Kraft loses bid for Bega docs as trial date looms
Intellectual Property July 13, 2018 5:30 pm By Cat Fredenburgh | Melbourne

A judge has shot down a bid by Kraft for extensive discovery from Bega, but granted its request for a so-called Sabre order against US company Mondelez, three weeks before trial kicks off in the case over who owns the rights to the iconic Kraft peanut butter trade dress in Australia.

Justice David O’Callaghan shot down Kraft’s request for documents related to Bega’s intentions when deciding to use the disputed packaging — including documents related to its marketing plans for the packaging and any documents that provide evidence of Bega’s decision-making process in relation to the disputed packaging — agreeing with Bega that its intentions were irrelevant to the case.

“I am not persuaded that the discovery of the documents described in categories [1]-[7] is necessary. That is because it is no part of Kraft’s pleaded case (either in respect of the so-called “impugned packaging” or the advertisements) that Bega intended to deceive. Intention to mislead or confuse is not a necessary element of any of the claims Kraft makes against Bega,” the judge said.

The judge also shot down a request that Bega produce copies of any trade mark usage style guides or brand books it was provided when it acquired the rights to use the Kraft trade mark and packaging as part of its 2017 acquisition of Mondelez’s Australian and New Zealand unit. A request that Bega produce documents related to licence agreements by the unit that was assigned Kraft’s IP rights during its 2012 restructuring, Kraft Foods Global Brand, was also shot down.

In a separate order, the judge granted Kraft’s request for a Sabre order to seek documents from Mondelez related to any licence agreements governing the use in Australia of trade marks or trade dress appearing on peanut butter bearing the “Kraft” mark between October 1, 2012 and December 31, 2017 that it or any companies in the Mondelez group are a party to.

The judge said he would not issue a subpoena because the company would not likely comply with it and the court had no power to enforce it, instead granting the request for a Sabre order, under which the court can direct a party to take steps to request documents possessed by a third party when there is a real likelihood the request will be granted.

Mondelez had argued the court had no power to issue a subpoena on a foreign corporation and that even if it did, the subpoena should not be granted because it would no be complied with.

The case will proceed to trial on August 6 in Melbourne.

In April, Judge O’Callaghan granted Bega’s request to halt US arbitration proceedings between it and Kraft over the peanut butter trade dress rights until the case Federal Court was resolved.

The US arbitration, compelled by a NY district court judge after US-based Kraft sued to force Bega to arbitrate their dispute, deals with who owns the peanut butter trade dress under a 2012 master agreement.

The agreement, between Kraft and Kraft unit Mondelez, granted Mondelez a limited exclusive licence to use the Kraft brand in Australia and New Zealand for certain products, including peanut butter. Bega acquired the limited rights shortly before they were set to expire at the end of 2017, when it bought Mondelez’s Australian and New Zealand unit.

In the US arbitration, Kraft claims Bega has deliberately misappropriated the goodwill in the Kraft brand by copying its peanut butter trade dress – which features a yellow lid, clear container, and mostly yellow label – without the use of the trademark. Kraft claims it owns the peanut butter trade dress, while Bega claims Kraft has not owned the goodwill generated by the sale of the peanut butter in Australia since at least 2012.

Bega had said it intended to use the trade dress after the licence expired in December, Kraft told the US court.

Kraft brought the Australian case against Bega in November alleging several ads misled consumers into thinking that Kraft peanut butter is now Bega peanut butter, when it was only granted a temporary licence to use the brand.

One radio ad central to the case features an announcer who says “Australia’s favourite peanut butter has changed its name. Kraft peanut butter is now Bega peanut butter” while one of the television ads at issue in the suit shows a jar of Kraft peanut butter, as an announcer says “Australia’s favourite peanut butter has changed its name to Bega peanut butter.” The Kraft label on the jar is then peeled off to reveal the Bega peanut butter label.

In his April judgment, Judge O’Callaghan agreed with Bega that both matters deal with the central issue of who owns the goodwill to the peanut butter trade dress and that the question of whether that goodwill is derived from a master agreement was related to the first question.

Kraft is represented by Spruson & Ferguson. Bega is represented by Addisons Lawyers. Mondelez was represented by Clifford Chance.

The case is Kraft Food Group Brands LLC & Anor v Bega Cheese Limited.

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Cat Fredenburgh

Cat Fredenburgh has been covering legal news for 12 years. She was previously Editor-in-Chief at US legal news publication Law360. She is the Co-Founder of Lawyerly.