued to apply the Packaging Logo but the respondents acted quickly to restore its halal certification upon discovery. The Court accepted that the respondents were concerned with no access to stocks and the lapses were an oversight. The Court held that the use of the Packaging Logo by the respondents were honest, as the respondents “believed the products had halal certification at all times”. The Court also found the respondents never tried to conceal the Packaging Logo from the knowledge of HCA and there was evidence that HCA had prior knowledge of the Packaging Logo being use by the respondents. The Court found no assiduous efforts of an infringer by the respondents and no ulterior motive in its use of the Packaging Logo other than genuinely wanting to indicate contents with halal certification. The Court concluded that had trade mark infringement alleged by HCA been made out, the defence under s 122(1)(b)(i) would have been made out.
On the issue of misleading and deceptive conduct and/or passing off, HCA alleged that from at least 31 July 2018, Flujo and/or Stevia and from at least 6 January 2020, Flujo and/or Natvia IP have represented to traders and consumers in Australia in relation to Natvia Products; and from at least 1 August 2018, Flujo and/or Raw Earth have represented to traders and consumers in relation to Raw Earth Products that Natvia and Raw Earth Products were certified by HCA as halal when they were not; Natvia and Raw Earth Products were certified halal by HCA and that the Products were manufactured, advertised, promoted in Australia with the sponsorship or approval of HCA and each had sponsorship, approval or affiliation with HCA when they did not.
The issue to be determined by the Court was how the Packaging Logo would be perceived by persons who saw the packaging.
The Court was not satisfied that the impugned conduct had any sufficient tendency to lead to a person exposed to it into the errors asserted by HCA in relation to both misleading and deceptive conduct and passing off claims. The Court was unpersuaded that the use of the Packaging Logo would have the likely effect as alleged and on balance, the Court held that any reasonable consumer examining the products closely would think that HCA had certified the products or had provided certification services that had sponsorship or approval of HCA. The Court held that Packaging Logo would convey no more than the contents were halal and someone other than the manufacturer confirming that the products were halal. The Court was not satisfied that an ordinary consumer would have made the necessary connection/link to HCA.
As for the issue of loss and damage to HCA that HCA has alleged, the Court inferred that the case rose no higher in substance than a complaint about missing out on licensing fees that might been charged. The use and certification of the logo was paid by the contract manufacturer who in turn factored the charge and pass them on to the respondents.
In light of the findings, the Court did not see the need to go into the findings of the HCA’s reputation. On balance, the Court concluded that HCA’s ACL case and passing off case must fail.
Cross-claim by the respondents
The respondents cross-claimed against HCA for rectification of its Trade Mark under s 88 of the TMA and removal of the Trade Mark for non-use under s 92(4)(b) of the TMA. Insofar as rectification was concerned, the respondents submitted that the use of the word “Authority” by HCA was likely to deceive and confuse. The respondents further relied on s 41 of the TMA, claiming that the Trade Mark was not inherently capable of distinguishing its services from those of other traders.
The Court found the word “Authority” has the meaning of “an official organisation or government department that has the power to make decision” from Collins Online Dictionary. In defence, HCA submitted that “Authority” meant “a quality which makes other people take notice of what they say”. The Court noted with the absence of the complete full name of Halal Certification Authority Pty Ltd within the Trade Mark, reasonable consumers would be unlikely to conclude that the certification body as Halal Certification Authority Pty Ltd. The use of the Trade Mark could leave an impression to consumers that some official, authoritative body was certifying that the goods were halal as opposed to a private entity like Halal Certification Authority Pty Ltd. The Court eventually upheld the application for rectification by the respondents.
As for the distinctiveness of the Trade Mark under s 41 of the TMA, the Court took the view that the combination of the components of the Trade Mark being the words Halal Certification Authority Australia, the annulus and the Arabic lettering meaning halal as a whole, was not capable of distinguishing its services provided by HCA from a like service provided by other traders.
In considering of the Court should exercise its discretion to retain the Trade Mark on the register, the Court held that the mark was likely to deceive and confuse with the use of the word “Authority” in the Trade Mark and that reason was sufficient not to exercise its discretion to retain the Trade Mark on the register.
On the issue of non-use removal, the Court found the use of its Trade Mark on Certificates as water mark for authentication purposes and that was sufficient to defeat the ground of non-use under s 92(4)(b).
Disclaimer: The above is provided to assist in the understanding of the decision by the Federal Court of Australia. It should not be relied upon as legal advice. Any errors or omissions are the author’s. For queries related to the article, please contact the author here.
[1] The Court noted there was no distinction between contract and toll manufacturer in this case
An old-fashioned Teochew engineer who prefers writing with fountain pens to the use of smart phones, he discovered his love for writing in mid-life. He became a pescatarian a few years ago after a life-changing event. An avid reader, he is piqued by the satisfaction of tackling difficult issues in life.