Bega receives green light to continue use of its peanut butter get up
The High Court of Australia has refused Kraft’s application for special leave to appeal the Full Court of the Federal Court of Australia’s decision in Kraft Foods Group Brands LLC v Bega Cheese Ltd concerning Bega’s use of the peanut butter trade dress. Kraft’s application was dismissed with costs.
As discussed in The Battle Over Peanut Butter Trade Dress, the Full Court’s decision found that when Bega acquired Kraft’s peanut butter business (including the assets and goodwill), this included the rights in the unregistered trade dress being “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”. This decision, and the High Court’s decision not to grant Kraft special leave to appeal, reinforces the position that in Australia an unregistered trade mark cannot be assigned separate from the business which holds the related goodwill.
The Full Court’s decision in Kraft v Bega
The High Court’s decision to dismiss Kraft’s application is not surprising. The Full Court’s decision cited the following two “uncontroversial” underlying principles of Australian law:
- Unregistered trade marks or product ‘get-up’, such as the peanut butter trade dress, are not recognised under Australian common law as a species of property; rather, the goodwill generated by use of an unregistered trade mark can be protected by actions for passing off or misleading and deceptive conduct in contravention of Australian Consumer Law.
- The goodwill of a business is property capable of assignment, where goodwill is understood to be the “legal right or privilege to conduct a business in substantially the same manner and by substantially the same means that have attracted custom to it”.
Important take home messages from Kraft v Bega
- In Australia an unregistered trade mark cannot be assigned separate from the business which holds the related goodwill.
- To avoid the automatic but perhaps unwanted assignment of trade marks which are embodied in get-up or trade dress to a new business owner, owners should seek trade mark registration of distinctive elements (such as colours, shapes and product packaging) that are used in isolation or combination to function as an indicator of the source of the goods or services. Registration of trade dress marks was explored in Be Best Dressed For Trade Dress Registration In Australia.
- When a trade mark is registered, a trade mark owner will be able to make a choice about the assignment of its trade mark.