Quality vs quantity: credence and provenance claims, branding and food security

Free range claims on produce paint a picture to consumers of animals that are able to roam free on open pastures and are farmed with high animal welfare standards. A number of voluntary accreditation schemes exist, but the standards vary widely. The ACCC is active in prosecuting cases where suppliers claim animal produce is 'free range'.

• Free range eggs: Snowdale Holdings used images and words on its egg cartons and website to convey the impression that its eggs were 'free range'. While the hens did have access to an outside range that may have technically met the definition of free range, they did not go outside on most days. The court found that a ‘reasonable person’ prepared to pay a premium would believe that the hens were able to roam freely in a grassy paddock, and therefore would have been deceived by the free-range claim and the imagery on the label.
• Free range pork: the ACCC conducted a broad investigation into 'free range' claims in the pork industry. This investigation resulted in three producers entering court enforceable undertakings to remove references to 'free range' in promotion and labelling of pork products, as it gave the impression to consumers that their pigs were able to 'move freely in an outdoor paddock on most ordinary days' when they were not.

Products labelled 'organic' generally attract a premium to account for the higher costs associated with growing and producing food without synthetic chemicals or genetically modified components.

• Export produce: it is mandatory for producers to gain certification for 'organic' claims under the National Standard for Organic and Biodynamic Produce.
• Domestic produce: it is voluntary for producers to seek certification under the National Standard for Organic and Biodynamic Produce. There is also a voluntary standard that provides guidance on best practice for 'organic' labelling on produce for sale in Australia. While these standards are not mandatory, compliance with them reduces the risk of investigation by the ACCC of 'organic' claims made on labelling.

Products labelled 'pure' or '100%' are another common claim that may give consumers the impression that a product is healthier, more natural, or of a higher quality than other products.

• In 2018, the ACCC investigated Capilano Honey following media allegations that its products were partially made of sugar syrup and therefore not 'pure' or '100% honey' as advertised. The ACCC concluded its investigation after finding no evidence that supported the allegation Capilano Honey was combined with sugar syrup. This shows the ACCC's willingness to commence investigations into representations made about produce to provide assurance to consumers about the premium quality of Australian produce.

Consumers are often willing to pay a premium for products they perceive as healthier or more nutritious options. Misleading or false claims relating to the health and nutritional content of food can cause serious detriment to consumers.

• Heinz was penalised $2.25 million dollars for making representations on packaging of its snacks that they were healthy and nutritious for children, through photos of fresh fruit and vegetables and using words such as '99% fruit and veg' and 'no preservatives' when the product was two-thirds sugar.

Claims about the therapeutic nature of products should only be made where there is a solid scientific basis. Misleading or false claims relating to therapeutic qualities or uses of products can cause serious detriment to consumer health.

• The Federal Court ordered Lorna Jane to pay $5 million in penalties for false or misleading claims about the therapeutic qualities of its activewear in protecting against COVID-19, which were not based on scientific or technological evidence.

Green or environmental claims may give consumers the impression that no harm is caused to the environment in the way a product is grown, produced or manufactured. This is a broad category of claims, which may capture words including 'sustainably made', 'responsibly sourced', or 'fully recycled' or 'safe for the environment', or packaging that is green or uses organic colours or photos of the environment.

• Goody was found to have engaged in misleading and deceptive conduct for making claims that its plastic bags were biodegradable and compostable in accordance with the Australian Standard. Goody entered into a court enforceable undertaking to refrain from making further representations unless it has first obtained independent scientific testing.

The Country of Origin Food Labelling Information Standard 2016 requires most food suitable for retail sale in Australia to carry country of origin information. The rules on when you can claim a product is 'made in Australia' are technical.

• Nature's Care was not entitled to use the 'Made in Australia' logo after the Federal Court ruled encapsulation of imported fish oil in Australia was not a sufficient 'substantial transformation' to permit the product being labelled as 'Made in Australia' under the ACL mandatory country of origin labelling requirements.
• Kalis Bros was issued an infringement notice for using on its packaging a large Australian flag, a map of Australia and the words 'Australian Caught' when the prawns were processed and packaged in Thailand.

Take care when making claims about the origin of produce, including if it originated from a particular region with a certain reputation or was sourced from a family farm.

• Grape Co Australia was issued an infringement notice for making false and misleading representations that all of its grapes were grown on the Grape Co Australia family estate, when it sourced some of its grapes from third-party growers. The ACCC stated that “consumers looking to support small businesses may make purchasing decisions based on representations that the produce is sourced from a family farm, and it is important they are not misled so they get what they pay for.”¹

Supporting the 'bush' or otherwise adding a charitable angle to a product can also allow suppliers to differentiate their products. But care should also be taken in this context. Taking advantage of consumers' charitable nature risks diminishing confidence and support in other businesses that genuinely engage in philanthropic activities.

• Oscar Wylee was penalised $3.5 million dollars for misleading and deceptive conduct and making false or misleading representations about its charitable activities. This included claims that for every pair of glasses purchased, it donated a pair of glasses to people in need, which was found to be untrue.

Traditionally, trade marks were only registered over common 'signs' such as words, names or logos. More recently, however, there has been a trend towards businesses registering for trade marks over a range of unconventional 'signs' such as colours, tastes and aspects of packaging. As these are not signs that consumers conventionally use to distinguish the goods and services of one business from those of another, someone who applies to register unconventional marks usually needs to show that they have become so distinctive that the mark in question has acquired the ability to distinguish the applicant's goods and services from those of another.

• Colour: trade marks may be registered over a colour where it has become so distinctive that consumers have come to identify the colour with a particular businesses' goods .
  • Frucor Beverages Ltd v The Coca-Cola Company demonstrates the difficulties with registering a trade mark over a colour.³ Frucor, the makers of the "V" energy drink, attempted to register for a trade mark over the colour green in Pantone 376C. The Court found that despite Frucor making substantial, consistent and conspicuous use of the colour, it had not become distinctive. In part, this was because Frucor used different colours for some flavoured varieties of the "V" drinks.
• Packaging: certain innovative aspects of packaging can be registered as a trade mark in addition to traditional trademarks such as names, logos or slogans.
  • Pacific Coast Eco Bananas successfully registered a trade mark over its innovative packaging of waxing the tip of bananas as a way for consumers to identify their environmentally friendly, organic status.
• Taste: as taste cannot be ascertained by consumers until after the product has been purchased, it is particularly difficult to prove the 'sign' has become so distinctive as to warrant a trade mark.
  • Pohl-Boskamp GmbH & Co recently attempted to register a trade mark over the peppermint flavour of its spray medicinal product. The United States Patent and Trademark Office rejected the application on the basis that inclusion of peppermint oil in medicinal spray products had a functional benefit, and granting the applicant exclusive rights to its use would place competitors at a significant disadvantage. This decision was upheld by the Trademark Trial and Appeal Board.
• Descriptive marks and commonplace words: Agribusinesses looking to capitalise on consumer preference for certain product characteristics need to be aware that words or images that describe the characteristics or quality of the goods are difficult to register as trade marks, unless they have become distinctive through use. Conversely, some seemingly commonplace words can be legitimate trade marks, so should be used with caution.
  • Conga Foods Pty Ltd, the importer of pasta products made by Pastificio Rana, was blocked from using 'LA FAMIGLIA RANA' as a trade mark because Goodman Fielder Pte Ltd holds a trade mark registration for 'LA FAMIGLIA', which the Federal Court found to be a distinctive trade mark, even though it simply means "the family" in Italian.

The recent Australian case Kraft v Bega established that rights in unregistered trade marks can only be transferred with the goodwill of a business. This position may complicate future licensing arrangements that involve unregistered trade marks because unregistered brand rights generated by a licensee through use cannot be transferred alone to the brand owner. Agribusinesses that license unregistered brand rights to other parties should consider registering relevant elements, such as packaging design, and take care to avoid unexpectedly finding that they do not own the brand rights. Agribusinesses that license unregistered brand rights from other parties should ensure that expectations are clear between the parties in order to avoid future disputes. The issue is likely to be particularly problematic when dealing with overseas licensors who may find the Australian legal position surprising.

Certification and collective trade marks will be increasingly important for producers who want to communicate to the consumer that the products or producers meet certain standards or originate from a particular geographical region.

However, the ability of Australian agribusinesses to use certain certification marks or collective marks may be impacted in the near future as a result of Australia's ongoing free trade negotiations with the European Union (EU) and also potentially with the United Kingdom since Brexit. The EU is demanding that Australia protect a set of European food and beverage names under a separate, EU-style system. The potential impact is wide reaching, and may require Australian agribusinesses to make significant adjustments to their product branding. Some examples of potential impacts include the following:

• Protection for PARMIGIANO-REGGIANO in the EU system means that "Parmesan", as a partial translation, cannot be used by any producer outside the relevant region in Italy.
• Protection for FETA in the EU system would prevent use of imagery on product packaging that may represent that the product originated in Greece.
• Protection for SCOTCH BEEF in the EU system may impact the use of "Scotch fillet" on Australian beef.

The EU system may also affect Australian agribusinesses downstream which process affected products or use them as ingredients. For example, using branding of 'sliced Parma Ham' can only be used if sliced in the Parma region. It is currently unclear how these changes under the free trade agreement would impact Australian certification marks, such as the 'Made in Australia' marks, which permit use in certain circumstances such as 'significant transformation'.

Australia ranks among the most food secure nations in the world and typically exports about 70% of agricultural output in years with average or favourable seasonal conditions. Maintaining Australia’s food exports and domestic food production requires ongoing protection from exotic pests and diseases and strategies to minimise the impact of climate change and adverse seasonal events. The number of serious plant pests has been rising, and there are currently 360 high priority pests.⁴ Australian agribusinesses will continue to rely on a rigorous biosecurity system to mitigate risks from these pests but a number of genetic technologies are available and provide significant benefits in terms of yield, pest resistance and improved tolerance to adverse climatic effects.

GM foods and crops contain genes from other organisms and can be used as a tool for agribusiness to manage production risks including pests and climate. While GM crops are not the only tool for maintaining food production, they can make a significant contribution through their ability to improve the sustainable use of crop inputs such as water, energy and pesticides, while increasing yields, using less land, and boosting the nutritional content of staple crops.

The regulatory environment for GM crops is relatively clear in Australia. GM canola and cotton are grown commercially in Australia, and trials are underway for GM pineapple, papayas, wheat, barley and sugarcane. These crops have been modified for insect resistance, herbicide tolerance, colour, oil production, sugar composition, and improved fruit development. While only a small number of GM crops are approved for commercial release in Australia, there are approximately 80 different types of GM crops grown worldwide.

The acceptance of GM food is a divisive topic that is deeply embedded in the ongoing debate around climate change, sustainability and food security. Despite multiple findings that GM crops do not pose health risks to humans, these foods are still subject to intense public scrutiny. Insufficient regulatory harmonisation between some of Australia's major trading partners potentially limits export markets for Australian GM grain. In particular, the EU arguably has the most stringent regulatory regime for GM products. For agribusinesses that need to maintain 'organic' certifications or the 'GM-free' status of their products, agribusinesses may consider the need to implement measures to control the risk of chemical or genetic contamination of crops or animals.

Despite the benefits of GM crops, widespread adoption of GM crops in some countries has been slow, largely because of perceived risks (often not supported by scientific evidence) and fears of limited export markets. New plant breeding techniques (NPBTs) have been rapidly developing and may allay fears associated with GM crops.

NPBTs typically use genome editing to alter the crop's genes to improve traits without transferring genes from other species into the crop. In particular, CRISPR-Cas is seen as useful system to edit crop genomes, with applications in major cereals such as rice, wheat, and maize and other crops important for food security crops such as bananas. As the genetic changes made by NPBTs are often indistinguishable from those that can occur naturally, many regulators do not intend to regulate crops with mutations that could have occurred in nature, including the US Department of Agriculture (USDA) and Australia's Gene Technology Regulator (as set out in the Gene Technology Amendment (Measures No. 1) Regulations 2019 (Cth)).

However, the regulatory position of other jurisdictions is either unclear or in contrast to the relatively permissive stance taken by Australia. For example, the current European GM regulations strictly regulate the introduction of DNA from other species into animals and plants. While these regulations do not explicitly cover genetic changes that are artificially introduced without inserting foreign DNA (such as those used in NPBTs), a 2018 decision by the Court of Justice of the European Union has determined that organisms obtained by NPBTs are considered GM and, in principle, subject to the obligations laid down by the EU 'GM Directive'. While crops produced by NPBTs provide significant benefits, there is considerable risk for Australian exporters as access to significant export markets will continue to be subject to sometimes disparate regulatory regimes. This will likely cause ongoing uncertainty in relation to the widespread adoption of commercial crops generated by NPBTs.

RNA is a versatile molecule which has become prominent in the public consciousness due to its role in various vaccines against COVID-19. The development of sprayable RNA-based pesticides has been gaining momentum recently, promising alternatives to chemical-based control measures.

RNA-based pesticides can accurately and specifically target pests including the Varroa mite, which destroys bee hives, as well as the fall armyworm and the diamondback moth, both of which severely damage fruit and vegetable crops. As RNA does not replicate in the environment, RNA-based pesticides may avoid concerns about the persistence of synthetic genes in the environment, organic food, and in exported agricultural products. There are several RNA pesticides in advanced stages of development, including Monsanto’s BioDirect and an as yet unnamed product from GreenLight Bioscience.

Appropriate regulatory frameworks will be key to widespread deployment of sprayable RNA-based pesticides. RNA pesticides can be synthesised or produced by GM organisms and will be regulated at least under the Agricultural and Veterinary Chemicals Code Act 1994 (Cth). This framework is designed for conventional chemicals, and while some biopesticide products including pheromones, plant extracts, and various microbial agents have been approved we are yet to see an RNA pesticide progress through the approval process.

Australia's geographic isolation is insufficient to prevent pest entry. Pests will enter by natural means, or may be brought into the country with increasing movements of goods and people post-COVID. While Australia's biosecurity system, governed by the Biosecurity Act 2015 (Cth) (Biosecurity Act), is rigorous, it is also complex. This has led to notable lapses, including the emergence of the banana-destroying Panama disease and 'fall armyworm' in north Queensland, are said to place an industry worth more than $500 million per year at risk. Biosecurity is also a serious concern for meat producers, with African swine fever being detected in significant quantities at mail centres and airports.

The Australian National Audit Office (ANAO) found that inappropriate processes for responding to non-compliance with biosecurity requirements contributed to products carrying the risk of disease or pests entering Australia. Prior to this, the Department of Agriculture, Water and Environment released 'Commonwealth Biosecurity 2030' as a roadmap for biosecurity reform. The ANAO report made eight recommendations relating to the implementation of governance and risk management frameworks to assess and manage biosecurity risks to target high risk activities; implementing effective systems for gathering and use of biosecurity intelligence; and implementing performance and evaluation frameworks. The Department accepted all the recommendations and agreed to the 1 July 2022 implementation deadlines for all but two recommendations where an extension to 30 June 2023 has been requested. With the biosecurity system being reformed over at least the next two years, Australian agribusinesses will continue to manage the risks posed by evolving threats from exotic pests and diseases across multiple import pathways.

Australian agribusinesses will need to implement biosecurity measures in their day-to-day operations and those facing particularly high risks should consider increasing the stringency of their biosecurity measures. Industry participants should prepare for an increased level of system connectivity to enhance data sharing across supply chains and the agriculture sector to identify and manage emerging risks. For agribusinesses that need to maintain 'organic' certifications or other characteristics of their products, this includes implementing measures to control the risk of chemical or genetic contamination of crops or animals.

Blockchain enabled technologies can significantly improve end-to-end traceability for Australian agribusinesses wanting to improve their biosecurity management, or ensure traceability of produce for certification of credence and provenance factors. A number of blockchain food safety solutions have been recently launched, including those by IBM, FreshChain and Biopass, which connect participants across the food supply through a permissioned, permanent and transparent record of food system data. Tracing produce in this way creates efficiencies, minimises perishable food waste, ensures the safety and quality of produce and provides accurate information about the produce to consumers and other market participants. However, it is necessary for suppliers relying on blockchain to do their due diligence. This area remains untested, and it is unlikely Australian regulators will excuse breaches of the ACL or Biosecurity Act purely because suppliers placed reliance on third parties. Suppliers should therefore do their homework before placing reliance on blockchain technology for product claims.