Fonterra case against Bega Cheese dismissed over trademark dispute

Fonterra’s plan to divest its Australian business has suffered a setback, after its case against Bega Cheese was dismissed on Monday.

Fonterra’s plan to divest its Australian business has suffered a setback, after its case against Bega Cheese was dismissed by the Supreme Court of NSW on Monday.

Fonterra Brands and Bonland Cheese currently have the benefit of Bega Cheese trade marks under two licence agreements, and the New Zealand-based dairy co-op was seeking declaratory relief that if the business is restructured and divests itself of its Australian consumer business, that those steps would not trigger “change of control” clauses within the licence agreements.

The two agreements have been in place since 2001 and 2002 respectively.

While acknowledging that the proposed divestment is not yet finalised, and that is it contingent on board, farmer shareholder and possibly regulatory approval, Fonterra’s senior counsel argued that the uncertainty over the issue “could kill this transaction”, that the price is “going to be materially affected by this issue”, and that “purchasers simply may not engage”.

In judgement Justice Elisabeth Peden wrote that until a particular restructure and particular sale process are identified, it is not apparent that the specific declarations would be of any utility.

Following the decision, Fonterra said the result would not change its plan to sell the consumer business, and that it may seek a court determination at a later date.

Fonterra has been ordered to pay Bega Group’s costs.

“Bega Group will always fight to protect its rights and we are very pleased with today’s outcome,” Bega executive chairman Barry Irvin said.

“We hope to work constructively with Fonterra Group on the sale of its Oceania businesses of which Bega Group is a natural acquirer and remains very interested in.”