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 21, 2020

Kraft-Heinz has announced it will try to appeal a Federal Court decision which awarded Bega Cheese rights to the “trade dress” of its peanut butter products.

On Wednesday, Bega told the ASX that Kraft had signalled it plans to take the matter to the High Court.

“On May 19, 2020, Bega Cheese received notice that Kraft-Heinz has filed an application in the High Court seeking special leave to appeal from the judgment of the Full Court of the Federal Court of Australia,” Bega said.

If the appeal is granted, the case will be the latest round of a long-running and costly legal battle waged between the two companies.

The issue centres on a dispute about who owns peanut butter’s ‘trade dress’ – ie the distinctive yellow lid, yellow label and other features of the peanut butter jars.

The dispute began in January 2017 when Bega Cheese purchased Kraft subsidiary Mondelez Australia (formerly called Kraft Foods Limited) and obtained the peanut butter business, assets and goodwill of Mondelez under the deal.

Mondelez-produced peanut butter had been marketed under the Kraft name through a licensing agreement between Kraft and Mondelez dating to 2012.

Later the same year, Bega bought out the Peanut Company of Australia to secure its peanut supply.

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.

Both companies counter-sued one another for misleading and deceptive conduct under competition and consumer law.

Kraft told the Federal Court the distinctive peanut butter trade dress was never Mondelez’s to sell.

But in a ruling last year, Justice David O’Callaghan said Bega had acquired “all rights” to the trade dress when it bought Mondelez.

And in April, the Full Court of the Federal Court upheld the trial judgment that confirmed Bega’s right to use the trade dress on its peanut butter products.

Bega’s shares declined slightly from $5.36 to $5.17 after Wednesday’s announcement.

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