The Court of Appeal ruling in Dairy UK Ltd v Oatly AB [2024] EWCA Civ 1453 declared the trademark POST MILK GENERATION, registered for use by Oatly AB for oat based milk substitutes and products made with them, as invalid. This judgment not only upholds stringent regulations on dairy-related terminology but also signals an increasingly robust approach to consumer protection in the plant-based and alternative food sectors.
The case at a glance
At the heart of the case was the use of the term “milk” in Oatly AB's POST MILK GENERATION trademark. Dairy UK argued that the trademark was invalidly registered under s3(4) of the Trade Mark Act 1994 (TMA) on the basis that use of the term was prohibited by the Common Market Organisation Regulation (EU) 1308/2013 (the Regulation), which has continuing effect in the UK post-Brexit as retained EU law. This Regulation strictly reserves the use of the term "milk" for products derived from animals unless specific exceptions apply, such as when the term is part of historical or cultural nomenclature (e.g. coconut milk).
In January 2023, the Intellectual Property Office (IPO) invalidated the trademark for oat based food and drink products, agreeing with Dairy UK’s contention that Oatly's mark could mislead consumers by associating its oat-based beverages with traditional dairy products.
On appeal, the High Court overturned the IPO’s decision, interpreting the regulation more narrowly and allowing the trademark to stand for oat-based products. The Court of Appeal has however now reinstated the IPO’s original decision, affirming that the use of "milk" in Oatly’s trademark contravenes both regulatory and consumer protection standards. The ruling emphasized that this issue was not merely about semantics but pivotal to ensuring fair competition and consumer clarity.
Key legal considerations
Dairy UK appealed the High Court Decision on two grounds:
1) that the High Court judge had erred in law in interpreting the term "designation" as meaning a generic description of the product, thus excluding a trademark, and should have interpreted it as meaning a term that refers to a product in any way, including a trademark; and
2) even if the High Court judge had correctly interpreted the term "designation" he erred in law in his approach to the assessment of invalidity under section 3(4) of the TMA because he failed to consider notional fair use of the Trade Mark.
Court’s decision
The Court of Appeal allowed Dairy UK’s appeal. The court examined whether the term “designation” in the Regulation (which is not a defined term) included a trademark or part of a trademark. Holding that "designation" is to be given its ordinary meaning, it ruled that it could encompass trademarks used in the marketing of products. Accordingly, Oatly’s use of “milk” in its trademark was not permissible under the Regulation, resulting in invalidation of the trademark. The court emphasized that the term “milk” could not be used for products that did not contain milk, except under specific exceptions, which did not apply in this case.
The Court also considered whether the use of "milk" in Oatly's trademark was prohibited under the proviso at Annex VII Part III of the Regulation, which restricts the use of dairy related terms for non-dairy products. Oatly argued that use of the trademark is permitted under this proviso when the designation is clearly used to describe a characteristic of the product.
The Court held that Oatly's trademark did not clearly describe a characteristic quality of the goods in question, and would be understood as referring to potential consumers of the goods. Whilst it may be understood as alluding to the fact that the goods are non-dairy products, it did not clearly describe any such characteristic.
The court’s reasoning hinged on several key points:
- Consumer Protection: The court emphasised the importance of clear, accurate labelling, especially in a growing market for plant-based alternatives. Consumers must not be misled into equating oat-based products with dairy.
- Fair Competition: Allowing non-dairy products to use protected terms like "milk" could undermine the dairy industry by blurring distinctions that regulations were designed to maintain.
- Trademark Scope: Significantly, the court confirmed that marketing standards, which traditionally govern product labels, also extend to trademarks, setting an important precedent for future branding disputes.
What does this mean?
The Court of Appeal's decision clarifies that plant based manufacturers are prohibited from using dairy specific terms in their trade marks for marketing non-dairy substitutes, even if used in a non-descriptive manner. The case confirms that the prohibition in the Regulation is a strict one and including words to try and make clear that a product is a dairy substitute may not be enough.
Implications for the industry
The court's decision has significant implications for the UK plant-based industry. It highlights that terms like "milk," "cheese," and "yogurt" are deeply rooted in consumer expectations and subject to strict protections under retained EU law.
Going forward, plant based manufacturers will need to be careful about any brand names and marketing slogans they adopt or seek to register as trademarks, and consider whether they fall foul of the Regulation.
The decision reinforces the enduring influence of EU-derived regulations in the UK, underscoring the importance of brands navigating these frameworks carefully in a competitive and evolving market, and ensuring that they allign their trademarks and marketing strategies with strict regulatory standards.
It also highlights the balancing act regulators must perform, fostering innovation in food alternatives while safeguarding traditional industries and preventing consumer confusion.
Oatly have filed an application at the Supreme Court seeking permission to appeal the Court of Appeal decision.
If you have any queries relating to this article, or would need legal assistance with any intellectual property case, please contact Asima Rana & Gabriella Rasiah
