Trade Marks - Oatly AB v Glebe Farm Foods Ltd

 

Jane Lambert

Intellectual Property Enterprise Court (Nicholas Caddick QC) Oatly AB and another v Glebe Farm Foods Ltd [2021] EWHC 2189 (IPEC) 5 Aug 2021

This was an action for trade mark infringement and passing off. There had been a counterclaim for a declaration of invalidity but that appears not to have been pursued at trial.  The action came on for trial before Mr Nicholas Caddick QC on 9 and 10 June 2021.  He delivered judgment on 5 Aug 2021 (Oatly AB and another v Glebe Farm Foods Ltd [2021] EWHC 2189 (IPEC)).  By para [117] of his judgment, he dismissed the claims for trade mark infringement and passing off.

The Claim

The action was brought by the Swedish company Oatly AB and its wholly-owned British subsidiary Oatly UK Ltd.  Oatly AB marketed a milk substitute made from oats under the following marks:

Mark	Number	Goods
OATLY	009001626233	Class 29: oat-based food beverages used as a milk substitute; milk substitutes containing oats. Class 32: oat-based beverages
OAT-LY!	00901218531	Class 29: oat-based food beverages used as a milk substitute; milk substitutes containing oats. Class 30: food preparations made from cereals: oat-based foodstuffs. Class 32: oat-based beverages
OATLY	009016364441	Class 29: dairy substitutes; dairy product substitutes; milk substitutes; milk substitutes containing oats; oat milk [milk substitute]; oat-based beverages and drinks for use as a milk substitute. Class 30: oat-based food and foodstuffs. Class 32: oat-based beverages
	009018002978	Class 29: dairy substitutes; milk substitutes; oat-based drinks for use as milk substitute; milk substitutes containing oats.
	009018002991	Class 29: dairy substitutes; milk substitutes; oat-based drinks for use as milk substitute; milk substitutes containing oats.

In 2019 Glebe Farm Foods Ltd launched a milk substitute made from oats called "Oat Drink".  On or about 15 Jan 2020, Glebe Farms relaunched the product under the mark “PUREOATY” in the following packaging:

The Oatly companies alleged that the use of the PUREOATY marks and the new packaging infringed s.10 (2) and (3) of the Trade Marks Act 1994 and amounted to passing off.

S.10 (2)

This subsection provides:

"A person infringes a registered trade mark if he uses in the course of trade a sign where because—
…

(b) the sign is similar to the trade mark and is used in relation to goods or services identical with or similar to those for which the trade mark is registered,

there exists a likelihood of confusion on the part of the public, which includes the likelihood of association with the trade mark."

It was common ground that the test for infringement is conducted through the eyes of the average consumer and that such a person would be a normal member of the public who buys and/or consumes oat drinks or, possibly, milk or milk alternatives more generally, or who might do so.  It was also agreed that the relevant date for assessing whether there has been an infringement would be the date when the use of the sign complained of commenced. In this case, it was15 Jan 2020, when Glebe Farm Foods launched its rebranded “PUREOATY” product.

In Comic Enterprises v Twentieth Century Fox Film Corp [2016] EWCA Civ 41 at [28] Lord Justice Kitchin said in relation to art 5 (1) (b) of the Trade Marks Directive which was implemented by s.10 (2)):

“A proprietor of a registered trade mark alleging infringement under Article 5(1)(b) of the Directive must satisfy six conditions, namely (i) there must be use of a sign by a third party within the relevant territory; (ii) the use must be in the course of trade; (iii) it must be without the consent of the proprietor; (iv) it must be of a sign which is identical with or similar to the trade mark; (v) it must be in relation to goods or services which are identical with or similar to those for which the trade mark is registered; and (vi) it must give rise to a likelihood of confusion.”

In Specsavers International Healthcare Ltd v Asda Stores Ltd [2012] FSR 19, [2012] ETMR 17, [2012] EWCA Civ 24, Lord Justice Kitchin has said at [52]:

“(a) the likelihood of confusion must be appreciated globally, taking account of all relevant factors;
(b) the matter must be judged through the eyes of the average consumer of the goods or services in question, who is deemed to be reasonably well informed and reasonably circumspect and observant, but who rarely has the chance to make direct comparisons between marks and must instead rely upon the imperfect picture of them he has kept in his mind, and whose attention varies according to the category of goods or services in question;
(c) the average consumer normally perceives a mark as a whole and does not proceed to analyse its various details;
(d) the visual, aural and conceptual similarities of the marks must normally be assessed by reference to the overall impressions created by the marks bearing in mind their distinctive and dominant components, but it is only when all other components of a complex mark are negligible that it is permissible to make the comparison solely on the basis of the dominant elements;
(e) nevertheless, the overall impression conveyed to the public by a composite trade mark may, in certain circumstances, be dominated by one or more of its components;
(f) and beyond the usual case, where the overall impression created by a mark depends heavily on the dominant features of the mark, it is quite possible that in a particular case an element corresponding to an earlier trade mark may retain an independent distinctive role in a composite mark, without necessarily constituting a dominant element of that mark;
(g) a lesser degree of similarity between the goods or services may be offset by a greater degree of similarity between the marks, and vice versa;
(h) there is a greater likelihood of confusion where the earlier mark has a highly distinctive character, either per se or because of the use that has been made of it;
(i) mere association, in the strict sense that the later mark brings the earlier mark to mind, is not sufficient;
(j) the reputation of a mark does not give grounds for presuming a likelihood of confusion simply because of a likelihood of association in the strict sense;
(k) if the association between the marks causes the public to wrongly believe that the respective goods [or services] come from the same or economically-linked undertakings, there is a likelihood of confusion.” `

There was no doubt that conditions (I), (ii), (iii) and (v) of the 6 conditions listed by Lord Justice Kitchin in Comic Enterprises had been satisfied.  Glebe Farm Foods's use of the signs complained of was clearly use within the relevant territory, in the course of trade, without Oatly’s consent and in relation to goods that were identical or similar to those for which Oatly’s trade marks had been registered. The case turned on whether conditions (iv) and (vi) had been satisfied, that is to say, whether Glebe Farm Foods had used a sign that was identical or similar to one or more of Oatly’s registered marks and whether such use gave rise to a likelihood of confusion.

In the deputy judge's view, the claim that the PUREOATY sign (whether used as a word or as depicted on the carton) infringes the OATLY marks was likely to be Oatly’s strongest case.  He compared the visual, aural and conceptual similarity of PUREOATY to OATLY.  He found a modest level of visual similarity and low to moderate conceptual similarity based on the defendant's use of the word OAT.

As to whether such similarity would give rise to confusion, Mr Caddick referred to Daniel Alexander QC's judgment in Planetart LLC v Photobox Ltd [2020] EWHC 713 (Ch), [2020] WLR(D) 266, [2020] Bus LR 2048 between paragraphs [26]-[29] where Planetart complained that Photobox's use of the sign “PhotoBox FREE PRINTS” infringed its registered park FreePrints:

“[26]    One aspect of the approach to determining whether there is a likelihood of confusion which is important to this case is the significance of the adoption of common descriptive elements. In Reed Executive Plc v Reed Business Information Ltd [2004] EWCA Civ 159 at [83]–[84] the Court of Appeal said:

'...where you have something largely descriptive the average consumer will recognize that to be so, expect others to use similar descriptive marks and thus be alert for detail which would differentiate one provider from another.'

See also Elliott v LRC Products (O/255/13 at [57]) where the Appointed Person, Daniel Alexander QC, observed that consumers are less likely to think that two descriptive marks denote businesses that are connected with one another because a credible and dominant alternative explanation exists for the similarity in marks which has nothing to do with their denotation of a common trade source, namely that the similarity is attributable to their descriptiveness.

[27]     The case law does not suggest that there are general rules as to how descriptiveness should be taken into account but it is clear that it should be done. The fact sensitivity of such is illustrated in a number of cases. For, example, one concerning registration of a figurative mark incorporating “VAPE & Co” for e-cigarettes which was opposed by the proprietor of a prior registration for a figurative mark including the words “The Vape Co” (Nicoventures Holdings Ltd v The London Vape Company Ltd [2017] EWHC 3393 (Ch)). Birss J said (see [31]–[36]):

'The nature of the common elements needs to be considered and in a case like this, in which the common elements are elements which themselves are descriptive and non-distinctive ... it is necessary somewhere to focus on the impact of this aspect on the likelihood of confusion. As has been said already it does not preclude a likelihood of confusion but it does weigh against it. There may still be a likelihood of confusion having regard to the distinctiveness and visual impact of the other components and the overall impression but the matter needs to be addressed.'

[28]     That approach drew on the analysis by Arnold J of the case law of the European courts in Whyte and Mackay v Origin [2015] EWHC 1271 (Ch) where he said at [44]:

'...what can be said with confidence is that, if the only similarity between the respective marks is a common element which has low distinctiveness, that points against there being a likelihood of confusion.

[29]     These cases show that there is no hard rule that use of a descriptive term cannot lead to a finding that there is confusion but they also show that such a case is harder to establish. It also has the impact of somewhat downgrading the significance of conceptual similarity in the evaluation of the likelihood of confusion at least in so far as the mark is descriptive of the goods and services in question.”

Mr Caddick concluded at para [58] of his own judgment:

"These comments highlight the difficulty in establishing any likelihood of confusion in a case where the similarity lies in a commonality of descriptive elements. However, as Mr Alexander in Planetart says and as the Specsavers guidance shows, the issue of a likelihood of confusion is highly fact sensitive and has to be assessed globally, taking into account all relevant factors, including the context in which the marks and the sign are used."

Mr deputy judge compared how Oatly used its mark with how Glebe Garm Foods used its sign and considered the limited evidence of actual confusion all of which had been disclosed by the defendant.   He concluded at [77] that there was no likelihood of confusion between the PUREOATY sign and carton and any of the Oatly trade marks and dismissed the claim under s.10 (2).

S. 10 (3)

This provides that:

"A person infringes a registered trade mark if he uses in the course of trade, in relation to goods … a sign which—
(a) is identical with or similar to the trademark
.....
where the trade mark has a reputation in the United Kingdom and the use of the sign, being without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark.”

As with s. 10 (2), the test is conducted through the eyes of the average consumer and the date of assessment was 15 Jan 2020.   It was summarized by Lord Justice Kitchin in Comic Enterprises at [110] and [111]:

“110 … infringement under this provision requires a degree of similarity between the mark and the sign such that the average consumer makes a connection between them. It is not necessary that the degree of similarity be such as to create a likelihood of confusion, but it must be such that the average consumer establishes a link between the mark and the sign, and this is to be assessed globally having regard to all of the circumstances of the case: Specsavers at [120]; Adidas-Salomon at [29] to [30]. The fact that for the average consumer the sign would call the mark to mind is tantamount to the existence of such a link: Specsavers at [122]; Intel Corp Inc v CPM United Kingdom Ltd (C-252/07) [2008] ECR I-8823; [2009] RPC 15 at [60].
[111]   In Interflora this court explained (at [69]) that a proprietor of a registered trade mark alleging infringement under Article 5 (2) must therefore show that the following requirements are satisfied: (i) the registered trade mark must have a reputation in the relevant territory; (ii) there must be use of a sign by a third party in the relevant territory; (iii) the use must be in the course of trade; (iv) it must be without the consent of the proprietor; (v) it must be of a sign which is identical with or similar to the trade mark; (vi) it must be in relation to goods or services; (vii) it must give rise to a link between the sign and the trade mark in the mind of the average consumer; (viii) it must give rise to one of three types of injury, that is to say, (a) detriment to the distinctive character of the trade mark, (b) detriment to the repute of the trade mark, or (c) unfair advantage being taken of the distinctive character or repute of the trade mark; and (ix) it must be without due cause.”

There was no doubt that conditions (ii), (iii), (iv) and (vi) had been satisfied.  The deputy judge noted that the PUREOATY sign had been used within the relevant territory, in the course of trade, without Oatly’s consent and in relation to goods or services.  The dispute was whether conditions (i), (v), (vii), (viii) and (ix) had been satisfied.

As to the first of those issues, it was admitted that the OATLY and OAT-LY! marks had a distinctive character and reputation but not the nature of that distinctive character and reputation,  Also, Glebe Farn Foods did not admit that the carton marks had any independent distinctive character or reputation.  Mr Caddick noted that the task of showing that a mark has a reputation in the UK is not particularly onerous. In his judgment, the evidence clearly established that a significant and extensive distinctive character and reputation attached not only to Oatly’s OATLY and OAT-LY! word marks but also to the carton marks. 

The deputy judge had already dealt with the level of similarity between PUREOATY and the Oatly marks when dealing with the s.10 (2) claim.  He repeated that there was a low or, at best, very modest level of similarity based largely on their common use of the letters “OAT” which would be seen as descriptive.

On the question of whether the average consumer would perceive a link between the PUREOATY sign and the word marks, Mr Caddick referred to paras [29] and [30] of Lord Justice Kitchin's judgment in Specsavers:

“[29] The infringements referred to in Art.5 (2) of [Directive 89/104], where they occur, are the consequence of a certain degree of similarity between the mark and the sign, by virtue of which the relevant section of the public makes a connection between the sign and the mark, that is to say, establishes a link between them even though it does not confuse them (see, to that effect, Case C-375/97 General Motors [1999] ECR I-5421, para.23).
[30] The existence of such a link must, just like a likelihood of confusion in the context of Art.5 (1) (b) of Directive [89/104], be appreciated globally, taking into account all factors relevant to the circumstances of the case (see, in respect of the likelihood of confusion, [Case C-251/95] SABEL [[1997] ECR I-6191], para.22, and [Case C-425/98] Marca Mode [[2000] ECR I-4861], para.40).”

The defendant's disclosures were not enough to show relevant confusion but they clearly suggested that the use of the PUREOATY sign was likely to bring the Oatly marks to the mind of the average consumer.  That would be enough to establish a link.

The next issue was whether the use of the sign took unfair advantage of, or was detrimental to, the distinctive character or the repute of the trade mark.   The deputy judge referred to paras [39] to [42] of the Court of Justice's judgment in Case C-487/07 L'Oreal v Bellure NV  [2009] ECR I-5185, [2009] EUECJ C-487/07, [2009] ETMR 55, [2010] Bus LR 303, [2010] RPC 1:

“[39] As regards detriment to the distinctive character of the mark, also referred to as ‘dilution’, ‘whittling away’ or ‘blurring’, such detriment is caused when that mark’s ability to identify the goods or services for which it is registered is weakened, since use of an identical or similar sign by a third party leads to dispersion of the identity and hold upon the public mind of the earlier mark. That is particularly the case when the mark, which at one time aroused immediate association with the goods or services for which it is registered, is no longer capable of doing so (see, to that effect, Intel Corporation, para.29).
[40] As regards detriment to the repute of the mark, also referred to as ‘tarnishment’ or ‘degradation’, such detriment is caused when the goods or services for which the identical or similar sign is used by the third party may be perceived by the public in such a way that the trade mark’s power of attraction is reduced. The likelihood of such detriment may arise in particular from the fact that the goods or services offered by the third party possess a characteristic or a quality which is liable to have a negative impact on the image of the mark.
[41] As regards the concept of ‘taking unfair advantage of the distinctive character or the repute of the trade mark’, also referred to as ‘parasitism’ or ‘free-riding’, that concept relates not to the detriment caused to the mark but to the advantage taken by the third party as a result of the use of the identical or similar sign. It covers, in particular, cases where, by reason of a transfer of the image of the mark or of the characteristics which it projects to the goods identified by the identical or similar sign, there is clear exploitation on the coat-tails of the mark with a reputation.”

Oatly's principal case was that Glebe Farm Foods had taken unfair advantage of the distinctive character or repute of its trade mark but it also complained that it had suffered detriment to the distinctive character or repute of its marks.

On the facts of the case, Mr Caddick did not see that there was any risk of injury to the distinctive character of Oatly’s marks. If Oatly had lost sales, it was likely to have been the result of there being a rival oat drink product on the market and not because the attractiveness of its brand as a badge of origin had been in any way diminished by the use of the PUREOATY sign.  In the absence of any likelihood of confusion between the rival products, it was hard to see how the fact that some (but not all) people did not like a product that they knew was the PUREOATY product would affect the reputation of the Oatly product. Certainly, there was no evidence to support an argument that the economic behaviour of the average consumer would be affected in that way.

On the question of unfair advantage, the deputy judge referred to paras [44] to [50] of L'Oreal v Bellure NV:

“[44] In order to determine whether the use of a sign takes unfair advantage of the distinctive character or the repute of the mark, it is necessary to undertake a global assessment, taking into account all factors relevant to the circumstances of the case, which include the strength of the mark's reputation and the degree of distinctive character of the mark, the degree of similarity between the marks at issue and the nature and degree of proximity of the goods or services concerned. As regards the strength of the reputation and the degree of distinctive character of the mark, the Court has already held that, the stronger that mark's distinctive character and reputation are, the easier it will be to accept that detriment has been caused to it. It is also clear from the case-law that, the more immediately and strongly the mark is brought to mind by the sign, the greater the likelihood that the current or future use of the sign is taking, or will take, unfair advantage of the distinctive character or the repute of the mark or is, or will be, detrimental to them (see, to that effect, Intel Corporation, paras [67] to [69]).
…
[48] In the general assessment which the referring court will have to undertake in order to determine whether, in those circumstances, it can be held that unfair advantage is being taken of the distinctive character or the repute of the mark, that court will, in particular, have to take account of the fact that the use of packaging and bottles similar to those of the fragrances that are being imitated is intended to take advantage, for promotional purposes, of the distinctive character and the repute of the marks under which those fragrances are marketed.
[49] In that regard, where a third party attempts, through the use of a sign similar to a mark with a reputation, to ride on the coat-tails of that mark in order to benefit from its power of attraction, its reputation and its prestige, and to exploit, without paying any financial compensation and without being required to make efforts of his own in that regard, the marketing effort expended by the proprietor of that mark in order to create and maintain the image of that mark, the advantage resulting from such use must be considered to be an advantage that has been unfairly taken of the distinctive character or the repute of that mark.
[50]. ….. the taking of unfair advantage of the distinctive character or the repute of a mark … does not require that there be a likelihood of confusion or a likelihood of detriment to the distinctive character or the repute of the mark or, more generally, to its proprietor. The advantage arising from the use by a third party of a sign similar to a mark with a reputation is an advantage taken unfairly by that third party of the distinctive character or the repute of the mark where that party seeks by that use to ride on the coat-tails of the mark with a reputation in order to benefit from the power of attraction, the reputation and the prestige of that mark and to exploit, without paying any financial compensation, the marketing effort expended by the proprietor of the mark in order to create and maintain the mark's image.”

He also quoted para [127] of Lord Justice Kitchin's judgment in Specsavers at [127]:

"The Court may reasonably be thought to have declared, in substance, that an advantage gained by a trader from the use of a sign which is similar to a mark with a reputation will be unfair where the sign has been adopted in an attempt to benefit from the power of attraction, the reputation and the prestige of that mark and to exploit, without paying any financial compensation, and without making efforts of his own, the marketing effort expended by the proprietor of the mark in order to create and maintain the mark’s image. …”

Finally, he mentioned para [315] of Mr Justice Arnold's judgment in Sky Plc v SkyKick UK Ltd [2018] EWHC 155 (Ch), [2018] RPC 5, [2018] ETMR 23:

"… .there is nothing in the case law to preclude the court from holding in an appropriate case that the use of a sign the objective effect of which is to enable the defendant to benefit from the reputation and goodwill of the trade mark amounts to unfair advantage even if it is not proved that the defendant subjectively intended to exploit that reputation and goodwill. Counsel for SkyKick did not challenge that conclusion.”

At para [98] of his judgment, Mr Caddick accepted that Oatly’s marks had a strong reputation and that there was an identity of the parties’ goods. He also accepted that the use of the PUREOATY sign was likely to bring the Oatly marks to the minds of many average consumers if only because the product is an oat drink and an average consumer would be well aware of Oatly’s importance in that market. On the other hand, there was a relatively low or, at best, very modest level of similarity between the sign and the mark. That similarity was due to the presence in both the sign and the mark of the letters “OAT” which was descriptive of the relevant products. In these circumstances, it seemed to him that Oatly’s unfair advantage claim was a difficult one. Without more, it did not seem to him that Glebe Farm Foods was taking unfair advantage of Oatly’s marks simply by using elements of those marks that were descriptive.

The Oatly companies contended that Glebe Farm Foods intended to take advantage of the distinctive character or repute of the Oatly marks and intended to cause consumers to make a link between the products.   Mr Caddick reminded himself of the following guidance from Daniel Alexander QC at para [39] of his judgment in Planetart:

“38 The difficulty with this aspect of law is not conceptual but arises because it is sometimes hard evidentially to disentangle a defendant’s intention to copy a claimant’s business from an intention to benefit from the claimant’s reputation and goodwill. In one sense any rival trader who is adopting similarities in approach and presentation of a business is intending to benefit from that but a court must be astute not to confuse that with the more specific intention to benefit from the reputation and goodwill of the registered trade mark. It is also necessary to bear in mind the observations of Kitchin LJ as he then was in Specsavers International Healthcare Ltd v Asda Stores Ltd [2012] EWCA Civ 24 at [115]:

'In my judgment it is important to distinguish between a defendant who takes a conscious decision to live dangerously and one who intends to cause deception and deliberately seeks to take the benefit of another trader’s goodwill. It has long been established that if it is shown that a defendant has deliberately sought to take the benefit of a claimant’s goodwill for himself the court will not “be astute to say that he cannot succeed in doing that which he is straining every nerve to do”: see Slazenger & Sons v Feltham & Co (1889) 6 RPC 531 at p.538 per Lindley LJ. A trader who has taken the decision to live dangerously is in a different position, however. He has appreciated the risk of confusion and has endeavoured to adopt a sign which is a safe distance away. All must depend upon the facts of the particular case. Further, it must be kept firmly in mind that the ultimate question whether or not the similarity between the trade mark and the sign is such that there exists a likelihood of confusion is one for the court to determine in the light of its global assessment of all material factors, of which the intention of the defendant, as a person who knows the market in which he is offering his goods or services, is only one.'

[39]     Although that was said primarily of a case under s.10 (2), it is equally applicable to a case under s.10(3): it is one thing to live dangerously, in the sense of pushing the boundaries of legitimate creep up on an incumbent. It is another to intend to deceive.”

After considering the evidence and arguments, the deputy judge could find no evidence of intention to take unfair advantage of the distinctive character or repute of the Oatly marks.

The last issue was whether Glebe Farm Foods's use of the PUREOATY sign was without due cause.   It was agreed that it would have been up to that defendant to establish due cause but the issue would have arisen only if the deputy judge's findings on the other issues had been wrong.   Lord Justice Kitchin had provided the following guidance in Comic Enterprises at para [123] of his judgment:

"More broadly the Court has explained that the concept of due cause involves a balancing between, on the one hand, the interests which the proprietor of a trade mark has in safeguarding its essential function and, on the other hand, the interests of other economic operators in having signs capable of denoting their products and services… (see, in particular, Leidseplein at [41] to [46]).”

Mr Alexander said in Planetart at para [43]:

“…… However, it must be borne in mind that this provision only comes into play after it has been found that there is not only a link between the registered trade mark and the sign but also that it has taken unfair advantage or is detrimental to the distinctive character of the trade mark in the sense that the case law has required. That does raise the bar for a defendant to show that the use of the sign is nonetheless with due cause.”

He added at [44] to [45]:

“[44]    Thirdly, where the registered mark includes descriptive elements (or other elements which are less likely to have trade mark significance—such as a colour or design) and the case for application of s.10(3) is largely based on the common use of such elements, the easier it will be for a defendant to show that the use of those elements is with due cause. That approach gives effect to the purpose of the law articulated in Leidesplein and Argos.
[45]     Fourthly, cases are highly fact dependent but the court should seek a proportionate response. The greater the intrusion into the trade mark proprietor’s legitimate interests in the ways that the law seeks to protect against, the stronger will need to be the defendant’s justification for nonetheless using the sign in question.”

Mr Caddick said that if he had found for the claimants on the other issues it would not have been possible for the defendant to show due cause,   In view of his findings on those issues, the claim under s.10 (3) failed.

Passing Off

It was agreed that the claim for passing off raised the same or similar issues to the s.10 (2) claim.   As that claim had been decided in favour of the defendant, it followed that the passing off claim would also fail.

Further Information

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