To milk or not to milk - Oatly wins appeal against invalidity of its ‘POST MILK GENERATION’ trade mark in the UK

Introduction

The High Court recently allowed an appeal by Oatly against a decision of the Intellectual Property Office ("IPO”) which had found the trade mark ‘POST MILK GENERATION’ to be invalid as it was deceptive in relation to oat based products (contrary to section 3(4) of the Trade Marks Act 1994 (the “Act”)).  The High Court overturned the IPO’s ruling and declared Oatly’s trade mark to be validly registered, ruling that the use of the term ‘milk’ in Oatly’s marketing did not amount to its products being “designated” to consumers as dairy products, so there was no deception (Oatly AB v Dairy UK Ltd [2023] EWHC 3204 (Ch)).

Summary of facts

In November 2019, Oatly filed an application for the trade mark ‘POST MILK GENERATION’ (the “Mark”) in Classes 29, 30 and 32 for various oat-based products. Observations were filed by Dairy UK under sections 3(3)(b) and (4) of the Act, claiming that the mark was deceptive pursuant to restrictions under EU law concerning the use of the term ‘milk’ in relation to non-dairy products. Although initially upheld by the IPO, following Oatly’s request for full written reasons the IPO waived the objection in April 2021. In response, Dairy UK filed for a declaration of invalidity of the registration in November 2021, citing the same provisions and also relying on pre-Brexit EU law that imposed restrictions on the use of the term ‘milk’ on packaging and when marketing food or drink. The IPO found against Oatly and declared the mark to be invalid, prompting the present appeal to the High Court.

The relevant law

Section 3(4) of the Act prohibits registration of a trade mark which would be contrary to “an enactment or rule of law”. The relevant enactment in this case was the Common Market Organisation Regulation (EU) No 1308/2013 (”the Regulation”) which defines the term ‘milk’ as the “normal mammary secretion obtained from [..] milking”, ‘milk products’ as those derived exclusively from animal milk, and ‘composite products’ as those in which milk or a milk product is an essential element. The Regulation goes on to state that:

1. the term ‘milk’ cannot be used for any product that does not satisfy that definition, regardless of whether the term is used in the product description or in a trade mark (the “definition prohibition”); and
2. use of this term in advertising (even if not on products) must not claim or suggest that the product is a dairy product if it is not (the “advertising prohibition”).

Use of the term ‘milk’ would be permitted only to describe the raw materials and to list ingredients following the guidelines of relevant Directives. The European Commission has also made specific exceptions (for example, under Commission Decision 2010/791/EU) allowing for the designation of  certain products by reference to restricted terms (such as “coconut milk”) due to their longstanding traditional usage, since consumers know that those ‘milk’ products are not actually derived from animal milk.

The Court’s Findings

As Oatly’s products were not “mammary secretions”, Dairy UK argued that ‘milk’ could not be used as a designation of Oatly’s products ‘regardless of how the mark as a whole may be viewed by the customers’ as this was not a relevant factor under the definition prohibition. Put simply, the mark contained the word ‘milk’ and the goods in question were not milk.

The TofuTown case (Verband Sozialer Wettbewerb eV v TofuTown.com GmbH, Case C-422/16) was also cited as support for the argument that the term ‘milk’ cannot be used to describe plant-based products in marketing (i.e. contrary to the advertising prohibition), even if accompanied by the use of additional descriptive language to clarify its intended meaning.

The fact that the term ‘milk’ was contained within a trade mark did not, Dairy UK said, prevent it from being caught by the Regulation. If the Regulation did not apply to trade marks, this would have created a ‘loophole’ that marketers could exploit simply by registering their advertising slogans as trade marks.

Mr Justice Richard Smith, sitting in the High Court, was not persuaded by these arguments. He criticised the IPO Hearing Officer for interpreting the definition prohibition too widely and “shoehorning” the Mark into its scope simply for having the word ‘milk’ in it, even though it was used to describe the source of the products, rather than to define or describe their characteristics. The Judge (as regards the use of the term ‘milk’) indicated that “although it may well have been used in their marketing, it does not purport to market them as any particular product, let alone as milk”. Accordingly, the term ‘milk’ in this context was not a ‘designation’ restricted by the Regulation, so the definition prohibition did not apply.  

In view of the Hearing Officer’s  finding (which was not contested) that Oatly’s products associated with the Mark would be understood as being targeted to “those [consumers] who no longer consume dairy milk”, it could not be said that the use of the term ‘milk’ claimed, suggested or implied that the products were dairy products. Therefore, the advertising prohibition did not apply either.

The Judge said his findings were “reinforced” by the fact that the term ‘milk’ appeared in a composite trade mark (‘POST MILK GENERATION’) which was not descriptive and whose purpose was to distinguish Oatly’s goods from those of others by their trade source. It was that very purpose which negated any finding that it would function as a designation of the product. This would also have been contrary to provisions of EU law which prevent traders from replacing the name of a food with a trade mark, brand name or another name protected by intellectual property. Accordingly, the two were mutually exclusive such that one could not amount to the other, and vice versa.

For those reasons, the High Court allowed the appeal and agreed with Oatly that the Mark did not fall within the prohibitions concerning restricted ‘designations’ under the Regulation, did not mislead consumers, and was validly registered.

Comment:

This decision is among several recent cases concerning the use of descriptive terms in the branding of alternative food products which specifically do not contain the named ingredient (in the traditional sense of the term) – see, for example, our Law-Now report on the MYBACON case (EU General Court) relating to plant-based meat substitutes here. Whilst that decision did not go in the brand owner’s favour, the Oatly ruling confirms that the use of such terms within a trade mark will not necessarily amount to the kind of use of a protected “designation” which would engage the Regulation. With the increase in meat-free, dairy-free, vegan and gluten-free food and drink products available on the market, this decision leaves the door ajar for food manufacturers to brand and market their ‘free from’ products creatively and allows scope for ‘tongue in cheek’ slogans whose true meaning will be understood by the average consumer.

That being said, the decision does not necessarily give trade marks a ‘free pass’ under the Regulation either. Although the Judge found that a term could not function both a protected ‘designation’ as well as a trade mark in this case, the definition prohibition does not specifically say that they are mutually exclusive.  Whilst the Judge was “reinforced” in his views by this distinction, it was not decisive to his ruling.

Moreover, each case is likely to turn on its own specific facts. It appears that the public’s “perception” of the intended meaning of the Mark (which Dairy UK had argued was ‘not a relevant factor’) played a crucial role in the Court’s finding in this case, likely because the words ‘POST MILK GENERATION’ specifically suggested a rejection of traditional animal-based milk. The scope of the Regulation may not be so clear-cut in cases involving a mark with a more ambiguous meaning. Brand owners and marketers should therefore have regard to all applicable laws and regulations in choosing brand names and advertising slogans for alternative food and drink products.

Co-authored by Ayse Neva Sark, Solicitor Apprentice