At the end of last year, the UK Court of Appeal gave a judgment preventing Oatly from using the wordmilk in relation to oat-based products (see Dairy UK Ltd v Oatly Ab [2024] EWCA Civ 1453). Since then, Oalty has been granted permission by the Supreme Court to make a further appeal. Undoubtedly, the Supreme Courts final decision on the matter will be highly anticipated and is sure to have significant ramifications across the dairy-alternative industry.
Background
Dairy UK Ltd, the trade association for the UK dairy industry, first made an application in 2021 to invalidate Oatlys registered trade mark of POST MILK GENERATION. The Intellectual Property Office (IPO) initially invalidated the trade mark, but following Oatlys appeal, the High Court decided in 2023 that the use of the wordmilk in Oatlys mark was permissible since it was used to indicate a unique trade source for its goods rather than to describe the goods themselves. Upon Dairy UKs further appeal, the Court of Appeal have now disagreed with the High Courts assessment and re-instated the IPOs original decision on the basis that trade marks are within the definition of adesignation and thatmilk is a designation set out in EU Regulation No. 1308/2013 (assimilated into UK law under Brexit) that can only be used in marketing specific dairy goods. It is yet to be seen how the Supreme Court will further deal with the case.
Court of Appeal reasoning
Part of Oatlys argument for the validity of its trade mark was that the definition ofdesignation under the Regulation should be interpreted narrowly as meaning a generic description of a product and thus should exclude trade marks from its scope. Dairy UK submitted alternatively thatdesignation should be interpreted widely as a term that refers to a product in any way. After considering the parties submissions, existing case law, and the context of the legislation, the Court of Appeal felt that trade marks were within the definition ofdesignation. Being mindful that the purpose of the Regulation is to protect consumers, the Court said it would not make sense for trade marks to be used to circumvent the rules.
Having determined that the POST MILK GENERATION trade mark did in fact fall within the rules of the Regulation – since it was a designation – the Court of Appeal determined thatmilk could not be used in reference to an oat-based product. Although Oatly tried to rely on the wording in the Regulation that allowsmilk to be used for products where the designation is being used to describe a characteristic quality of the product, the Court of Appeal felt that this trade mark was being used to describe the consumers of the product rather than a quality of the product itself.
Whats next?
The Court of Appeals decision so far follows in the footsteps of precedent cases such as the 2017 EU case of VSW v TofuTown in which the Court did not allow designations likebutter andcheese to be used in marketing for soya-based products, despite additional language communicating that the products were plant-based. It will therefore be interesting to see whether the Supreme Court finds differently on these facts.
This case serves as a reminder of the strict nature of designations, as well as the risks of failing to take this into account when creating a trade mark. The Regulation does, in fact, extend beyond limiting the use of the wordmilk and also lists words such as veal and wine as designations which may only be used in marketing for prescribed products. The Court of Appeal made it clear in its judgment that the lack of an intention to deceive did not excuse the use of the termmilk in marketing for an oat-based product, so business should always be mindful when coming up with marks and slogans. It will be interesting to see how the case and the law continues to develop.
If you have any questions about trade mark protection or other intellectual property rights, please contact our Commercial and Technology team or our Dispute Resolution team.
