A Nutty Trade Mark Dispute: Kraft v Bega

Date: June 16, 2020
Author: FAL Lawyers
Posted in: Insights

Practice/s:

The Full Court of the Federal Court of Australia unanimously dismissed Kraft Foods Group Brands LLC’s (Kraft) appeal of a decision entitling Bega Cheese Limited (Bega) to exclusive use of the distinctive trade dress or ‘get up’, consisting of ‘a jar with yellow lid, yellow label, blue or red peanut device (logo) and having a brown appearance when filled’ (Peanut Butter Trade Dress).[1] A comparison of the products can be shown below.

Background

In 2017, Bega acquired the “peanut butter business” and related assets and goodwill of Kraft’s Australian subsidiary Mondelez Australia (Foods) Ltd (Mondelez), including the Peanut Butter Trade Dress.

Following the acquisition, Bega began selling Bega-branded peanut butter products using the elements of the Peanut Butter Trade Dress.

Soon after, Kraft began to manufacture and sell a peanut butter product in Australia, also using elements of the Peanut Butter Trade Dress, under the brand “The Good Nut”.

Both Bega and Kraft argued that the other’s use of the Peanut Butter Trade Dress constituted misleading or deceptive conduct under Australian Consumer Law.[2] Other causes of action included breach of contract and passing off.

Last year, the Federal Court at first instance determined because the Peanut Butter Trade Dress was inseparable from the goodwill of the business – it could only be assigned with the assignment of the rest of the peanut butter business. As such, Bega had exclusive use of the Peanut Butter Trade Dress when they purchased the iconic product.

The Appeal

In dismissing Kraft’s appeal, the Full Court confirmed the primary judge’s interpretation that, under Australian law, an unregistered trade mark may only be assigned together with the goodwill of the underlying business of which the trade mark is used.

The Full Court’s decision can be found here.

Practical takeaways

There are a number of lessons that come out of the Full Court’s judgment:

  • registered and unregistered trade marks can be an important source of goodwill of a business;
  • goodwill in an unregistered trade mark is inseparable from the business using it. Therefore, an unregistered trade mark in Australia may only be assigned with an assignment of the goodwill of the business in respect of which the trade mark was used;
  • registration of intellectual property rights, including trade dress or get up that is commercially valuable, is imperative to enforce your rights in the marks against others;
  • ensure that all licenses clearly state ownership and the scope of each parties’ right to use the intellectual property; and
  • conduct due diligence when selling your assets – ensure that the transaction documents clearly set out which intellectual property rights will be sold with the business.

It’s NUT over: Appeal to the High Court

It was recently announced that Kraft has filed an application in the High Court seeking special leave to appeal the Full Court’s decision.

Need assistance?

Our Intellectual Property team is well-placed to assist Australian businesses in protecting their intellectual property. If you have any queries about this article or trade marks generally, please get in touch.

The information contained in this document is not legal advice. It sets out matters of general opinion and should not be applied to your particular circumstances without obtaining specific legal advice as to your position, rights and obligations.

 

[1] Kraft Foods Group Brands LLC v Bega Cheese Limited [2020] FCAFC 65.

[2] The Australian Consumer Law is contained in Schedule 2 of the Competition and Consumer Act 2010 (Cth).

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