Dairy UK Ltd v Oatly AB [2026] UKSC 4 — “Designation” Covers Any Use “in Respect of” a Product; “Characteristic Quality” Exception Requires Clear, Unambiguous Description

1. Introduction

This Supreme Court appeal concerned whether Oatly AB (“Oatly”), a Swedish producer of oat-based dairy alternatives, could validly register the trade mark POST MILK GENERATION for oat-based foods and drinks in classes 29, 30 and 32, given EU-derived (now UK-assimilated) rules restricting the use of dairy terms. The respondent, Dairy UK Ltd (“Dairy”), the UK dairy industry trade association, sought a declaration of invalidity under section 3(4) of the Trade Marks Act 1994, which bars registration where “its use is prohibited” by other enactments.

The key statutory instrument was Regulation (EU) No 1308/2013 (the “2013 Regulation”), specifically Point 5 in Part III of Annex VII, which reserves “milk” and “milk products” designations to qualifying dairy products and prohibits their use for other products, subject to a proviso including where designations are “clearly used to describe a characteristic quality of the product”.

The IPO hearing officer held the mark invalid for oat-based foods and drinks but not for T-shirts (class 25). Richard Smith J reversed that as to foods/drinks in [2023] EWHC 3204 (Ch). The Court of Appeal restored invalidity in [2024] EWCA Civ 1453. Oatly appealed to the Supreme Court on two grounds: (i) “designation” should mean the product’s name (so the mark was not caught), and (ii) if caught, the “characteristic quality” proviso saved it.

2. Summary of the Judgment

The Supreme Court (Lord Hamblen and Lord Burrows, with Lord Hodge, Lord Briggs and Lord Stephens agreeing) dismissed Oatly’s appeal.

  • Ground 1: “Designation” in Point 5 is not limited to the product’s “name”; it extends to the use of protected dairy terms “in respect of” a product. Accordingly, using “milk” within POST MILK GENERATION for oat-based foods/drinks is prohibited by Point 5 (subject to the proviso).
  • Ground 2: The proviso’s second limb (“clearly used to describe a characteristic quality”) did not apply on the facts: POST MILK GENERATION does not clearly describe a product characteristic (such as being milk-free); it more naturally targets or describes a consumer cohort.

The trade mark remained valid for T-shirts (unchallenged on appeal), but not for the contested oat-based food and drink categories.

3. Analysis

3.1 Precedents Cited

A. Modern approach to statutory interpretation (domestic authorities)

The Court anchored its method in the now orthodox “modern approach” to interpreting legislation: ascertain the meaning of the words used, in their context and in light of statutory purpose. The authorities cited were:

  • R (Project for the Registration of Children as British Citizens) v Secretary of State for the Home Department [2022] UKSC 3; [2023] AC 255
  • News Corp UK & Ireland Ltd v Revenue and Customs Comrs [2023] UKSC 7; [2024] AC 89
  • R (N3) v Secretary of State for the Home Department [2025] UKSC 6; [2025] AC 1473
  • Darwall v Dartmoor National Park Authority [2025] UKSC 20; [2025] AC 1292
  • X v Lord Advocate [2025] UKSC 44; [2026] 2 WLR 43

These cases did not determine the substantive outcome on dairy-term restrictions; rather, they justified the interpretative stance the Court took toward assimilated law: apply domestic interpretative principles, while recognising that EU provenance may still illuminate context and purpose.

B. EU authority on dairy designations

The Court discussed the CJEU decision in Case C-422/16 Verband Sozialer Wettbewerb eV v TofuTown.com GmbH ("TofuTown"). In TofuTown, the CJEU held that Article 78(2) and Annex VII, Part III of the 2013 Regulation preclude using “milk” and reserved dairy designations for purely plant-based products in marketing/advertising, even with clarifying plant-based descriptors, unless the term falls within the recognized exceptions (including the list now reflected in assimilated law via the 2010 Decision).

The Supreme Court treated TofuTown as not directly on point because the challenged expressions there (“tofu butter”, “plant cheese”, “rice spray cream”) functioned as product-naming uses, whereas POST MILK GENERATION was argued to be a slogan/branding expression rather than the product name. Crucially, however, the Court rejected Oatly’s attempt to extract from TofuTown an implication that “designation” is confined to product names: the CJEU simply did not decide that limitation.

3.2 Legal Reasoning

A. The statutory gateway: section 3(4) Trade Marks Act 1994

The case exemplifies how sectoral marketing rules can invalidate trade marks. Section 3(4) is a “legality filter”: if using the mark for the relevant goods would be prohibited by another enactment (here, assimilated EU agricultural marketing law), registration must be refused/invalidated to that extent.

B. Ground 1: “designation” is broader than “name”

The Court’s core interpretative move was textual and structural. It contrasted “designation(s)” with “names” and “sale description” within Annex VII:

  • Point 2(a) and (b) uses “names”, indicating “designation” cannot be synonymous with “name”.
  • The introductory definition of “sale description” explicitly equates it with “the name of the food”, again implying “designation” is different.
  • Recital (76) and the Annex VII heading use “designations and sales description” side-by-side, supporting a deliberate semantic distinction.

On that basis, the Court held that “designation” in Point 5 naturally refers to use of protected terms in respect of a product—not merely as the product’s formal name. The operative phrase “may not be used for any product other than...” was read as a broad restriction: if “milk” is used in relation to a non-qualifying product, Point 5 is engaged (subject to the proviso).

The Court also rejected Oatly’s heavy reliance on legislative history (earlier versions using “names”). It emphasised that the statute “as it now stands” governs; looking back to earlier, differently worded regimes was potentially misleading, and in any event did not displace the contextual reading of the current text.

C. Purpose: fair competition, not only consumer protection

A significant clarification is that Point 5 is not merely an anti-deception measure. Relying on Recital (76), the Court treated the rule as serving “fair conditions of competition” through a strict allocation of dairy terms. Therefore, the IPO hearing officer’s finding that consumers would not be deceived by POST MILK GENERATION did not neutralise the prohibition. The prohibition can bite even where the average consumer is not misled.

D. Ground 2: the “characteristic quality” exception demands clarity

The second limb of the proviso saves designations “clearly used to describe a characteristic quality of the product.” Even accepting (without deciding finally) that the “listing” requirement in the 2010 Decision applies only to the first limb (traditional usage) and not the second, the Court found Oatly failed on clarity.

The Court agreed with the Court of Appeal that POST MILK GENERATION primarily signals the identity/values of a target consumer cohort rather than a product attribute. Any “milk-free” message was, at best, oblique. Two additional points reinforced the lack of clarity:

  • Even if it gestures toward “milk-free”, it does not clearly indicate whether the product contains no milk or merely less milk (illustrated by the analogy “POST ALCOHOL GENERATION”).
  • The mark’s accepted validity for T-shirts supported the reading that it functions as a badge of identity (“anti-milk generation”), not a descriptor of product composition.

Importantly, the Court gave a practical illustration: a hypothetical mark MILK-FREE for oat-based foods/drinks would be a prohibited designation under the broad reading, but would likely be saved by the proviso because it clearly describes a characteristic quality (no milk).

3.3 Impact

A. Brand strategy for plant-based products

The decision tightens the compliance perimeter: brands cannot avoid Point 5 by embedding “milk” in a slogan-like mark if it is still “used for” the marketing of non-dairy foods/drinks. This extends beyond straightforward product names and captures broader “in respect of” uses.

B. The exception is narrow in practice

The “characteristic quality” exception is workable for direct, unambiguous descriptors (eg “milk-free”), but weak for indirect, metaphorical, or identity-based messaging. Businesses should assume that to fall within the proviso, the term must communicate the relevant characteristic plainly, not via implication or irony.

C. Trade mark validity as a function of regulatory legality

The judgment underscores the force of section 3(4): trade mark registrability is conditioned by external regulatory regimes. Marks may remain registrable for some classes (here, T-shirts) while being invalid for regulated product categories (here, foods/drinks).

D. Assimilated EU law and interpretative discipline

The Court’s approach signals continuity: EU-derived marketing restrictions will be interpreted with a modern UK statutory method, but with EU context/purpose still informing meaning. This may shape future disputes over other “reserved terms” regimes retained post-Brexit.

4. Complex Concepts Simplified

  • Assimilated law: Former EU rules that continue to apply in domestic law after Brexit, subject to domestic modification.
  • Section 3(4) Trade Marks Act 1994: a bar on registering a mark if using it would be unlawful under other legislation (not trade mark law).
  • “Designation” vs “name” vs “sale description”: the Court treated “name/sale description” as product naming concepts, while “designation” is broader—covering protected terms used in respect of products even where not used as the product’s formal name.
  • Point 5 proviso (two limbs): (i) traditional usage (linked to an official list of accepted exceptions), and (ii) use clearly describing a product quality (eg “milk-free”).
  • Fair competition rationale: the rule protects the competitive framework for dairy-sector terms, not merely consumer understanding.

5. Conclusion

Dairy UK Ltd v Oatly AB establishes that, under Point 5 of Annex VII to the 2013 Regulation as assimilated, “milk” is a protected designation whose use is prohibited for non-dairy foods/drinks even where it appears within broader branding and not as the product name. The Court also confirms that the “clearly used to describe a characteristic quality” exception is demanding: implied or lifestyle-oriented messaging will not suffice. The decision materially constrains trade mark registration and marketing for plant-based alternatives where reserved dairy terms are deployed, and it illustrates the continued bite of assimilated EU marketing standards through section 3(4) of the Trade Marks Act 1994.