Court delivers blow to Nestlé in high-profile KitKat shape decision
The Court of Justice of the European Union (CJEU) has dismissed appeals brought in the high-profile four-finger KitKat case, ruling that the EUIPO must reconsider whether the three dimensional (3D) shape can be retained as an EU trademark.
In 2012 the EUIPO held that Nestlé’s 3D sign had acquired distinctive character through its use in the European Union. However, the General Court annulled that decision, finding that such acquisition had been proved for only part of the European Union. On appeal, Nestlé and the EUIPO argued that the court was wrong to hold that the owner of an EU trademark must show that it has acquired distinctive character through use in each of the EU member states separately.
In Mondelez UK Holdings & Services v EUIPO (joined cases C‑84/17 P, C‑85/17 P and C‑95/17 P) the CJEU pointed to case law illustrating that a sign without inherent distinctive character can be registered as an EU trademark only if it is proved that it has acquired distinctive character in the part of the European Union in which it did not previously have such character. This territory may comprise a single member state, but the regulation does not require that the acquisition of distinctive character through use be established by separate evidence in each individual member state. For example, if an economic operator has grouped various member states into one distribution network and treated the states as if they were one market, the evidence for use of a sign within this cross-border market is likely to be relevant for all member states concerned.
In this instance, the CJEU noted that, given the unitary character of the EU trademark, for a sign to be accepted for registration, it must have distinctive character throughout the European Union. As the EUIPO had not adjudicated on whether the mark had acquired distinctive character in Belgium, Ireland, Greece or Portugal, the CJEU found that the General Court was right to annul its decision.
The judgment clearly upholds the principle of extrapolation of evidence and is good news for trademark owners. It is now clear that EU trademark owners trying to show acquired distinctiveness are not expected, as a matter of a box-ticking exercise, to assume a disproportionate and entirely artificial exercise of evidence collection for each and every member state. Where, due to market proximity or other reasons, the same evidence can indicate acquired distinctiveness in a number of member states, there is nothing to preclude the relevant authority from taking such evidence into account. Instead, market realities must be considered when judging the evidence as a whole. However, when relying on such unitary evidence for showing acquired distinctiveness in several member states, trademark owners are well advised to explain clearly why this evidence is capable of establishing such acquisition throughout the relevant member states.