Dairy UK Ltd v Oatly AB

Factual and Procedural Background

On 19 November 2019, Company A filed a United Kingdom Trade Mark Application to register the mark "POST MILK GENERATION" for goods in Classes 25, 29, 30, and 32, including oat-based drinks and related products. The Trade Mark was registered on 23 April 2021. Subsequently, on 23 November 2021, Company B, a trade association for the UK dairy industry, applied for a declaration that the Trade Mark was invalidly registered under sections 3(3)(b) and 3(4) of the Trade Marks Act 1994. Company B argued that the mark was deceptive because it included the word "milk" for non-milk goods and that its use was prohibited under EU-derived regulations.

A hearing officer held on 17 January 2023 that the invalidity application succeeded under section 3(4) in relation to goods in Classes 29, 30, and 32 but was dismissed otherwise. Company A appealed, and the High Court judge allowed the appeal, overturning the hearing officer's invalidity declaration for those classes. Company B was granted permission to appeal this decision. The appeal concerns the interpretation of EU Regulation 1308/2013 (the 2013 Regulation), which is assimilated law in the UK.

Legal Issues Presented

1. What is the meaning of the term "designation" in Article 78(2) and Annex VII, Part III of the 2013 Regulation, particularly whether it includes trade marks or is limited to generic product descriptions?
2. Whether the use of the Trade Mark "POST MILK GENERATION" is prohibited under section 3(4) of the Trade Marks Act 1994, given the restrictions on the use of the term "milk" and related designations in marketing non-milk products under the 2013 Regulation.
3. Whether the Trade Mark could fall within the exception in the proviso to point 5 of Annex VII, Part III of the 2013 Regulation, permitting designations clearly describing a characteristic quality of the product or those with traditional usage.
4. Whether the judge erred by not considering notional fair use of the Trade Mark under section 3(4).

Arguments of the Parties

Appellant's Arguments (Company B)

• The term "designation" in the 2013 Regulation should be interpreted broadly to include trade marks, not just generic product names.
• The hearing officer correctly found that the use of "milk" and related designations is prohibited for non-milk products under the 2013 Regulation, including trade marks.
• The judge erred in construing "designation" narrowly as excluding trade marks.
• The judge failed to consider notional fair use in his section 3(4) invalidity assessment.

Appellee's Arguments (Company A)

• The term "designation" should be interpreted as a generic description of a product, excluding trade marks, consistent with the 2007 Regulation.
• The Trade Mark "POST MILK GENERATION" is not deceptive and would not contravene the 2013 Regulation because the average consumer would understand it as an ironic or figurative reference, not a literal description of milk content.
• The Trade Mark does not clearly describe a characteristic quality of the goods and so does not fall within the exception in point 5 of Annex VII, Part III.
• The hearing officer's declaration of invalidity on grounds of section 3(4) was incorrect.

Table of Precedents Cited

Court's Reasoning and Analysis

The court analysed the meaning of "designation" in the 2013 Regulation, noting that unlike the 2007 Regulation, the 2013 Regulation does not define "designation" but defines "sales description" as the name under which a foodstuff is sold, excluding trade marks, brand names, or fancy names. The court rejected the argument that "designation" should be limited to generic descriptions only, reasoning that "designation" is a general term encompassing distinctive marks including trade marks, especially considering the context of marketing.

The court found that the hearing officer's interpretation that "designation" includes trade marks aligns with the purposes of Article 78 and Annex VII, Part III, which aim to prevent misleading use of terms reserved for milk and milk products and to protect consumers and economic conditions for producers.

The court relied heavily on the decision in VSW v TofuTown, which confirmed that terms such as "milk" and designations reserved exclusively for milk products cannot be used for purely plant-based products, even if accompanied by clarifying terms indicating plant origin, unless listed in the 2010 Decision's Annex I. This prohibition extends to marketing, advertising, and trade marks.

The court held that the Trade Mark "POST MILK GENERATION" includes the designation "milk" and is used in relation to goods that do not meet the definition of milk or milk products under the Regulation. Therefore, its use is prohibited under Article 78(2) and Annex VII, Part III, point 5. The fact that the mark is registered as a trade mark does not exempt it from this prohibition.

Regarding the exception in the proviso to point 5 (allowing designations for products whose exact nature is clear from traditional usage or when designations clearly describe a characteristic quality), the court found that this exception is limited and primarily concerns traditional generic product names. The Trade Mark does not clearly describe any characteristic quality of the goods but rather refers to an age-related consumer group. Hence, it does not fall within the exception.

The court also noted that the judge below erred in interpreting "designation" narrowly and in not considering the prohibition on the basis of notional fair use, although the latter ground was not determinative as the appeal was allowed on the first ground.

There was some judicial divergence on whether the 2010 Decision's list of products in Annex I applies solely to the first limb of the exception or both limbs; however, this was not determinative of the outcome.

Holding and Implications

The court ALLOWED the appeal by Company B and reinstated the hearing officer's declaration that the Trade Mark "POST MILK GENERATION" is invalid in relation to goods in Classes 29, 30, and 32 on the grounds that its use is prohibited under Article 78(2) and Annex VII, Part III, point 5 of the 2013 Regulation.

The direct effect is that the Trade Mark cannot be used or registered for the specified goods that do not meet the definition of milk or milk products under the Regulation. No new precedent was established beyond the proper interpretation and application of existing EU-derived law in the UK context.