Mondelez loses bid to protect trade secrets in Kraft-Bega peanut butter case
Intellectual Property July 6, 2018 3:54 pm By Cat Fredenburgh | Melbourne

The judge overseeing the lawsuit between Kraft and Bega over peanut butter trade dress rights has denied a request by non-party Mondelez to implement a restrictive regime to protect its trade secrets in certain transaction documents it has produced in the case.

Justice David O’Callaghan in a judgment on Friday denied the restrictions proposed by Mondelez, including that the documents subpoenaed by Kraft only be produced in unredacted form to two solicitors – one for Kraft, and one for Bega – that the solicitors be delivered one copy each by hand, that the solicitors be barred from copying the documents, and that the documents be kept in a locked drawer accessible only to the solicitors, among other restrictions.

Mondelez argued that the restrictions were needed because “a mistake or a mishap” could happen and because the trade secrets, once disclosed to its rival Kraft, were such that they could not be forgotten.

“Once the documents are inspected by the principals of the trade rival the information which is revealed is known to the trade rival and cannot be forgotten. Confidentiality is destroyed once and for all (at least so far as the particular trade rival is concerned). To say that the trade rival is bound not to use the documents except for the purposes of the action concerned is, in a case such as this, to impose upon that trade rival an obligation that is impossible of performance by him and impossible of enforcement by the party whose secrets have been revealed,” Mondelez told the court.

Judge O’Callaghan said unless there was some reason why the undertaking of a solicitor should not be accepted, the court must assume that the individuals making the undertaking will do what they have agreed to do.

“The effective operation of the legal system and the administration of justice depends upon the court accepting that, as responsible members of the legal profession, those giving the undertakings will do as they say,” the judge said.

In February, 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 license 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 license 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 license 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 judgment, Justice 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.

The following two tabs change content below.

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.