The Federal Court recently considered how damages are to be calculated in relation to misuse of a certification trade mark.

Halal Certification Authority Pty Ltd (“HCA”) owned certification trade mark registration No. 1005647 for:

Click here to view the image.

The services covered by the registration include “issuing halal certification to businesses and individuals for goods and services if religious and technical requirements are met”.

Quality Kebab’s Wholesalers Pty Ltd (“Quality Kebabs”) was a wholesale supplier of kebabs meat to retail outlets.  Two of those retail outlets had asked Quality Kebabs to provide a document confirming that the supplied meat was halal certified.  The certificate supplied by Quality Kebabs, and displayed in each of the retail outlets, included HCA’s registered certification trade mark as a prominent element.   Neither Quality Kebabs nor the retailers were authorised to use the certification trade mark.

HCA brought claims for trade mark infringement and misleading and deceptive conduct against Quality Kebabs, the retail outlets and their directors.The claims for misleading and deceptive conduct succeeded only against Quality Kebabs.

However, all of the parties were found to have infringed the certification trade mark registration.  HCA asked foran award of ordinary damages, injunctions and a course of corrective advertising against all parties.  HCA submitted that any damages should be based on the amount of its licence fee for providing a halal certification.   The court held:

  • HCA failed to establish that Quality Kebabs and the two retail outlets would otherwise have paid the licence fee to obtain a genuine halal certification from HCA.  It also failed to show that members of the public had been aware of the misuse of its registered mark.  Further, as none of the parties were likely to have otherwise paid the licence fee to obtain a genuine halal certificate, they were not considered to be lost sale opportunities for HCA, and no loss was deemed to have been suffered.
  •  Therefore, HCA’s licence fee was not an adequate measure of its losses for the purpose of calculating ordinary damages.
  • Nevertheless, as the retailers and Quality Kebabs had infringed the registered mark, a nominal sum of $10 damages was awarded against each party.
  • Injunctive relief was also granted against Quality Kebabs, as was an order for corrective advertising to make it clear that Quality Kebabs' products were not halal certified by the applicant.

 HCA also claimed additional damages against Quality Kebabs for its flagrant misuse of the registered mark.  Again, HCA submitted that the damages be calculated based on the amount its licence fee for providing a halal certification.   The court found that:

  • The purpose of additional damages was to make infringement unattractive, and to deter such conduct.
  •  To award additional damages in the amount of HCA’s licence fee would not be a sufficient deterrent to potential infringers.  It would also mean that traders could simply “use now” and pay the licence fee later when (or if) their infringing conduct was detected.
  •  As Quality Kebab’s misuse of the registered mark was considered to be “as flagrant as it could be”, the court imposed additional damages in the amount of 150% of the licence fees that would have been payable during the period of infringing use.