Product configuration cannot be registered based on inherent distinctiveness

In August Storck KG v Alfa Intuit Food Productions Ltd (Case CA-11487-03, March 23 2008), the Israeli Supreme Court has ruled that a product configuration cannot be registered on the basis of inherent distinctiveness. The court sought to clarify the circumstances in which a three-dimensional mark will be accepted for registration.

August Storck KG, a German company, produces various sweets, including a chocolate sweet shaped as a ball cut into halves which is sold under the mark TOFFIFEE. Toffifee has been sold in Israel since 1996. In 2003 August Storck applied for the registration of the shape of its Toffifee sweets with the Israel Trademark Office. The trademark application comprised three photos of the sweet, each taken from a different angle.

Alfa Intuit Food Productions Ltd specializes in the importation and distribution of sweets. Alfa is the importer and distributor of a chocolate product sold under the mark CHOCODAN'S, whose shape is similar to that of the Toffifee sweets.

August Storck filed suit against Alfa for trademark infringement and unjust enrichment. August Storck alleged that both the shape of the Chocodan's product and its wrapper infringe its mark. The Tel Aviv District Court rejected August Storck's claim, holding that the TOFFIFEE trademark is two-dimensional. Therefore, the court stated that the registration provided no protection for the three-dimensional shape of the Toffifee product, but protected only the graphic representation of the sweets as it appeared in the registration certificate. The court also ruled that even though the Israeli Trademarks Ordinance 1972 does not prohibit the registration of three-dimensional marks, the visual form of a sweet (in the present case, the shape of a ball cut into halves) is not registrable as a trademark. Therefore, the distribution of sweets whose shape is similar to that of the Toffifee sweets does not constitute trademark infringement (for further details please see "Tel Aviv Court denies rights in shape mark in landmark ruling"). Alfa appealed to the Supreme Court.

The Supreme Court reversed the District Court's decision, holding that the product configuration of the Toffifee sweets was entitled to registration. In so ruling, the court adopted a test similar to the test for the protection of three-dimensional marks expressed by the US Supreme Court in Wal-Mart Stores Inc v Samara Brothers Incand by the Canadian Court of Appeal in Kirkbi AG v Ritvik Holdings Inc. The Israeli Supreme Court ruled that a product configuration may be registered, but only if the mark has acquired distinctiveness. The court did not provide a bright line test in this regard, but pointed out that the more the claimed mark serves a functional purpose, the less the likelihood of registering it.

In obiter, the court observed that the registrability or protection of a packaging design should be more readily allowed than the product configuration: the risk to competition in granting a monopoly to the packaging of a product (by allowing it to be registered as a trademark) is less than that of granting a monopoly to the product's configuration.

The decision reversed the policy of the Trademark Office which, in recent years, has not registered three-dimensional marks as a general rule. In particular, the decision de facto reverses a circular that was issued by the commissioner of patents, designs and trademarks in 2003, and which served as the basis for the District Court's decision.

Neil Wilkof, Gilad Shay and Adar Ortal, Herzog Fox & Neeman, Tel Aviv