Clifford Gouldson Lawyers

Kraft v Bega - never oily, never dry

Print Version

25/07/2019

Kraft Peanut Butter is a family favourite across Australia.  Many of us have it in the pantry at home.  Smooth, or nutty, we each have our favourite.  But is it that special taste or the unique yellow lid that prompts you to pick it up in the shopping aisle? 
  
The familiar brand is currently in Australian hands after Australian food cooperative Bega bought it from a world food giant a few years ago but the two have been involved in litigation over who can use the yellow lid and labelling. 
 
The Federal Court recently decided Bega had the exclusive right to use the familiar yellow lid and labelling on its peanut butter jars. The main controversy in the litigation instigated by Kraft was that it alleged Bega was engaging in misleading and deceptive conduct because Kraft claimed to still own the “get-up” or “trade dress” of the peanut butter jars.   
  
Bega Cheese Limited purchased the business from Mondelez Australia (Foods) Ltd, who prior to Kraft’s restructuring in 2012 were known as Kraft Foods Limited.  One of the assets Bega acquired in the purchase was the Kraft peanut butter factory in Port Melbourne including the peanut butter recipe, workers and product labelling.  Kraft decided it wanted to continue selling peanut butter in Australia in 2018 alleging the use of its labelling by Bega was only under a limited license period which had expired under Mondelez’ watch and did not extend to Bega under the terms of the sale agreement. 
  
O’Callaghan J confirmed “The stakes are high, because it is common ground that upon Bega entering the market using the Peanut Butter Trade Dress, it obtained the whole, or almost the whole, of Kraft’s peanut butter market share, which is worth more than $60 million in annual sales”.   
  
The principal issue about the ownership of the trade dress was to be resolved by addressing six inter-related issues concerning the nature of any goodwill in the trade dress and the transfer of goodwill upon the sale to Bega. The trade dress constituting the yellow lid and label were not specifically registered as trade marks.  
  
Kraft Foods Ltd asserted that any use of the trade dress was under licence from the global parent company and therefore not part of the sale to Bega.  O’Callaghan J did not find any evidence of Kraft’s use of the trade dress to be as a licensee, and accordingly that the trade dress and associated goodwill benefited Kraft Foods Ltd, and after restructuring, Mondelez Australia (Foods) Ltd.  Any assignment of the goodwill to the parent company was not effective as a matter of Australian law. The trade dress and goodwill were purchased fairly and squarely by Bega.   
  
This case is a reminder to ensure all aspects of your branding are properly protected by registered intellectual property rights, and that structuring of companies and use of IP and goodwill is adequately protected through clear terms in written licensing agreements.  If you don’t adequately describe what is included in a license arrangement, you could struggle to enforce rights against infringers down the track.   
  
Licensing agreements and their terms and conditions, just like your peanut butter, needs to be never oily or dry, and easy to spread! 
 
For further advice on this topic please contact our Intellectual Property team
 

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