Dairy UK Limited v Oatly AB

Designation in Article 78(2) and Annex VII, Part III of Regulation (EU) No 1308/2013 includes a trade mark, or part of one. It is not confined to a generic product description or sales description.

Accordingly, a registered trade mark does not avoid the prohibition on using milk for products which are not milk. Additional words in the mark do not alter that result. The exception for designations clearly describing a characteristic quality requires a clear description of a quality of the goods. A slogan which merely alludes to non-dairy products or their intended consumers does not satisfy it.

Oatly registered POST MILK GENERATION for clothing and for oat-based food and drink products. Dairy UK sought a declaration of invalidity under sections 3(3)(b) and 3(4) of the Trade Marks Act 1994. It contended that the mark's use for non-dairy products was prohibited by Article 78(2) and Annex VII, Part III of Regulation (EU) No 1308/2013.

A hearing officer declared the mark invalid for the Class 29, 30 and 32 goods. The High Court allowed Oatly's appeal, holding that the relevant prohibition did not extend to a trade mark: [2023] EWHC 3204 (Ch). Dairy UK appealed. The central issue was whether “designation” in the Regulation included a trade mark or part of a trade mark.

1. Appeal allowed. The court reinstated the hearing officer’s declaration that the mark was invalid for the goods in Classes 29, 30 and 32.

2. Lord Justice Arnold held that “designation” in Article 78(2) and Annex VII, Part III of Regulation (EU) No 1308/2013 has its ordinary and broad meaning. It includes a trade mark or part of a trade mark. The 2013 Regulation did not retain the former definition from the 2007 Regulation. It separately defined “sales description”, and its statutory context was materially different. Those matters precluded reading “designation” as confined to a generic product description.

3. That construction accorded with Verband Sozialer Wettbewerb eV v TofuTown.com GmbH, [EU:C:2017:458], and with the Regulation’s consumer-protection and competition purposes. “Milk” is a designation within point 1. Under point 5 it could not be used for the relevant oat-based goods, which were not milk as defined, merely because it appeared within the composite registered sign POST MILK GENERATION. The qualifying words and the fact of registration did not avoid the prohibition.

4. The respondent’s notice also failed. Even assuming that Oatly could invoke the characteristic-quality limb of the point 5 proviso, the mark did not clearly describe a characteristic quality of the goods. It referred to a prospective cohort of consumers and at most alluded to non-dairy products. The unchallenged finding that the mark was not deceptive did not compel a different result, since the burden to establish deception lay on Dairy UK, while the burden to establish the exception lay on Oatly.

5. Lord Justices Snowden and Jeremy Baker agreed that the appeal should be allowed. They expressed competing non-dispositive views on whether Annex I to the 2010 Decision exhausts the characteristic-quality limb of the point 5 exception. The court did not need to decide that issue, nor the permissibility of “milk-free”.

• Court of Appeal (Civil Division): Dairy UK’s appeal was allowed and the hearing officer’s declaration of invalidity was reinstated: [2024] EWCA Civ 1453.

• High Court (Chancery Appeals): Allowed Oatly’s appeal from the hearing officer and held that the statutory prohibition did not apply to the trade mark: [2023] EWHC 3204 (Ch).

• UK Intellectual Property Office: The hearing officer declared the mark invalid under section 3(4) of the Trade Marks Act 1994 for the Class 29, 30 and 32 goods, but rejected the remaining grounds.