Bega wins long-running legal battle against US food giant Kraft

Australian food brand Bega has prevailed in a long-running legal battle against US food-giant Kraft, winning exclusive rights to use trademarked yellow labelling on its peanut butter.

The rights to the yellow-lidded peanut butter most Australians are familiar with has been up in the air for nearly two years, after a series of corporate carve-ups created a stoush over the rights.

When Kraft Foods split its business into two companies back in 2012-13, creating Mondelez International, the local arm for the business was renamed Mondelez Australia, and traded the Kraft brand and peanut-butter labels under a licence agreement.

But Mondelez Australia ended up selling the peanut-butter business to Bega Cheese for $460 million in 2017, who scooped up Kraft’s Port Melbourne factory in the process.

When Bega began selling peanut butter in the traditional yellow-labelled jars, alongside slogans such as “Kraft peanut butter is now Bega peanut butter”, Kraft took them to court, alleging they were engaging in misleading or deceptive conduct by using the packaging.

Back in 2017, Kraft claimed Bega’s product design was a “blatant violation” of its intellectual property rights in a mediation request.

But Federal Court Justice David O’Callaghan ruled on Wednesday Bega is exclusively entitled to the rights of “a 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”.

He said Bega was transferred the rights to use the labelling when it inked its deal with Mondelez in 2017.

ACCC aware of case

O’Callaghan also found Bega engaged in “conduct in trade or commerce which is misleading and deceptive or likely to be contrary to … Australian Consumer Law”.

That related to an advertisement Bega ran claiming its peanut butter was “loved since 1935”, despite only acquiring the business in 2017.

Asked on Thursday morning whether it will be investigating Bega over alleged consumer law breaches, the ACCC said it was aware of the case, but declined to comment further.

“Good decision”

Intellectual property lawyer Nicole Murdoch, principal at EAGLEGATE lawyers, says the court made a “good decision” regarding the sale of intellectual property rights in marketing material.

“The case follows the general principal that all of the business assets are part of a sale unless they are expressly excluded from the sale,” Murdoch tells SmartCompany.

“It is also a lesson to vendors to consider who may eventually own the intellectual property and that the buyer has every right to assign that intellectual property and goodwill to another.”

Another hearing will be scheduled, where possible damages will be considered.

In a statement to the ASX, Bega said it will review the decision and make “any necessary further announcements”.

“This gives Bega Cheese the right to continue to use the current packaging of its Smooth and Crunchy Peanut Butter products,” the company said in a statement.

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