The peanut butter packaging, left, used by Mondelez at the time of its sale to Bega Cheese (red for crunchy, blue for smooth) … and the Bega Cheese packaging after it bought Mondelez in 2017

May 1, 2019

American food giant Kraft Heinz has lost a Federal Court bid to stop Bega Cheese from selling peanut butter in clear jars with yellow lids.

In a lengthy judgment handed down on Wednesday, the court confirmed Bega’s right to use the “trade dress” (ie. the look and feel of the packaging).

In 2017, Bega Cheese – owners of the Peanut Company of Australia – bought the Victorian-based Mondelez grocery business for $460 million.

The purchase included most of Mondelez’s Australian and New Zealand grocery and cheese products, including peanut butter, sliced cheese and Vegemite.

These had been marketed under the Kraft name, linked to a licensing agreement between Kraft and Mondelez dating to 2012.

The Bega purchase also included the manufacturing facility at Port Melbourne where the products had been made for more than 50 years.

When the licence to use the Kraft name expired, Bega began selling the Australian-made products under its own name.

However, Kraft re-entered the Australian market in 2018 selling peanut butter in yellow-lidded jars and launched proceedings in the Federal Court claiming ownership of the trade dress, ie. a jar with a yellow lid and a yellow label with a blue or a red peanut device, with the jar having a brown appearance when filled.

It sought to prevent Bega from using this packaging.

Federal Court Justice David O’Callaghan said that while the goodwill generated by the trade dress had benefited Kraft, and later Kraft and Mondelez, those rights had been transferred to Bega as part of the sales agreement between it and Mondelez.

As a result, Bega was now exclusively entitled to use the yellow lid and red and blue peanut labels.

In a statement to the ASX on Wednesday, Bega said the Federal Court had determined that Kraft Heinz’s use of the trade dress was misleading or deceptive under Australian law.

“Importantly, (the judgment) gives Bega Cheese the right to continue to use the current packaging of its Smooth and Crunchy peanut butter products,” the statement said.

Kraft has also initiated action against Bega in US courts.

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