The UK Supreme Court’s Ddecision in Dairy UK Ltd v Oatly AB: Oatly’s Trade Mark Falls Foul Of Dairy Designation Rules

On 11 February 2026, the UK Supreme Court handed down its judgment in the case Dairy UK Ltd v Oatly AB [2026] UKSC 4, confirming that Oatly’s trade mark for POST MILK GENERATION was invalid for oat-based food and drink products.

What was the case about?

Oatly produces oat-based food and drink products and its UK trade mark POST MILK GENERATION was registered in April 2021 for oat-based food and drink products in classes 29, 30 and 32 and for T-shirts in class 25 (the Trade Mark).  Dairy UK is the trade association for the UK dairy industry and applied to invalidate the Trade Mark in November 2021. The case turned on the interpretation of a regulation relating to agricultural products.

What was the applicable law?

Section 3(3)(b) Trade Marks Act 1994 (TMA) states that “A trade mark shall not be registered if it is

of such a nature as to deceive the public (for instance as to the nature, quality or geographical origin of the goods or services)”.  This ground was dismissed by the UKIPO and was not appealed; there was no actual deceit or sufficiently serious risk of deception.

Section 3(4) TMA states that “A trade mark shall not be registered if or to the extent that its use is prohibited in the United Kingdom by any enactment or rule of law other than law relating to trade marks”.

One such enactment of law is EU Regulation (EU) No 1308/2013, known as the Common Markets Organisation Regulation, which is assimilated law in the UK (the Regulation).  The Regulation is wide-ranging and somewhat complex.  For present purposes, it defines “milk” and prohibits the use of the term “milk” on non-milk agricultural products.  The key provisions are:

Article 78: “the definitions, designations and sales descriptions provided for in Annex VII shall apply to the following sectors or products: … (c) milk and milk products intended for human consumption”; and

Annex VII point 5: “The designations referred to in points 1, 2 and 3 [for present purposes, “milk”] may not be used for any product other than those referred to in that point [which does not include oat-based food or drink].  However, this provision shall not apply to the designation of products the exact nature of which is clear from traditional usage and/or when the designations are clearly used to describe a characteristic quality of the product.”

Chronology of judicial decisions

The UKIPO held that the Trade Mark fell foul of the Regulation and was therefore invalid.  The High Court overturned that, holding that the use of “milk” was not prohibited here because although the Trade Mark contained the word milk, it was not used to identify the product as milk.  The Court of Appeal overturned the High Court and reinstated the UKIPO’s decision that the Trade Mark was invalid.  The Supreme Court has now upheld the Court of Appeal’s decision, in a short judgment issued quickly after the 10 December 2025 hearing.

The UKIPO held that the Trade Mark was valid in relation to T-shirts.  That finding was not appealed.

What does “designation” mean?  Did the proviso apply?

Oatly’s main argument was that the term “designation” as used in the Regulation meant the name of a product, and that as it was not using the term as the name of its product, it was not caught by the Regulation.

The Supreme Court rejected this.  Lords Hamblen and Burrows, giving judgment for the court, set out a reminder that “domestic statutory interpretation requires the court to ascertain the meaning of the words used, in the light of their context and the purpose of the provision(s)“.  The context and purpose of the Regulation included its EU origin and the fact it was intended to “set out fair conditions for competition“; it seeks to ensure that those terms cannot be used by competitors in ways that would blur the distinction between categories.

The words “names” and “sales descriptions” sat alongside the word “designation(s)”, and it was clear that they all had different meanings.  With that context and purpose and looking at the natural meaning of “designation(s)”, it was clear that “[t]he prohibition bites where the designation has been used for a relevant product, and it is not necessary that it has been used as the name of the product“.  That covers any marketing use.  The Trade Mark fell within the scope of the Regulation.

The court then went on to consider whether the Trade Mark was saved by the proviso to Annex VII point 5.  It was not.

The first limb of the proviso (regarding traditional usage) was not relevant here, but the court was careful to point out (obiter) that a product must be in the list set out (which did not include oat-based food or drink) to fall into the ambit of that limb, while a product did not need to be listed to fall into the second limb.

The second limb however required that “the designations are clearly used to describe a characteristic quality of the product“.  Oatly claimed that its use of POST MILK GENERATION was in reference to the milk-free quality of the product.  However, the court held it was “far from clear that that trade mark is describing any characteristic of the contested products. Rather, on its face it  focussed on describing the targeted consumers … In so far as it is describing a characteristic quality of the product, it is doing so in an oblique and obscure way and is certainly not doing so “clearly”“.

The court considered that “milk-free” would be a prohibited designation, but that “it would be saved because it would fall within the second limb of the proviso … as clearly being used to describe a characteristic quality of the product – i.e. that it does not contain any milk“.

Oatly was not permitted to use its mark POST MILK GENERATION in respect of its oat-based products, and therefore it was not permitted to register it as a trade mark.

Wider implications

Although the decision relates to an ostensibly niche area of law, it applies equally across the commercially significant dairy-free industry.  Terms such as cream, butter, cheese, yoghurt and kefir are all also covered by the Regulation.  The specified designations cannot be used, and as a consequence cannot be registered; trade marks are a secondary consideration after use.

Businesses should therefore carefully consider risk before using terms such as “oat milk” and “vegan cheese”, even though such terms are commonplace and are easily understood by consumers.  This conflicts with the reality of the consumer experience, but it is important to note that what is being protected here is not the consumer, but the dairy industry.  The key will be ensuring any use of those terms falls into the proviso.

It will be interesting to see whether this decision provokes similar challenges to other marks, both those owned by Oatly and those owned by other businesses in the dairy substitute industry.

Finally, it is noteworthy that the Supreme Court’s decision maintains the UK’s alignment with the EU.  The Regulation applies throughout the EU, and it is likely that this interpretation of it by the UK’s highest court would be persuasive in any similar dispute within the EU.  Given the economic significance of the dairy alternatives market – estimated to be around EUR 2.1 billion per annum in the UK and around EUR10.6 billion per annum in the EU – it may well be that this is an issue which comes up elsewhere.