The issue is a sensitive one for Cadbury, which could risk losing sales and having its brand image compromised if competitor products are passed off as its flagship chocolate.
The company brought proceedings against Darrell Lea Chocolate Shops, alleging that the use by Darrell Lea of a shade of purple " amounted to the tort of passing off and also misleading and deceptive conduct ", in contravention of the Trade Practices Act 1974, according to court papers.
However, Judge J Heerey concluded that: " I am not persuaded that Darrell Lea, in using the colour purple, has passed off its business or products as those of Cadbury or contravened the Trade Practices Act".
He said he was "not satisfied" that Darrell Lea's use of the purple packaging would mislead or deceive consumers.
Brand identity Cadbury Australia confirmed to ConfectioneryNews.com that it would be appealing the court's decision.
In a statement the company said that Cadbury Schweppes has established " a connection between our shade of purple and Cadbury chocolate and many customers associate Cadbury purple with Cadbury chocolate.
We remain totally committed to protecting our brand identity ."
In 2006 Judge Heerey had also ruled against Cadbury, but his decision was appealed on grounds that the testimony from expert witnesses was not taken into account.
At the time, Heerey had said: " Cadbury does not own the colour purple and does not have an exclusive reputation in purple in connection with chocolate ."
"Darrell Lea is entitled to use purple, or any other colour, as long as it does not convey to the reasonable customer the idea that it or its products have some connection with Cadbury ."
Long battle Cadbury has been struggling to register purple as a trade mark in Australia in the face of opposition from Darrell Lea since 1998.
In April 2006 a Trade Marks hearing concluded that the company had been using the colour as a trade mark since 1994 and could therefore register it as such on its boxed and block chocolate.
Australia and New Zealand are the largest markets for Cadbury in the Asia-Pacific region.
Cadbury Schweppes says it is the leading company in the Australian confectionery market and has the number one position in chocolate with a 53 per cent market share and a " strong presence " in candy.
The company also manufactures in Australia.
Financial results Cadbury Schweppes, which has just released financial results for the three months to March 2008, has said its Asia Pacific region growth in confectionery was driven by a strong quarter in Australia.
More generally, Todd Stitzer, Cadbury Schweppes CEO said: " We have had a strong start to the year in confectionery with revenues in the first quarter driven by excellent performances from our gum and emerging market businesses and higher pricing to recover increased commodity costs ."
Confectionery saw a revenue growth of 7 per cent.