Federal Court dismisses Sanitariumís claim: granola not used as a trade mark
Australian Health & Nutrition Association Limited (t/as Sanitarium Health Food Company) v Irrewarra Estate Pty Limited (t/as Irrewarra Sourdough)  FCA 592
The Federal Court of Australia has dismissed an application by Sanitarium Health Food Company alleging infringement by Irrewarra Sourdough of the trade mark “granola”. Justice Jagot found that Irrewarra did not use the word “granola” as a trade mark to distinguish its goods from other traders. Instead, the Court found that Irrewarra’s use of the word “granola” on its packaging was purely descriptive of its cereal product.
This case emphasises the importance of considering the context in which a word appears on a product label when determining whether or not that word has been used as a trade mark. It also illustrates the dangers when trade mark owners are not diligent in preventing their trade mark from becoming descriptive.
Irrewarra’s granola product
Irrewarra manufactures and distributes breads, baked goods and a cereal product which was the subject of the trade mark infringement proceedings. Since August 2004, Irrewarra has been making and distributing the cereal product which is sold in a clear plastic bag and has a front and rear label. At issue was the front label which featured the word “granola” as part of the phrase “all natural handmade granola”. The label has taken three slightly different forms since 2004. The front labels appeared as follows ordered from the earliest (left) to the latest (right):
Sanitarium’s trade mark “granola”
Sanitarium is an authorised user of the trade mark “granola”, which has been registered since 1921 in respect of goods in class 30 which includes preparations made from cereals. The registered owner of the “granola” trade mark is Australasian Conference Association Limited who was also a party to the proceedings.
Did Irrewarra use the word “granola” as a trade mark?
Sanitarium contended that Irrewarra had used the “granola” mark in contravention of section 120 of the Trade Marks Act 1995 (Cth). Irrewarra argued that it had not used the word “granola” as a trade mark, rather its use of the word was purely descriptive to describe its cereal product.
In determining whether or not Irrewarra had used the word “granola” as a trade mark, Justice Jagot posed the following question:
Did the words GRANOLA, Granola or granola in the context of the packaging as a whole distinguish Irrewarra’s product from other cereal food products in the course of trade? Alternatively, did Irrewarra use the word “granola” as a “badge of origin”?
“Granola” not used as a trade mark
Justice Jagot agreed with Irrewarra and held that Irrewarra had not used the word “granola” as a trade mark on its packaging. Her Honour found that the word “granola”, in the context in which it appeared on the label, did not indicate a connection between Irrewarra and its cereal product, but rather described the contents of the package.1 Her Honour reached this finding based on the following factors:
- Whilst the word “granola” is an invented word (it was invented in 1876 in the United States to refer to a wheat and oat breakfast cereal), the word is now inherently suggestive of meaning. In the context of the clear packaging and the size of the package (500g) it would be obvious to consumers that the phrase “all natural handmade granola” describes the contents of the package, that being a grain, fruit and nut breakfast cereal.2
- Justice Jagot was also unpersuaded by Sanitarium’s argument that the word “granola” has meaning only in the United States. Her Honour noted that “the modern world is characterised by rapid communication and extensive cultural exchanges” and through films, television programs, music, books and travel, Australians are routinely exposed to many words which are commonplace in the United States.3
- The word “granola” does not appear in isolation on the package and reads as part of the phrase “all natural handmade granola”. The words “all natural handmade” are descriptive of the product, and in the context, the word “granola” also reads as part of the product description.4
- Her Honour was of the view that in the context of the packaging as a whole, the word “granola” as used on Irrewarra’s packaging lacked the necessary prominence to be a trade mark. In reaching this conclusion, Justice Jagot considered:5
- Irrewarra’s prominent use of its own “Irrewarra Sourdough” trade mark;
- the phrase “all natural handmade granola” is in a plain font style located below Irrewarra’s “Irrewarra Sourdough” trade mark; and
- the absence of the word “granola” on the rear label.
Justice Jagot went further and considered what the case would have been if Sanitarium established that Irrewarra had used the word “granola” as a trade mark (which it did not). If Her Honour had to determine the issues of substantial identity and deceptive similarity, Justice Jagot considered that the mark used by Irrewarra on its product was the phrase “all natural handmade granola” (and not the word “granola” by itself). Her Honour also found that the phrase was not substantially identical with or deceptively similar to Sanitarium’s trade mark “granola”.6
Lessons for brand owners: when is a word used as a trade mark?
- This case emphasises the importance of considering the context in which a word appears on a product label in determining whether or not that word has been used as a trade mark. A word is used as a trade mark if it is used as a “badge of origin” to indicate the source of that particular product. It is not enough for the word or words in issue to simply appear on the product label, they must also possess the character of a “brand”, in that they are capable of distinguishing those products from similar products from other traders.
- In determining the context in which a word is used on a product label, the Court will consider the packaging as a whole. This includes consideration of whether the trader has prominently used its own trade mark on the goods to show “commercial origin”, the font style of the word in issue and whether the word has been used descriptively. This case confirms that a trader may still use a registered trade mark descriptively. This is consistent with previous decisions by the Federal Court including Nature’s Blend Pty Ltd v Nestlé Australia Ltd  FCA 198.
- Whilst a word might originate or have common meaning in an overseas country, that does not mean that the word cannot also have meaning in Australia. Through “rapid communication and cultural exchanges”, the word can also acquire meaning in Australia.
- An invented word which starts its life as a trade mark can become descriptive over time if the use of the mark is not carefully monitored and controlled. Once a trade mark becomes generic or descriptive, the ability of the trade mark owner to prevent others from using that word is greatly diminished.
- Justice Jagot considered the sign used by Irrewarra to be the phrase “all natural handmade granola”. Her Honour was not willing to isolate or separate the word “granola” from the phrase for the purpose of determining substantial identity and deceptive similarity (which the Court did not have to do because the Court ultimately found that Irrewarra had not used the word “granola” as a trade mark).