Kraft Foods Group Brands LLC v Bega Cheese Limited (No 8) [2019] FCA 593: Court Rules in Favour of Bega Cheese

Monday 6 May 2019 @ 11.05 a.m. | Legal Research | Trade & Commerce

In the recent case of Kraft Foods Group Brands LLC v Bega Cheese Limited (No 8) [2019] FCA 593 (1 May 2019), the Federal Court of Australia (the “Federal Court”) has handed down a decision in favour of Bega Cheese Limited (“Bega”) after Kraft Foods Group Brands LLC (“Kraft”) went to the Federal Court alleging Bega engaged in misleading or deceptive conduct over the marketing of its peanut butter. See our previous TimeBase article for more on the history of the matter.


The Sydney Morning Herald (“SMH”) reports Kraft took the Australian company to the Federal Court in a bid to stop it using a specific type of packaging - claiming it [Kraft] owned the exclusive rights to the “jar with a yellow lid and a yellow label with a blue or red peanut device, with the jar having a brown appearance when filled ".

Kraft claimed Bega Cheese's use of the packaging amounted to misleading and deceptive conduct. 

Dispute over Trade Dress

The principal dispute in the case centred on who owned the "peanut butter Trade Dress", which is currently used by both brands. Trade Dress is considered an important identifier of a product, similar to a trade mark. O’Callaghan J referred to it in [para 2] of his judgment:

“… Trade dress refers generally to the total image, design, and appearance of a product and may include features such as size, shape, colour, colour combinations, texture or graphics …”

Both companies currently sell their peanut butter to Australian consumers in jars that are similar and in this case counter-sued one another for misleading and deceptive conduct under Australian competition and consumer law.

The Findings

The US food giant's Australian subsidiary, Kraft Foods Limited (renamed Mondelez Australia as part of a restructure in 2013), was granted a licence to use the Kraft brand and packaging on peanut butter.

Mondelez Australia sold its peanut butter business and assets to Bega Cheese in 2017, which began producing the spread at what was the old Kraft peanut butter factory in Port Melbourne and selling it in a yellow labelled and lidded jar. Kraft claimed Mondelez could not sell the rights to use Kraft's peanut butter packaging as the company merely had a licence to use it which expired in December 2017.

This claim was rejected by O'Callaghan J, who at [para 28] of the judgment, commented:

“… Bega contends that the Master Trade Mark Agreement, the construction of which is a main limb of Kraft’s case that the Peanut Butter Trade Dress was licensed by Kraft Foods Global Brands LLC to KFL, is also of no avail to Kraft because KFL was not a party to it … “

Callaghan J said the Australian company was therefore "entitled exclusively" to use the packaging, and at [para 32] noted:

“As things currently stand, only Bega’s peanut butter is available at major supermarkets in Australia, which account for about 80% of the total nationwide annual sales of peanut butter. The major supermarkets have declined to stock the new Kraft peanut butter manufactured by the second applicant, citing the likelihood of consumer confusion. Both products are, however, still available at smaller, independent supermarkets.”

Comment and Reaction to the Decision

Responding to the outcome in the SMH, Kraft said it was disappointed at the decision and was considering its options.

ABC News reports Adam McNamara (Bega Foods's Executive General Manager), said the matter had taken almost 18 months to resolve and the company's legal team was still going through the detail of the judgement, in which they believe Kraft had partially won, but he said the company was pleased it would not need to change its peanut butter packaging "… it's going to look the same on the shelf and that's what we're delighted about."

Speaking to the SMH, Ms Cate Nagy (partner in an intellectual property team) said the judgment was highly significant:

"Because what it does do is confirm the valuable nature of unregistered trade marks, such as trade dress ... which the court has found form an inseparable part of the goodwill of a business."

Ms Nagy said the value of registered IP rights had been well recognised for a very long time, "but what this really does is underscore the valuable nature of unregistered trade marks".

Claim for Damages

A hearing for further orders and damages will be determined by the court at a later date.

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