ECJ's Kit Kat decision more nuanced than media reports suggest 16 Sep 15
This morning the Court of Justice of the European Union (ECJ) issued its much-awaited decision in Société des Produits Nestlé SA v Cadbury UK Ltd (Case C-215/14), with most media reports arguing that the decision deals a final blow to Nestlé’s attempt to protect the ‘four-finger’ shape of its Kit Kat bar as a trademark in the UK. However, the reality is more nuanced, with the company itself stating that it was “very pleased” with the judgment and looked “forward to the decision of the UK High Court”.
The dispute dates back to 2010, when food giant Nestlé applied to register the 'four-finger' shape as a 3D mark in the UK for various goods in Class 30, including chocolate, chocolate confectionery and chocolate products.
Multinational confectionery company Cadbury opposed.
The UK Intellectual Property Office (UKIPO) rejected the application, finding that the mark was devoid of inherent distinctive character and had not acquired such a character through use. In particular, the UKIPO found that the shape has three features:
the basic rectangular slab shape;
the presence, position and depth of the grooves running along the length of the bar; and
the number of grooves, which, together with the width of the bar, determine the number of ‘fingers’.
The UKIPO concluded that “[consumers] associate the shape with Kit Kat (and therefore with Nestlé), but no more than that. Therefore, if it is necessary to show that consumers have come to rely on the shape mark in order to distinguish the trade source of the goods at issue, the claim of acquired distinctiveness fails”.
Nestlé appealed. The High Court referred several questions to the ECJ for clarification:
“ (1) In order to establish that a trademark has acquired distinctive character following the use that had been made of it within the meaning of Article 3(3) of Directive 2008/95..., is it sufficient for the applicant for registration to prove that, at the relevant date, a significant proportion of the relevant class of persons recognise the mark and associate it with the applicant’s goods in the sense that, if they were to consider who marketed goods bearing that mark, they would identify the applicant; or must the applicant prove that a significant proportion of the relevant class of persons rely upon the mark (as opposed to any other trademarks which may also be present) as indicating the origin of the goods?
(2) Where a shape consists of three essential features, one of which results from the nature of the goods themselves and two of which are necessary to obtain a technical result, is registration of that shape as a trademark precluded by Article 3(1)(e)(i) and/or (ii) of Directive 2008/95...?
(3) Should Article 3(1)(e)(ii) of Directive 2008/95... be interpreted as precluding registration of shapes which are necessary to obtain a technical result with regard to the manner in which the goods are manufactured as opposed to the manner in which the goods function?”
In June this year Advocate General Wathelet stated that mere recognition of a shape by the public is insufficient to prove acquired distinctiveness, and that the applicant must demonstrate that "only the trademark in respect of which registration is sought, as opposed to any other trademarks which may also be present, indicates, without any possibility of confusion, the exclusive origin of the goods or services at issue". The advocate general also held that the absolute grounds for refusal may be applied cumulatively, provided that at least one of them fully applies to the shape in question. Finally, he found that a shape which is necessary to obtain a technical result not only with regard to the manner in which the goods function, but also with regard to the manner in which they are manufactured, should not be registered.
Today the ECJ held that, for the purposes of registration, the applicant must prove that the mark alone - as opposed to any other trademark which may also be present - identifies the undertaking from which the goods originate. Mere recognition of the shape is not enough to prove acquired distinctiveness. Importantly, though, the court refrained from using the term ‘rely’, which was present in the questions referred by the High Court. Moreover, in contrast to the advocate general, the court did not use the terms “without any possibility of confusion”.
With regard to the second question, Nick Bolter, partner at Cooley (UK) LLP, told WTR that the answer of the ECJ was unsurprising: “It is logical to conclude that only one of the criteria (shape resulting from nature of goods, shape necessary to achieve technical result and shape which gives substantial value to goods) needs to be met in full for the shape to be refused registration as a trademark.”
The ECJ’s findings differed from the advocate general’s opinion with regard to the third question - and, for Bolter, this is where things become more interesting. He explained: “Whilst it is clear that the consumer is generally not concerned by manufacturing processes, the ECJ’s decision that the exclusion from registration applies only where the shape is dictated by the function of the product itself, and not where the shape is an inevitable result of the manufacturing process, may enable sophisticated businesses (and their sophisticated lawyers) to use trademark law to prevent competitors using the same manufacturing process. It is my view that the exclusion from trademark registration of shapes dictated by function was intended to prevent businesses using trademarks to create monopolies that extend beyond the protection of indicators of origin.”
Despite media reports suggesting that Nestlé has “failed to convince European judges that it has the right to trademark the shape of its four-finger KitKat bar in the UK”, the case will actually now be referred back to the High Court, which will apply the ECJ’s decision to the facts. For Nestlé to succeed, the court would have to find that consumers associate the shape alone, without the embossed words ‘Kit Kat’ on each of the fingers of the chocolate bar, exclusively with the company. Nestlé would no doubt argue that its survey - which shows that 90% of respondents identified the Kit Kat shape (in its applied for form) as originating from the company – does show that consumers identified the mark as originating from them. The company will also welcome the avoidance of ‘reliance’ in today’s judgment and the finding that the manner in which goods are manufactured is not part of the assessment.
Whether today’s judgment leads to a victory for, or blow to, Nestlé remains to be seen. All eyes now turn to Arnold J to see exactly how the case is decided.
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