Aldi Foods Pty Ltd v Moroccanoil Israel Ltd  FCAFC 93 (22 June 2018)
Partly successful appeal by Aldi.
The Full Court also tried to clarify review by an appellate court in cases involving evaluative assessments which is typically relevant to intellectual property appeals. Allsop CJ noted that tests requiring the trial judge to be plainly and obviously wrong, or for there to be a sufficiently clear difference of opinion, need to be nuanced. It really comes down to whether the assessment of difference is adjudged to be sufficient to be characterised as error. Perram J took a similar view and also rejected the plainly and obviously wrong test, but favoured an approach for appellate review where there is a sufficiently clear difference of opinion having deference to the relative advantage enjoyed by the trial judge over the appellate court. Hence, the Full Court approved the approach taken in Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd  FCA 1833.
The judgment by the primary judge, Katzmann J is reported here
Israel alleged Aldi’s conduct in selling various hair care products under its PROTANE and VISAGE brands with reference to MOROCCAN ARGAN OIL infringed its trade mark registrations and constituted misleading or deceptive conduct under the Australian Consumer Law and passing off.
The infringement action failed. Although the primary judge considered ALDI was using MOROCCAN ARGAN OIL as a trade mark, this combination word mark was not deceptively similar to either of Israel’s registrations for composite marks containing a stylised letter “M” and the word MOROCCANOIL.
The primary judge also found that Aldi’s packaging get-up did not bear any misleading or deceptive resemblance to Israel’s packaging and did not constitute passing off. However, the primary judge did find that Aldi’s packaging did make certain false representations. In particular, the use of the word NATURALS misrepresented that some of its hair care products were made wholly or substantially from natural ingredients (the “Naturals Claim”) and its hair brushes and hair appliances falsely represented that argan oil makes a material contribution to the working of those products (the “Performance Benefits Claim”).
Finally, the primary judge overturned the Registrar’s decision and found in favour of registration of Israel’s MOROCCANOIL word mark. Her Honour considered this word mark has some inherent adaptation to distinguish and, when considered with Israel’s use, it qualified for registration.
Israel did not challenge the findings on infringement or passing off and the associated misleading or deceptive conduct issues.
The Full Federal Court upheld Aldi’s appeal and overturned the primary judge on the Naturals Claim and refused registration of Israel’s MOROCCANOIL word mark. However, the Performance Benefits Claim was maintained.
The MOROCCANOIL word mark
Perram J gave the leading judgment and noted the general principle that “the English language should continue to be available to its speakers unmolested by trade mark monopolies over ordinary words”. Since this trade mark application was filed on 7 December 2011, s41 as it stood before it was amended by The Intellectual Property Laws Amendment (Raising the Bar) Act 2012 on 15 April 2013 was relevant.
Perram J noted that, by mid to late 2011, there were some 10 hair care products on the market in Australia containing argan oil and the words MOROCCAN, MOROCCO and OIL were all being used extensively by other traders. There was also direct evidence that Moroccan Oil could be used descriptively in relation to hair care products in 2011 and that, for practical purposes, Morocco was the primary location from which argan oil was sourced for Israel’s products. Against this background, there were errors in the primary judge’s reasoning and, as at 7 December 2011, argan oil products were on trend and there were legitimate reasons in Australia for a trader to market an argan oil hair care product by reference to the fact it was an oil from Morocco and to use the words “Moroccan Oil” to describe their own argan oil hair care products. Consequently, the word MOROCCANOIL was not to any extent inherently adapted to distinguish Israel’s goods and fell with s41(6), so it was necessary to consider the extent to which Israel had used this word before 7 December 2011. Israel carries the onus of establishing that the word MOROCCANOIL is no longer descriptive and that it has come to gain sufficient distinctiveness. His Honour considered Israel’s evidence did not establish this. In the 2 years period from the Australian launch in September 2009 up until December 2011, Israel’s marketing activities did not come close to showing the plain word MOROCANOIL identified Israel’s hair care products. Most of these activities were directed at members of the trade rather than consumers and much of the use of MOROCCANOIL was as part of Israel’s full branding which included a stylised letter “M”. As a result, Perram J found that the MOROCCANOIL word mark did not qualify for registration.
Allsop CJ and Markovic J agreed with Perram J on this issue.
The Naturals Claim
Perram J did not accept Aldi’s submission that the primary judge failed to properly take into account the context in which its conduct occurred, but did agree that the primary judge had adopted an artificial approach of focussing on dictionary definitions of the word “naturals”. His Honour noted that “… armed with the dictionary definition her Honour was understandably seduced into asking whether the ingredients in the products could be described as ‘natural’ when the correct question was what did the use of the word ‘NATURALS’ convey to ordinary reasonable consumers. This involved error.” Perram J also agreed with Aldi there were good reasons why a trader might decide to call a product line ‘NATURALS’ without implying that the products were substantially made from natural ingredients. Hence, the primary judge fell into error and Perram J took the different view that, in the setting of an Aldi supermarket, the ordinary reasonable purchaser would have understood that argan oil was a natural product and to the extent that such consumers pondered what was natural about these products, it would have been that they contained some argan oil. Consequently, Aldi’s appeal on this issue was allowed.
Allsop CJ and Markovic J agreed with Perram J on this issue.
The Performance Benefits Claim
Perram J took the view that Aldi’s packaging did not suggest to the ordinary reasonable consumer that the performance benefits were linked to the presence of argan oil. However, while this view differed from that of the primary judge, Perram J found no error in the reasoning of the primary judge and dismissed Aldi’s appeal on this issue.
Allsop CJ agreed with Perram J that there should be no interference with the primary judge’s conclusions on this issue, but also agreed with the primary judge’s view and had little doubt that ordinary and reasonable members of the relevant class of consumer would infer that it was the argan oil which was wholly or largely responsible for the touted benefits. Markovic J agreed with Allsop CJ on this.