The consumer watchdog, Choice, recently reported on the emerging practice of using trade marks as ‘nutritional branding’. Choice examined over 200 products branded using ”natural” or “healthy” on the packaging, and found that many of these products contained preservatives, sugar or high levels of salt.
Use of ‘nutritional branding’ raises a number of legal issues including compliance with the Australian Consumer Law, the Food Standards Code and the ability to obtain trade mark registration.
Australian Consumer Law
The Australian Consumer Law requires that businesses must not make false, misleading or deceptive claims about a product’s quality, characteristics, benefits or origin.
Consumers will often pay a premium for food that is ‘healthy’, ‘organic’ or sourced from a particular area. Businesses know this and it is often tempting to claim that their products have some attributes which may not be 100% accurate. The ACCC takes a pretty dim view of businesses misleading consumers in this way, and some hefty fines have been issued. For example:
- GO Drew were fined $270,000 plus court costs for mixing organic eggs with other eggs, where all of the eggs were labelled as ‘organic’
- Victorian butcher Hooker Meats was fined $50,000 for falsely claiming it sourced its meat from King Island in Tasmania.
Businesses wanting to use ‘nutritional branding’ need to be sure that they are not making false, misleading or deceptive claims that could land them in hot water with the ACCC.
Food Standards Australia New Zealand (FSANZ)is responsible for assessing the quality of food and any specific health claims on packaging of goods under the Australia New Zealand Food Standards Code - Standard 1.2.7 - Representations about Food (Food Standards Code), introduced on 18 January 2013.
The Food Standards Code prohibits health claims (a claim that either directly or impliedly states the food will have some sort of health effect on the consumer) from being placed on products if they are not substantiated. Businesses may only make health claims on foods that meet the required nutrient profiling scoring criterion, for example, that they are not high in saturated fat, sugar or salt.
For general level health claims, businesses may either self-substantiate the health claim or rely on one of the pre-approved food-health relationships (that is, a claim that a certain food has particular health benefits). High level health claims can only be based on the FSANZ pre-approved food-health relationships.
Although the simple use of the word ‘healthy’ or ‘natural’ may not automatically be considered a health claim, businesses should examine closely the messages on their products and ensure they are complying with the Food Standards Code. Businesses have three years to comply with the requirements of the new Code.
There may be difficulties in registering a ‘healthy’ trade mark if it is descriptive or if it contains some connotation that is deceptive or likely to cause confusion.
The descriptiveness problem might be overcome by combining the words with a distinctive brand, e.g. “McCain Healthy Choice”.
Misleading or deceptive brands should not be used. It is possible that an application for registration may be rejected if either a standard or a certification trade mark indicates that the food has a particular nutritional quality and consumers may be misled because those products do not in fact have that quality.
Certification marks are intended to show a product has a particular quality or characteristic. The ‘National Heart Foundation Approved’ and the ‘Australian Certified Organic’ trade marks are well known certification marks relating to healthy endorsement of food. Certified marks are different to standard trade marks in that the owner of the mark must submit a set of rules with the application to register the mark (for approval by the ACCC) and nominate an approved person to certify whether goods or services are of the quality required to use the certification mark.
Implications and recommendations
- Choice has alerted consumers to the potential trap of picking up a ‘natural’ or ‘healthy’ branded product and assuming it has sufficient nutritious value.
- Businesses should ensure that they are not engaging in misleading and deceptive conduct that could land them in trouble with the ACCC. This requires not only consideration of the accuracy and specificity of claims, but also substantiation of claims.
- Businesses should review their products to see if they contain any ‘health claims’ which would require them to comply with the new Food Standards Code.
- It is possible that, if there is a false representation in a trade mark in relation to a particular quality of food, the trade mark registration may be rejected by IP Australia.