Key UK ruling for producers of "free-from" products

In-depth analysis

The Supreme Court decision prohibiting the use and registration of POST-MILK GENERATION for oat-based products has significant implications for those producing "free-from" products.

What has happened?

The Supreme Court has ruled in Dairy UK v Oatly that the use and registration of the mark POST MILK GENERATION in relation to oat-based food and drink products is prohibited in the UK.

The ruling turned on the proper interpretation of EU Regulation No. 1308/2013, which is retained law in the UK. It is one of a number of pieces of legislation that restricts the use of protected terms (here, dairy terms such as milk) in marketing.

The Supreme Court held that the prohibition on the use of protected terms in the 2013 Regulation applies broadly. It is not just the use of a protected term to describe the type of product that is prohibited; any use of a protected term on a product is potentially caught. Use of the term "milk" in a brand – such as POST MILK GENERATION - was therefore in scope.

The Court also held that the proviso (which disapplies the prohibition) only applies where the protected term is "clearly used to describe a characteristic quality of the product". Here, the word milk was being used by Oatly to describe the target audience - not a characteristic quality – of the product so it could not benefit from the proviso. In any event, Oatly's mark was not "clear" as it left open whether the product was entirely free of milk or not.

Helpfully, the Court commented (obiter) that designations such as "milk-free" would fall within the proviso when used on free-from products.

The decision has significant implications for free-from brands that use dairy and other protected terms on their products. There is now a much greater risk of a challenge to any such use. Attempts to register such brands as trade marks will also fail. Those in the free-from space (particularly dairy-free, meat-free and alcohol-free) should seek advice.

Want to know more?

The background

Oatly AB is a Swedish company manufacturing and selling oat-based food and drink products as alternatives to dairy. Dairy UK Ltd is the trade association for the UK dairy industry.

In April 2021, Oatly registered "POST MILK GENERATION" for oat-based food and drink (in classes 29, 30 and 32) and T-shirts (in class 25) as a trade mark in the UK. In November 2021, Dairy UK applied to have that registration declared invalid under section 3(4) of the Trade Marks Act 1994, which bars the registration of marks whose use is prohibited by any enactment or rule of law. The relevant enactment is the 2013 Regulation, now assimilated law following Brexit.

The invalidity application succeeded at the UKIPO (except in respect of T-shirts, which fall manifestly outside the scope of the 2013 Regulation, which deals only with agricultural products). Oatly's appeal was allowed by the High Court but that decision was itself overturned by the Court of Appeal. Oatly appealed to the Supreme Court.

The two key questions

Does Point 5 apply?

Point 5 of Part III of Annex VII of the 2013 Regulation provides that protected terms such as "milk" can only be used as "designations" on products if the product falls within the relevant definition (for milk, the normal mammary secretion). Oatly argued that "designation" means the name of the product type. Its argument was that POST MILK GENERATION does not state that the goods are milk, and so falls outside of the prohibition. The Supreme Court rejected this argument.

Reading the term "designation" in context - and in light of the distinction drawn between "designations", "names" and "sale descriptions" elsewhere in the Regulation - the Court held that "designation" has a broader meaning: it applies to any use of the term in relation to a food or drink, not merely its use to describe the product type. That broad reading is also consistent with the purpose of Point 5, which, as Recital 76 makes clear, is to maintain fair conditions of competition for milk producers, rather than simply to prevent consumer deception.

The Court was referred to the ECJ's decision in TofuTown (which is retained EU case law in the UK), which confirmed that dairy designations (in that case, tofu butter) cannot be used to designate plant-based products in marketing or advertising, even where clarifying terms indicating plant-based origin are added. The Court declined to read TofuTown as limiting the scope of "designation" to use as a product type.

Is the mark saved by the proviso?

Under the proviso, the prohibition in Point 5 does not apply where the designation is "clearly used to describe a characteristic quality of the product". The Supreme Court agreed with the Court of Appeal that POST MILK GENERATION does not satisfy this element of the proviso. In particular:

The mark refers to a generation of consumers (those for whom concerns about the production and consumption of milk are widespread), rather than to any characteristic quality of the goods themselves.

Even if the mark alludes to the milk-free nature of the products, it does so obliquely and not "clearly" as required by the proviso.

Likewise, the mark does not indicate whether the products are entirely free of milk or merely have a low milk content. The Court drew a useful analogy: "POST ALCOHOL GENERATION", if used for a drink, would not clearly indicate whether the drink is low in alcohol or entirely free of it.

The Court also helpfully confirmed (obiter) that, although a designation such a "MILK-FREE" for oat-based products would fall within the prohibition under Point 5, unlike POST MILK GENERATION, it would be saved by the proviso as it clearly describes a characteristic quality of the product.

What does this mean for you?

The prohibition in Point 5 is strict and broad. It potentially applies wherever a protected dairy term is used in relation to free-from products, regardless of whether consumers would be confused. The purpose is fair competition, not consumer protection.

The proviso offers a practical route to compliance, but only where the mark clearly describes a characteristic quality of the product. Brands wishing to communicate the absence of dairy should do so in direct, unambiguous terms. "Milk-free" passes the test; "POST MILK GENERATION" does not.

The ruling means that there is now increased risk of a challenge to anyone attempting to use (or register) protected dairy terms like milk, butter, cheese and cream for free-from products in the UK. The position is similar in the EU, as illustrated by the Tofutown case mentioned above.

The ruling follows the recent ECJ ruling in Verband, which held that the use of the term "non-alcoholic gin" was prohibited for gin-free products under similar (although not identical) legislation. The UK retained an earlier version of that legislation, which is open to interpretation.