Kraft's preliminary injunction against Starbucks denied by appeals court

NORTHFIELD, Ill. — A U.S. appellate court denied Kraft Foods' request for a preliminary injunction against Starbucks, upholding a lower court's ruling.

The U.S. Court of Appeals for the Second Circuit's denial of the injunction will allow Starbucks to end its strategic partnership with Kraft before an arbitration proceeding. The arbitration process currently is under way, Kraft said.

After the ruling, Marc Firestone, Kraft Foods EVP corporate and legal affairs and general counsel, stated, "while disappointed in the outcome, we respect the U.S. Court of Appeals' decision," adding that the company expects "to prevail in the marketplace, given the strength of [our] $5 billion global coffee business. Kraft is committed to competing in all coffee segments, including premium and on-demand. Our future plans are as robust as our coffee products, and we look forward to sharing them at the appropriate time."

The preliminary injunction against Starbucks initially was filed in December in the U.S. District Court for the Southern District of New York and was denied in late January.

As previously reported, Kraft filed an arbitration proceeding against Starbucks last November after the coffee giant sought to end its 12-year strategic partnership with the company. At the time, Kraft claimed that it boosted Starbucks' retail grocery coffee business since 1998, which has garnered approximately $500 million in annual revenues. Starbucks said "Kraft did not meet its responsibilities" under the agreement.