By Joe Lederman and Alexandra Jannetto The use of a certification trade mark as an endorsement in food marketing can provide a food company with benefits that its business might not otherwise enjoy and different types of endorsement schemes can offer different benefits. This article considers the legalities and benefits of certification trade mark endorsements using different examples of endorsement schemes in existing food marketing. Legal risks in food marketing There are various legal risks that can arise in the way a food company markets its products, such as claiming a product is “organic” or “gluten-free” or has a health benefit if it fails to live up to the marketing claim. Strict food composition and food labelling requirements contained in the Australia New Zealand Food Standards Code (Food Standards Code) as well as the consumer protection provisions contained in Sections 52 and 53 of the Trade Practices Act mean that a food company may be in breach of the law even if making only a voluntary claim about a food product or inferring a benefit from the use of a food descriptor or even just pictorial content on the label. Any food company making a claim about its food needs always to be able to sufficiently substantiate that its claim is true. Risks of breaching the Food Standards Code (under the various State and Territory Food Acts) include: Risks of breaching the Trade Practices Act include Court orders imposing all or any of the following: Using certified trade marks in food marketing The use of a certification trade mark endorsement under an independent third party’s certification program for the product of a food business can provide an attractive avenue for a food company seeking to enhance consumer demand for its food products. Some of the benefits can include: · Recognition or identification of an association with an established brand concept · Relieving the costs and burden of substantiating a claim from the food company to the endorsing certifier; · Circumventing legal liability by shifting the legal burden of substantiation onto the certifier that owns the trade mark. In Australia, trade marks are governed by the Federal Trade Marks Act 1995. A trade mark is defined under Section 17 of this Act as: “a sign used, or intended to be used, to distinguish goods or services, dealt with or provided in the course of trade by a person, from goods or services so dealt with or provided by any other person.” Upon registration of a trade mark in Australia through the government agency IP Australia, the registered owner of the trade mark acquires exclusive rights in relation to the goods and/or services in respect of which the trade mark is registered, to use that trade mark and to authorise others to use the trade mark. Using an established valuable brand of a Third Party Many organisations run certification trade mark endorsement programs which allow a food company to use their certification trade marks if the product of the food company meets the standards and requirements set by the certifying organisation. Some of the many examples of such organisations include the Heart Tick logo of the National Heart Foundation of Australia or the Rainforest Alliance Group frog logo on products such as McDonald’s McCafe coffee. Relief from full burden of substantiation By using a certification trade mark, the burden of substantiating a claim passes from the food company on to the certifying body. The courts have shown that in determining whether a food company is misleading, the court usually considers only whether the product was actually endorsed, rather than considering whether the actual certification is misleading. For example, the ACCC initiated proceedings against GO Drew Pty Ltd for marketing its free range eggs as “organic” and falsely stating that the product was “certified organic”. The Federal Court did not consider whether in fact the product was “organic” but found that GO Drew Pty Ltd had engaged in misleading conduct based on the fact that the product had not been as organic. Circumventing legal liability Using endorsements may also reduce a food company’s risk of legal liability from a regulator for not having complied with certain regulatory standards in the Food Standards Code. Under Section 109 of the Australian Constitution, when a State law is inconsistent with a Federal law, the Federal law shall prevail. The Food Standards Code is considered to be inferior to Federal law under Section 109 of the Constitution when it is enforced under State or Territory Food Acts. Therefore, as the Trade Marks Act is Federal law and governs the use of trade marks, the Trade Marks Act will likely prevail over any specific food standard legal criteria required to be met under the Food Standards Code. However, it still needs to be borne in mind that the ACCC is also a Federal enforcement agency with power to prosecute or seek court orders against any misleading labelling or advertising. There have been cases (e.g. Just Squeezed Juice case in 2006) where the ACCC has been able to curtail the prominence or inappropriately misleading usage of a brand, so one may not always be able to rely on the Constitutional law argument mentioned above. Likewise, in relation to imported ‘food’ products, the Australian Quarantine and Inspection Service (AQIS) has power to deny entry of a product that is a ‘failing food’ for failing to comply with Australian laws. However, to date, AQIS has not been linking non-compliance with the Trade Practices Act to its criteria for checking for non-compliance. Furthermore, the low rate of randomised inspection (usually one in 20 shipments) means that the high level of non-compliance with the Trade Practices Act by imported products is not being readily detected despite strong anecdotal evidence of non-compliance. FoodLegal has previously written on this subject – see “Why Australian food producers face unfair disadvantage by AQIS inspection processes for imported foods” in our December 2008-January 2009 issue of FoodLegal Bulletin. This article now discusses a variety of endorsement schemes in food marketing and related benefits below. Examples of Endorsement Schemes for Different Types of Claims 1. Claiming Health Benefits Currently, making a health claim in respect of a relationship between a food (or a property of food) and a health effect is prohibited under the Food Standards Code. However, the current draft of the proposed new food standard, Standard 1.2.7 ‘Nutrition, Health and Related Claims’ of the Food Standards Code may allow an exemption for “endorsements” and includes endorsement by certification trade marks. This means that, for example, any specific legal requirements in the Food Standards Code for making a claim in relation to healthier qualities of a food might be overcome by choosing to use a certification trade mark, for example of the National Heart Foundation of Australia being its Tick program. A food marketer could decide it is a better alternative to use an endorsement rather than trying to make a specific health claim for a food that might not meet the strict eligibility criteria for such claims under the Food Standards Code, either as the Code is now or even when the new Health Claims Food Standard is introduced as law (expected during 2010). @@img:hrt@@
2. Green and Environmental Claims An increasing trend in food marketing in Australia is the use of environmental labelling endorsements relating to the environmental credentials and the beneficial environmental impact of a product. The ACCC has brought proceedings against companies making eco-labelling or “green” claims where the company has not been able to substantiate the claims. For example, in September 2008, as a result of proceedings initiated by the ACCC, the Federal Court declared that GM Holden Ltd had breached the Trade Practices Act by making false and misleading claims in relation to its “Grrrrrreen” campaign which promoted the environmentally friendly nature of its Saab vehicles by representing that the carbon dioxide emissions from any Saab would be neutral over the life of that motor vehicle, when it would not. As discussed earlier, using endorsements in relation to the environmental impact of the product has the benefit of effectively transferring the burden of proof onto the certifier while all the manufacturer needs to show is that the relevant certification has been granted. For example, obtaining a certification of a food process that is considered “environmentally sustainable” may allow a product produced using that process to be marketed more favourably to environmentally-conscious consumers. A successful international example is the Rainforest Alliance certification. The “Rainforest Alliance Certified” brand appearing on all of McDonald’s McCafe brand coffee can signify to consumers that the production of the coffee has produced less water pollution and less soil erosion than conventional farming methods, reduced certain threats to wildlife and human health, created less waste and used improved farming practices. Rainforest Alliance has certification trademark processes for retail trades and businesses, shops and farms. @@img:rfa@@ 3. Protecting the reputation of a particular region Endorsements are useful in protecting and enhancing the reputation of a particular region. This provides the benefit of meeting consumer demand for products from a particular region and the opportunity to differentiate from imported products. Example 1: Buy West, Eat Best Buy West, Eat Best is a voluntary certification scheme aimed at making it easier for Western Australian consumers to identify food products made by the Western Australian food industry. This scheme is voluntary but is managed and controlled by the Western Australian government’s Department of Agriculture and Food. Example 2: King Island Many food producers in King Island, situated between Tasmania and Victoria believe their products have exceptional qualities because of the unique environment of the island. To ensure that this reputation persists, a group of these producers developed trade marks to indicate when products have been exclusively produced on King Island. For example, King Island beef producers have formed an alliance to control the type, supply and quality of their beef, which includes private production standards such as not feeding cattle antibiotics. However, problems with the scheme have emerged inasmuch as the scheme is not legally enforceable if non-compliant King Island-based producers do not abide by these voluntary self-imposed standards. Furthermore, the words “King Island” are not proprietary to the scheme, thereby allowing the non-compliant operators to use the same words from the brand notwithstanding that they are excluded from usage of a proprietary logo. @@img:kib@@ @@img:kid@@ 4. Certifying production methods Production methods can be certified to protect the integrity of a production method. For example, consumers may have greater trust that a product certified as “organic” or “kosher” has in fact been produced in this way. Production methods can also be certified to protect a food company’s own unique way of producing food. Example 1: Organic production methods Organic certifying bodies audit a business’ methods of production to ensure compliance with national or international standards for organic farming and processing. Businesses that produce organic foods may seek certification as a means of reassuring wholesalers, retailers and consumers that their products are indeed organic. @@img:oca@@ @@img:oga@@ Example 2: “Eco-bananas” One example of a successful trademark used to identify a production methodology is the red wax-tipped “Eco-Bananas” grown by banana growing company Pacific Coast Produce in Queensland. The producers have developed a certified farming process of their own termed “ecoganic”. These bananas are not an “organic” product but the waxed tips and the marketing with respect to being environmentally sustainable and better tasting has led to the trade mark being synonymous (in consumers’ minds) with a superior or premium product. It should be noted that the “ecoganic” banana is known to be grown with fewer chemical inputs than “organic” products. By contrast, ‘organic’-grown produce can still contain chemical inputs albeit the chemicals might sometimes be derived from more ‘natural’ sources than in conventional farming. Organic is not the same concept as the concept of environmental sustainability, which is the principal claim being made by "ecoganic" farmers. @@img:eco@@ 5. Animal Welfare Certification Another increasing trend is the emergence of animal welfare certification as more and more consumers demand welfare-friendly products. The Royal Society for the Protection of Cruelty to Animals (RSPCA) in Australia has developed its own certification trade mark scheme for both egg producers and pork farmers to ensure the welfare of hens and pigs during egg production or prior to slaughter of the pig in meat production. Certification will usually be obtainable if food companies are able to meet the high standards of welfare required and allow regular inspections to ensure that these conditions are maintained. For example, a food company seeking certification from the RSPCA for eggs must not keep hens in battery cages, and must have litter in which the hens can dust bathe, have space to flap wings, stretch and socialise and have nests in which to lay their eggs. @@img:rsp@@
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