Don Brash and Keith Turner’s dairy start-up, formerly named The New Zealand Milk Company, has been forced to change its name to Oceania Milk after Fonterra threatened it with legal action.

AJ Park, acting as the IP lawyers for Fonterra, issued a cease and desist order against the then New Zealand Milk Company (NZMC) over the usage of the term New Zealand Milk which Fonterra has trademarks to.

Fonterra has said that it has significant investment and goodwill built up over the years in the names New Zealand Milk, NZM and New Zealand Milk Products, and can’t have competitors trading off that goodwill.

Chairman Keith Turner says the company probably had a good chance of defending its name, but can’t afford the $50,000-100,000 in legal fees required to challenge Fonterra.

“We feel that a legal battle at this early stage of the company’s existence will be unhelpful, expensive, and not provide a legitimate return to our shareholders. We’re a small company, they’re a big one,” he says.

IP law firm James and Wells’ partner Ceri Wells says the company would probably have a good basis for defending their right, as the term “New Zealand Milk” is a common generic descriptor, and could probably be overturned.

The new name, Oceania Dairies, is an attempt to recapture the original name’s modus operandi – to provide cheap quality New Zealand milk.

NZMC plans to start build a $20 million factory at a site in Glenavy, South Canterbury and is going through the resource consent process.

It plans to have its first production season in 2011-2012, says director Tim Howe.

The finalised structure of the company is yet to be defined, but the focus at this stage appears to be on a vertically integrated operation.

There has been substantial interest from third party private equity and farmers alike, Mr Turner says.

The company has not begun capital raising as of yet, and is still working on its business case.

Mr Turner would not rule out an eventual listing, but says it’s too early in Oceania Milk’s life to make any definitive long-term calls.

Other than the cease and desist, Fonterra have not made any untoward actions against the company, and Mr Turner says they are concentrating on getting the venture up and running before worrying about the competition.

“We aren’t looking at cannibalising market share from any of the over dairy operators in South Canterbury, and are focusing on growth milk,” he says.