Full Federal Court affirms Bega’s title to Kraft peanut butter trade dress

The Full Court of the Federal Court of Australia in Kraft Foods Group Brands LLC v Bega Cheese Limited [2020] FCAFC 65 (Kraft v Bega) has upheld the decision that Kraft’s iconic peanut butter trade dress (Trade Dress) – consisting of a yellow lid, clear jar and red and blue labelling – now officially belongs to Bega Cheese Limited (Bega).  Bega acquired title to the Trade Dress, which was not registered as a trade mark, in 2017 following Bega’s purchase of assets from a number of Kraft’s Australian and New Zealand subsidiaries, which collectively made up Kraft’s “joey business” or “peanut butter business”. 

Importantly, Bega’s asset purchase included acquiring all assets and goodwill of Kraft Australian subsidiary Mondelez Australia (Foods) Ltd (MAFL).  MAFL had been using the Trade Dress in the Australian market for a number of years.  For more background on the case, see our previous articles: Federal Court crunches down on peanut butter trade dress, preferring Bega’s smooth arguments  and Peanut butter makers find themselves in a sticky situation

Judgment

In dismissing Kraft’s appeal, the Full Federal Court of Australia confirmed the primary judge’s interpretation that, according to Australian law, unregistered trade marks cannot be assigned without the underlying goodwill of the business in which the trade mark is being exploited.  As such, MAFL assigned the Trade Dress to Bega when it sold all of its assets and goodwill to Bega.

Practical takeaways

The Kraft v Bega case reinforces that, in Australia, unregistered trade mark rights (such as trade dress) are owned by the business specifically using the marks and generating goodwill from the use.  Relying on common law rights can be problematic, given the goodwill is inseparable from the business to which it adds value.  On the other hand, registered trade marks can be assigned with or without the associated goodwill.

International company groups intending to maintain ownership and control over trade marks and trade dress in Australian subsidiaries or related entities should ensure those trade marks are registered with the Australian Trade Marks Office.  Parent companies should ensure appropriate assignment and licensing documents are in place that specifically deal with group registered trade marks.

Care should also be taken in commercial due diligence to identify both registered and unregistered intellectual property rights, to ensure clients have the ability, by ownership, to license or assign all contemplated rights, particularly any unregistered trade marks – the devil is in the detail.

Businesses should also undertake regular intellectual property audits to ensure key brand identifiers are registered as trade marks, and to bolster protection and crystallise ownership.  While Kraft did subsequently file trade mark applications to attempt to register the Trade Dress as trade marks in Australia, those filings were ultimately made too late.