Kraft Foods cheesed off by use of its trade mark on supermarket packaging

Kraft Foods Group Brands LLC v Bega Cheese Limited [2020] FCAFC 65

(14 April 2020)

Trade Marks – supply of products in shippers bearing the registered mark – whether that use was use “as a trade mark”.

In what was a relatively minor aspect of the case, the Full Court upheld the primary judge’s finding that Bega infringed the appellant’s registered “KRAFT” trade mark: Kraft Foods Group Brands LLC v Bega Cheese Limited [2020] FCAFC 65. Bega was, otherwise, entirely successful on the appeal, but those successes related to questions of construction of a contract and so will not be dealt with here.

The trade mark infringement arose from Bega’s supply of “The Good Nut” branded peanut butter jars in shippers that bore the first appellant’s KRAFT trade mark. The shippers were designed to be stacked in a supermarket shelf and opened to display the jars within, but also designed to display the KRAFT trade mark on the side of the shipper facing the customers. Bega apparently used these shippers because, following the termination of its licence to use the KRAFT trade marks, it still held some stock of the KRAFT labelled shippers.

The primary judge found that, when the jars were offered for sale or sold by supermarkets in the shippers, that involved a use of the trade mark by Bega. In particular, his Honour held “As for Bega’s submission that it did not use the mark – the supermarkets did – I accept Kraft’s submission that a mark which has been applied to goods by a manufacturer is relevantly “used” by the manufacturer at the time when the products are offered for sale or sold by a retailer. See E & J Gallo Winery v Lion Nathan Australia Pty Ltd [2010] HCA 15; (2010) 241 CLR 144 at 162 – 164, [42] and [46].”

Of course, E & J Gallo concerned use of a trade mark for the purposes of the owner of a mark establishing use in answer to a non-use application under s 92 of the Trade Marks Act 1995 (Cth). Bega contended that the concept of “use” in the context of infringement pursuant to s 120 of the Act is different – the issue there being whether an upstream supplier (or manufacturer) of goods is to be directly (or vicariously) liable for the use by another person of a trade mark in Australia. There is some force in this argument when one considers the scenario of an overseas manufacturer who has no intention of its product entering Australia, but which product is nonetheless imported and sold here by a third party. On the primary judge’s construction, the manufacturer would be liable for direct infringement. Unfortunately, the Full Court considered it unnecessary to decide the issue.

Therefore, the primary judge’s decision on this issue remains on foot, along with a similar decision by Moshinsky J in Playgro Pty Ltd v Playgo Art & Craft Manufactory Ltd (2016) 117 IPR 489 where His Honour concluded at [139] that “use” in s 120 (infringement) of the Trade Marks Act should have the same meaning as in s 92 (removal for non-use), so that the expansive concept of “use” from E&J Gallo was “equally applicable to an infringement context”. His Honour was then able to conclude that an overseas supplier of PLAYGO-branded goods infringed an Australian trade mark registration for PLAYGRO, where the goods were supplied in China and imported by the customer. That finding, and that of the primary judge in this case, appear at odds with the finding in Ward Group Pty Ltd v Brodie & Stone Plc (2005) 143 FCR 479 that there is no trade mark infringement where the trade mark use was not “targeted or directed” at Australian consumers.

The reason the Full Court did not need to address the issue was because, no doubt to Bega’s chagrin, during the hearing of the appeal, Kraft sought and obtained leave to contend that the primary judge ought to have found that Bega’s supply to the supermarkets of the shippers bearing the KRAFT trade mark and containing the peanut butter was, in and of itself, a trade mark infringement. The Full Court agreed.

In response to this late argument, Bega contended that the circumstances of its supply of the shippers to the supermarkets meant there was no trade mark use. That was because, when the peanut butter jars were purchased from Bega, the supermarkets had no idea what they would be packaged in. Bega also contended that, if receipt of the shippers by the supermarkets was part of the relevant purchase, supermarkets would not have understood the word “KRAFT” on the shippers to be acting as a trade mark because they understood the product to have been purchased from Bega.

The Full Court considered that, when Bega supplied the peanut butter products to supermarkets in shippers with the KRAFT trade mark, that constituted use of the mark as a trade mark for the purposes of s 120 of the Act because it was used as a “badge of origin” in the sense that it indicated “a connection in the course of trade between goods and the person who applies the mark to the goods” – it distinguished the “goods dealt with in the course of trade by a person from goods so dealt with by someone else”.

The Full Court applied an “objective” test of whether the mark acted as a badge of origin, putting aside the subjective knowledge of the supermarkets. We observe that, while it seems clear that the test is “objective”, it may be difficult to identify a sharp line between what matters are “objective” and what are “subjective” in the context of determining whether a mark is acting as a badge of origin. It appears that Bega was arguing that, objectively, supermarkets comprise a specialised market (given the way the supermarkets ordered, received and then used the products) which would not consider that the KRAFT marks on the shippers were being used as a trade mark. We understand the Full Court to conclude that one simply looks at the presentation of the mark itself on the packaging, not the context in which it is received or used by the consumer.

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