trademark

Trade Marks in Breach of Consumer Laws – Is it about the Brand or the Product?

There are organisations and consumer groups focusing on production method issues and these may very well have an impact on trade marks.

The function of trade marks has evolved from an indication of product source to other areas such providing an indication of product quality, product nature and an advertising tool. In this article “product” refers to both services and goods.

There is a temptation for business producers and their marketers to “push the envelope” in an effort to convey a beneficial characteristic of their product and this is being reflected in the branding practices as well.

A trade mark such as NATURES FARM conveys the message of a naturally produced product and in today’s climate, the question arises whether such trade mark could be actionable for misleading the public if it was produced in a non-natural manner.

In Australia the ACCC is closely monitoring labelling claims and this may very well rub off to trade marks. So in choosing a trade mark it is important to understand what labelling practices may be misleading and actionable.

Breaching the Australian Consumer Law
Labelling may potentially breach the consumer protection provisions of the Australian Consumer Law if it conveys a misleading or deceptive impression or representation, whether this is through words, pictures or another means … such as a trade mark.

The term ‘misleading’ has been interpreted as conduct which is inconsistent with the truth or which leads or is likely to lead the person to whom it is directed astray and into error.

It is not necessary to show any intention to mislead or to deceive or to prove that the content of a label actually misled or deceived someone.

It is not essential that a person has actually been misled or deceived, provided that the content has a real capacity or tendency of doing so.

Conduct is likely to mislead or deceive if there is a real, or not remote, chance or possibility of the conduct having that effect regardless of whether that chance is more or less than 50 per cent.

A trade mark for bread, for example, which features the word or picture of a farm, is not likely to mislead people into thinking the bread is made on a farm.

Misleading someone may include:

  • lying to them or creating an impression which is not true
  • leading them to a wrong conclusion or leaving out (or hiding) important   information or making inaccurate claims

Such as using the trade mark ORGANICKS when a product is not strictly of an organic nature.

The Federal Court in a case involving the creating of a false impression as to the nature of a product was particularly critical of the conduct, stating that it involved a high level of dishonesty and that it “amounts to a cruel deception of consumers who seek out particular products as a matter of principle”.

The judgment in that case confirmed that courts are willing to impose significant penalties upon businesses that advertise and contain matter on labels that is likely to mislead the public.

A label that seems clear and proper to its designers can still mislead its intended audience. In one such case the Federal Court stated in relation to a pictorial part of a label:

“In each case it is likely that some reasonable consumers would be misled or deceived by the representation and influenced by it to purchase the product concerned on the basis that it contained the real fruit represented” on the label. The Court rejected the contention that the use of the phrase ‘flavoured cordial’ with the representation of the fruit on the label was not sufficient to overcome any effect the depiction of real fruit might have.

Any qualification of the impression created basically cannot contradict the headline claims or representation on a label.

Business must clearly direct the consumer’s attention to the most significant points of sale, so that the consumer can make a reasonable and informed judgment about whether to buy the product. A trade mark which distracts from this could potentially be found to be misleading as it must of its nature be considered to be a “headline”.

So care needs to be exercised in choosing a trade mark which may have the potential to mislead consumers and what seems acceptable to you may still offend the Australian Consumer Law

A trade mark which actually misleads may be easy to identify. However a trade mark that is likely to mislead will prove more difficult to identify.

Whether particular people are likely to get the wrong message from a trade mark is a subjective question. It can be answered only when all the circumstances are known and it does not depend on the intention of the business concerned.

Basically the ‘do not mislead’ or “are not likely to mislead” principle requires businesses to be honest and forthcoming in what they say and not engage in  practices which are likely to create the wrong idea or wrong impression on the part of the consumer.

So the main message or the impression of the content on a label or packaging or other materials, including the trade mark, is a critical factor to be taken into account. If wording or images forming part of the trade mark, or other information on the label, give a misleading impression of the nature or characteristic of the product or its production method, then it is likely to breach the Australian Consumer Law.

It is the impression and the likely conclusion drawn from the impression that is vital and should form an essential element in deciding what trade mark to adopt or use.

If you would like any advice regarding this subject matter, please contact Protect@chrysiliouip.com.au