Cereal wars: Small bakery triumphs against granola giant in court

Granola is back on the menu at cafes around Australia after a small Victorian bakery emerged victorious from a legal dispute as to whether a trademark on the word “granola” had been infringed.

Multinational food giant Sanitarium sued the Geelong-based Irrewarra Sourdough Bakery for infringing its trademark on the word granola after the bakery sold packets “much like toasted muesli, although perhaps clumpier” labelled as ”all natural handmade granola”.

Sanitarium has a trademark on the term as part of its ”Granola Oat Clusters” breakfast food.

In the Federal Court case, Sanitarium argued the word ”granola”, widely understood in the United States to mean a crunchy toasted cereal, had a more ”boutique” meaning in Australia and was limited to its own breakfast products.

Sanitarium argued Irrewarra had been using the term ”granola” as a trademark but Irrewarra said the use of the word was ”purely descriptive”.

In a judgment handed down last week, Justice Jagot rejected Sanitarium’s argument and held that the words “all natural handmade” were “plainly descriptive of the product”.

“In context, the word ‘granola’ also reads as part of the product description,” she found.

She also rejected the proposal that the word had only a limited meaning in Australia and said Sanitarium’s case “suffers from an air of unreality”.

Jagot looked at Irrewarra’s evidence about recipes for a homemade breakfast food called granola, appearances of such a breakfast food in various cafes and restaurants, and manufacture and sale of boutique-style packets of such a breakfast food in Australia from the 1970s onwards.

“The modern world is characterised by rapid communication and extensive cultural exchanges, particularly from the USA in the form of films, television programs, music, books and travel,” she found.

“The fact is that the word granola has appeared in Australian dictionaries since at least 2004 and, since its invention in the late 1800s, has had more than a century of usage in the USA to percolate into the consciousness of Australians.”

Ben Hamilton, partner at law firm Hall & Wilcox, told SmartCompany the legal controversy arose over a registered trademark which could also be described as descriptive.

“In this case it is granola, you have been given a right to have a trademark but that right only extends to where someone else is using that word granola has a trademark. If they are using it in a descriptive sense to describe their product then it won’t be trademark infringement,” says Hamilton.

“The court looked at the context of where the word appeared in the packaging, in this case the label did contain the word granola but the word granola was not that prominent in the overall context of the label.”

Hamilton says there is a difference between getting a trademark and actually enforcing a trademark.

“There is a presumption of registerability and in some instances it then becomes a question of can you enforce that trademark,” he says.

“The trademark register should be taken at face value and assumptions should not be readily made about what rights appear to be.”

Julie Praestiin, spokesperson for Sanitarium, told SmartCompany the court upheld that in the breakfast cereal category Granola remains a registered trademark of Sanitarium which it has held since 1921.

“It also determined that the word granola has limited use as a generic descriptor,” she says.

“As part of normal business operations, Sanitarium will continue to protect its intellectual property and its associated trademarks.”

SmartCompany also contacted Irrewarra for comment but did not receive a reply prior to publication.