False Halal Certification and Trade Mark Infringement
Thursday 26 June 2014 @ 2.15 p.m. | IP & Media
A Federal Court judge has awarded costs of over $90,000 against a company that was found to have created false halal certification certificates, in Halal Certification Authority Pty Limited v Scadilone Pty Limited [2014] FCA 614.
According to Tim Francis from K&L Gates, this is the first time that the Federal Court has awarded damages for trade mark infringement in the “additional damages” category, which he believes is:
"promising news for trade mark owners, who can take encouragement from the Court's readiness to award additional damages as a deterrent from further infringement."
This was particularly important in this case, as on the facts it was difficult for the copyright owner, Halal Certification Authority Pty Ltd, to produce any evidence of actual loss.
Facts
Halal Certification Authority Pty Ltd (HCA) was a halal certification business that is one of 13 organisation authorised by the Federal Government to issue certificates. HCA uses a registered trade mark (1005647) in the form of a seal on the certificates it issues. HCA sued three groups of respondents that it alleged had used its trade mark without permission: two kebab shops who had displayed the false certificates, and a wholesale manufacturer of kebabs, Quality Kebabs Wholesalers Pty Ltd (Quality Kebabs).
Both the kebab shops been provided with the certificates from Quality Kebabs, who were the suppliers for the shops. Quality Kebabs admitted providing the certificate, but told the court “the certificate had been manufactured by a former employee acting alone and for whose actions it was not to be held to account” [at 6].
HCA sought damages from the two kebab shops in the forms of the licensing fees it ordinarily charged for retailers for the period that HCA believed they had displayed the trade mark (two years at $5,000 per annum, per shop). HCA similarly sought the sum of a licensing fee for wholesalers ($34,510 per annum) from Quality Kebabs for the nearly two years they alleged they had been infringing. They claimed in total this should be no less than $89,020, which Perram J declared to be “a lot of kebab” [at 9]. HCA also claimed aggravated damages against Quality Kebabs.
Decision
After considering the evidence, Perram J concluded that Mr Kose, the managing director of Quality Kebabs, either made or instructed the false certificate to be made, that “customers who sought a halal certificate… were as a matter of practice provided with the false certificate” and that Mr Kose was aware that the kebabs produced by his business had not been certified halal by HCA [at 45].
His Honour dismissed the portion of the claims made against the directors of the kebab shops in person, finding that they did not know the certificates were false. Although the shops were clearly liable for infringing the applicant’s trade mark, His Honour dismissed HCA’s argument that they should be made to pay the licence fees. He did not find any evidence to suggest that the shops wanted halal certification themselves, but rather simply wanted a certificate covering the meat provided to them by Quality Kebabs. Perram J thus awarded only nominal damages of $10 each against the shops.
The same problem arose with the claim against Quality Kebabs. His Honour found that “if Mr Kose had not misappropriated the applicant’s reputation he would have misappropriated someone else’s” [at 94], and that consequently he could only award the same nominal damages of $10 against Quality Kebabs.
However, HCA was successful in their claim for “additional damages” under s 126(2) of the Trade Marks Act 1995 (Cth), which was inserted by the Intellectual Property Law Amendment (Raising the Bar) Act 2012 (Cth). His Honour noted that it was unclear from the legislation alone what the purpose of the provision is, and referred to the second reading speech and the explanatory memorandum when concluding that the section could be applied for the purpose of deterrence. He concluded that this was a case where it would be appropriate to award additional damages, and went on to say:
“The damages to be awarded must operate as a sufficient deterrent to ensure that the conduct will not occur again. If the damages were to be fixed at the level of the applicant’s wholesale licence fee this would strip Quality Kebabs of the benefit it has received of using the trade mark without having to pay for it but it would not, in my opinion, be a sufficient deterrent. It would mean that an infringer could acquire, in effect, a compulsory licence to use a trade mark subject only to paying for it…That situation would eliminate the capacity of the trade mark owner to control who used its trade mark. [at 111]”
He therefore awarded additional damages of the annual fee plus a “50% uplift” for 2012 and 2013 against Quality Kebabs, which totalled $91,015.00. Clearly the ability of the court to award “additional damages” made a significant difference in this case.
TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products.
Sources:
Halal Certification Authority Pty Limited v Scadilone Pty Limited [2014] FCA 614
