In brief 4 min read
Is there more than one reason to call a product ‘natural’? The Full Court of the Federal Court thinks so, overturning Justice Katzmann’s finding that it is misleading to describe a product as ‘natural’ if it is not made wholly or substantially from natural ingredients.
How does it affect you?
The consequences of the Full Court decision in Aldi Foods Pty Ltd v Moroccanoil Israel Ltd [2018] FCAFC 93 are that:
- describing a product as ‘natural’ will not necessarily convey that the product is made wholly or substantially from natural ingredients;
- traders might have genuine reasons for describing a product as ‘natural’ that are unrelated to the percentage of natural ingredient(s) in the product; and
- the definition of ‘natural’ is unchanged, and ingredients that are naturally derived but chemically altered are not ‘natural’. But this point is distinct from whether it is misleading to describe a product as ‘natural’.
The background
We previously reported on Justice Katzmann’s decision in Moroccanoil Israel Ltd v Aldi Foods Pty Ltd [2017] FCA 823. That case concerned the marketing by Aldi Foods Pty Ltd (Aldi) of a range of argan oil hair care products under its house brand PROTANE and sub-brand NATURALS. Moroccanoil Israel Ltd (MIL), which produces and distributes argan oil hair and skin care products, claimed that Aldi’s marketing infringed MIL’s trade marks and breached sections 18 and 29 of the Australian Consumer Law (ACL).
Among MIL’s ACL claims was that by using the word NATURALS on the packaging of Aldi’s PROTANE NATURALS argan oil hair care products, Aldi had misleadingly conveyed that the products were made wholly or substantially from natural ingredients. Justice Katzmann found in MIL’s favour in relation to this claim. Her Honour accepted that the representation was conveyed for the following reasons:
- the dictionary definition of ‘natural’ is ‘not manufactured or processed’ or ‘not artificial’;
- ordinary reasonable consumers would not consider a product made mostly from processed or manufactured ingredients to be ‘natural’; and
- there is no logical reason why a trader would call a product line ‘NATURALS’ unless it intended to convey that the products were ‘natural’ or comprising substantially natural ingredients.
Her Honour found that the representation was misleading on the basis that, water aside, the products contained a very small percentage of natural ingredients. In coming to this finding, Justice Katzmann considered expert evidence on the classification of ingredients as either ‘naturally occurring’ or ‘chemically synthetic’. One of the experts suggested that the term ‘naturally occurring’ was misleading, as it ‘does not adequately reflect the complexity involved in manufacturing’. He preferred the term ‘naturally derived with synthetic modification’. Her Honour’s response to that evidence was that:
I do not believe that the ordinary or reasonable consumer would consider a product that has been chemically altered to be a natural product. ‘Naturally derived with synthetic modification’ is not a synonym for ‘natural’.
The appeal
Aldi appealed Justice Katzmann’s finding that use of the word NATURALS on its product packaging conveyed that the products were made wholly or substantially from natural ingredients. Aldi submitted, among other things, that:
- Her Honour placed too much emphasis on the definition of the word ‘naturals’; and
- it was wrong to say that there was no logical reason a trader would call a product line ‘NATURALS’ unless it intended to convey that the products were ‘natural’ or comprising substantially natural ingredients.
The Full Court accepted both of these submissions and allowed Aldi’s appeal.
In relation to Aldi’s first submission, Justice Perram (with whose reasons Chief Justice Allsop and Justice Markovic agreed) said:
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.
In response to Aldi’s second submission, Justice Perram expressed the view that:
A trader might well have legitimate reasons for calling a product line NATURALS which have little to do with the quantity of natural product in the product. For example, it may merely connote that the product has a nominated natural product added to it.
Having found error in Justice Katzmann’s reasons, Justice Perram considered what the use of the word NATURALS on Aldi’s product packaging conveyed to ordinary reasonable consumers. The font, positioning and plurality of the word NATURALS indicated that it was a sub-brand (and not merely descriptive of the product). Further, the products were sold ‘in the cheapest part of one of the cheapest stores’. Given this context, the court concluded that although ordinary reasonable consumers would have understood that the products contained the natural ingredient argan oil, they would not have thought that the products were made wholly or substantially from natural ingredients.
What was left unsaid?
The Full Court only considered whether use of the word NATURALS on Aldi’s product packaging conveyed that the products were made wholly or substantially from natural ingredients. It did not consider whether, if conveyed, that representation would have been misleading.
Accordingly, the Full Court did not disturb Justice Katzmann’s findings regarding the meaning of ‘natural’.
The implications of the findings in the trial decision for the food industry are set out in the previous Food Law Bulletin.