A long-running legal battle over peanut butter jars has finally ended, with Australian food brand Bega Cheese prevailing over U.S. food giant Kraft Heinz. Bega Cheese now has exclusive rights to use the trademarked yellow label and lid with a blue or red peanut design, depending on the variant of peanut butter.

In a statement to the ASX (Australian Securities Exchange), Bega Cheese said that it was pleased with the decision, which ruled that Kraft Heinz’s use of similar-looking packaging is misleading or deceptive under Australian law.

“We look forward to continuing to produce and supply our customers with our much-loved peanut butter products,” the statement further said. However, the matter’s not over yet, with the court having to determine further orders and damages at a later date. Even so, the whole affair took almost 18 months to resolve. How did this peanut butter battle begin, in the first place?

Origins of the Legal Battle

Back in 2012, Australia’s Kraft peanut butter was owned by the U.S. food company Kraft. When the company split in two, it transferred its Australian operations to a new firm called Mondelez International.

In 2017, Australian-owned Bega bought most of Mondelez International’s Australia and New Zealand grocery and cheese business. The acquisition cost the Australian brand $460 million and consisted of ownership of Kraft-branded products, such as cheeses, mayonnaise, Vegemite and, yes, peanut butter. This included recipes and trade dress (an important identifier of a product, operating like a trademark).

Since the Kraft name wasn’t part of the acquisition, Bega Cheese simply replaced it with their own on the distinctive yellow jars. They also ran ads where they stated that “Kraft peanut butter is now Bega peanut butter” and “Never oily, never dry, with the same taste you’ve always loved and now is Aussie owned by Bega.”

This didn’t sit right with Kraft – now Kraft Heinz – who wanted to return to the Australian market and use their famous yellow jars exclusively. In 2017, they took Bega Cheese to court on trademark infringement allegations, first in New York then in Australia, arguing that the peanut butter trade dress wasn’t part of the acquisition.

Kraft alleged that Bega’s usage of the unique yellow jars was a “deliberate effort to trade off the goodwill of the Kraft brand, cause consumer confusion and irreparably harm the value of Kraft’s intellectual property”. They demanded that Bega drop the famous packaging – but Bega maintained that it now owns the brand’s intellectual property. They filed a crossclaim against Kraft over their re-entry into the peanut butter market.

While the cases were going on, Kraft cooked up a brand-new peanut butter formulation and, in 2018, began selling it in almost identical yellow-labelled jars. At the same time, Bega simply continued producing the original Kraft “never oily, never dry” recipe under the name Bega peanut butter.

Before the decision was made, both brands had the same look. Now, though, Kraft Heinz will have to redesign their peanut butter jars, since the court ruled that Bega Cheese acquired “all rights” to the peanut butter trade dress when it acquired Mondelez International. They had bought the trade dress fairly and squarely.

As a result, Bega Cheese is now exclusively entitled to the rights of “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.” Meanwhile, Kraft Heinz is “disappointed” and “considering its options.”

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