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Why Oatly’s lawsuit might win it a trademark battle, but cost its reputation

Is Oatly’s court battle not so wholesome?

Market leader and superstar Oatly decided to take the small British producer Glebe Farms to court on the grounds of trademark infringement. What could have been a small private affair may start turning the tables for Oatly’s underdog reputation. Here’s why the brand may be doing the right thing, but risks going about it in a not-so-Oatly way.

Something’s been roasting in the oat milk industry, and this time it’s not just about perfecting your barista coffee. It’s been impossible to miss the Oatly v Glebe Farms oat milk dispute.

According to the filing, the $15bn oat milk leader is arguing Glebe Farms are in breach of multiple trademarks. It is taking issue with the use of the word ‘Oaty’ (too close to its own), the likeness of the white and blue packaging, the tagline ‘ideal for professional coffee’ and the use of the words ‘shake me’ next to the cap. Riveting stuff.

Is it right? Legally it’s now for the judges to put an official seal on this decision, but the public’s court seems to vehemently disagree with Oatly. So far reactions tend to express disappointment for a brand that had done really well presenting itself as the dairy industry’s David, with disbelief that it has become such a mean Goliath. Things have gone as far as a 55,000-signature petition on Change.org, and a number of social posts have publicly questioned Oatly’s righteousness in the matter. Some are calling out its recent ties with investor Blackstone Group, a less-than-favored group among environmental activists.

Considering how ‘woke’ the brand’s communications have been, that behavior has raised many eyebrows among consumers. And three weeks in, a quick sentiment analysis returns a pretty clear verdict: with close to half of mentions expressing a negative sentiment (a mere 6.2% positive), this gives it a whopping 42% net-negative sentiment. It turns out oat milk can turn sour pretty fast too.

Rightful or not, is this the right thing to do for Oatly?

If you ask me, those two brands look nothing like each other, but like most of you I’m not a lawyer. To be fair though, there is something a little bit fishy about PureOaty: every one of its non-dairy milks is named very humbly (‘Almond’, ‘Soy’), but somehow for its oat milk went for ‘PureOaty’. It argues it is a nod to the purity of the product, but is it saying its other drinks are not pure? It is admittedly pretty off-brand for its portfolio conventions.

If I’m completely honest, while I doubt many consumers would be confused seeing the two cartons, it does seem it is trying to ride the wave of Oatly’s marketing formula here, and I’d wager it knew exactly what it was doing. So not only might Oatly have grounds to at least get things raised, there is an important reality Oatly is facing: because of how trademark laws operate, defending your trademarks isn’t just a question of right or wrong against a specific producer.

Defending your brand’s position on every possible infringement is critical to demonstrate how seriously a company is ready to defend itself. It signals to future court decisions that it’s not just cherry picking who it likes and doesn’t like, it is simply objectively defending its trade. What’s at stake here is not ruining a small farm (something Oatly has expressly said it’s not interested in), but simply setting the precedent for future infringements. Say, for example, when Danone gets to business. When asked, its communications manager was pretty adamant that “trademark protection works like this: we have to take every fight”. They said: “We can’t pick and choose. If we don’t, that would be like us saying it’s okay for others, including Big Milk, to also use similar branding and the name ‘Oaty’.”

Going after a small producer might be a costly exercise for its image in the short term, but in the long run having that precedent set might just be an inevitable choice. Ultimately, whether we like it or not, Oatly has become the standard of a category it not only invented, but exploded. A brand of its size now plays by rules that may seem unfair to the little guys, but they’re just collateral damage in a fight against the bigger ones.

There’s something about Oatly

Notwithstanding the court’s decision, Glebe Farms will probably not let that crisis go to waste. People love a good David v Goliath story, bringing an unprecedented spotlight on a small producer that doesn’t normally have access to BBC News coverage. Meanwhile, Oatly may well win a trademark fight, setting the grounds for a bigger one in the long term; and look, whether that’s how your woken heart wishes to see it or not, it does present it to the mainstream as a reliable, credible company playing at the top of the category. At this stage, the question is not so much whether Oatly should have taken this step, but whether it took it a little too complacently.

So far, its public statements have been disappointingly corporate. Operationally, it’s done a good job trying to respond individually to everyone who would tag it on social media (leaving little-to-no post unanswered on LinkedIn). But tonally, something feels a little off when your brand-next-door starts talking like another lawyered-up big corporation whose first duty is to increase shareholder value. Fiduciary responsibility is a reality, but it’s not been part of Oatly’s vocabulary.

Assuming its legal actions had to be made, it could have used this ordeal more to its advantage by framing more towards PureOaty’s benefit. First of all, it could be laughing a bit more about the Soy v PureOaty difference, a clear indication that, taken in context, Glebe Farms is trying to surf the (naturally) sweet wave of Oatly. It could have also used this as a way to celebrate the farmer’s foray into the category. If we are to believe it, this fight is not about ruining the farmer, it’s about protecting the trademark. If what it wants is for it (and every brand after) to not use ‘Oat-y’ in its name, then focus on that and show support for the business behind the infringement. Celebrate the fact it hopes it’ll put the spotlight on yet another brick in this progressive wall.

Give a hat tip to Glebe Farms, and maybe even look for creative ways to reduce its legal fees at the end when Oatly wins it all. Use this as a public reminder that it wants the world of oat milk to succeed at large. Oatly have brilliant writers and creatives who mastered the art of building this equity. But it’s important to take the measure of corporate actions, not just words or social contact, to shape a company’s reputation. And when Oatly’s is built on being the unusual alternative, it probably shouldn’t just be (big) business as usual.

Shann Biglione is co-founder and head of product at Kelp and former Zenith and Publicis Media exec.

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