Bega Cheese wins trademark stoush with Fonterra

Legal battle ends with a court ruling Bega can use its own brand on a range of new products, outside a 20-year deal with Fonterra.

Bega Cheese executive chairman Barry Irvin with some of his companies products. Picture: supplied

Bega has won its four-year legal battle with Fonterra, with the Supreme Court ruling the NSW-headquartered company can use its own trademark on products outside its licensing agreement with the New Zealand dairy giant.

Fonterra took Bega to the Victorian Supreme Court after Bega put its own logo on jars of peanut butter when it acquired most of Kraft’s Australian food operations for $460m in 2017.

Fonterra argued Bega’s move was in breach of 20-year-old deal between the two companies, which granted Fonterra exclusive rights to Bega’s trademarks on a range of cheeses in Australia.

This was despite the licence being strictly limited to natural cheddar, processed cheddar and string cheese as well as butter — and Fonterra not producing peanut butter itself.

“They (Fonterra) recognised that they only had rights on cheese — and they know that they can’t use the brand on other products but they equally go nor can we,” Bega executive chairman Barry Irvin said.

The Supreme Court ruling means Bega can continue its transformation from commodity cheesemaker to a higher-value brand builder, where it can attract higher margins for its products.

This means Bega can keep its logo on the former Kraft branded jars of peanut butter as well as potentially launch its own branded range of fresh milk and other products.

Bega branded peanut butter.

“The Supreme Court of Victoria has held that Bega Cheese is entitled to use the Bega trademark on products outside of the scope of the Fonterra licence without Fonterra’s consent,” Mr Irvin said.

“Bega Cheese is entitled to use the Bega trade mark on products outside of the scope of the licensed products, including on peanut butter.

“Bega Cheese is pleased that its right to use its brand on these products has been confirmed by the court.”

On the eve of the ruling, Mr Irvin said he would have preferred to strike an agreement with Fonterra about the ongoing use of the Bega brand, rather than the New Zealand company take it to court.

“Obviously we would prefer not to be conducting a legal case with Fonterra, equally sometimes it’s a circumstance that you find yourself in. We would have preferred to come to some sort of agreement rather than be in court.”

Fonterra Australia managing director René Dedoncker said: “Although we’re disappointed with the decision on the trademark claim, we are confident that we can work together with Bega Cheese Limited to continue to grow the value of the brand.”

Fonterra will retain the exclusive rights to Bega’s brand on cheese and butter in Australia.

“Since the 1980s, Fonterra and its predecessor Bonlac have nurtured and built the Bega brand, and supported Bega Cheese Limited to grow and provide good returns back to its farmers, shareholders and community.

“We will continue to invest in the Bega brand because we believe in it.”

It is the second court battle Bega has won regarding the use of its own logo on the former Kraft-branded peanut butter jars.

Last November, Bega won its High Court battle against US food giant Kraft Heinz over the packaging of its peanut butter.

Kraft had appealed against a Federal Court decision that allowed Bega to continue to use the branding, colours and style of the classic jar of Kraft Peanut Butter.