P&G Sues Kraft Over Maxwell House Packaging

Marketer Claims Container Design Infringes on Patents It Holds for Folgers

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BATAVIA, Ohio (AdAge.com) -- Procter & Gamble Co. has sued Kraft Foods, alleging the new plastic screw-top packaging for Kraft's Maxwell House coffee infringes on patents for P&G's Folgers packages, which were introduced four years ago.
Plastic containers with handles helped P&G's Folgers propel past Maxwell House for leadership in the $2 billion ground-coffee category.
Plastic containers with handles helped P&G's Folgers propel past Maxwell House for leadership in the $2 billion ground-coffee category.


"We made large investments to overcome the technical challenges in making a lightweight plastic container that can withstand the pressure changes that occur between the factory and the consumer's home," said Jim Johnson, P&G chief legal officer, in a statement. "Many innovations in this container are covered by P&G patents, which we believe Maxwell House has infringed."

Looking to halt shipment
In a suit filed in U.S. District Court in San Francisco, P&G is seeking to halt shipment of Maxwell House in its new plastic containers and for unspecified monetary damages.

A Kraft spokeswoman said in a statement that the company hasn't had a chance to review the lawsuit fully yet, but added: "Kraft respects valid patent rights of others and abides by all appropriate U.S. patent laws."

Plastic containers with handles helped propel Folgers past Maxwell House for leadership in the $2 billion ground-coffee category by 2004 -- though a production shutdown in P&G's New Orleans coffee plant following Hurricane Katrina temporarily ended Folgers' leadership two years ago.

Folgers since has bounced back, and for the 52 weeks ended July 15 led Maxwell House 35% to 34% in ground-coffee market share, according to Information Resources Inc.

Both could be divested
But both brands have been subject of divestiture speculation. People close to P&G say it may divest Folgers, following a portfolio review expected to be completed in September, to concentrate on its faster-growing personal-care and household cleaning businesses, while Maxwell House has been mentioned as a brand activist investor Nelson Peltz may pressure Kraft to divest. P&G and Kraft both have declined to comment on the divestiture speculation.

The retail coffee business has been losing ground to coffee shops for years. Both P&G and Kraft have sought to play on the growth of foodservice coffee brands, Kraft by selling Starbucks-branded whole coffee beans, and P&G more recently by selling Dunkin' Donuts ground coffee.
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