Moroccanoil Israel Ltd v Aldi Foods Pty Ltd  FCA 823 (31 August 2017)
Moroccanoil Israel Ltd (Israel) was partly successful in restraining the sale by Aldi of various hair care products, brushes and appliances containing or infused with argan oil. Israel was also successful in overturning the Registrar’s decision refusing registration of its MOROCCANOIL word mark and in defending the validity of its existing registrations for composite marks containing the word MOROCCANOIL; although the specifications of its registered marks were restricted on the ground of non-use.
Israel was incorporated in October 2007 with its hair care products, including an oil treatment product, shampoo and conditioner have been sold in Australia under the MOROCCANOIL brand since September 2009. These products achieved considerable commercial success and are currently marketed in almost 80 countries and, in over 20 of these countries (but not Australia) the product range has expanded into skin care. Some examples of the current labelling for a small selection of these products are shown below:
Israel is the owner of 2 registrations for the composite trade marks shown below dating from 24 January 2008 and 4 August 2010 respectively, each covering a relatively broad range of class 3 goods including hair care products, skin care products, toiletries, cosmetics, dentifrices, shaving and sunscreen products.
Israel also filed an application to register the MOROCCANOIL word mark on 7 December 2011 for hair care products in class 3 and Aldi was successful in its opposition before the Registrar on the ground this word mark lacked inherent adaptation to distinguish. Israel appealed that decision.
Aldi sells a range of hair care products, brushes and appliances under its PROTANE and VISAGE brands with reference to MOROCCAN ARGAN OIL. Some examples of the labelling for a selection of these products are shown below:
By January 2016, Aldi had substituted “Argan oil of Morocco” for “Moroccan Argan Oil” on all the products in its range and, with the exception of shampoo, also changed the colour of the packaging.
Aldi’s evidence disclosed that its practice was to introduce its own version of a product in an on-trend product category. Aldi identifies a “benchmark” product to evaluate cues that customers may associate with the product type generally and considers packaging used by competitors as part of the process for developing its own house brand packaging with the objective of achieving a product consistent with its advertising slogan “Like Brands. Only Cheaper”. Health and beauty products containing argan oil were identified by Aldi as being on trend by mid to late 2011 and at least some of Israel’s products were known to Aldi at that time and were benchmark products along with some Organix products. Aldi’s policy objective was “to match the clear market leader in quality attributes including size and packaging design cues”. The intention was to replicate the benchmark product but in a way that would distinguish the Aldi product. A rule of thumb was to have “at least 10 points of difference” in the packaging of the respective products. Much of Aldi’s evidence was directed to its PROTANE hair care products with very little evidence directed to the development of its VISAGE hair care appliances.
Israel’s evidence included affidavits from a number of witnesses who were apparently confused by the Aldi products. There was also expert evidence in the specialist areas of lexicography, marketing and industrial chemistry.
Israel gave notice, under section 97 of the Evidence Act 1995, of its intention to rely on evidence consisting of photographs comparing a number of Aldi’s house brand products resembling those of other well known brands purchased from other supermarkets to show that Aldi has a tendency to copy elements of the get-up of other brands and, because of this tendency, it is more likely that it copied elements of Israel’s get-up and/or Aldi’s purpose was to appropriate or capitalise on the reputation of the other brands.
Katzmann J decided this notice was given too late in the proceedings and was inadequate because the description of the alleged tendency lacked the necessary degree of specificity. Her Honour also considered this evidence lacked significant probative value. Consequently, this evidence was inadmissible.
Trade Mark Infringement
Katzmann J was satisfied Aldi was using MOROCCAN ARGAN OIL as a trade mark (i.e. as a badge of origin) and not as a descriptor having regard to the context and setting in which these words appear. In doing so, her Honour was not impressed with the opinions of the marketing experts on this issue. The fact that a phrase may be descriptive does not mean that its use is not use as a trade mark. Further, the proper description is “argan oil” and not “Moroccan Argan Oil”. Her Honour also noted that these words were rendered in a stylised manner on various product lines with an oil drop replacing the first letter “O” in “MOROCCAN” and the “O” in “OIL” and the case for trade mark use was stronger for this stylised version.
However, Katzmann J did not consider Aldi’s MOROCCAN ARGAN OIL mark to be deceptively similar to either of Israel’s registered marks. These registered marks were composite marks where both the large letter “M” and the word “Moroccanoil” are essential features. Furthermore these trade marks, although filed in colour, were not limited to any specific colours and are deemed to be registered for all colours; so colour is not a feature of these registered marks. The comparison is between the mark as used by Aldi and Israel’s registered marks. Similarities in colour or get-up, though relevant under the Australian Consumer Law and passing off, are irrelevant to trade mark infringement and any deceptive similarity arising from get-up or aspects of packaging are to be disregarded. Her Honour scrutinised Israel’s evidence of instances of alleged confusion, but considered it lacked probative value.
After taking all relevant matters into account, Katzmann J was not satisfied that the hypothetical consumer would mistake the Aldi “Moroccan Argan Oil” mark for either of Israel’s registered marks or wonder whether the Aldi products originate from the same source.
In the context of considering Aldi’s sale of brushes and other hair care apparatus, her Honour did comment that she regarded such goods as being similar (of the same description) to Israel’s registered class 3 goods. However, her Honour went on to comment that Aldi’s manner of use of the MOROCCAN ARGAN OIL trade mark in relation to such goods is not likely to deceive or cause confusion and Aldi would be entitled to the defence to infringement in any event. However, these comments were obiter as Katzmann J had previously found the respective trade marks were not deceptively similar and so infringement did not arise.
Aldi’s cross claim for cancellation and partial restriction of Israel’s registered trade marks
It was accepted that Aldi had standing to seek cancellation as a ‘person aggrieved’. Aldi argued that Israel’s composite trade marks should not have been registered as they lacked sufficient capacity to function as badges of origin and distinguish Israel’s relevant class 3 goods from those of others. Section 41 as it stood prior to the 15 April 2013 amendments was applicable and Aldi carried the burden of proof.
Katzmann J had no hesitation in dismissing Aldi’s claims. Her Honour was not persuaded that these composite marks, when considered in their totality, were not capable of distinguishing and adapted to qualify for registration as at their filing dates. At the very least, they possessed some degree of inherent adaptation to distinguish and Israel’s use of these marks reinforced that they did so distinguish the relevant goods.
Aldi also sought to restrict Israel’s trade mark registrations on the ground of non-use insofar as they covered non-hair care products.
Israel admitted that it had not sold certain goods anywhere in the world and had no intention of doing so. These goods were skin toners, non-medicated foot cream, nail enamels, talcum powders, antiperspirants, dentifrices and sunscreen and suntan oils (but not creams). Hence, there was no issue that these goods should be removed. However, Israel defended its registrations to the extent they covered other skin care, facial products, fragrances and toiletries. It sought a favourable exercise of discretion and submitted the skin care products had been on sale overseas since 2012 at least under the later registered mark and that facial products, fragrances and toiletries are in its product development calendar. Israel also relied on the Australian reputation derived from use of its registered marks for hair care products and that consumers are well accustomed to a variety of hair care and skin care products under well-known brands being sold alongside one another.
Katzmann J considered that Israel’s evidence supported its submissions and also considered that the skin care, facial products, fragrances and toiletries were similar goods to hair care products. Her Honour concluded that the later registered mark should remain on the Register for goods other than shaving preparations, shaving creams and soaps, after shave creams and lotions. Israel had not shown any intention to use either registered mark for these shaving goods and, to all intents and purposes, had abandoned the registered mark for these goods. However, her Honour considered the earlier registered mark had only ever been used for hair care products and directed that mark be removed for all goods other than the hair care goods.
Incidentally, Aldi also pointed out that Israel had, on some occasions, wrongly asserted the MOROCCANOIL word mark was registered in Australia and sought to bring this into the exercise of discretion, but did not allege any contravention of the Trade Marks Act or Australian Consumer Law. Katzmann J considered this had no relevance to the non-use claim as it involved a different trade mark.
Australian Consumer Law and Passing Off claims
Israel argued three claims, namely (i) the get-up of the entire Aldi range is misleading or deceptive in falsely representing a relationship with Israel or its goods, (ii) the use of the word NATURALS amounts to a misrepresentation that Aldi’s products contain only or substantially natural ingredients and (iii) the use of the words “argan oil” in connection with certain products in the Aldi range falsely represents the performance benefits of argan oil.
For the first claim, Katzmann J regarded the ordinary or reasonable consumer to be someone who shops or may shop at an Aldi supermarket, is aware of Israel’s brand and products, and is attracted by the prospect of purchasing them at a bargain price. The parties agreed the notional consumer is a woman. Her Honour was satisfied that, as at September 2012 when the Aldi products first went to market, Israel had a substantial, valuable and exclusive reputation and goodwill in each of its registered marks, the sign MOROCCANOIL, the get-up of its oil treatment and box, and the get-up of all products in its range. The question to be resolved is whether the get-up and/or branding of the Aldi products or any of them was so similar to Israel’s products that a not insignificant number of ordinary or reasonable consumers in the relevant class would, or would be likely to, mistake the Aldi products for Israel’s products or would, or would be likely to, believe that the Aldi products were related or affiliated in some way with Israel or that they were sold under licence from Israel or with its approval or sponsorship.
Katzmann J concluded that, in adopting the particular get-up for the Aldi oil treatment bottle and box, Aldi copied from the get-up of Israel’s oil treatment and box and that it did so in order to appropriate part of Israel’s trade or reputation. However, the mere fact that one trader copies aspects of the get-up of another does not mean that the rival trader’s conduct is misleading or deceptive or likely to mislead or deceive. That will depend on whether the copyist has sufficiently distinguished its products and made it clear that they are not the goods of the manufacturer whose design or get-up is copied. In this case, her Honour noted there are a number of differences in the get-up of the respective products and, in her opinion, the get-up of the respective Oil Treatment products are similar, but not deceptively so. Also, for the most part, the get-up of the other products, particularly of the shampoos and conditioners, are not even similar. Her Honour did not attach any weight to the evidence of confusion relied upon by Israel. As a result, the first claim was dismissed.
Israel relied on the same facts to allege passing off, but that was also dismissed.
The second claim related to all products in Aldi’s PROTANE NATURALS Moroccan Argan Oil range except the hair brushes.
In its pleadings, Aldi admitted that the word “naturals” on the products in question is intended to convey to consumers that the products contain or feature one or more ingredients derived from a plant or animal source. A primary issue concerned the meaning of “natural” and Katzmann J found the expert evidence on this to be of little assistance. It is necessary to determine what the word “natural” or “naturals”, in the context in which it is used, connotes to the ordinary or reasonable member of the relevant class of consumer, not to a scientist. That must depend, not on any particular scientific meaning, but on the ordinary English meaning. In her Honour’s opinion, the ordinary or reasonable consumer shopping for hair care products, seeing the reference to “naturals” on the bottles or their containers, would consider that they were made, either wholly or substantially from natural ingredients.
After reviewing the evidence, Katzmann J concluded that Israel failed to discharge its burden of proof in relation to Aldi’s conditioner, renewing treatment mask, heat protection spray and hair spray products. However, the oil treatments, shampoo and dry shampoo products were each made up of substantially synthetic ingredients and Aldi’s representation that they were natural is misleading or deceptive or likely to mislead or deceive.
The third claim related to Aldi’s oil treatment, shampoo and conditioner products, as well as its hair brushes and appliances. Israel alleged that Aldi has falsely claimed that the argan oil in each of these products makes a material contribution to the product’s performance.
Katzmannj was satisfied that there was no reasonable foundation for the performance claims made with respect to the first version of Aldi’s oil treatment, shampoo and conditioner. In all likelihood the argan oil was used for emotive effect, the claims were made for marketing purposes, and Aldi was indifferent to the truth of them. This was misleading or deceptive.
In relation to the hair brushes and hair appliances, Israel alleged that Aldi represented that the argan oil infused in the bristles of the brushes and in the heating elements of the appliances makes a material contribution to the performance of the products. Her Honour was satisfied these representations were made by Aldi and were false or misleading.
Israel’s appeal against Registrar’s decision refusing registration of its MOROCCANOIL word mark
Israel’s application to register the MOROCCANOIL word mark for hair care products in class 3 was filed on 7 December 2011. Aldi’s opposition was successful with the Delegate finding this mark had no inherent adaptation to distinguish and the pre-filing evidence was insufficient to support registration.
In the appeal (and also before the Registrar), the onus was on Aldi to establish MOROCCANOIL was not capable of distinguishing the relevant hair care products.
Katzmann J accepted much of the lexicography evidence presented by Israel’s expert, but was not satisfied on this evidence alone that “Moroccanoil” had no ordinary signification at the filing date and was inherently adapted to distinguish Israel’s goods. There was some evidence to indicate that “Moroccan oil” had been used descriptively before December 2011. However, the onus was on Aldi to prove that “Moroccanoil” was not inherently adapted to distinguish and Israel did not need to prove anything.
Her Honour ultimately considered that MOROCCANOIL is to some extent inherently adapted to distinguish Israel’s hair care products from the goods or services of others. This was because there was no evidence to suggest that the single word “MOROCCANOIL” has an ordinary meaning to the Australian consumer, purchaser or trader. Furthermore, although “Moroccan oil” could be descriptive, it is not necessarily or self-evidently descriptive of the designated goods. The word “Moroccanoil” connotes (or the words “Moroccan oil” connote) a relationship between Morocco and oil but not, on the face of things, a relationship with the relevant goods. Her Honour was also satisfied that, before Israel took its goods to market, it is unlikely to have occurred to an honest competitor to use MOROCCANOIL in relation to hair care products.
Katzmann J then went on to consider the use of MOROCCANOIL by Israel and, after reviewing the evidence, was satisfied that it supported trade mark registration. Evidence as to this word being registered by Israel in other countries was irrelevant, but Israel’s use of this word mark in other countries was relevant. Her Honour was satisfied that a significant number of consumers, purchasers, and traders in the Australian hair care market identify MOROCCANOIL as coming from one trade source and in this market the word MOROCCANOIL is distinctive of Israel’s goods.
Consequently, her Honour consider the MOROCCANOIL word mark qualified for registration under section 41(5) but, if she was wrong and this word had no inherent adaptation to distinguish at all, then her Honour would still have found in favour of registration under section 41(6) on the basis that, because of the extent to which Israel had used this mark before the filing date, it does in fact distinguish Israel’s hair care products.