06 June 2017

Fonterra: Intelact v. Fonterra

A two million dollar damages claim against Fonterra for alleged trade mark breach over use of the brand FarmSource was struck out by the High Court.
Fonterra was sued by Te Awamutu-based dairy consultants Intelact Ltd, reviving a 2014 trade mark dispute over use of the word “source” as branding in the dairy industry.  Intelact owns NZ trade mark registration for Source World and SourceNZ and has the domain name SourceNZ.com.  It took legal action in November 2014 when RD1, Fonterra’s retail arm, started using the brand FarmSource.
The High Court was told the dispute was settled with a mediation conference.  Interlact agreed to stop using “source” in its branding after June 2016 in return for a cash payment from Fonterra.  The amount paid was supressed.  Fonterra and Intelact agreed to use their best endeavours to reach agreement on a tolling arrangement allowing Intelact a reduced rate for processing.  When no agreement was reached on reduced rates, Intelact argued the mediation agreement was at an end.  Intelact was threatening ongoing use of “source” in its branding and the gloves were back on over their trade mark dispute.    
Justice Venning ruled wording of the mediation agreement settled the dispute over branding.  The earlier dispute was replaced by new obligations: a cash payment and negotiations over a tolling arrangement.  The payment was made.  And Fonterra was not in breach of any obligations over a tolling arrangement, he ruled.  Fonterra and Intelact agreed to use best endeavours to reach agreement.  This was no more than an agreement to negotiate, creating no fixed legal obligations.  
Intelact Ltd v. Fonterra – High Court (6.06.17)

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