Vitaco Health IP Pty Ltd v AFI Cosmetic Pty Ltd (No 3)

This case was about online use of the HEALTHERIES brand on websites directed to Australian consumers. The applicants were Vitaco Health IP Pty Ltd and Vitaco Health Australia Pty Ltd. The respondents were AFI Cosmetic Pty Ltd and its director, Shikai Han.

The applicants said they had built substantial reputation in Australia in the HEALTHERIES brand, associated Chinese characters and related artistic works through long-running sales and promotion of health food, sports nutrition and supplement products. The Court accepted that the applicants had acquired and maintained a substantial and valuable reputation in those brand assets among Australian consumers of those goods.

According to the admitted allegations, AFI registered two domain names containing HEALTHERIES in about May 2023. Since at least October 2023, AFI published online material promoting cosmetic face masks, children’s toothpaste and children’s skincare products to Australian consumers. The websites used the HEALTHERIES marks, Chinese characters associated with the brand, and artistic works owned by the first applicant. They also displayed almost identical imagery to imagery used on the second applicant’s website and included statements indicating that AFI was a partner of Healtheries.

One of the statements recorded in the judgment said that Healtheries was founded in 1904, originated from New Zealand, and had partnered with AFI in Australia in 2019 to develop natural and healthy products. The respondents admitted they did not in fact have any partnership or affiliation with the applicants, so the Court treated those statements as false and misleading.

This was a default judgment decision, not a fully contested trial. The proceeding started in November 2023, when the applicants also sought urgent interlocutory relief to restrain ongoing online publication of the websites. The Court granted urgent relief and later made orders dealing with deemed and substituted service on the second respondent.

The final judgment came after the respondents failed to participate properly in the proceeding. The first respondent failed to appear at a hearing on 22 November 2023, failed to file and serve a notice of address for service, and failed to file and serve any defence. The second respondent also failed to file and serve a notice of address for service and failed to file and serve any defence. The judgment also records that the respondents did not respond to communications from the applicants’ lawyers despite numerous communications having been sent since the initial letter of demand.

The Court was satisfied that service of the relevant court documents had been reasonably effected on both respondents in accordance with earlier orders, and that they ought to have been on notice of the proceeding. That procedural setting mattered because, under the Federal Court Rules, the Court can give judgment against a respondent in default if it is satisfied the applicant is entitled to the relief claimed.

The Court explained that, in the absence of a defence, the facts pleaded in the statement of claim are taken to be admitted. So the Court still had to decide whether those admitted facts established the legal claims, but it did not have competing evidence or argument from the respondents. That is why businesses should read this case as both a branding case and a civil procedure warning.

The Court considered several overlapping claims. First, it had to decide whether the first respondent had infringed the first applicant’s registered trade marks by using HEALTHERIES as a trade mark in relation to goods covered by the registrations. The judgment records that the relevant marks were Australian Trade Mark Registration Numbers 514257 and 1220216.

A key issue in trade mark law was whether the respondents had used HEALTHERIES as a trade mark, meaning as a badge of origin. The Court approached that question objectively, looking at the context in which the sign was used, the relevant trade, the way the words were displayed, and how they would present to consumers. On the admitted facts, the first respondent used the HEALTHERIES marks in relation to cosmetic face masks, children’s dentifrices and children’s skin care products promoted to Australian consumers, and did so through the registration and use of domain names containing HEALTHERIES. The Court held that this was use as a badge of origin.

Second, the Court had to decide whether the respondents had infringed copyright in artistic works depicted in Annexure A to the reasons. The Court was satisfied that the artistic works were original artistic works in which copyright subsisted and were owned by the first applicant. On the admitted facts, the first respondent reproduced and published those works online on the impugned websites, and the second respondent authorised that conduct.

Third, the Court considered claims under the Australian Consumer Law and the tort of passing off. The issue here was whether the website presentation and statements conveyed false messages to Australian consumers, including that AFI was the first applicant, was authorised by the first applicant, was a partner of the applicants, or that its products were sponsored by or approved by the applicants. The Court also considered the specific statements about partnership, New Zealand origins and a business founded in 1904.

Finally, the Court had to decide whether the director could be personally liable and whether his own registered trade mark, Australian Trade Mark Registration Number 2325650, should be cancelled. On personal liability, the Court considered whether he had directed or procured the conduct, entered into a common design with the company, or was knowingly concerned in the ACL contraventions.

The Court entered judgment for the applicants. On the admitted facts, it found that the first respondent had engaged in misleading or deceptive conduct contrary to section 18 of the ACL, made false or misleading representations about association or affiliation contrary to section 29(1)(g) and (h), committed passing off, infringed the first applicant’s registered trade marks, and infringed the first applicant’s copyright in the artistic works.

On trade mark infringement, the Court held that the first respondent had used the HEALTHERIES marks as badges of origin in relation to the products promoted on the websites and through the domain names. The Court considered the marks substantially identical to the registered marks and held that the first respondent had infringed them under section 120(1) of the Trade Marks Act.

On copyright, the Court held that reproducing and publishing the artistic works online and communicating them to the public without licence or consent infringed the first applicant’s exclusive rights. The Court was satisfied that copyright infringement was established on the admitted facts.

On the ACL and passing off claims, the Court relied on the admitted use of the registered marks, artistic works, Chinese characters, almost identical imagery and statements indicating partnership. It held that the first respondent’s conduct conveyed false representations to Australian consumers, including that it was the first applicant or was authorised by the first applicant, that it was commercially affiliated with the applicants, and that its products were sponsored by or approved by the applicants.

The Court also found the second respondent personally liable. The judgment records that he had been a director of the first respondent since its incorporation, was the sole director and controlling mind of the company, directed the company to engage in the conduct, and was fully aware that he had no lawful right to do so. The Court was satisfied that he acted concurrently with the company and that there was a common design, supporting joint tortfeasor liability. It also found that he aided, abetted, counselled, procured, induced or was knowingly concerned in the ACL contraventions.

The Court described the respondents’ conduct as deliberate and flagrant and said there was no realistic possibility that it had been carried out in good faith.

The final orders were broad and commercially significant. The respondents were restrained from operating any website at a domain name containing HEALTHERIES, including the two websites identified in the orders. They were also restrained from displaying the word HEALTHERIES, including the stylised form depicted in Annexure A, and the Chinese characters 贺寿利 in any manner that distinguished their cosmetic face masks, children’s dentifrices and children’s skin care products from those of other traders.

The Court also restrained the respondents from otherwise using HEALTHERIES and the Chinese characters in relation to those products or any other goods or services that were the same, similar or closely related to goods or services listed in either of the first applicant’s marks. Separate orders restrained further infringement of the registered marks and the first applicant’s copyright in the artistic works, including by reproducing the works in material form, publishing them and communicating them to the public.

Under the ACL, the Court restrained the respondents from making statements falsely suggesting that they were in partnership with, or otherwise associated with, the applicants, a business founded in New Zealand, or a business founded in 1904. The Court also ordered the respondents, within 21 days, to transfer the registration of the relevant domain names to the first applicant and to take all necessary steps to assist with that transfer.

Another major consequence was cancellation of Australian Trade Mark Registration Number 2325650 in the second respondent’s name. The Court also ordered the respondents, jointly and severally, to pay damages of $280,000 and to pay the applicants’ costs of and incidental to the proceeding, to be taxed.

For business owners, the practical point is that the remedy in a brand misuse case can go far beyond a stop-use order. A business may be forced offline, lose domain names, lose its own trade mark registration, pay substantial damages and pay legal costs. If a director is personally involved, those consequences may not stop at the company level.

This case is especially relevant for businesses that launch products online, source products from third parties, or build websites quickly using borrowed branding cues. The Court’s reasoning shows that legal risk is assessed in context. A business may think it is only using a word in a domain name or only borrowing a visual style, but if the overall presentation tells consumers that the goods come from, are approved by, or are affiliated with another brand owner, several legal claims can arise at once.

The judgment also shows that adjacent product categories can still create serious risk. The applicants were known for health food, sports nutrition and supplement products, while the respondents’ websites promoted cosmetics, children’s toothpaste and skincare. Even so, the Court accepted on the admitted facts that the respondents’ use was in relation to goods appearing in the specifications for the registered marks, and that the website conduct conveyed false affiliation.

Another practical point is that translated or transliterated brand elements matter. The Court’s orders covered not only HEALTHERIES in English but also the Chinese characters associated with the brand. Businesses selling to multilingual audiences should treat translated brand elements as part of the clearance exercise, not as an afterthought.

Directors should also read this case carefully. The Court was prepared to impose personal liability where the director was the controlling mind, directed the conduct and knew there was no lawful right to engage in it. If a founder or director personally signs off on branding, website content or false affiliation claims, the company structure may not shield them.

Finally, the case is a reminder that procedure matters. If you receive a letter of demand, an originating application or court orders, do not ignore them. Even where you think the claim is weak, failing to respond can leave the Court deciding the case on the other side’s pleaded facts. That can be commercially disastrous.