Aldi wins appeal over ‘natural’ claims
Competition & Consumer Protection June 22, 2018 3:16 pm By Cat Fredenburgh | Melbourne

The Full Federal Court has found products that market themselves as “natural” need not be made wholly of natural ingredients, handing a win to Aldi on appeal in its legal battle with the maker of the popular MoroccanOil line of hair products.

The Full Court ruled Friday that Justice Anna Katzmann was too focused on dictionary definitions of “natural” when she found Aldi’s “Naturals” line of products were misleading and deceptive in August last year.

“Armed with the dictionary definition her Honour was understandably seduced into asking whether the ingredients in the products could be described as ‘natural’ when the correct question was what did the use of the word ‘NATURALS’ convey to ordinary reasonable consumers. This involved error,” the appeals court said.

Judge Katzmann found that Aldi breached Australian consumer law by representing that its shampoo and conditioner, sold in packaging similar to specialty brand MoroccanOil hair oil products, contained all, or substantially all, natural ingredients.

The case also involved an allegation by Israel-based MoroccanOil that Aldi’s packaging on the products was deceptively similar to its own, but Judge Katzmann sided with the supermarket chain on that claim.

In overturning Judge Katzmann’s ruling on Aldi’s “natural” claims, the Full Court ruled Friday that products did not have to be made of substantially natural ingredients in order to be called “natural”. There were reasons traders could have for labeling their products as “natural”, including that they contain a natural ingredient such as argan oil, in the case of Aldi’s hair products.

The appeals court said the ordinary consumer would not have thought Aldi’s products were substantially natural because “Naturals” appeared in small font, was plural and the products were sold in Aldi’s discount bins – “in the cheapest part of one of the cheapest stores”.

“This is not where one expects to find hair products made substantially from boutique natural ingredients such as argan oil. This is an Aldi supermarket,” it said.

The appeals court also reversed the primary’s judge ruling allowing MoroccanOil’s trade mark application for the phrase “MorrocanOil” to proceed.

The mark was not inherently adapted to describe MorrocanOil’s products, but rather was used by several traders at the time the trademark application was filed to describe their argan oil hair care products, the Full Court found.

“Whatever else one might say, Moroccan oil means an oil from Morocco in ordinary Australian English, argan oil was an oil associated with Morocco and many traders as at 7 December 2011 were using the words Moroccan and oil to describe their argan oil hair care products.”

The Full Court also disagreed that the mark had come to distinguish MoroccanOil’s products through use.

“The question posed by s 41(6) [of the Trade Mark Act] is whether by these various uses of MOROCCANOIL prior to 7 December 2011 that word has come itself to distinguish the Respondent’s goods from those other traders.  In my view, the answer to this question is no. I do not doubt that in the brief two-year period prior to 7 December 2011 the Respondent was able to obtain a substantial reputation in its branding and product. But I do not think that in that short time the marketing activities outlined above can have come close to having the effect that the plain word MOROCCANOIL identified the Respondent’s hair care products.”

The Full Court let stand Judge Katzmann’s ruling that Aldi violated the consumer law through its shampoo and conditioner’s performance claims, including that they helped strengthen and restore shine to hair.

The appeals court also weighed in on how the Full Court should approach reviews of evaluative findings, and said that the Eagle Homes line of authority was wrong, referring to a 1999 ruling that found that for an appeals court to review a finding that involves an evaluative standard it must find the judgment in question “plainly and obviously wrong”.

Chief Justice James Allsop, Justice Nye Perram and Justice Brigitte Markovic were on the Full Court panel.

Aldi was represented by Christian Dimitriadis SC with Nigel Bowen Chambers, Andrew Fox with 5 Wentworth, and solicitors from Norton Rose Fulbright Australia.

Moroccanoil Israel was represented by Richard Cobden SC with Nigel Bowen Chambers, Julian Cooke with 5 Wentworth and solicitors with Ashurst Australia.

The cases are Aldi Foods Pty Ltd v Moroccanoil Israel Ltd and Aldi Foods Pty Ltd (In its capacity as a general partner of Aldi Stores (a limited partnership)) and Anor v Moroccanoil Israel Ltd.

The following two tabs change content below.

Cat Fredenburgh

Cat Fredenburgh has been covering legal news for 12 years. She was previously Editor-in-Chief at US legal news publication Law360. She is the Co-Founder of Lawyerly.