Supreme Court: ‘POST MILK GENERATION’ trade mark invalid

In brief

The Supreme Court has unanimously dismissed Oatly's appeal, ruling that its "POST MILK GENERATION" trade mark is invalid when used in relation to oat-based food and drink products.

This landmark judgment clarifies the scope of EU-derived agricultural product marketing regulations (which became assimilated UK law post-Brexit). 'Milk' is one of a number of food and drink designations which are prohibited from being used in relation to products that do not contain that product (subject to some exceptions).

The Supreme Court did suggest that a designation such as 'milk' could be used in relation to plant-based products where it clearly describes the product, e.g., 'milk-free'. However, Oatly's trade mark was not clearly describing the characteristic of its plant-based products.

The decision will cause those in the alternative food and drink market to consider carefully how they brand and market their products.

Background

Oatly AB, a Swedish company that manufactures and sells oat-based food and drink products as alternatives to dairy products, registered "POST MILK GENERATION" as a UK trade mark in April 2021 for use in relation to categories of oat-based food and drink, and t-shirts. In November 2021, Dairy UK Ltd, the trade association for the UK dairy industry, applied for a declaration that the registration was invalid under section 3 of the Trade Marks Act 1994.

The application succeeded before the UK Intellectual Property Office (UKIPO) hearing officer (except for t-shirts), but this was overturned on Oatly's appeal in the High Court. The UKIPO decision was then reinstated by the Court of Appeal.

At the heart of this dispute is Parliament and Council Regulation (EU) No. 1308/2013, which regulates the use of various food and drink terms, including dairy terms such as milk, cheese and yoghurt, in relation to the marketing of such products.

The Regulation provides that the designations of "milk" and "milk products" may not be used for any products other than genuine milk or milk products. However, this prohibition does contain an important proviso: it does not apply to designations which "are clearly used to describe a characteristic quality of the product".

The Supreme Court ruling

The Supreme Court upheld the Court of Appeal's decision, invalidating Oatly's trade mark in respect of oat-based food and drink products.

Ground 1: the meaning of "designation"

The first fundamental question before the court was whether "designation" (i.e., the designation of 'milk' or 'cream') in the Regulation meant merely the name of a product or had a broader application.

Oatly argued that "designation" should be interpreted narrowly as the name of a product, and that its trade mark was not the name of the product. They said that if you asked what its product was, the answer would be "oat-based milk" not "post milk generation", and so its trade mark was not caught by the prohibition.

The court rejected this narrow interpretation, holding that "designation" and "names" do not have the same meaning under the Regulation, as there were separate references in the Regulation to "designation", "names" and "sale description" (which was defined as the name of food in the Regulation). The term "designation" referred to the use in respect of a food or drink, irrespective of whether it had been used as the name of that product. The court emphasised that this wider meaning is consistent with the Regulation's purpose which is to set out fair conditions of competition. Further, the meaning of "designation" was not linked to whether or not consumers would be deceived by the use of that designation. In fact, the UKIPO hearing officer had found that the average consumer would view the trade mark as an ironic way of saying Oatly's goods had moved on from conventional milk and would not be deceived into thinking they were buying dairy milk (this finding was not in issue on appeal).

The court also addressed the relevance of earlier versions of the Regulation. Whilst Oatly presented a detailed examination of previous versions to show that earlier iterations had used the word "names" rather than "designations", this was an unhelpful exercise, as legislation must be interpreted as it now stands, with provisions read in their particular context.

Ground 2: the "characteristic quality" exemption

Having determined that "POST MILK GENERATION" constituted a prohibited designation, the court turned to whether it could be saved by the proviso allowing such designations where they are "clearly used to describe a characteristic quality of the product". There is also another exception in relation to some traditional uses of dairy product designations listed in Commission Decision 2010/91/EU, such as peanut butter and custard creams, but this was not relevant to the case.

Oatly contended that "POST MILK GENERATION" was clearly being used to describe a characteristic quality of its product, namely that it is milk-free, thereby making clear that there is no milk in the product.

The court disagreed, finding it was far from clear that the trade mark was describing any characteristic of the contested products. Rather, on its face, it was focused on describing the targeted consumers (particularly those younger consumers who, the court said, may belong to a generation for whom there are widespread concerns about the production and consumption of milk). Insofar as the trade mark was describing a characteristic quality of the product, it was doing so in an oblique and obscure way and was certainly not doing so "clearly". In particular, the trade mark did not indicate whether the products were entirely free of milk or only that the milk content was low.

The "MILK-FREE" hypothetical

In obiter comments, the court considered whether a hypothetical trade mark such as "MILK-FREE" used for oat-based food or drink would be prohibited. It suggested that, whilst this would constitute a prohibited "designation" under the Regulation, it would be saved because it would fall within the proviso as clearly being used to describe a characteristic quality of the product, namely that it does not contain any milk.

This hypothetical provides valuable guidance as to where the line may be drawn between permissible and impermissible use of dairy (and other agricultural) terminology.

Key takeaways

The Supreme Court has drawn a clear line in the sand: terminology is reserved for certain agricultural products under the Regulation, including dairy, meat, olive oil and certain wines, and businesses offering alternatives cannot trade on those terms, even cleverly, to reach consumers who have moved away from traditional agricultural products, such as dairy.

Even where there is no realistic risk that consumers will be confused or misled, the use of, for example, dairy terms for non-dairy products may still be prohibited. This represents a higher bar than traditional trade mark law which tends to focus on the likelihood of confusion.

Businesses can only rely on the characteristic quality exemption where the use of designated agricultural product terms clearly and unambiguously describes a specific quality of the product. It appears that clever, oblique, or ambiguous references will not suffice.

Businesses developing product alternatives, such as plant-based, should carefully consider their branding strategies. Rather than using, for example, dairy terms in creative ways, it may be safer to use entirely distinct terminology that clearly communicates the plant-based nature of products without reference to dairy terms at all. In any event, there is an argument that dairy or meat terms do not need to be relied on because consumers have now been sufficiently educated that, for example, milk-free or meat-free alternative products exist.

It is also worth noting that the same trade mark may be valid for non-agricultural products (such as clothing), whilst being invalid for some food and drink products. A comprehensive intellectual property strategy must account for these sectoral distinctions.

For the rapidly growing product alternatives (such as plant-based) sector, the decision reinforces the need for innovative branding that respects established regulatory boundaries whilst effectively communicating product benefits to health-conscious and environmentally aware consumers. The challenge for affected businesses will be in developing compelling brand identities that do not rely on prohibited references to the products they seek to replace.

How Mishcon de Reya can help

Our Food and Beverage and Intellectual Property teams have extensive experience advising businesses on the protection, exploitation, and enforcement of intellectual property rights, and related advertising issues, in the food and beverage sector. We act for dynamic clients across the industry and possess a deep understanding of the opportunities and challenges the industry faces.

If you have any questions, please contact our Intellectual Property team.