UK dairy industry milks EU regulations

Proponents of Brexit promoted escape from cumbersome EU laws and regulations as one of the principal benefits of the UK leaving the EU.  However, in reality, the vast majority of EU regulations existing at the relevant date was automatically assimilated into UK law after Brexit under the European Union (Withdrawal) Act 2018.

One of these was EU Regulation No 1308/2013 which prohibits the use of the “designation” milk on plant-based products, reserving it exclusively for mammary secretions from animals. Interestingly, perhaps because it’s a product that has existed for thousands of years, the Regulation does however exempt the use of the term coconut milk.

Background

In 2021, Oatly AB, the Swedish producer of oat-based drinks, successfully registered POST MILK GENERATION as a UK trade mark for range of oat-based foods and drinks in classes 29, 30 and 32, including oat- based drinks as milk substitutes, and for T shirts in Class 25. Later that year, Dairy UK Ltd, the UK trade association for dairy producers (Dairy), applied to invalidate this UK TM registration. The basis of the invalidity cancellation application was that the mark was invalidly registered since it offended against both Section 3(3)(b) (being of such a nature as to deceive the public) and Section 3(4) of the Trade Marks Act 1994. Section 3(4) prohibits the registration of a mark to the extent that its use is prohibited in the United Kingdom by any enactment or rule of law.

Dairy argued that use of the registered mark in the UK was prohibited by point 5 of Article 78 of the above mentioned 2013 Regulation (the Regulation) which prohibits the use of the “designation” milk on anything which is not “exclusively the normal mammary secretions obtained from one or more milkings”. Point 5 does however, somewhat obliquely, disapply the restriction on the use of the protected “designations” where:

“the designation of products the exact nature of which is clear from traditional usage and/ or when the designations are clearly used to describe a characteristic quality of the product”

This proviso (the Proviso) was to be relied upon heavily by Oatly.

UKIPO decision

The UKIPO dismissed the Section 3(3)(b) claim on the basis that there was no deception but upheld Dairy’s cancellation action (other than in respect of T shirts) on the basis that: “the use of ‘milk’ is prohibited for non-milk products under point 5 […] regardless of how the mark as a whole may be viewed by consumers which is not a consideration under point 5”.

The UKIPO claimed that the Proviso did not apply because the trade mark didn’t “clearly describe a characteristic quality of the goods”.

Initial appeals

Oatly appealed the UKIPO’s decision to cancel its registration (other than in respect of the Class 25 goods) to the High Court (HC). The HC found that the UKIPO had misinterpreted the prohibition in the Regulation which, in the HC’s view, only prohibited the use of the designation milk to actually identify products as being milk (and not the mere use of the designation milk in the marketing of products). The HC overturned the cancellation of Oatly’s registration in 2023.

Dairy then appealed to the Court of Appeal (COA). The COA held that the Regulation prohibited any use of the designation milk on a product that was not mammary secretions from animals, even if it is not used to describe the product. The COA held that the trade mark did not fall within the Proviso since it did not clearly describe a characteristic quality of the food and drinks in question. Accordingly, in 2024, the COA upheld the cancellation of POST MILK GENERATION for all the Class 29, 30 and 32 products.

Appeal to the Supreme Court

Oatly appealed the COA’s decision to the Supreme Court (SC). Oatly argued that, based on earlier versions of the Regulation, the designation of milk which the Regulation prohibits is the use of milk as the name of the product. Oatly argued that, since POST MILK GENERATION is not the name of any of the products for which the mark was registered, its use is not therefore prohibited. Oatly also argued that use of POST MILK GENERATION was permitted by the second limb of the Proviso because it is clearly being used to describe a characteristic quality of the products i.e. that they are not the mammary secretions of animals.

The SC rejected Oatly’s first argument, finding that “designation” meant using milk in respect of a product, rather than just to name it. In relation to Oatly’s argument that use thereof was saved by the Proviso, the Supreme Court held that even if POST GENERATION MILK could be regarded as referring to a characteristic quality of the products (namely, the characteristic of being milk-free), it does so in an oblique and obscure, rather than clear, manner.  Accordingly, the SC upheld the cancellation of POST MILK GENERATION for all the Class 29, 30 and 32 products.

Consequence of Supreme Court decision

Milk is not the only designation which the Regulation prohibits, it also prohibits e.g. the designations cheese and yoghurt for plant based foods. The decision therefore represents a significant victory for the UK dairy industry in its battle to restrict use of e.g. milk and yoghurt for dairy alternative products. The basis of the successful challenge to Oatly’s trade mark was, of course, the Regulation. One wonders what efforts the dairy alternative industry made, post Brexit, to lobby UK parliamentarians not to assimilate the Regulation into UK law.

Interestingly, Oatly’s EU TM registrations of POST GENERATION MILK have not been challenged.

A useful clarification obtained from the SC’s decision was that both parties and the SC agreed that use of a hypothetical trade MILK FREE on oat-based food and drink would not be prohibited under the Regulation because it would fall within the Proviso since it would clearly be used to describe a characteristic of the products ( i.e. that they contained no milk).