Effective brand packaging has an interesting way of seeping into the subconscious of consumers. You may not think much about seeing a jar with a bright yellow lid on the supermarket shelf, but over time this becomes how you identify the product. For a product as common in pantries as peanut butter, this jar is an invaluable business asset. This yellow lid has become the subject of a bitter legal battle between US company Kraft and Australian dairy food company Bega Cheese.

In this case, American brand Kraft asserted that they had sole rights to the use of the iconic yellow lid on their peanut butter jars. Bega had started producing peanut butter in jars that looked virtually the same – the only difference was the brand name on the product. However, Bega argued that they owned the intellectual property, through their purchase of a company called Mondelez in 2017. In this piece, we’ll discuss the murky disputes that can arise when intellectual property assets get lost in a business sale.

Bega’s acquisition of Mondelez

You may have noticed that you haven’t seen Kraft’s brand of peanut butter on the shelves for a while. In 2017, ‘Australian’ Kraft (called Mondelez) was sold to Bega. When Bega purchased Mondelez, they received all the recipes and even their factory. It wasn’t long before the well-known peanut butter jars had the name ‘Bega’ printed on them instead of ‘Kraft’. Assumedly, this sale included the intellectual property assets of Mondelez.

Kraft takes action

Kraft commenced proceedings in the Federal Court alleging that Bega did not have the right to use the packaging. They also alleged that their trademark was subject to a licence allowing use which has expired a year beforehand. Mondelez held this licence, which Bega then acquired. Kraft argued therefore that Bega were using the packaging illegally since the time the licence had expired. So what did Bega purchase then?

Who gets the IP in a business sale?

Selling a business involves more than a change of personnel. For a business like Kraft, one of their most valuable assets is undeniably their intellectual property. Intellectual property can be assigned or excluded when a business is sold, but more often than not it’s included. An intellectual property agreement thttps://lawpath.com.au/legal-documents/intellectual-property-agreementhen assigns the property. This agreement serves to confirm that the new owner has all the rights to the property. In this case, it’s unclear whether Kraft assigned their intellectual property, so it had to be decided by the Courts.

The Federal Court found that the sale of Mondelez to Bega included their intellectual property rights. Mondelez was a subsidiary of Kraft, and was sold to Bega – meaning that Bega was the rightful owner. It looks like we won’t be seeing the end of the iconic yellow lids anytime soon.

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Jackie Olling

Jackie is the Content Manager at LawPath and manages the content team. She has a Law/Arts degree from Macquarie University and has worked in the legal industry since 2014. She's interested in legal tech and the opportunities it offers to not only the legal industry, but all people.