Oatly Lost Its Trademark Battle—What Should It Do Next?

The Swedish alternative milk market leader had taken the British oat milling business to court on the grounds of trademark infringement, referencing the likeness of the color choices of the packaging and—crucially—the letter “Y.”

It’s a classic David and Goliath battle, where typically the majority of those without investment or brand love for either product will inevitably end up rooting for the little guys, who have come out on top, with the additional benefit of a phenomenal amount of global media coverage for the family-run Cambridgeshire business. (And potentially, a sudden spike in new customers over the next few weeks, as oat milk aficionados taste-test to see what the fuss is all about).

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And as Oatly has found out, there’s no use crying over spilled oat drink. The company’s spokesperson has confirmed that the verdict will not be contested and they will now want to swiftly move on from the case and its ensuing cacophony of headlines, which sit somewhat awkwardly with the friendly character that has become synonymous with the brand.

There are a few interesting features to this case: how tricky it can be to create something truly distinctive and ownable, how hard it can be to protect your brand assets effectively and at what altitude you should fly as a big brand surrounded by minor players.

Oatly is no stranger to the courts having been pulled up by the milk industry for attempting to register its “it’s like milk but for humans” slogan. It’s brand savvy and will no doubt have seen this case as an opportunity to warn others off what it perceives as its territory in a high-growth market.

Creating something distinctive and ownable

New entrants and product line innovators often opt for highly descriptive names that hint at the ingredients and characteristics of their goods to provide an instant short-hand for consumers. So it’s no surprise there are lots of “oaty” type names in the world. In this instance, the argument centered largely around the general brand and product design, including use of the “y.” 

From a trademark perspective, you have to prove that side by side the products are likely to be confused with one another, diminishing awareness and sales for one of the parties. There’s not a lot to argue in this instance as the infringement isn’t that obvious once you remove generic factors that anyone might use—like the word “oaty” being in the product name and hints of raw oats in the design. Oatly’s brand equity on the shelf lies largely in its use of type and tone of voice, making PureOaty look rather humdrum by comparison—so no confusion there.

Protecting your brand assets

Name, trademark checks and registration are core to any brand process. Made up names are popular as they are easier to protect than regular words, but they do carry the risk of feeling too abstract, technical or cold. Putting greater emphasis on the logo, supporting design and tone of voice helps make the case for greater and more personalized ownership.

Any court will take into account how all of the assets together make an impression as much as any individual element. It makes sense for a brand to invest comprehensively in its brand toolkit and to invest in creating high levels of awareness for the brand, given how brand recognition is another key factor when it comes to trademark issues.

Finding the right altitude

Oatly made it clear from the start that the trademark battle wasn’t specifically against one competitor, but more about laying a claim to the name before other and more sizable players—it alluded to “Big Milk”—attempt to steal a march in a booming market. This was less about winning the case and more about staking its claim and firing a warning shot for all to see. 

Commercially this may be smart, but the brand does have to be careful given that Oatly is built around a friendly, irreverent personality. Playing the playground bully against small local players is not without its drawbacks, especially as a lot of the brand’s ethos is built around promoting greater use of oat-based products for a better planet. Making Glebe Farm Foods and other small players an ally may have elevated its cause and brand.

Inevitably a big, well-funded global or domestic player will tackle Oatly head-on—the market potential is too great for it not to. Given Oatly’s brand personality and its CEO’s flair for the theatrical, I’d love to see it take a leaf out of the Stevens/Southwest playbook:

Herb Kelleher of Southwest Airlines was famously challenged by Kurt Herwald of Stevens Aviation (a smaller player) for use of the slogan “Just Plane Smart” in the ’90s. Through a series of fun and high-profile public exchanges they decided to settle on who owned the slogan through a straightforward arm wrestling match dubbed “Malice in Dallas.” Pure PR gold for everyone involved with a massive halo effect for both leaders and brands, including a congratulatory message from POTUS at the time.

With the verdict now in, it’s best to graciously accept defeat, pause to reflect and then slowly return to that joyful personality that helped to escalate the brand and win it both plaudits and fans. After all, nobody wants a sour oat milk brand.

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