We discussed the case of Oatly AB and Oatly UK Limited v Glebe Farm Foods Limited in our recent IP and the Food & Drink Industry Round Up. The Court has now handed down its decision in the case. The Court refused the world's largest oat drink company's claim against the family run business - accordingly finding in favour of 'David' in a claim from 'Goliath'.

Facts

Oatly brought the action claiming that Glebe Farm Foods Limited's brand 'PureOaty' infringed its EU word and logo marks for 'Oatly' and 'Oat-ly!' and that its packaging was too similar, amounting to passing off.

Specifically, the trade mark claim was made under sections 10(2) and 10(3) of the Trade Marks Act 1994 ("the 1994 Act"). Section10(2) provides that a trade mark is infringed where a sign similar or identical to a registered trade mark is used in relation to similar or identical goods or services and there is a likelihood of confusion between the products amongst consumers. Section 10(3) provides that a trade mark is infringed when a sign which is identical or similar to a trade mark is used and that use takes unfair advantage of, or is detrimental to, the distinctive character or repute of the trade mark.

Decision

Section 10(2) of the 1994 Act

Similarities between sign and mark

The judge first considered whether, in the eyes of the average consumer, the sign and marks were similar. It was held that while there were similarities between the packaging – such as the colour, logo font and letters – they were of "a very modest level".

Likelihood of confusion

In determining the likelihood of confusion of consumers, the judge considered that any similarities between the sign and mark could be said to be descriptive (the use of the word 'oat' to describe a drink made with oats) which made it difficult to establish a likelihood of confusion. Further, in considering the appearance of the sign and the cartons as a whole, including the use of the word 'Pure' before 'Oaty', it was "hard to see how any relevant confusion would arise".

Section 10(3) of the 1994 Act

Previous case law has set out a test for determining whether there has been an infringement under section 10(3). There are 9 requirements to be satisfied, as set out in InterfloraInc v Marks and Spencer plc.

In this action, it was clear that Glebe Farm was using the sign in the course of trade in the UK, for their goods, without the consent of Oatly. The judge considered the remaining criteria in more detail.

Reputation

It was determined that Oatly's trade marks have a clear reputation in the market. This was particularly because Oatly's marketing often featured pictures of its cartons, and those cartons were distinctive. The vast sales of Oatly in recent months was also taken into consideration.

Similarity of mark

For the reasons dealt with under the consideration undersection 10(2), the judge did not consider there was similarity beyond a "modest level".

Link between sign and mark in the mind of the average consumer

While the evidence – including individuals mistakenly referring to 'PureOatly' as opposed to 'PureOaty' - was not sufficient to conclude that there was confusion, the judge considered that it did suggest that the use of the 'PureOaty' sign brought the Oatly marks to the mind of the average consumer and there was a link.

Injury

Oatly made arguments on all three types of injury:

1. Injury to distinctive character of the mark

The judge was not convinced that there was any injury to the distinctive character of Oatly as any loss in Oatly sales was due to a competitor in the market rather than diminution to the attractiveness of the Oatly brand. 

2. Injury to repute of the mark

    Oatly argued that there had been injury to the repute of its marks due to negative customer feedback of the PureOaty product. The judge was not satisfied that this was sufficient, in the absence of a likelihood of confusion of the products (which he had found to be unlikely).

    3. Unfair advantage of the sign

    Oatly's primary claim for damages was that PureOaty's sign took unfair advantage of the repute of Oatly's branding. The judge held that, while Oatly's marks did have a strong reputation and there was likely to be a link between PureOaty's sign and Oatly's brands by the average consumer (if only because of the type of drink and Oatly's importance in the market), there was relatively low similarity between the sign and Oatly's marks and any similarity largely stemmed from the presence of the word 'oat' which was in itself descriptive. Further, while Oatly sought to lead evidence that PureOaty's branding strategy had made reference to Oatly, the judge was not satisfied that it amounted to taking unfair advantage. In particular, he noted that the concept was not designed to prevent businesses from learning from their competitors.

    Accordingly, while it was clear that Glebe Farm was using the sign in the course of trade in the UK, for their goods, without the consent of Oatly and it was determined that Oatly had a reputation in the market and there was a link between the sign and the Oatly brand in the mind of the consumers, the judge did not determine that the sign was sufficiently similar to the mark or that there had been any injury to Oatly or unfair advantage to Glebe Farm.

    Protect the brand

    As discussed in our previous blog, Oatly faced significant backlash for bringing the action against a much smaller competitor. Since the decision has been handed down, Oatly have released a statement which states that their decision to raise the action came from a need to protect its brand – regardless of the size of any potential infringers. Oatly were unsuccessful in their claim and there are differing views on whether they were right to bring the case. However, ultimately, it is important for all brands to carefully protect their IP and legal advice should always be sought in relation to any similar branding which may amount to IP infringement.