It was billed as a genuine ‘David and Goliath’ legal battle. In this bitter trademark tiff between oat milk producers, why did the smaller opponent emerge triumphant?
By Luke Moulton
In January 2019, Glebe Farm launched its gluten-free oat milk as OAT DRINK, which was relaunched as PUREOATY in early 2020.
Oatly was aggrieved, considering it had earlier rights that were infringed and issued proceedings alleging infringement of five of its registered trademarks (registered broadly for oat milk) resulting from Glebe Farm’s use of: (i) PUREOATY, as a word mark and in the style used on its carton; and (ii) the design on the front of its carton.
A registered trade mark confers the exclusive use of the registered mark for the goods or services for which the mark is registered. Trade mark law protects signs to the extent that they are ‘distinctive’, i.e., to the extent that they are capable of distinguishing goods and services of one business from another. As a general rule, if a possible meaning of a sign is descriptive, it will not be granted registered trade mark protection because no trader is entitled to monopolise language to prevent others from using descriptive words to describe goods or services. Often, a sign has a descriptive element but other matter is added (e.g. words/designs/logos) which makes the mark as a whole distinctive and capable of registration. However, there is no monopoly to use the descriptive element per se. This principle was significant in Oatly’s failed claims.
In a lengthy judgment, two types of alleged infringing acts were substantively considered:
- Confusing similarity
Trade mark infringement occurs where a sign that is identical or similar to the registered mark is used in a manner that makes confusion on the marketplace likely. Oatly alleged that a likelihood of confusion existed as a result of Glebe Farm selling its oat milk as PUREOATY in its re-designed carton.
The Judge undertook a global assessment of all relevant factors to decide whether a consumer of oat drinks, milk alternatives or milk was likely to be confused as to origin. Confusion required the Judge to decide that consumers were likely to be confused into thinking PUREOATY originated from Oatly or an associated business. Mere association is insufficient; that is, relevant consumers calling Oatly to mind but not being confused as to origin.
The Judge held commonality was principally in “the word “OAT” which is highly descriptive” and it is “difficult to establish any likelihood of confusion where the similarity lies in a commonality of descriptive elements”. Whether a likelihood of confusion exists is highly fact sensitive so the Judge went on to consider how the respective marks were used in the cartons.
The Judge decided that the similarities relied on by Oatly (e.g. irregular style of lettering, stylised cup and a pale single colour with a textured overlay of white speckles) were “very high level” and not likely to have any relevance to origin. Significantly, Glebe Farm used PUREOATY in connection with a distinctive main logo, which was a clear indicator that the origin was Glebe Farm, not Oatly, and Glebe Farm’s carton had other features disassociating Oatly.
The Judge held there was no likelihood of confusion.
- Detriment/unfair advantage
Trade mark infringement occurs if a sign that is identical or similar to a registered mark is used in a manner which takes unfair advantage of, or is detrimental to, the distinctive character or repute of a registered mark.
The Judge held that Oatly’s marks had distinctive character and reputation. In terms of similarity, the Judge re-stated similarity was largely based on the commonality of “OAT”, which was entirely descriptive.
Although there was no likelihood of confusion, the Judge held that there was a link, which is a lower threshold. It was held that it was likely that an average consumer would call the Oatly marks to mind when engaging with the PUREOATY product. However, the Judge dismissed the claim because Glebe Farm’s use did not take unfair advantage of the distinctive character or repute of Oatly’s marks. Again, the commonality largely being in the descriptive element “OAT” was significant.
As to any unfair advantage being taken of the Oatly’s marks, the Judge held that, without more (i.e. an intention to take advantage), there was no unfair advantage by reproducing elements of a mark that are descriptive.
Oatly made numerous allegations to support its allegation of an intention to take advantage. The Judge considered the evidence and decided the acts complained of demonstrated Glebe Farm learning from a rival’s approach and targeting Oatly’s market, which is acceptable, rather than an intention to take advantage of the distinctive character or repute of Oatly’s marks.
In respect of the alleged dilution of Oatly’s brand, the Judge stated the principle that a trader has less right to complain if it chooses a brand of limited distinctiveness. The Judge decided any lost sales for Oatly would not result from the attractiveness of Oatly’s brand being diminished by Glebe Farm’s use of PUREOATY but from a rival oat milk legitimately being on the market.
The law seeks to balance a trader’s right to protect the mark it adopts and uses and the rights of others to have signs to denote their goods and services. Oatly’s failed claims demonstrate the risk associated with registering a mark, including descriptive elements, and then attempting to claim infringement when the commonality in the allegedly infringing mark is principally a descriptive word.
In addition to losing in the High Court, Oatly appears to have lost in the court of public opinion. The negative reputational impact for Oatly could be more significant than the adverse costs of losing the litigation. Whether that happens remains to be seen. Following the decision, Oatly has, however, confirmed it will not appeal, explained why it pursued Glebe Farm and wished it well.
For Glebe Farm, receiving a letter of claim from a multi-national company such as Oatly would have been very concerning. However, its decision to contest the allegations appear to have been a success not only in court, but commercially too, with it benefiting from widespread national press coverage.
Luke Moulton, Senior Associate, Wright Hassall
Luke is an experienced intellectual property lawyer advising clients on disputes relating to their intellectual property rights, the ownership and/or misuse of IPRs. He also advises SMEs and large corporates in respect of technology contract disputes, particularly those arising from IT outsourcing contracts.