Oatly suffers a legal (and PR?) setback

The recent UK trade mark and passing-off case of Oatly v Glebe Farm Foods, has attracted considerable attention. While the trade mark aspects have been much discussed, the reputational issues are also important.

Oatly

For the benefit of those who don’t do plant-based foodstuffs, Oatly is the world’s largest oat drink producer – this very successful Swedish company started life in the 1990s and it’s now apparently worth some USD10-billion.

Oatly is one of those companies that is said to use the “wackaging” approach to marketing and branding. What is wackaging? Here’s a definition from Collins: “The increasingly overly familiar, infantilised copy that’s become ubiquitous ever since ‘Innocent’ adopted a wacky and distinctive tone of voice on their packaging in 2000.” Oatly’s marketing puts a strong emphasis on a sustainable lifestyle. Among the slogans it has used are “It’s milk but made for humans” and “Wow no cow”.

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Glebe Farm Foods

Glebe Farm Foods sounds like it may be as far removed from Oatly as it’s possible to be. This small, family-run UK company launched an oat drink in 2019 under a label comprising the descriptive term Oat Drink and a tractor logo. In 2020, the company upped its branding game a bit by adopting the trade mark PureOaty. It was the change from Oat Drink to PureOaty that caused all the trouble. Oatly sued Glebe Farm Foods for trade mark infringement, based on both the likelihood of confusion and dilution, and for passing-off.

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The judgment

Judge Caddick was not at all convinced by Oatly’s claims regarding the alleged similarities, similarities that covered the brand names but also included the use of the colour blue and an irregular font. The judge regarded the fact that one trade mark, (PureOaty) comprises eight letters and the other just five (Oatly) as relevant.

The judge used terms like “a very modest level of similarity” and similarities “at a very superficial level”. He said that “the average consumer would see the degree of conceptual similarity as being low to moderate at best and as deriving from the presence in both the sign and the marks of the descriptive word ‘OAT’”.

The judge also said that “it is hard to see how any relevant confusion would arise from the defendant’s use of the sign PureOaty.” He said further that “I do not see that there is any risk of injury to the distinctive character of Oatly’s marks”

The judge therefore dismissed the claim of trade mark infringement based on possible confusion, as well as the claim that the trade mark was taking unfair advantage of, or was detrimental to, the distinctive character or repute of the trade mark, the dilution claim. He also dismissed the claim of passing-off.

The reaction

Glebe Farm Foods was naturally delighted with the result, saying that “it is enormously gratifying… to see that smaller independent companies can fight back and win.” It was no doubt even more delighted when Oatly announced that it would not be filing an appeal. An Oatly spokesperson made this magnanimous comment: “For us, this case has always been about protecting our trade mark and how the single letter Y creates too much similarity between Oaty and Oatly”. Although there was also a bit of a bite: “We just think they should do so in their own unique voice, just like we do”.

The PR aspects

The PR aspects of this case have attracted attention. This may be down to the fact that a company like Oatly, which is involved in plant-based foods and is apparently endorsed by a number of celebrities including Oprah Winfrey, needs to be particularly attuned to public opinion.

An article in The Drum by Jennifer Faul makes for interesting reading. The article makes the point that a company like Oatly needs to think hard about pursuing a smaller company: “Any time Oatly goes after a big guy, it’ll be fine. It can still play the underdog. But going after smaller businesses or a farm or a family business, it becomes the Goliath. And so, it needs to set some rules on how it operates and guidelines on how it wants to handle its engagements and litigations with small businesses in a more coordinated way”.

The article also makes the point that things change for companies as they become bigger and more conventional. Oatly is apparently no longer the cool wacky little company it once was: “It now has to be mindful that it has introduced a narrative to the brand and has moved from being the small guy with the cool, funky product to being Blackrock-owned and going after small farms...that’s the narrative you’ll see popping up – that it is not the company it is portraying itself as”.

The upshot

Trade mark issues and reputational issues often go hand in hand. It’s worth remembering, and is certainly a consideration in the advice we give to our clients.

Gaelyn Scott

Executive | head of IP

gscott@ENSafrica.com

+27 83 632 1445