A recent U.K. decision illustrates that the determination of whether two competing trademarks are confusing involves considerable uncertainty. Marketplace evidence of actual confusion is not required but if available can carry significant weight.
The plaintiff is a Swedish company that manufactures and sells oat-based drinks. The beverages are a plant-based alternative to dairy products, such as cow’s milk. It sells its products under the brand name “OATLY” in the UK through its wholly-owned subsidiary.
The plaintiff’s business was founded in the mid-1990s by Swedish researchers using patented enzyme technology to turn oats into a liquid that could be used as a milk or dairy substitute.
The plaintiff owns registered marks for the marks OATLY and OAT-LY! registered for use in association with oat-based food beverages used as a milk substitute; milk substitutes containing oats; and oat-based beverages. A more recent registration was obtained for OATLY registered for use in association with 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; oat-based food and foodstuffs and oat-based beverages. The plaintiff also owned registrations for the design appearing on the product labels it used.
In or about 2013 the plaintiff started a strategic repositioning and rebranding exercise. The aim of this approach was to make its brand stand out as speaking to and connecting with its customers, sometimes called “wackaging” and presenting an informal and less corporate image with a focus on a healthier and more sustainable lifestyle. For example, the new packaging included the words “SHAKE ME!” on the top and featured various lifestyle-focused messages delivered in an informal chatty way on its sides and back panel.
The approach was successfully implemented, and the plaintiff’s sales increased dramatically in the U.K and across the EU. In addition, the plaintiff’s products were widely exposed to the public with some 80% of its sales being made through the main supermarkets. Its products were stocked in over 20,000 retail outlets.
Because of its efforts which included multiple marketing campaigns the Plaintiff’s products became the best-selling oat drink in the UK and across the EU.
The Defendant is a company incorporated in England and Wales. It operates the Rayner family farm in Cambridgeshire where it has grown oats since 2008. It specializes in the production of gluten-free oats and has set up systems to guarantee that its oats are 100% gluten-free. The Defendant is proud of the purity of its oats and that it is the only farm in the UK growing and processing gluten-free oats for use in porridge flakes, oat flour and oat drinks. Around 50% of the Defendant’s oat production is used for a range of own-label products which it sells via its website and through retailers such as Holland & Barrett, the Co-op and Amazon. The packaging used by the Defendant for the majority of its own-label products is very different to that which it has adopted for its PureOaty drink:
In January 2019 it launched an oat drink called “Oat Drink”. Later that same year, it decided to re-brand and to re-design the packaging of this product. Eventually, it chose the brand name “PUREOATY”. The purity of its oats was important to the Defendant and the Defendant made this concept central to marketing its oat drink. The rebranded product was released in January 2020.
The plaintiff’s case was that the Defendant’s use of the “PUREOATY” mark infringed the Plaintiff’s trademarks. The Judge observed that the starting point was to assess whether in the eyes of the average consumer the respective marks were similar.
The Judge dealt with the visual, aural and conceptual similarity of the marks. Visually, there was some similarity due to the presence of the letters “OAT”. However, this was categorized as a very modest level of similarity. The defendant’s mark is 8 letters long; the plaintiff’s marks are 5 letters and the addition of the letters PURE at the start of the defendant’s mark and the absence of the letter “L” detract significantly from the visual similarity perceived by the average consumer.
The level of aural similarity depends in part on whether the average consumer saw the defendant’s mark as one word with the emphasis on the first syllable “PURE”, in which case there is a limited similarity, or as two words or with the emphasis on the second part “OATY”, which would increase the similarity.
The Plaintiff argued that, conceptually, the average consumer would see the PUREOATY sign as two words and see the word “PURE” as being a mere descriptor or laudatory and would focus, instead, on the word “OATY” which is highly similar to the “OATLY” marks. The Judge did not agree. He said the average consumer would see PUREOATY as two descriptive words put together to form a single word doubly descriptive of the Defendant’s oat drink. The degree of conceptual similarity was low to moderate and derived from the presence in both of the respective marks of the descriptive word “OAT”.
The defendant presented evidence to show that the words “OAT” or “OATY” were equally descriptive and showed various other goods using such words, as for example, McVities’ Oaty Flapjacks, Tesco’s Oaty Flapjacks, Organix’ Banana Oaty Bars and Quaker’s Oatie Mix-Up cereal.
The Judge relied on established case law to the effect where a mark is largely descriptive the average consumer will recognize this and expect other marks to use similar descriptive marks and be alert for details that differentiate one mark from another. If the only similarity between the respective marks is a common element that has low distinctiveness, this points against there being a likelihood of confusion.
Based on the above analysis the Judge dismissed the claim.
The Canadian Position
While there are differences in approach potential confusion is dealt with in a similar fashion in both countries. Under Canadian case law where a trademark consists of words that are common and which are also contained in several other trademarks in use in the same market, the mark will be less distinctive and entitled to less protection than with a strong mark. Trademarks consisting of initials or numbers fall within this category and typically have a small ambit of protection. However, if a trademark consists of a new combination of words or designs, even though some components are common to the trade, the combination when looked at as a whole, may have some distinctiveness.
In this case the marks OATLY and OAT-LY! seem to be coined words with both some inherent distinctiveness and acquired distinctiveness. It is possible that a Canadian Court would be prepared to give more weight to the dominant “OATY” component of the defendant’s mark to justify a finding of confusion.
This case also struck me as one where survey evidence could be helpful, so I spoke to Dr. Ruth Corbin, a well-respected survey expert. She said that “ the plaintiff may have missed an opportunity to present survey evidence to buttress its case. Given that the analysis of human perception has entailed more than fifty years of scholarly research, one might find it disconcerting that two lawyers and a judge would debate the perception of the average consumer without a shred of direct input from consumers themselves. Surveys may be a controversial form of delivering evidence, to be sure; but in the face of inconsistent speculation by officers of the court, notwithstanding that they are intelligent law-trained professionals, the opportunity for some form of objective evidence from the marketplace can hardly be disputed. One can only speculate that the swirl of controversy about surveys, and the unpredictability of how they will be received, had dampened the enthusiasm of both plaintiff and defendant for investing in such evidence.
The facts of the case recall a trademark dispute in Canada in the 1990s between Lactantia PurFiltre Milk and Neilson TruFilter milk. The case went to arbitration, the arbitrator relying in part on survey research to find a likelihood of confusion. Similar facts, opposite result.”
The Plaintiff seems to have become concerned with potential adverse publicity associated with this case and publicly announced that it would not appeal the decision.
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These comments are of a general nature and not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer.
A version of this article originally appeared in the Lawyer’s Daily published by LexisNexis Canada Inc.