The UK Supreme Court has issued its landmark ruling in the Oatly POST MILK GENERATION case (see the full decision here). The case centres around the use/registration of the trade mark POST MILK GENERATION for non-dairy milk substitutes, and whether this is contrary to EU law, specifically Regulation (EU) No. 1308/2013 on the labelling of agricultural products (retained EU law post-Brexit).
The case will undoubtedly impact on how vegan alternative products can be marketed going forward and brings to an end a dispute that has been running for several years. Going forward, business that produce and market vegan alternatives will need to do so with great care, ensuring that the branding, marketing and labelling of these products does not deceive consumers or fall foul of regulations.
The article below takes an in-depth look at the history of the case and the Supreme Court’s judgment, exploring why the matter has been hotly contested and divisive, whilst also considering the practical implications for those in the dairy and vegan alternatives industries respectively.
Background
In November 2019, Oatly filed an application for the trade mark POST MILK GENERATION. The application covered t-shirts in class 25, as well as a range of oat-based drinks, foods and ingredients in classes 29, 30 and 32.
No oppositions were filed against the application, but Dairy UK (a trade association for the UK dairy industry) submitted observations arguing that the application was contrary to Regulation (EU) No. 1308/2013 (the Regulation) – retained EU law post-Brexit.
The Regulation reserves the use of the dairy designations (such as "milk", “cream” and “butter” etc) for products derived from animals unless specific exceptions apply; namely, where the designation has been used traditionally in other contexts (for example, Coconut Milk or Cream Sherry), or where the designation is clearly used to describe a characteristic of the goods (for example, “milk-free”). This is set out in Annex VII Part 3 of the Regulation.
The UKIPO initially accepted the application, before Dairy UK filed an invalidation action. Dairy UK argued that POST MILK GENERATION was contrary to the Regulation given that it covered oat drinks/food and not any products as defined by the Regulation, thus being invalidly registered as per Section 3(4) of the Trade Marks Act 1994. Furthermore, the trade mark was liable to deceive the average consumer and thus invalidly registered as per Section 3(3).
In response, Oatly argued that the trade mark did not contravene the Regulation, as the trade mark did not make any claim, implication or suggestion that the product contained ‘milk’ as defined in the Regulation.
The UKIPO Tribunal Section sided with Dairy UK, thus declaring the application to be invalid. Whilst the Tribunal disagreed with the assertion that the average consumer was liable to be deceived, they agreed that the application did contravene the Regulation, and was therefore invalid as per Section 3(4) of the Trade Marks Act 1994.
Oatly appealed to the High Court.
High Court
The High Court took a very different view to the Tribunal and allowed Oatly’s appeal.
Oatly had argued that the Tribunal had erred in their assessment of the application, as the Regulation only prohibited the use of milk in relation to “definitions, designations and sales descriptions” and not in relation to trade mark use. The trade mark POST MILK GENERATION was fundamentally different from a “designation” as defined by the Regulation, given that it does not designate any specific characteristics of the goods but instead indicates trade origin. As a consequence, it could not fall under the remit of the Regulation.
The Judge concluded that the EU Regulation was concerned with the use of exclusive and protected designations (such as “milk”) to enable products to be identified with certainty. The trade mark POST MILK GENERATION alluded to the evolving attitude of consumers rather than to any specific characteristics. By definition, a trade mark has to be distinctive and not descriptive of the goods/services it covers; therefore, the designation “milk” had to be mutually exclusive from the trade mark POST MILK GENERATION. The Tribunal had, therefore, erred in their assessment.
Court of Appeal
Dairy UK subsequently appealed to the Court of Appeal 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
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.
The Court of Appeal allowed Dairy UK’s appeal, essentially siding with the original decision of the Tribunal in the invalidation proceedings. The Court held that the term “designation” was to be given its ordinary meaning, with the meaning being a “distinctive mark or indication” – naturally – this could include a trade mark. Consequently, the trade mark POST MILK GENERATION did contain the designation “milk” and was contrary to the Regulation and the Tribunal’s original decision in the invalidation proceedings was reinstated.
Oatly subsequently appealed to the Supreme Court.
Supreme Court
Oatly appealed the Court of Appeal’s decision on two grounds:
1. The Court of Appeal had incorrectly interpreted the meaning of “designation” within the Regulation, and the trade mark POST MILK GENERATION did not fall within the remit of the Regulation.
2. Even if the trade mark POST MILK GENERATION falls foul of Point 5 of the Regulation per se, it is saved by the second limb of the proviso in Point 5 as it is clearly being used to describe a characteristic quality of the products.
On the first point, Oatly had argued that the word “designation” within the Regulation was to be interpreted as meaning the name of a product; as such, the use of the word “milk” within the trade mark POST MILK GENERATION did not fall within the remit of the Regulation. The Supreme Court rejected this submission, concluding that the Regulation applies where a particular designation has been used for a relevant product, irrespective of whether it has been used as the name for the product. This interpretation is consistent with the natural meaning of the word “designation”. Consequently, POST MILK GENERATION falls foul of the Regulation.
On the second point, Oatly submitted that, even if POST MILK GENERATION falls foul of the Regulation per se, it is saved by the second limb of the proviso in Point 5 that stipulates as follows:
“However, this provision shall not apply to the designation of products the exact nature of which is clear from traditional usage and/or when the designations are clearly used to describe a characteristic quality of the product.”
Oatly argued that, when used in relation to oat-based drinks, the trade mark POST MILK GENERATION clearly described a characteristic quality; namely, the target consumer (people who had moved away from drinking milk and those who had wider concerns about the production/consumption of dairy). The Supreme Court rejected this submission, concluding that the trade mark POST MILK GENERATION did not clearly describe any characteristics. Instead, the trade mark was an oblique and obscure way of referring to the product being either dairy free or low in dairy (with both of these interpretations being plausible); consequently, it did not fall within the exception set out in Point 5.
Consequently, the Supreme Court dismissed Oatly’s appeal.
Secerna Comment
The decision of the Supreme Court affirms that, when marketing vegan alternative products, extreme care must be taken when using regulated dairy terminology. Using dairy terminology in an oblique or obscure way when advertising/naming vegan alternatives will very likely fall foul of the Regulation. It would appear that only very clear and objective use of regulated dairy terms in specific circumstances will fall outside of the scope of the Regulation. This fact will no doubt be warmly welcomed by the dairy industry.
The decision will come as a blow to the vegan industry who will have to take great care when marketing their ‘alternative’ products. There are still legitimate reasons to use regulated designations in certain narrow scenarios, for example, the decision does not prevent labelling of products as “milk-free” or “dairy-free”.
Indeed, it could be argued that consumers are already familiar with terms such as “oat-milk” and “almond milk” and definitively understand that these products do not contain dairy milk.
Nonetheless, the decision significantly narrows the scope of marketing creativity afforded to those in the vegan products sphere and will likely be the death-knell for terms such as “oat-milk” (and similar terms). Going forward, descriptors such as “plant-based drink” or “oat-based drink” will need to be used instead, arguably making it harder to clearly communicate to consumers about the specific nature/purpose of vegan alternative products.
There is a fine balance to be struck between protecting consumers from deceptive or misleading marketing whilst facilitating fair competition for vegan alternatives. As more consumers move towards vegan alternatives, issues surrounding the labelling and marketing of these alternative products is likely to become more contentious.
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