Oatly, a prominent brand in the EU and UK, is well-regarded for its innovative dairy alternatives, most notably its oat drink. On 23 April 2021, Oatly secured a UK trade mark for the phrase ‘POST MILK GENERATION’, a registration that covers a variety of goods in Classes 25, 29, 30, and 32. These categories include products like oat-based drinks as milk substitutes, sauces, food spreads, energy drinks, and fruit beverage options.
However, in November 2021, Dairy UK, the trade association representing the UK dairy sector, filed an application with the UK Intellectual Property Office. They sought a declaration to invalidate the mark under the UK Trade Marks Act 1994. This Act stipulates that a trade mark should not be registered if it is “of such a nature as to deceive the public” or if its use is prohibited “by any enactment or rule of law.” Similar provisions are present in Irish law as well.
Dairy UK argued that the trade mark could mislead consumers, notably due to the inclusion of the term ‘milk’ in relation to products that do not contain milk or any related ingredients. Furthermore, they claimed that the use of the trade mark was prohibited under the EU regulation that governs the collective organization of agricultural product markets, which was altered post-Brexit.
In January 2023, the Registrar of Trade Marks ruled in favor of the invalidity application, stating that the use of the trade mark was prohibited concerning goods in Classes 29, 30, and 32. Although Oatly successfully appealed this decision, Dairy UK continued to contest the outcome in the Court of Appeal, questioning the interpretation of the regulation as it fits within UK law.
Understanding the Regulation
According to Article 78 of the regulation, “definitions, designations, or sales descriptions” specified in Annex VII regarding milk and milk products intended for human consumption can only be used for products meeting the stipulated requirements.
The Annex defines milk as “exclusively the normal mammary secretion obtained from one or more milkings without addition or extraction.” It further states that milk products are defined as those derived solely from milk but may allow for the addition of certain substances in manufacturing. The Annex also specifies terms that are reserved exclusively for milk products, such as cream, butter, and cheese, clarifying that these designations cannot be applied to any products outside the defined scope.
The Court of Appeal’s Decision
Following Dairy UK’s appeal, the court evaluated whether the previous judge made a legal error by interpreting the term ‘designation’ solely as a generic product description, thereby excluding trade marks. It was crucial to determine if designation should encompass any term referring to a product, including a trade mark.
While Article 78 addresses the use of definitions, designations, and sales descriptions for marketing purposes, only the latter is explicitly defined in the current regulation. This definition describes sales description as the “name under which a food is sold”, indicating that “no trade mark, brand name, or fancy name may replace the name under which the product is sold.”
Oatly argued for a distinction between sales description and a trade mark, positing that designation should carry the same interpretation as it did under prior regulations—that being “the name used at all stages of marketing.” Oatly’s position effectively sought to align the meanings of sales description and designation, despite the latter lacking a clear definition in the new regulation. Ultimately, Oatly contended that its trade mark, being a trade mark, cannot serve as a designation.
The Court of Appeal, however, rejected Oatly’s interpretation and reached several key conclusions:
- The absence of a definition for designation suggests that it should be understood in its ordinary sense.
- Designation must differ in meaning from sales description, given that the regulation defines the latter, indicating a need for differentiation.
- The context of the two terms in the current regulation varies significantly from that of the 2007 regulation, making it unreasonable to assume they share the same meaning and implications.
- The Registrar appropriately interpreted designation to incorporate (part of) a trade mark, as this term is general; for instance, one dictionary defines it as a “distinctive mark or indication,” which aligns with trade mark characteristics.
- The Court referenced the EU case of ‘VSW v TofuTown’, in which ‘Soyatoo Tofu Butter’ was acknowledged as a designation. Counsel for Oatly argued that this ruling was irrelevant; however, the court indicated that while Soyatoo was the source of distinctive character, this does not preclude the owner from seeking a comprehensive registration.
In conclusion, the Court of Appeal determined that the presence of additional qualifying words in the trade mark or its registration status did not change the fundamental issue: ‘milk’ qualifies as a designation under current regulation and cannot apply to any product not containing milk. As such, the court reinstated the Registrar’s declaration of invalidity against the ‘POST MILK GENERATION’ mark.
Supreme Court Appeal
However, the dispute is far from over. Oatly has sought permission to appeal the ruling to the UK Supreme Court, and this request has been granted. The Court of Appeal’s analysis poses significant considerations as we await the Supreme Court’s decision. This forthcoming judgment will be crucial not only for Oatly but also for its EU registered mark ‘POST GENERATION MILK’, which could face invalidation pending an unfavorable decision from the UK Supreme Court.
The outcome of this case will also have important implications for other brand owners who aim to market dairy alternatives under designations protected by current regulation. Therefore, food and beverage manufacturers should exercise caution when selecting terms and phrases for their branding to mitigate unnecessary legal risks. Only time will reveal the impact on the dairy alternative market.