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Court finds right to use unregistered trade mark in peanut butter case

Malcolm Campbell ||

Back in November of 2017, Coleman Greig published a piece concerning a dispute between Aussie big brand Bega and US giant Kraft, over the use of the ‘peanut butter trade dress’ of the iconic peanut butter jars with yellow lids, available throughout major retailers within Australia.  This blog comes as an update to that article, following the handing down of the decision in Kraft Foods Group Brands LLC v Bega Cheese Limited (No 8) [2019] FCA 593.

A trade dress is similar to a trade mark, in that it operates to identify a specific producer of a product.

Following a complex series of licence agreements and take-overs, both Kraft and Bega asserted a right to the production of a near identical peanut butter jar design.  Due to Kraft temporarily exiting the market, major Australian retailers have refused to stock Kraft’s range, due to concerns of consumer confusion.

Kraft Foods brought proceedings against Bega for unauthorised use of a trade mark, breach of contract and breach of copyright (among others).  Regarding the use of the iconic peanut butter jars, Kraft stated:

“A series of historical corporate decisions saw the brand licenced to an external company for a limited period of time under strict conditions.  It’s always been our intention to continue with Kraft products in Australia.”

Bega, in response, brought a cross-claim asserting that it had purchased the exclusive right to the use of the jar’s colour and design through their purchase of the ‘goodwill’ of a former Kraft subsidiary.

Justice David O’Callaghan concluded that Bega had indeed acquired ‘all rights’ to the peanut butter trade dress, which in this case was agreed to be:

“…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.”

This decision allows Bega to continue to use the trade dress, and confirms that unregistered trade marks, such as trade dress, form an inseparable part of the goodwill of a business.

This decision has also helped to highlight the fact that Intellectual Property rights are far better protected where they have been officially registered – a point that Coleman Greig supports and urges readers to take heed of.  The registration of a trade mark creates a property interest that can be assigned – and had this been done in this circumstance, Kraft may have been able to take steps to avoid losing control of the trade dress.

Other complaints against Kraft were also upheld by the Court, including Kraft’s use of the phrase “loved since 1935” on its new peanut butter jars, in circumstances where the original business had been sold to Bega.  Further investigation by the ACCC is pending.

If you have a query relating to this particular matter, or you would like to speak with a lawyer in Coleman Greig’s Intellectual Property team, please don’t hesitate to get in touch.

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