Glebe Farm Foods has succeeded in its defence of the trade mark PUREOATY in an infringement action brought by the non-dairy giant Oatly.   This recent decision from the Intellectual Property Enterprise Court (IPEC) shows that even when you are a reputable market leader like Oatly, use of a mark with low distinctive character means narrow rights.

In the mid-1990s Oatly developed a process to turn oats into a milk alternative drink. The name Oatly was adopted in 2001 and with consumers shifting to more sustainable products, the business has grown rapidly in the last few years.  With annual sales in the UK last year approaching £100 million, their sales are twice the size of all the other oat-based drinks combined.

Glebe Farm Foods is a family run business, growing and selling gluten free oats since 2008.  It launched its own oat drink in January 2019 and after consulting with customers, it started using the trade mark PUREOATY in January 2020.  Oatly swiftly acted against Glebe Farm Foods for the infringement of five registered trade marks and for passing off.

In his assessment of the similarity of the marks PUREOATY and OATLY, Mr Caddick sitting as a Deputy High Court Judge, concludes that there is a “very modest level” of visual similarity, due to the letters “OAT”.  He goes on to say that what makes OATLY distinctive, is the transformation of a word with a meaning into a fancy word by the addition of the letters “LY”.   Therefore, any conceptual similarity between the marks is based on the word OAT, which is entirely descriptive.

The defendant’s use of the mark was analysed in detail and while it was accepted that there were some similarities in the packaging, such as the colour and irregular lettering, the Glebe Farm logo appeared prominently on the Defendants packaging above the PUREOATY mark.   It was therefore concluded that use of the prefix “PURE” to “OATY” and the appearance of the carton as a whole would avoid any likelihood that PUREOATY would be seen as some sort of sub-brand of Oatly.

Oatly also argued that documents disclosed by the defendant showed actual instances of confusion.  However, these were not considered confusion as to trade origin, but mere mistakes which lie in the closeness the Oatly name to the descriptive word “Oat” or “Oaty”.   Infringement on the grounds of a likelihood of confusion with Oatly’s registered trade marks was therefore rejected.

Further grounds of trade mark infringement based on Oatly’s reputation were also considered and there was some evidence that use of PUREOATY had created a link in the minds of the average consumer to the Oatly products.   However, Mr Carrick did not see any risk of injury to the distinctive character of Oatly’s trade marks and if there was a loss of sales it was merely because of a rival product and “not because the attractiveness of its brand as a badge of origin had been in any way diminished”.

It was accepted that the mark OATLY has a strong reputation and that use of PUREOATY is likely to bring the OATLY marks to mind, but the similarity of the marks is confined to letters “OAT”, which are descriptive.   The disclosed documents, despite mentioning Oatly, did not suggest any intention to get close, let alone take advantage of the distinctive character of the OATLY trade mark.  For these reasons, the grounds of infringement based on reputation were also rejected.

Finally, the passing off claims were considered briefly, but rejected because the issue of misrepresentation raised the same or similar issues to those rejected when considering a likelihood of confusion for trade mark infringement.

This decision shows that even when you are the clear market leader, with a significant reputation, choosing a mark with low distinctive character means that other parties can sail very close without confusion.  This decision has been seen as an example of a dominant player trying to squash the competition and perhaps fearful of further negative press in a sensitive sector of the market, Oatly has decided not to file an appeal.

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