Kraft Heinz commenced the proceedings in the Federal Court and claimed ownership of the peanut butter packaging get-up or trade dress, comprising 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, and sought to prevent Bega Cheese from using this packaging. The Federal Court judgment has rejected this and determined that Kraft Heinz’s use of packaging with these elements for its own peanut butter product constitutes passing off and misleading or deceptive conduct under the Australian Consumer Law.
The Mondelez Grocery Business in Australia and New Zealand, which was acquired by Bega Cheese in 2017, included Vegemite and peanut butter products originally branded Kraft as well as the manufacturing facility at Port Melbourne at which those products have been made for many years. After the acquisition, the peanut butter products were transitioned to the Bega brand with a similar packaging design.
The principal legal issue determined by the Federal Court judgment related to the nature of the rights in the disputed peanut butter packaging and the ownership of those rights. Justice O’Callaghan held that rights associated with packaging get-up or trade dress are rights to protect the goodwill by a passing off action or an action for misleading or deceptive conduct under section 18 of the Australian Consumer Law.
Referencing High Court decisions relating to the nature of goodwill and packaging get-up, his Honour confirmed that there is no separate property in such get-up and that the rights associated with it are rights to protect goodwill. In this case, the peanut butter products had been manufactured for many years by the Australian company Kraft Foods Limited, which was subsequently renamed Mondelez Australia (Foods) Limited, as part of what became the Mondelez Grocery business that was purchased by Bega Cheese. Bega Cheese became the owner of the goodwill of that business in 2017 and also acquired the rights in respect of the peanut butter packaging get-up.
Kraft Heinz argued that it acquired the rights to the peanut butter packaging as part of the separation or demerger of the global Kraft business in 2012, which allocated various businesses around the world between Mondelez and Kraft Heinz. Kraft Heinz had been allocated the registered Kraft trade mark in this separation and licensed the use of that trade mark to Mondelez in respect of its Australian and New Zealand business. Kraft Heinz argued that the peanut butter packaging get-up was licensed with the Kraft trade mark.
However, the Federal Court rejected this and held that the packaging get-up remained with Mondelez as part of the goodwill of the Australian business in which it had been used for many years. As such, Mondelez was able to transfer the goodwill including the rights in respect of the peanut butter packaging get-up to Bega Cheese.
The judgment of the Federal Court comes after a lengthy and hard fought hearing of the matter including the grant of an injunction applied for by Bega Cheese to prevent Kraft Heinz from arbitrating the dispute in New York under provisions in the 2012 separation documents.