Oatly Loses Trademark Battle Against Small Family Farm

In the business of oats, sometimes you get rolled over.

A UK court on Thursday tossed out a case by Oatly, in which the Swedish dairy alternative giant sought an injunction against a family farm — whose assets total a mere 0.0007% of Oatly’s market cap — for endowing their product with the not-especially-similar name PureOaty.

David vs. Oatliath

Oatly listed in New York at a $10-billion valuation in May, while Glebe Farm — which started calling its oat milk PureOaty last year — had net assets of less than $6.9 million as of March 2020.

Despite Glebe’s relatively small enterprise, Oatly claimed the farm’s branding was intended “to bring Oatly’s products to mind,” asking the court to bar Glebe from using the name and award damages and costs.

The judge had none of that, however, ruling there was no evidence of brand confusion. Now, humbled by a British magistrate, Oatly turns to face an even more heated battle in the court of public opinion:

  • The company’s shares tanked three weeks ago after short seller Spruce Point issued a scathing report accusing Oatly of shady accounting practices. Among other allegations, Spruce Point noted that Oatly claimed $12 million in 2018 U.S. revenue during an investor presentation, while a Swedish media report pegged that figure at just $6 million.
  • Spruce Point also noted that Oatly has run through three auditors in six years, something the company failed to mention in IPO filings. And the short seller alleges — along with anomalies in its reported cash flow and balance sheet — Oatly’s gross margin is 6.4% lower than the company claims.

Getting Ugly For Oatly: Spruce Point didn’t pull any punches, even going after Oatly’s environmental record: the short seller got hold of government records showing that Oatly’s New Jersey plant guzzles even more water than it takes to make cow’s milk and that it’s been out of compliance with the EPA.

become smarter

Subscribe to The Daily Upside.

Become smarter with only 5 minutes every morning.