A2 Milk frothing over alleged copyright infringement by Braum’s in US

A family-owned fast food chain in Oklahoma says A2 Milk’s trademark is unenforceable. But the dairy giant disagrees and is demanding damages.

A bottle of A2 milk from US family firm Braum’s.

In nine months a family-owned fast food chain based in Oklahoma allegedly caused “irreparable harm” to trans-Tasman dairy company A2 Milk and the business it “carefully” built up over the past two decades, according to court documents.

A2 Milk, which has a market capitalisation of more than $12.4bn, has lodged a counterclaim against Braum’s, which husband and wife team Bill and Mary Braum founded in 1968 and grew to 280 restaurants and “old-­fashioned” ice cream parlours across Oklahoma, Kansas, Texas, Missouri and Arkansas.

The legal tussle is part of a greater strategy by A2 to warn off imitators. At stake is A2’s claim that a special protein which it says makes milk easier to digest than regular milk is part of the dairy company’s own brand, underpinning sales of nearly $2bn annually.

A2 objected to a complaint the fast food chain’s chief executive, Drew Braum, filed with the US District Court in May, defending his right to use the A2 name across Braum’s own range of dairy products.

Mr Braum argued A2 was a generic term to describe a beta casein protein found in milk and he should be free to use it across Braum’s range of fresh and flavoured milk, which he launched in February and sells alongside crinkle-cut fries, hamburgers and fried chicken club sandwiches, saying it’s ­“easier on digestion”.

While A2 Milk agrees people find its product gentler on the stomach, it says Braum’s has wilfully infringed its trademark, causing irreparable damage to its US operations where it has set an ambitious sales target of $US100m a year.

In the fiery counterclaim, filed in an Oklahoma court this week, A2 not only demanded all profits from Braum’s A2 products, but asked that the damages be tripled given how blatant the knock-off is.

Bill and Mary Braum started their restaurant and ice-cream parlour business in 1968.

The company, dual-listed on the Australian and New Zealand stock exchanges, said the wording A2 Milk was bigger than Braum’s own logo on the offending products and that Braum’s had even ripped off its cartoon cows, highlighting that it was more than describing a beta-casein protein and was instead an attempt to capitalise on A2’s success.

“Because of the wilful nature of Braum’s infringing actions, this is an exceptional case, entitling a2MC (A2 Milk Company) and a2MC-US to an award of treble damages, prejudgement interest, and their reasonable attorneys’ fees,” the company wrote in its counterclaim.

“Braum’s has wilfully engaged in unfair competition with a bad faith intent to injure a2MC and a2MC-US,” it says.

The dairy brouhaha began in early May when A2’s US boss, Blake Waltrip, sent Mr Braum a letter requesting it cease and desist using its registered trademarks “A2” and “A2 milk” on its new range of dairy products, which it sells exclusively in its 280 restaurants.

“However, instead of discontinuing its infringing use of “A2 MILK” on its labels and website, Braum’s responded by filing this lawsuit against a2MC,” the company said. “As the result of a2MC’s nearly two decades of hard work and investment, the A2 MILK Mark has become well-known among the consuming public in a number of countries. And as part of that investment, a2MC has successfully expanded to markets throughout the world, and more recently, throughout the US.

“This success has attracted third-party entrants. Braum’s is one of those third parties, which has been in business for many years, yet, in an effort to capitalise on the success of a2MC’s brand, recently released a new line of milk products using the “A2 Milk” brand.”

But Braum’s says for the past 12 years they have been quietly breeding their own A2 cows and now claims to have the biggest A2 producing herd in the US across two farms — one of them in Follett, Texas, and the other in Tuttle, Oklahoma.

Throughout childhood, Bill Braum helped his father Henry H. Braum with the family business learning every aspect of the operation.

Mr Braum said A2 was a generic term used to describe a beta casein protein and therefore A2 Milk’s trademark was unenforceable. Further, Mr Braum “respectfully” requested a jury trial rule on the matter.

“A2 and A2 milk are generic when used in connection with milk and other dairy products, or, alternatively, are so highly descriptive that they are not protectable as trademarks when used to describe A2 milk and other dairy products,” Braum’s says in its complaint.

But A2 Milk disagrees and says the trademark infringement extended beyond slapping A2 Milk labels on bottles, to ripping off its slogan “feel the difference” versus Braum’s “the A2 difference”, to even poaching its graphics to explain A1 and A2 beta-casein proteins.

“Braum’s identical use of a2MC’s A2 Milk mark on its milk products — the identical goods a2MC uses on its A2 Milk mark to advertise — is likely to cause confusion whereby consumers mistakenly believe they are purchasing dairy products from a2MC-US but instead purchase Braum’s milk, causing monetary loss to a2MC and a2MC-US.

“This confusion is compounded by Braum’s unauthorised reproduction of a visually similar “two cows” graphic to a2MC’s copyrighted two cows artwork on Braum’s website. And this confusion damages a2MC’s reputation built over the past 20 years as a2MC has no control over the quality of Braum’s dairy products.”

A2 said its founder, Corran McLachlan, learned that ordinary cows produce milk with different types of beta-casein proteins — A1 and A2 — in 2000. Dr McLachlan discovered the proteins affect people differently. His innovation and research, which includes genetic testing on cows, were quickly patented and remain protected in the US and elsewhere.

While the discovery has attracted a series of copycats, A2 Milk’s beginnings were less illustrious. Dr McLachlan travelled to Switzerland with co-founder Sir Bob Elliott in an effort to convince Nestle executives of the validity of the science and see if they could strike a commercial arrangement. But they came back empty-handed.

The company then faced a battle at home, with opposition from New Zealand dairy giant Fonterra, which had 98 per cent of dairy farms in New Zealand under contract, and by October 2004 it had fallen into administration.

But it persevered and has become a market darling, with its shares soaring from 47c in May 2015 to around $17.15 on Friday.

An A2 spokesman said the company took defending its trademark “very seriously”.

“There are a number of players in the market who are potentially infringing our intellectual property and who have sought to capitalise on and exploit the success we have achieved over the life of our company,” he said.

“We take defending our brand, intellectual property and positions in the market place very ­seriously.”