Sometimes we get caught up in lives of companies. We root for them one minute and boo them the next, as if they were real live people. It’s a sensible reaction to scorn a company for egregious things like polluting, discriminating or shameless worker exploitation. For their day to day business decisions or when they’re doing the bare minimum for decency, not so much. The recent Oatly vs “family owned” PureOaty trademark infringement case is getting people upset. What’s the deal here? Should we be angry at Oatly? Does PureOaty deserve sympathy because it’s a small business? Are small businesses special in some way? And what does blueberry pie have anything to do with this? Find out in this brief journey into what it means to run a company in a capitalist world. Please note, this piece is a simplified explainer meant to be widely accessible.
What’s a public company?
Oatly went public (NASDAQ: OTLY) on 20 May 2021. That means the shares of Oatly went from being owned by private individuals (including other companies) to being bought and sold by the public – you and me – on a stock market. Oatly is now owned by public shareholders instead of private shareholders and referred to as a publicly traded company or, simply, a public company. Because of this public ownership there are loads of new regulations Oatly must follow and in many ways a public company has more duties towards its shareholders than they had before.
What are some implications for Oatly?
Oatly will need to pay close attention to anything which might hurt it and their shareholders. How do you hurt a shareholder? Basically, anything that might lower the share prices as a result of Oatly not properly carrying out its business. Should the shareholders believe something Oatly did or didn’t do negatively and significantly affected the share price, then the shareholders might sue Oatly and maybe even its directors.
Properly carrying out its business includes safeguarding Oatly’s intellectual property. Oatly’s name, branding, logos, slogans and that sort of thing would be part of their intellectual property (“IP”). Generally, IP wouldn’t normally include a recipe. If Oatly didn’t look after its IP, people might buy other similar products. That’s the argument, anyway. If people go elsewhere for their oat milk, Oatly’s share price might drop as a result of losing market share, sales and so on. If Oatly didn’t secure its IP, whether from large or small businesses, the shareholders might allege Oatly and maybe even its directors were negligent in discharging their duties by not doing what the system is set up to encourage and even demand of all companies. And, incidentally, not defending one’s IP risks the owner losing or weakening their rights over it, which would be another bit of negligence a shareholder action could allege.
So what’s this mean in practice?
Is it fair or nice? It’s neither. This is reality and the rules we’ve accepted in our capitalist world. Imagine the following: You don’t like blueberry pie. You bake a blueberry pie. And then you’re upset because you’ve got a pie you don’t like. Being upset about the blueberry pie is a bit of a wasted effort, but might lead you to look at what other pies you might want to bake and how things could be different. Using that emotion to lead us to thinking about broader issues is certainly worthwhile. Meanwhile though, you’ve got to deal with the blueberry pie.
What about Pure Oaty?
Up to now, we’ve talked about Oatly, but what about PureOaty (made by Glebe Farm)? They’re a private company and apparently “family owned”. There’s no doubt they received a cease and desist letter from Oatly asking them to change their branding. That would’ve been standard practice. They chose not to change their branding, which is their prerogative. Why might they have done that? Perhaps they believe they will win, or they might be using this moment strategically in hopes Oatly will buy out their gluten free production facility, which Oatly doesn’t have. Or maybe they see this as beneficial in some way because they’re getting loads of free publicity.* I hadn’t heard of PureOaty before. Had you? I’ve no idea what the ultimate outcome of this action will be or how PureOaty will be affected, whether good or bad.
Some thoughts about small businesses
I have one more thing for you to think about. Why do we fetishise or idolise small businesses? Are they always better? If so, why or how? Do they always pay better, treat their workers better or are generally more ethical than large companies? Sometimes, sure. Much regulation doesn’t apply to small businesses, while it will always apply to larger ones. Often small businesses can get away with doing less or being less fair not because they’re inherently bad, but because, again, that’s how we’ve baked the pie.
I don’t know anything about PureOaty and I like shopping from a small business where I might know the people. So it suits me from an aesthetic or personal reason. And I always hope they’re doing the right thing by their employees, suppliers and the environment around them. Ultimately, though, all businesses are vehicles for people to make a living within the construct of the world we’ve built. What we must always continue to question is whether what we’ve built is the right thing or do we want a different kind of pie?
*Update 16 July, from Glebe Farm’s LinkedIn… some publicity, which is clever and funny. Will it be worth it? Will it create sustained increased sales now and after this issue is resolved? Or might it be an own goal and used by Oatly as further evidence of Oaty’s imitating Oatly. After all, Oatly is renown for their cheeky marketing campaigns and barbs printed on their cartons.
Thanks for sharing this – everything is more nuanced than initially perceived.
Thank you for reading and commenting, Sareta. I very much believe the more we know how things work, the better it is for everyone.
I think it’s the combination of a few facts that has people upset: the packaging looks completely different, the fact that the target is a small business, and (less importantly here I think) Oatly claims to be making the world better with their product.
We’ve all seen mickey-taking packaging before and if that was the case here the reaction would have been different. Also if the target of the lawsuit were e.g. Sainsbury’s who will never have a problem putting their product on their own shelves I don’t think anyone would care all that much.
Business have to weigh up the cost benefit when making a decision to take legal action or not, people like me make a fuss about cases like this because we hope the adverse publicity and potential loss in sales will be enough of a disincentive to put Oatly and others like them off from taking similar actions in the future. Maybe that’s not realistic but saying nothing doesn’t seem like a great alternative.
Thanks for your comment. What makes a small business better? What makes a big one worse? How do we know small businesses are better? What does family-owned mean? Are only small businesses family-owned? Doesn’t the small business make a cost benefit analysis in decided not to abide by a cease and desist letter?
Hi Emi, thanks for sharing your thoughts on this from another perspective. Personally I think it’s not a question about smaller firms being better but a question about fairness (there’s no way to confuse the two packaging) and giving the smaller guy a chance (why should you Bow out to a bigger firm just because they say so? Where’s your backbone then?). Corporations are not built on charity or sympathy, I know, but I also think maybe that’s why now we need to find ourselves in this conversation about going plantbased to save our environment, precisely those initial ways of business and thinking, profit chasing corporation bulk buying, killing small business and consumerism, brought us here. Corporations again trying to capitalize on consumers’ purchasing habits; oat milk for environment.
Thanks for reading and commenting! The perspective I bring is being a corporate lawyer for over 20 years. And what I discuss is factual reality. This is the system we got and its laws. Glebe Farms would do the same to Oatly if they had come up with the branding before them. Oatly must – under the laws we live with – do what it did. It’s not a matter of fairness. It’s literally how our world is set up – legally and economically. Corporations as you say “trying to capitalise on consumers’ purchasing habits” is literally capitalism. Companies do what they do because that’s the system we have and the legal framework we have. And declining a cease and desist letter is certainly a prerogative of any company or individual being sent one. But doing so brings with it a variety of consequences – including a ton of publicity for the company – and then the legal obligation to defend their decision. Whether anyone will be confused is the question before the court. They might take your view or another. Who knows. That’s literally their job right now, to figure out whether consumers would or wouldn’t be confused.
Precisely the law and system we have now isn’t always fair and capitalism and our current ways of operating are leading to some destruction of our environment. So it’s fair to say that we can look into the motive of a small company to decline a cease and desist but what’s that of the entire system and the larger players? Should they just be let off the hook cause they are assumed to be capitalists?
There is no morality or ethics involved in either party’s action. Their respective actions are neither good nor bad. These are companies doing what they’re designed to do. There is no “letting off the hook” because there is in fact no hook. There is no motive other than each party doing what they are either required to do or what they deem best for their own existence. Ascribing morality in this situation is misplaced. You want to discuss capitalism great. Then that’s the discussion. Zoom out from this micro situation without an ethical or moral aspect and focus on the bigger picture as you do in your first sentence. That’s the real issue. Not the action of these two companies.
Sticking towards case law and the case;
might find these links helpful – as in this case it is purely about the name (or letters used and their arrangement) alongside the packaging design (colour, layout etc.)
https://www.oatly.com/uploads/attachments/ckq0o0iu5013s9fgissoy2b5h-glebe-farm-skeleton-for-trial.pdf
https://www.oatly.com/uploads/attachments/ckq0nxkic00wc9fgipdqhzogb-oatly-skeleton-for-trial.pdf
Regardless of Organisational Size, Public/Private.
It appears there is pretty little real substance.
Most likely these impacts has raised overall Brand Awareness of both Pure Oaty and Oatly/Oatly!
It has probably harmed Oatly plc and improved Pure Oaty Brand Image and Value.
In terms of Oatly plc the last month their share price has fallen, although this can be suggested to be in relation to the greater implications about their alledged mis-quoting of financial figures.
When it comes to Brand and Mission.
Brand Value, Awareness, Loyalty – ideally need to be positive associations.
Mission, is not owned by anyone and can be identical to another organisation.
Hi James
Small fry litigation will not have been the driver behind the share price fluctuation.
It’ll be interesting to see what the court decides!
Thanks for the links!!
Cheers
Emi
I heard that the judge dismissed vOatly’s lawsuit. On LinkedIn people are angry at Oatley for (I guess) squeezing the family run business and plan to stop buying Oatly. For me it all comes down to taste. Oatly is delicious but if another is tastier, I don’t have much brand loyalty.
Hi Debra
Oatly did what they felt they needed to do as did Oaty. And the court did what they were entrusted to do. Here’s the link for the decision, which is very interesting https://www.oatly.com/uploads/attachments/ckryqo0uz05694kgib9wns6ya-oatly-judgment-final-for-handing-down.pdf
The court case isn’t a moral issue to get worked up about.
Hi Emi,
I’m not sure how I got to your page .. a link from reddit.
Since the trial I’ve helped many people who have had the same experience with other companies.
One lady was at full breakdown. She’d worked for 3 years for pretty much nothing. A US lawyer had managed to shut down her shopify account (probably illegal) by claiming she was passing-off. She couldn’t afford a solictor call.
She’s got through it now, got them to F-off and raised some money. That’s proper stress and I’m very happy for her.
It’s a singular view that there is no moral issue with aggression and ‘signalling’.
Even Oatly UK individuals have said they disagreed – it came from Sweden & private equity.
Anyway, it was an experience and pleased to have won.
Hi Philip
Interesting you got here from a reddit thread. Good on you for successfully defending your client.
In my piece it’s implied questioning the morality of all intellectual property, but that’s not where we are is it?
That’s not how we’ve built our laws, society or economic system.
So, this is what we’ve got. We want to protect our “intellectual property” and these sorts of things happen.
Oatly isn’t any more or less moral for enforcing the system of laws we’ve created.
There’s no morality in that when we created a system of rules that we can choose to enforce to our benefit.
Just like Disney going after little bakeries for making a Mickey Mouse cake. Or the Parmiggiano protection consortium for
going after vegan cheese makers who use the term (protected term everywhere but in the US where manufacturers there can use the term Parmesan –
query – was that a moral decision to exempt US manufacturers?).
Is it a nice thing to do? Do they really need to? Probably not on both counts. But that’s not the point of these laws.
Intellectual property owners are completely allowed to do this and, in the case of Disney, have managed to shift intellectual property laws in their favour.
(There’s a great podcast on Disney and copyright actually on ALAB – very good series).
Whether individuals within or outside of the industry think it’s aggressive, well, that’s their prerogative.
As I said, it’s a strategic decision to sue anyone, after all.
What about if we ditch all intellectual property if we’re concerned about the morality of applying it to a small business.
Why should it be immoral on one hand, but moral on another? At what level do we say it’s moral if your gross receipts are above a certain amount
and immoral if they’re less. Hey, sure that could be a way to go, but I don’t see anyone making that suggestion.
Thanks so much for your comment!
Hi Emi, thanks so much for your article. I had never truly thought about why a company may take the action Oatly did. As you say, it’s not about taking out small businesses; though I’m sure there are some who do this with the intention of removing any business that could become a major competitor.
Thank you for the education and ignore the criticism!
Thanks very much for your comment! Interesting point about someone doing this to eliminate competition. I suspect it would be very risky for a company to do something like this because it’s illegal. I can hear you say it, but what if these types of suits effectively wipe out a smaller company in defending it… yes, there’s that risk. And that smaller company would have to decide whether to cease and desist, or spend money and hope they’d win. I’m not completely certain, but I suspect, Oatly as the losing party will have to pay Pure Oaty’s legal costs. This might not be the case in all jurisdictions, mind you, but I believe it would be so in England.
I’ve just come across this now as I am reading about the court case, and we now know Pure Oaty won. This is an interesting article from the Oatly perspective, but I think might be slightly over-complicating the issue.
I don’t think that people are angry at a big company taking a small company – I think that does make people angry in lots of circumstances, but in this circumstance it seems to be actually because of how outrageous the claim was. The other brand is called PureOaty and their packaging is very different (you can look at it online). You say that Oatly did “what they had to do”, and I think people would understand this if the packaging looked similar at all, but it clearly doesn’t. Does that mean they “have to” take every oat drink with the word “oat” in their name to court for a lengthy and expensive legal battle?
Big businesses and corporations are made up of humans constantly making decisions, so in my opinion yes it was absolutely a moral choice that Oatly made as well as a legal and business decision.
Thanks for your opinion.