The A2 Milk Company Ltd (ASX: A2M) share price is up almost 2% in late afternoon trading on Wednesday.
Shares of the baby formula giant are currently at their intraday high of $5.30 a share, a 1.92% gain on yesterday's closing price.
The company's shares are defying a minor sell-off in the consumer staples sector on Wednesday, with the S&P/ASX 200 Consumer Staples Index (ASX: XSJ) currently down 0.73%.
Meanwhile, the broader market is almost flat, with the S&P/ASX 200 Index (ASX: XJO) up only 0.16%.
The gain comes amid news that A2 Milk is challenging one of its rivals over an intellectual property dispute, as reported by The Australian. And judging by its share price movement, investors seem to believe it will come out on top.
Let's investigate the details of the lawsuit.
Image source: Getty Images
A2 Milk sues Care A2
A2 Milk has filed a claim in the Federal Court against its rival Care A2, seeking a "permanent injunction restraining the respondents from infringing the A2 Milk registered marks", according to the report.
The action follows a cease and desist letter to Care A2 as well as Care A2's countersuit denying any alleged trademark infringement.
The article also said that Care A2 milk's parent company, Care Corporation, has warned of a fake prospectus circulating. It reportedly contains claims the company seeks to raise $49.5 million to float the company on the ASX and has a valuation of $544.5 million.
Inside the fake prospectus, there are also several unfavourable comparisons between A2 Milk's products and Care's. These reportedly include the claim that A2 Milk's Platinum product "is not produced from grass-fed A2 cows and does not use fresh milk", the article said.
A2 Milk has historically shown some resilience when it's found itself in legal trouble. In May, A2 Milk's shareholders launched a class action against the company for alleged misleading and deceptive conduct.
This could indicate that A2 Milk will maintain its footing despite the legal turmoils ahead.
A2 Milk share price snapshot
The A2 Milk share price is down around 3% year to date. Meanwhile, the S&P/ASX 200 Index is down more than 6% over the same period.
The company's market capitalisation is around $3.9 billion.
