A licencing deal between Bega Cheese Ltd and Fonterra Brands Pty Ltd from 20 years ago was recently litigated in Fonterra Brands (Aust) Pty Ltd v Bega Cheese Ltd ( VSC 75) ending a three year dispute. The Court considered whether the trademark and licencing agreement between the companies prevented Bega from using its trademark on any products or only certain cheese products, and whether Fonterra breached a contractual obligation by failing to effectively market and promote Bega-branded products.
The Trademark and Licensing Agreement (TMLA) of 2001 granted Fonterra a ‘sole and exclusive’ licence to use the BEGA trademark on, or in relation to certain cheese and butter products. The term was 25 years. Up until 2017, Fonterra was the only supplier of products which bore the BEGA trademark to grocery retailers in Australia. However, in that year, Bega acquired ‘Mondelez International,’ which comprised peanut butter, Vegemite, cheese and cream cheese spread products. Bega notified Fonterra that it wanted to launch its own products under the BEGA trademark.
Fonterra claimed that the TMLA gave it the exclusive right to use the BEGA trademark and that Bega had no right to use the mark on products such as peanut butter. The Court disagreed. Additionally, Bega counter-claimed that Fonterra had breached terms of the TMLA by failing to market and promote Bega-branded products and the Bega brand, entitling them to terminate the agreement. Again, the court disagreed.
The Court confirmed Bega’s right to use the Bega brand on peanut butter products purchased from Mondelez. Fonterra would retain the exclusive licence for the Bega Cheese brand for cheese and butter. This case demonstrates the difficulties which can arise under long-term contractual agreements.