Kraft Foods Group Brands LLC & Anor v Bega Cheese Limited [2020] HCATrans 193 (13 November 2020)

Last Updated: 18 November 2020

[2020] HCATrans 193

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Melbourne No M41 of 2020

B e t w e e n -

KRAFT FOODS GROUP BRANDS LLC

First Applicant

H.J. HEINZ COMPANY AUSTRALIA LIMITED

Second Applicant

and

BEGA CHEESE LIMITED

Respondent

Application for special leave to appeal

NETTLE J
GORDON J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 13 NOVEMBER 2020, AT 11.25 AM

Copyright in the High Court of Australia
MR J.T. GLEESON, SC: May it please the Court, I appear with MR B.R. KREMER, for the applicants. (instructed by Jones Day)

MR A.S. McGRATH, SC: If it please the Court, I appear with MR C.H. SMITH, for the respondent. (instructed by Addisons)

NETTLE J: Yes, Mr Gleeson.

MR GLEESON: Your Honours, could I go directly to ground 1 and to the four propositions of law that we would contend for if leave were granted. The first proposition is that what Justice Graham stated in Re GE, which is at page 56 of the book, accurately reflects the nature and function of a common law trademark under modern business conditions and, in particular, a trademark may indicate a connection in the course of trade in the sense that it indicates the person who controls the character and quality of the goods which may not be the direct manufacturer.

Your Honours, the second proposition would be that, under Australian law, a common law trademark may be assigned in the manner indicated by the Lanham Act in the United States or section 106 of our Trade Marks Act, which are found at page 338.

The third proposition is that Australian law recognises a concept of product goodwill. The concept has been referred to by the Court, albeit briefly, in cases such as Hospital Products, relying upon what Justice Windeyer had said in Estex v Ellis. It calls out, we submit, for elucidation, particularly in the present context.

Your Honours, the fourth proposition on ground 1 is that the courts below have misunderstood what this Court held in Murry and in Placer Dome. The relevant passages are set out at page 46 of the book, and the Court there, clearly enough, was identifying that the business goodwill of a company related to the right to carry on the business must be carefully distinguished from the sources of the goodwill and the potential use or earning power of each of those sources.

NETTLE J: Mr Gleeson, these may be interesting questions, but do we get to them unless you establish that the court was wrong in its construction of the 2012 agreement?

MR GLEESON: Your Honour is correct. We must win on ground 3 to have success in the appeal.

NETTLE J: Should we not then start there?

MR GLEESON: I am happy to go straight there, your Honour. The only reason I mention these is that we do contend that the court’s errors on ground 1 and ground 2 informed its erroneous approach to construction under ground 3.

NETTLE J: Very well.

MR GLEESON: Your Honours, going straight then to ground 3, could I ask the Court to go to page 281. The starting point was at section 2.1(a)(i) and then paralleled in (b)(i). There was an allocation of what was called GroceryCo Brand IP to our side of the new group, and there was an allocation of SnackCo Brand IP to the other side of the group, and appropriate assignments accordingly. The second step is to go to the definition of “GroceryCo Brand IP” on page 279, and the same follows with “SnackCo Brand IP”, and it:

means, collectively, the GroceryCo Marks –

capital M, and I emphasise the next words:

(and the goodwill associated therewith) –

So at that stage the agreement has, we submit, been constructed on the basis of product goodwill so that what is allocated or assigned to each side of the group necessarily carries all goodwill associated with the relevant marks, and that is true whether the marks are registered or unregistered, and that is the first bridge between ground 1 and ground 3. Your Honours, the third step, then, is to go to “GroceryCo Marks” on the same page, and they are the capital T:

Trademarks owned by Kraft –

or any company in the group that satisfy one of two conditions. Pausing on the capital T “Trademarks”, which are defined on page 281, within that definition they include:

all registered Trade Dress . . . whether registered or unregistered –

So the trademark has already incorporated within it the concept of the related trade dress. If your Honours go immediately to “Trade Dress”, that gives us:

the visual appearance of a product packaging –

no doubt including the colour and the design, but importantly, it is the visual appearance:

used on the package in combination with a licensed GroceryCo Primary Brand or a licensed SnackCo Primary Brand –

That is the critical bridge and point that the Full Court did not consider - this is one of our ground 4 arguments that we raised but they did not consider. The trade dress is not any get‑up. It is only the get‑up which is used in combination with a primary brand. Now, on the product in the present case, Kraft undoubtedly was a primary brand.

GORDON J: How do we know that?

MR GLEESON: Your Honours know that because of the finding on page 286, at paragraph 173 – that Kraft is in Schedule B in respect to groceries, cheese and dairy and that renders it a GroceryCo primary brand within the definition on page 280, near the top. So, Kraft – looking at that definition, your Honours – found in Schedule B as a brand, not simply as a word but as a brand – was a GroceryCo primary brand.

So, coming back to “GroceryCo Marks” on the foot of 279, the point we have reached is that the “Trademark” which includes as a package Kraft as a primary brand and the trade dress – because it is used in combination with the primary brand – has satisfied not only the opening limb which is “Trademark” but it has satisfied the next limb which is “GroceryCo Primary Brands”.

That being so – if your Honours just go back up to “GroceryCo Brand IP” – we now have a GroceryCo mark being the whole of the trademark, including Kraft and the related trade dress, and the goodwill associated with that – the product goodwill – has been allocated, we would submit, to our side of the new group. So, at that point, we see the concept of product goodwill – not Murry business goodwill – being attached to, as one might expect, the primary mark and also to the trade dress which supports the primary mark.

Your Honours, the reason we lost on that part of the argument was that the Full Court said that within the definition of “GroceryCo Marks” the court should read “GroceryCo Primary Brands” as a narrowing condition, namely, that although you have started with the trademark which included the whole package in the trade dress, you are now narrowing it down so that only the Kraft name has been allocated, leaving the trade dress that you had started with as part of the package as a floater which has to be dealt with under the next part of the clause “primarily relates to one or other of the businesses”.

GORDON J: Is that right, Mr Gleeson? I thought that the passages at 173, 174 and 175 came to a different – had additional reasons for rejecting that submission – on page 286 of the application book – or I have misread those paragraphs.

MR GLEESON: At 173 to 175, the court was first identifying what were primary brands and we agree those paragraphs are correct. You go to Schedule B for our primary brands. You go to Schedule C for their primary brands and at 175 the court was saying that because “Never Oily, Never Dry” was in the SnackCo Binders, it was deemed to be one of theirs and we accept that as well. The error that I am referring to is perhaps clearest seen at page 300, paragraph 209 where, at about line 40 in the middle of 209, the court taking a grammatical approach to the definition says you:

commence with the broadly defined concept of a Trademark, to which narrowing conditions are applied.

That is the critical step where we lost and we submit that these are not narrowing conditions. Rather, what is occurring is that you are starting with the trademarks which is the package. You are keeping the package and what you are doing under the first condition is saying if that package reflects a primary brand allocated to GroceryCo then that is where it sits. If it represents a primary brand allocated to SnackCo then that is where it sits.

So, at that stage of the exercise, as you would expect, the parties will have allocated most - most, if not all of the relevant IP, and they have done it quite clearly by reference to what is in the schedules plus the definitions I have taken you to. Instead of that approach, what the Full Court did was to say, as you will see over on page 301, that the second condition is much broader in scope, so that is the condition found back on the bottom of 279 to 280 which is do they “primarily relate to” or “used in one business or the other”. We would submit that rather is the residual catchall for ones which have not been clearly allocated by the schedules. Just to conclude that paragraph on page 301, your Honours, you will see at that point, at the end, the court refers to:

The Australian peanut butter business conducted by KFL was part of what became the SnackCo Business –

and, therefore, they get the PBTD. That is an important passage, firstly, because that is where the ground 1/ground 2 error has come back in treating it as being an Australian peanut butter business. But, secondly, your Honours, even if one was applying that second limb can I show you how the agreement works on its true construction? That second limb requires – this is back on the foot of 279 to 280 – an identification of what is used in the GroceryCo business or, in the equivalent definition, what is used in the SnackCo business.

To find out what those terms mean, it is necessary to go back to the other agreement, the SDA. The GroceryCo business starts on 275. No doubt, if your Honours look at paragraphs (a) through to (d), the definition is working largely on a geographical line. This is the first principle of the restructure, which is this is on geographical lines. The critical one, however, is (f). You will see from (f) that the GroceryCo business includes:

any other businesses or operations conducted primarily through the use of the GroceryCo Assets.

Immediately beneath that, you see the avoidance of doubt provision, which says that the MTA governs and trumps anything in the SDA. If one goes for the GroceryCo assets, they are back on page 274, in particular paragraph (a). The second half of paragraph (a):

all other Assets that are expressly provided in this Agreement or any Ancillary Agreement –

That includes the MTA:

as Assets to be transferred to or retained by any member of the GroceryCo Group -

Pausing there, that is critical because it is common ground that the Kraft brand was given to our side as a primary brand under the MTA. What that means is that the business conducted in Australia, primarily through the use of the Kraft brand prior to 2012, is a GroceryCo business. Once that is true, it means that whichever limb is used within the critical definition back on page 279, it goes to our side and it goes as a package – the primary mark, plus the trade dress and the product goodwill follows it.

Your Honours, what that indicates in terms of why ground 1 relates to this ground is that the Full Court did not conceive of the agreement working this way because it was always looking for what it thought was the Murry goodwill of the business. That, we submit, was the wrong goodwill because the agreement is structured on product goodwill.

Your Honours, could I show that link, if your Honours could go back, please, to pages 262 to 263. At page 262, at the end of paragraph 124, the Full Court read that critical passage in Murry at paragraphs [51] to [52] as limited only to registered trademarks and the effect of that was that if you had an unregistered trademark, you do not do the exercise indicated in Murry, you do not value the full earning power of the trademark before you do business goodwill, somehow:

the full “earning power” of the trade mark –

is assimilated to the Murry goodwill, and that fundamental error is what is driving the construction in ground 3. Your Honours, could I then note on that same page at paragraph 126, that although the primary judge said he was following Murry, and that to assign a common law trademark you have to assign the Murry goodwill of the business, he immediately encountered a problem that KFL was conducting an integrated business. It was the sole manufacturer and supplier of Kraft‑branded peanut butter, Kraft‑branded Philadelphia cheese, and every other Kraft‑branded product in Australia. It was running a single business. It had a single Murry goodwill.

What the primary judge did was to in fact divide up the Murry goodwill into a series of sub‑business goodwills. There was the goodwill of the peanut butter business, the goodwill of the Vegemite business, and so on. That, we submit, directly contradicts the statements in Murry that I commenced with, that the goodwill of the business is indivisible. It is that concept of these divided Murry goodwills which, we submit, has driven the court’s construction.

Your Honour, my final submission is that ground 4 really folds into ground 3, save to note that if you were to go, for example, to page 301, to paragraph 210, this is one of the places the court said, well our construction does not work because if you had Kraft Vegemite the trade dress would travel with both - the Kraft brand, which goes to us, and the Vegemite, which goes to them, so our construction is a nonsense.

The answer to that was in one of the arguments we put, which was not addressed, which is on page 98 of the book, which is that the agreement anticipated this problem in the clause at the foot of the page, (i), which is the umbrella clause which says that if Kraft is used together with one of the primary brands that goes to them, Kraft operates merely as an umbrella sitting above it, and so the trade dress follows the Vegemite or the Philadelphia to them.

The additional problem the court thought was found at page 211 about “Never Oily, Never Dry” was again answered by an argument we put which was not addressed and I will conclude on that. If your Honours could go back to page 280 please. I would emphasise with trade dress that trade dress must be used in combination with a primary brand. “Never Oily, Never Dry” was not a primary brand and so the trade dress was never caught up within it as a trademark. Indeed, “Never Oily, Never Dry” was a sub‑brand - you see the definition on 280 which expressly excludes
trade dress. For those reasons, your Honour, we would submit that the construction argument has good prospects of success and is a good vehicle for raising the larger questions. May it please the Court.

NETTLE J: Thank you, Mr Gleeson. Yes, Mr McGrath.

MR McGRATH: As your Honour identified at the outset, none of grounds 1, 2 or the rest of ground 4 arise for any consideration by this Court if the applicant cannot succeed on the construction argument. In other words, if the rights in the peanut butter trade dress do not get assigned from SnackCo to GroceryCo under those agreements then the applicants have no case.

Turning to the question of the proper construction, nothing that Mr Gleeson has pointed to indicates an error of principle because what the Full Court did was to look at a highly fact‑specific set of agreements applying New York law on orthodox principles of interpretation which had been agreed by the parties to be exactly the same as the corresponding Australian legal principles. In summoning this Court’s intervention, the applicants do not point to any question of general application or importance that could be resolved by this Court in relation to that contractual construction.

Turning to the proper construction, the applicants assert that the Full Court’s construction of the two agreements was fatally infected by its conclusions in respect of grounds 1 and 2. But that submission is misconceived because the Full Court made it clear at paragraph 151, if I could take your Honours to page 271 of the application book. The court states in paragraph 151 that when were considering the issue they were:

concerned only with the correct construction of the Restructure documents (as distinct from the requirements for an assignment of an unregistered trade mark under Australian law).

In other words, the very thing about which the applicants complain is the very thing that the Full Court stated that they were not influenced by.

The Full Court’s judgment is a regular judgment in relation to construction. They set out all of the relevant provisions of a complex and interconnected set of provisions and they did so at great length. Their reasoning for the rejection of the applicants’ arguments on the construction is comprehensive and detailed. It stretches from paragraphs 179 through to paragraph 221.

None of that analysis draws on the views that the Full Court had already reached on the matters which are the subject of grounds 1 and 2. The analysis is conventional. It turns, first, to the language actually used in the section. If I could take your Honours to page 300, their Honours set out at page 300, in paragraphs 208 and 209, their relevant reasoning on the grammar of the particular sections that they were grappling with. Paragraphs 208 and 209 contain their views on the grammar and the use of the words there. So that was step one of their construction.

GORDON J: Mr McGrath, in relation to 208 and 209, Mr Gleeson describes it as, in effect, a critical.....words he used, but he regarded 209 as, in effect, the error – that is, this misunderstanding, as he would put it, about the way in which the definitions of “grocery trademarks” worked with the definition of “trade mark” and the like.

NETTLE J: In particular, that the Full Court were wrong in using what they describe in the last five lines at 209 as a limiting condition.

MR McGRATH: It was correct, effectively, to say that that was a limiting condition because of the way that the grammatical structure of those sections worked together. What was actually occurring was that the Full Court was looking at what was the interplay between critical definitions in relation to the GroceryCo primary brand and the trademarks. The Full Court was quite correct to regard the grammatical construction as one which favoured their interpretation, grammatically, rather than the interpretation that is put forward by the applicants.

The Full Court’s analysis in 209 is in fact a correct grammatical analysis of the particular sections. But their Honours do not stop there. Having grappled with the grammar, they then turn to the context. Your Honours will see in paragraph 210, at page 301, that they reject Kraft’s construction in relation to “contextual considerations”.

NETTLE J: Mr Gleeson says that that anomaly is specifically provided for, which is something that the Full Court failed to take into account ‑ ‑ ‑

MR McGRATH: I accept that the Full Court does not refer to clause 3(i) in their considerations. However, that matter is actually at the margins of the matters with which the Full Court was having to deal. To put that in perspective, the applicants’ submissions on that point consisted of a single paragraph in their reply submissions and it was contained in less than half a page of the transcript.

The particular section, 3(i) of the MTA, which deals with the concept of an umbrella brand ‑ there is in fact no definition of “an umbrella brand” and there is nothing in the document that tells you what happens in relation to umbrella brands as opposed to the central concepts of construction, which are dealt with by the primary application of the considerations for what was a GroceryCo trademark. That is what the court had to deal with.

So, in our submission, although the court did not in terms refer to section 3.1(i) of the MTA in their judgment, it was not a submission that could be put at the level of being a substantial matter that was overlooked by them. They did, in fact, have to deal with the very point that they dealt with in paragraph 210 as to how the allocation was to occur for the Vegemite product under the application of the usual provisions that they were dealing with. Was it a GroceryCo primary brand and, if it was, in which way was the trade dress of that primary brand to be dealt with? So in effect, the issue that they say has been overlooked is not one that takes the court anywhere.

Turning back to the manner in which the Full Court dealt with this, the Full Court did in fact, having dealt with the context, then go on in conventional principles and consider what were the purposes or objects of the relevant agreements, and that is to be seen in paragraph 213 when the court was setting out there why they regarded their construction as better reflecting the commercial purposes or objects of the MTA. No criticism is made in respect of the considerations that are set out there.

So, on our submission, your Honours, there has been a conventional application of orthodox principles and there is no matter which would raise the issues that are dealt with by the court there to the level for which special leave should be sought.

Your Honours, if I can turn now to deal with the matters that are raised regarding product goodwill. Of course, none of the matters concerning product goodwill or the issue of control in ground 1 or ground 2 arise, unless your Honours feel that there is a special leave point in the construction.

Permeating the applicants’ submissions on ground 1 is the same point of weakness that they unsuccessfully argued at trial and before the Full Court, the argument that the brand, which is the registered trademark “Kraft” is the sole critical source of all reputation and all goodwill from the sale of the peanut butter products to which it was applied.

At paragraphs 144 through to 146, the Full Court comprehensively summarised why all of the trial judge’s findings to the contrary were correct, including that, in this case, there were multiple sources of goodwill of the relevant business. Addressed overall, the alleged error by the Full Court in relation to product goodwill simply does not exist. It is an assertion built on the mischaracterisation of the task that was undertaken by the trial judge and the Full Court, and which draws on an argument to the effect that there was a change in the common law of Australia said to have been brought about by the introduction of section 106 of the Trade Marks Act.

That argument was never put to the trial judge, and it was only orally argued, in an entirely different way, before the Full Court. The application at paragraph 1 said that the Full Court’s error was:

in holding that an unregistered trade mark can be assigned only with the goodwill of the entire ‘business’ in respect of which it was used. The Full Court ought to have held that an unregistered trade mark may be assigned with the goodwill of the business concerned in the relevant product(s) to which that mark is applied.

On our submission, on either postulation, the Full Court’s task was the same. They had to identify the goodwill of the business, and the Full Court did that explicitly at paragraph 122, when they accepted the trial judge’s definition of a “peanut butter business”.

They started out with the two underlying principles which they did not regard as uncontroversial: first, that unregistered trademarks such as the peanut butter trade dress are not a species of property under Australian law and it is the business goodwill or reputation which can be protected by the passing off and misleading and deceptive conduct actions.

In doing that they set out senior Judges of this Court - extractions from judgments in JT International from Chief Justice French, Justice Gummow and Justice Crennan and then they turned to another principle which again was uncontroversial which is that the goodwill of the business is the property which is capable of assignment and they cited Murry for doing so.

The applicants’ arguments for a product of goodwill are bound to their argument for the alleged effect of the enactment of section 106. None of the arguments withstand scrutiny to the level of special leave required at this Court. The first argument against product goodwill is that by using the label “product goodwill” it conceals the task of the court because it tells nothing of its content.

The second argument against product goodwill is that the obiter observation of Justice Dawson in Hospital Products, to which the applicants quote, does not accept the concept of product goodwill exists. Justice Dawson was merely raising a query of how and when it may exist if at all. Then, within exactly the same reference in Hospital Products at pages 114 to 115 Justice Dawson expresses the view that perhaps the explanation why product goodwill as a concept is virtually unexplored is to be found in the position at common law where a trademark is assignable only in conjunction with the goodwill of the business in which the mark is used and he observes that that was the position for some time with registered trademarks. So, he applied or referred to a well‑recognised and longstanding common law principle, precisely the one that the Full Court applied in this case.

In any event, whatever might have been speculated by Justice Dawson in obiter in Hospital Products about the notion of “product goodwill” has been, on our submission, comprehensively dealt with in the subsequent cases of this Court and most particularly in the case of Murry at paragraphs 35 through to 37 where the notion of a business having lots of different goodwill such as sight goodwill, personal goodwill and name goodwill was explicitly rejected because it erroneously identifies the concept of goodwill as property with the sources of the goodwill.

The acceptance of a conclusion to the contrary would contradict what their Honours describe as two fundamental premises of the law of goodwill. The first is that goodwill has no existence independently of the conduct of a business and the second is that goodwill cannot be severed from the business that created it.

At paragraph 37 of Murry their Honours reinforced their repeated statements that goodwill is indivisible by explicitly rejecting the notion that it is divisible and the foundation for the argument that is now made by the applicants before your Honours was rejected by Murry and has been subsequently also rejected by the acceptance of Murry in JT International. Importantly, on this application, your Honours, the applicants do not say that Murry was wrong in any way.

The next argument against goodwill is one which comes from the fact that the applicants say that the Full Court failed to consider their argument concerning section 106. As I have mentioned, no argument to that effect was put before the trial judge. The only argument that was put before the Full Court was to a very limited degree orally. It was merely to quote section 106 and the definition of “predecessor in title” and to assert that the relevant portions of the MTA met the requirements of the common law for the valid assignment of unregistered trademarks because the transfer of the GroceryCo trademarks stated it was with all associated goodwill.

The argument that is now made in this application is quite different. It is that section 106 supports the view that product goodwill is a valid concept in Australian law. That argument was never put in terms to the Full Court. It is obviously why it was not dealt with in terms in the Full Court’s judgment. Special leave, on our submission, should not lie for such an argument where the bounds of it were not put before the Full Court.

The fifth argument against product goodwill is that there is a longstanding presumption against the alteration of the common law on a fundamental principle such as the assignment of an unregistered trademark, unless the legislature has expressed an intention to do so with irresistible clearness, to quote Justice O’Connor in Potter v Minahan in 7 CLR. That is a presumption that has been frequently applied by this Court, and the applicants do not point to any irresistible clarity in the words of section 106 to introduce the concept of product goodwill and the applicants do not draw attention to any secondary materials in support, either.

The next argument against product goodwill is that, because the peanut butter trade dress is neither a registered trademark or a trademark whose registration is being sought, this case is genuinely unsuitable to consider the effect of the enactment and operation of section 106 in any event.

There would be wider and much more complicated questions concerning the operation of many provisions of the Trade Marks Act which affect the resolution of the question, which do not arise for consideration in this case and none of which have been ventilated in this case.

The next argument against product goodwill is in fact the very terms of section 106 do not talk about product goodwill but they actually reference the wider concept of business goodwill by the use of the words “the goodwill of a business concerned in the relevant goods and/or services”. The goodwill of the business concerned in the peanut butter goods was exactly what the trial judge identified and the Full Court accepted as open to his Honour to find, being the peanut butter business. The applicants tried to read out the words “goodwill of the business” and instead replace them with “goodwill in the relevant goods”. That argument has little prospects and it is not deserving of any special leave.

The next argument against product goodwill is the relevant parts of the judgment in Murry which deal at length with the concept of a business and how it can be assigned. The applicants do not identify precisely how the concept of product goodwill fits with or relates to the goodwill of a business. The parts of Murry on which the applicants relied ‑ paragraphs 51 and 52, to which your Honours were taken – do not recognise product goodwill but merely that a trademark may be a major source of goodwill for a business.

Within ground 4, the applicants have asserted that the failure to consider their submissions in relation to Murry, that were consistent with product goodwill, that was in fact adequately addressed by this Full Court at
paragraph 121 when they specifically referred to the passages of Murry at 51 and 52.

Further argument against product goodwill is the applicants rely on the series of US cases and section 10 of the Lanham Act. Section 10 of the Lanham Act is in completely different terms from section 106. Section 10 of the Lanham Act states that a registered trademark cannot be assigned without goodwill. That is not the position in Australia.

Finally, in relation to the issues of control, the argument that is put is that a novel proposition that the imposition of control by a parent over a subsidiary is sufficient to give ownership of the rights of an unregistered trademark. This is ground 2 of the applicants’ alleged errors. They argue that the ultimate controlling entity should be the person who uses the trademark and therefore the goodwill from its use goes to the parent.

No Australian authority has been cited for that proposition and, at its core, it is an argument for the piercing of the corporate veil, so that all trademarks that are owned by a subsidiary are to be regarded as the property of their parent and not itself.

But the crucial fact on which the trial judge and the Full Court proceeded was that the peanut butter trade dress was first applied by KFL to the peanut butter products that it manufactured and it sold, and that it had its own staff being responsible for quality and marketing.

Finally, your Honours, there is nothing that is put in relation to the principles referred to in GE or in Revlon which would indicate that there was any error on the part of the Full Court in considering that they were not applicable to this case. For those reasons, your Honour, we submit that special leave should not be granted.

NETTLE J: Thank you, Mr McGrath. Mr Gleeson, is there any reply?

MR GLEESON: Only two matters, your Honour. Could your Honours go to page 302, please, to paragraph 213. This was said to be the purposive aspect of the construction. What you in fact see within 213 is a restatement of the narrowing condition approach which was found in paragraph 209.

It is an acceptance that what happens is that if the trademarks are allocated as a primary brand – that is, in the Schedule B or C, or the binders – that is the catchall – limiting that to the word, the word “Kraft” but not the whole trademark as defined – then it goes in a particular direction. But anything else that is within the defined trademark, including the trade dress, travels in a different direction, namely through an inquiry into how the businesses were divided between the two groups.

What that means, stepping back from it, is – and it is not just about the peanut butter – there were literally hundreds of products being supplied by this group around the world. What this has done is split the primary brands – which will usually be registered marks – from the trade dress and sent one in one direction and potentially sent the other in the other direction.

That is the problem we pointed to in paragraph 214 – that this would create deception and confusion because, for example, between 2012 and 2017, when you looked at a single jar of peanut butter, the Kraft name – which was ours – told you that we were the person responsible for the character and quality of the goods whereas the associated trade dress – according to the Full Court – went the other way and told you that the person responsible for the character and quality of the goods was the particular manufacturer in Australia, KFL.

So, at a purposive level – by splitting the trademark and splitting the brand – this was creating the very risk of deception and confusion, in effect exposing all of the trademarks of the now separated group to risks of either revocation or failure. So, at a purposive level, the narrowing condition approach really undermines the entire purpose of the division.

Your Honours, the only final matter is that you will see, for example, at the end of paragraph 215, where the court is referring back to its earlier reasons and, similarly, near the end of paragraph 220, that the approach the Court has taken to grounds 1 and 2 is an important part of its construction on ground 3. May it please the Court.

NETTLE J: Thank you, Mr Gleeson.

In this matter the Court was not persuaded that the Full Court’s construction of the master trademark agreement is attended by sufficient doubt to warrant the grant of special leave or, therefore, that this is an appropriate vehicle for consideration of the questions of principle as to the assignability of goodwill that the applicant seeks to agitate. The application is dismissed with costs.

MR GLEESON: May it please the Court.

MR McGRATH: Thank you, your Honour.

NETTLE J: Thank you, gentlemen. Adjourn the Court.

AT 12.11 PM THE MATTER WAS CONCLUDED