Halal Certification Authority P/L v Scadilone P/L [2014] FC 614

KEY ISSUES

Misuse of certification trade mark

First award of “flagrant infringement” additional damages under section 126(2) of the Trade Marks Act 1995 for deterrent purposes

FACTS

HCA owned a trade mark used to certify that food had been prepared in accordance with halal (Islamic) requirements, for which it charged authorised users a licence fee to use and display the mark.

Quality Kebab Wholesalers Pty Ltd (QKW) supplies meat products to various retail outlets including S and White Heaven Pty Ltd. They sought QKW’s assurance that the products complied with halal requirements.

Without authorisation from HCA (including payment of applicable licence fees), QKW copied and provided certificates bearing HCA’s mark to S and White Heaven, who displayed the certificates in their stores.

HCA took action against QKW, S and White Heaven alleging trade mark infringement and breaches of the Australian Consumer Law seeking damages, injunction and other orders.

COURT DECISION AND REASONING

Held: QKW and the outlets were infringing the trade mark by using it without HCA’s authorisation.  An injunction to restrain further unauthorised use by QKW was granted.

QKW also infringed the Australian Consumer Law including by falsely representing that it had a licence from HCA, with the managing director of QKW knowingly involved in the contravention.

No compensatory damages based on HCA trade mark licence fees were awarded as there was no evidence that QKW or the outlets would have acquired a licence from HCA to use its mark if required to pay the fee.  No reputational damages were awarded to HCA due to a lack of proof of damage.

Significant additional damages of $91,000 were awarded against QKW due to its flagrant infringement and conduct calculated on the notional licence fees payable to HCA for the relevant period plus a 50% uplift.  Additional damages are intended to perform a deterrent function rather than a compensatory function.

QKW was ordered to undertake corrective advertising in 2 widely circulating Islamic newspapers to advise that it had not been certified by HCA.

Only $10 nominal damages were awarded against H and White Heaven given their lack of knowledge.

KEY LESSONS

Seeking licence based compensatory damages requires proof that the infringer would have taken a licence.

Significant additional damages may be available even if actual damage cannot be quantified.