A decision by the Intellectual Property Enterprise Court that the use of the sign "PureOaty" does not infringe registered trademarks for OATLY demonstrates the difficulty of enforcing marks that include a descriptive element.
The case concerned a claim by Oatly AB and Oatly UK Limited (Oatly) against Glebe Farm Foods Limited (the defendant) for infringement of five registered trademarks and passing off. Oatly is a Swedish company that manufactures and sells oat-based drinks – in particular, oat milk. It is the owner of a number of UK trademarks in relation to its product range, five of which were the subject of this action: three word marks (OATLY, OAT-LY! and OATLY) and two device marks (the blue OAT-LY! carton mark and the grey OAT-LY! carton mark).
In January 2019, the defendant launched an oat-milk drink called "Oat Milk". Following a rebranding exercise, this was renamed and released in January 2020 as "PureOaty". Oatly alleged that the defendant's use of the name "PureOaty" (both in itself and as depicted on the product packaging) infringed Oatly's trademarks under sections 10(2) and 10(3) of the Trade Marks Act 1994 and also amounted to passing off.
Similarity and confusion
The challenge for the judge, and for trademark owners, was how to deal with the obvious similarity (and link) when that similarity was largely based on a descriptive element. For section 10(2) infringement, the judge, Mr Nicholas Caddick QC, had to decide whether the defendant had used a sign that was identical or similar to one or more of Oatly's registered marks, and whether such use gave rise to a likelihood of confusion (or association). In particular, he had to consider the significance of confusion arising "where the mark/sign in question share features that are descriptive". While the judge examined the alleged infringement of each of Oatly's five trademarks, he considered that Oatly's strongest case was the infringement claim in respect of its word mark OATLY, and this is where the majority of the analysis was focused.
Assessing whether the PureOaty sign and the OATLY mark were similar, the judge found there was a "very modest" level of visual similarity and "limited" aural similarity. With respect to conceptual similarity, Oatly argued that the average consumer would see the PureOaty sign as two separate words and would, having identified the word "pure" as being "a mere descriptor or laudatory", focus on the word "oaty", which is highly similar to the OATLY mark. However, the judge disagreed, finding the degree of conceptual similarity to be "low to moderate" and deriving from the presence in both of the descriptive word "oat".
Oatly's case as regards confusion was that the defendant's use of its sign gave rise to a likelihood of confusion because, for instance, some members of the public may be confused into believing that the PureOaty product was a version of an Oatly product (possibly one made using British oats). As is so common in trademark infringement cases, the judge noted that there was very little evidence of actual confusion, but highlighted that the question was whether there was a likelihood of confusion. Reviewing the case law, he commented on "difficulty in establishing any likelihood of confusion in a case where the similarity lies in a commonality of descriptive elements". In particular, he referred to the comments of Mr Daniel Alexander QC in Reed Executive Plc v Reed Business Information Ltd:(1)
where you have something largely descriptive the average consumer will recognise that to be so, expect others to use similar descriptive marks and thus be alert for detail which would differentiate one provider from another.
In the Oatly case, the judge considered that the marks and the sign did have such differentiating detail, remarking that "the distinctive elements of the marks and of the sign are very different and the only other component of the marks and the sign is the word 'OAT' which is entirely descriptive".
It was interesting to see how the judge dealt with the evidence of alleged actual confusion, not least because the evidence presented by Oatly was a number of different documents disclosed by the defendant. These showed various pieces of correspondence between the defendant and customers or clients in which the latter referred to the defendant's product, PureOaty, as "PureOatly" or "Oatly". However, the judge was not satisfied that the evidence met the requirements of section 10(2) – namely, that confusion is as to the trade origin of the relevant goods. For instance, one email sent to the defendant, concerning a sample oat drink that the defendant had sent to the consumer, had a subject line reading "Oatly drink". Nonetheless, the judge held that the sender would have known that the PureOaty sample had come from the defendant, and that there was no relevant confusion.
This exemplifies why it is so difficult to advise a client when asked "what evidence of confusion will suffice?" It may be relevant that in this case, it was clear that both companies were engaging in tough, but fair competition. There was no suggestion from the evidence that the defendant had "sailed close to the wind" in a deliberate attempt to get close to Oatly's trademarks. The evidence showed that the defendant wanted a brand that provided the consumer with the message that its product came from oats.
Detriment and unfair advantage
The judge went on to consider infringement under section 10(3). The first consideration was whether the Oatly trademarks had a reputation in the United Kingdom. The defendant admitted that the OATLY and OAT-LY! marks had a "distinctive character and reputation" and the judge agreed with Oatly's own submissions that the cartons were "highly distinctive and would be very recognisable to customers". The judge also accepted that the use of the PureOaty sign could give rise to a link between that sign and the Oatly marks in the mind of the average consumer, referring the Court to the evidence submitted by Oatly in respect of likelihood of confusion.
Oatly then had to establish that the defendant's use of the PureOaty sign had caused injury – namely:
- detriment to the distinctive character of the Oatly marks;
- detriment to the repute of the Oatly marks; and/or
- unfair advantage being taken of the distinctive character or repute of the Oatly marks.
The descriptiveness of the Oatly trademarks once again became a key theme of the judge's reasoning. In finding that there was no detriment to distinctive character, the judge referred to the comments of Mr Daniel Alexander QC in Planetart LLC v Photobox Ltd(2) that "a trader has less right to complain that its brand is being diluted if it has chosen a mark which is of limited distinctiveness in the first place". The judge also held that there was no detriment to repute, given that – by virtue of the absence of any likelihood of confusion between the products – it was difficult to see how consumers being unhappy with a product they know to be PureOaty would affect the reputation of the Oatly product.
The bulk of the judge's analysis of injury was in respect of unfair advantage. Oatly argued that the defendant had intended to take advantage of the distinctive character or repute of the Oatly marks and cause consumers to make a link between the products. In making this assertion, Oatly pointed to, among other things, the "significant departure" of the packaging of the defendant's product from its original design. However, as noted above, the judge did not find any evidence of an intention on the part of the defendant to take advantage of the Oatly marks or brand, and accepted the defendant's evidence – in relation to the rebranding exercise – that a number of possible new names had been considered, of which PureOaty was just one. Consequently, Oatly's section 10(3) claim was rejected.
Passing off
As is so common, the passing off claim was dealt with very briefly by the judge, finding that there was no misrepresentation on the basis of his earlier finding in respect of section 10(2) that there was no likelihood of confusion.
This decision shows that being clever with a descriptive word as part of a brand name – here turning "Oat" to "Oatly" – will only take a brand so far. It will obviously afford protection in "double identity" cases if a competitor were foolish enough to use the mark as registered for oat-based products pursuant to section 10(1) of the Trade Marks Act. However, based on Mr Caddick's judgment, it is clear that an infringement action started on the basis of either section 10(2) or section 10(3) requires strong and extensive evidence of confusion as to the trade origin of the goods, or of a real intention to take an unfair advantage or be detrimental to the infringed party. Without these, the court is likely to find that average consumers see the common descriptive element as just that – descriptors – rather than as an indication of origin. Indeed, the rationale behind forbidding the registration of purely descriptive trademarks is that such terms should be left available for all traders to use.
For further information on this topic please contact Iain Connor or Guy Buckle at Pinsent Masons by telephone (+44 20 7418 8250) or email ([email protected] or [email protected]). The Pinsent Masons website can be accessed at www.pinsentmasons.com.
Endnotes