Kraft Foods sues restaurant chain over Cracker Barrel product sales

Kraft macaroni and cheese products are seen on the shelf at a grocery store in Washington, May 3, 2012.

(Reuters) - Kraft Foods (KRFT.O) has filed a lawsuit against casual dining chain Cracker Barrel Old Country Store Inc (CBRL.O) over its decision to begin selling certain Cracker Barrel branded products outside of its restaurants and stores, court documents show.

The food manufacturer wants a marketing license agreement between Cracker Barrel Old Country Store (CBOCS) and the John Morrell Food Group to be declared void because it violates its rights to the Cracker Barrel brand.

The November deal with John Morrell Food, a unit of Smithfield Foods (SFD.N), would see select Cracker Barrel branded products sold in new retail channels besides CBOCS's restaurants, which Kraft said would encroach upon its market.

Kraft said in the court papers on Thursday that since 1954, the only Cracker Barrel brand products offered at grocery and similar stores have come exclusively from Kraft or have been licensed by Kraft and not from the restaurant chain.

Also, Kraft said CBOCS has never made "significant sales" of refrigerated foods such as meat products under the Cracker Barrel mark in any channel of trade, other than as items on their restaurant menus.

"The parties' market separation that has existed for decades will be eliminated," Kraft said in its suit asking the court to quash CBOCS's license agreement with John Morrell Food.

CBOCS could not immediately be reached for comment by Reuters.

The case is: Kraft Foods Group Brands LLC vs Cracker Barrel Old Country Store Inc, Case No. 13-cv-00780, U.S. District Court, Northern District of Illinois.

(Reporting by Sakthi Prasad in Bangalore; Editing by Hans-Juergen Peters)