Addisons’ helps Bega beat Kraft Heinz in battle over peanut butter packaging

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Addisons Lawyers has helped Bega Cheese in its win over American food giant Kraft Heinz.

The Federal Court of Australia on 1 May upheld Bega’s rights to use the packaging get-up or trade dress associated with its peanut butter products. The ruling gives Bega the right to continue to use its current packaging for its Bega Peanut Butter Smooth and Bega Peanut Butter Crunchy products.

Addisons’ legal team was headed by litigation partner Justine Munsie and special counsel Hayden Martin. Bega Cheese has been a longstanding client of the firm.

At the heart of the long-running legal stoush is the well-known trade dress that consists of a jar with a yellow lid, yellow label with a blue or red peanut device, and an appearance of brown when filled.

Bega bought the Mondelez Grocery Business in Australia and New Zealand in a deal announced in early 2017. The $460m acquisition included Vegemite and the peanut butter products originally branded as Kraft, as well as the Port Melbourne manufacturing facility for those products.

After Bega transitioned the peanut butter products to their own brand with a similar packaging, Kraft Heinz took Bega to court to stop the company from using the packaging. Kraft later re-entered the Australian market using the same trade-dress elements for peanut butter products.

The Federal Court rejected Kraft Heinz’s claim of ownership to the trade dress in dispute and said that the company’s use of the packaging with these elements for its peanut butter products in Australia constituted passing off and misleading or deceptive conduct under consumer laws in the country.

Addisons said that the principal legal issue determined by the Federal Court centred on the nature of the rights in the peanut butter trade dress in question and the ownership of those rights.

“Justice O'Callaghan held that rights associated with packaging get-up or trade dress are rights to protect the goodwill by a passing off action or an action for misleading or deceptive conduct under section 18 of the Australian Consumer Law. Referencing High Court decisions relating to the nature of goodwill and packaging get-up, his Honour confirmed that there is no separate property in such get-up and that the rights associated with it are rights to protect goodwill,” Addisons said in a statement.

“In this case, the peanut butter products had been manufactured for many years by the Australian company Kraft Foods Limited, which was subsequently renamed Mondelez Australia (Foods) Limited, as part of what became the Mondelez Grocery business that was purchased by Bega Cheese. Bega Cheese became the owner of the goodwill of that business in 2017 and also acquired the rights in respect of the peanut butter packaging get-up,” he said.

Kraft Heinz contended that it acquired the rights to the peanut butter trade dress when the global Kraft company split in 2012. The demerger allocated various businesses around the world between Mondelez and Kraft Heinz, it said.

As a result of the deal, Kraft Heinz became the owner of the registered Kraft trademark and subsequently licensed the use of the trademark to Mondelez, including for the Australia and New Zealand business. Kraft Heinz said that the peanut butter packaging was licensed with the Kraft trademark.

The Federal Court did not agree, saying that the ownership of the trade dress for the products in question remained with Mondelez as part of the goodwill of the Australian business in which it had been in use for many years. Mondelez therefore had the ability to transfer the goodwill, including the rights to the trade dress, in the 2017 acquisition by Bega.

Addisons said that the Federal Court, “after a lengthy and hard fought hearing,” also granted an injunction to stop Kraft Heinz from arbitrating the dispute in New York under the provisions of the separation documents used in the 2012 split of the Kraft business.