On May 26th, 2023, the 1st Civil Court of Valdivia pronounced its final conviction decision in the trial started by “APROVAL” (Milk Producers’ Trade Association / Asociación Gremial de Productores de Leche) against “The Not Company S.A”. for alleged acts of unfair competition.
The claim was based on the production and marketing that the defendant made of its vegetable-based drink called “Not Milk” – which name and labels are duly registered as trademarks before INAPI (Industrial Property National Office), which displayed on its box the image of a “crossed out” cow, introducing itself to the public as a substitute or replacement of milk, taking advantage of the benefits that this product has, but at the same time implying that milk is a harmful food for health and for the environment.
The foundations of the litigation and the evidence submitted in it were if the product “Not Milk” was misleading the public, since consumers could be confused as to the real composition of the product, confusing it with one of dairy origin, in circumstances in which it is a vegetable-based product.
The Court decided to accept the unfair competition claim, since it ruled that the defendant had tried to mislead the public through the packaging of the product, its images, labels, signs and advertising, intending to confuse it with natural milk, illegitimately diverting customers who seek to consume this product of animal origin.
“The defendant sells a product that, literally, is not milk, but misleads the consumer to confusion, which is an objective conduct that contravenes the standards of correctness required by law, such as imitating the sale packaging of milk to the consumers.”
One of the most relevant milestones of this decision lies in the sentence that falls on the defendant ordering the cessation and prohibition of the use of any brand, labeling or image, of any nature, that contains the name “Not Milk”.
In this sense, one of the conflicts that are foreseen with such pronouncement is related to the collision that this prohibition means with the exclusive and excluding right that INAPI has given to the Not Company for the use of the trademark “Not Milk”, which can be seen as a curtailment or expropriation of the conferred trademark right.
“The exercise of a right, such as the trademark right, legally constituted by the defendant, has not been exercised, in view of the foregoing, in a legitimate manner by the holder of the right, since the defendant has engaged in unfair competition act by pursuing the diversion of customers.”
Indeed, the defendant filed within the time limit a well-founded appeal and cassation appeal, where one of the arguments consists precisely in this clash that means the prohibition of the use of the sign “Not Milk” ordered by the sentence with the acquired and consolidated and exclusive rights of the defendant to use said trademark in the national territory.
Now, the decision of this litigation will be made by the Court of Appeals of Valdivia.