Oamaru company Milligans has lost a trademark case against Fonterra over the label Dairilife.

Fonterra argued before the Intellectual Property Office that Dairilife was similar to its "Dairy for life'' wording, which it uses in conjunction with the word Fonterra, Stuff has reported.

Milligans group managing director Bruce Paton declined to comment other than to say it was an "ongoing'' matter.

He told the Intellectual Property Office Milligans had sold bulk goods to industrial users under the Dairilife name.

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While it had not yet sold packaged goods under that name, it had made plans to do so.

Milligans, which began production in 1896, says it is one of New Zealand's leading suppliers and manufacture of food ingredients, consumer food and animal nutrition products.

Milligans group managing director Bruce Paton. Photo / File
Milligans group managing director Bruce Paton. Photo / File

It is based at Chelmer St, Oamaru.

Fonterra registered "Dairy for life'' in 2006.

Milligans registered its name in 2016.

Fonterra's lawyer told assistant commissioner of trade marks Jane Glover that use of the mark by Milligans would be likely to deceive or cause confusion, and would be likely to prejudice the interests of Fonterra, Stuff reported.

Milligans accepted the word Dairilife looked and sounded like Dairy for life, but argued when considered as a whole, it was not confusingly similar.

Glover said there was a "very high level of similarity''.

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"In my view, use of the opposed marks is likely to deceive or cause confusion in light of the reputation in the Fonterra combined mark, and stylised versions of that mark. I find that the phrase 'Dairy for life' is an important element of the Fonterra combined mark, even though it is not the most distinctive element of that mark.

"Fonterra submits that the use of the opposed marks is likely to diminish the distinctiveness of Fonterra's combined mark, and compromise the significant investment that has been made in respect of that mark. For the reasons set out above, I consider that use of the opposed marks would be likely to prejudice the interests of Fonterra.

Fonterra was awarded costs of $4470.