Questions referred to ECJ in Kit Kat shape mark case

In Société des Produits Nestlé SA v Cadbury UK Ltd ([2014] EWHC 16 (Ch), January 17 2014), Mr Justice Arnold has referred questions to the Court of Justice of the European Union (ECJ) for a preliminary ruling.

Swiss-based food giant Société des Produits Nestlé SA sought to register the three-dimensional UK trademark depicted below for a chocolate wafer product sold under the name Kit Kat.

The shape mark applied for covered various goods in Class 30 of the Nice Classification, ranging from chocolate products and chocolate confectionery to pastries, cakes and biscuits. 

Cadbury UK Ltd opposed the application on a number of grounds.

In Société des Produits Nestlé SA’s application; opposition of Cadbury UK Ltd (O-237-13), hearing officer Allan James considered two issues in particular:

1. Did this mark consist exclusively of the shape of the goods which was necessary to obtain a technical result (ie, did the shape assist in the product’s manufacture and facilitate the division and consumption of the goods)?
2. Was the mark devoid of distinctive character and, if it did not have distinctive character in the first place, had it acquired it?

Having considered Cadbury's technical functionality objections at some length, James identified the essential features of the mark applied for as being:

• the rectangular ‘slab’ shape (including the length, width and depth and their relative proportions);
• the breaking grooves along the length of the bar (including their presence, position and depth) which divide the bar into ‘fingers’; and
• the number of these grooves.

Having completed this task, James concluded thus:

“The exclusion under Section 3(2)(b) [of the Trademarks Act 1994] therefore applies where the essential features of the shape are attributable only to a technical result. Other minor arbitrary features which make no real impact on consumers do not prevent the exclusion applying if the essential features of the shape are caught by the exclusion.”

Having had the benefit of cross-examination of witnesses from both parties who had given evidence about the functional aspects of the shape represented by the mark, the hearing officer concluded that:

 “ i) The basic rectangular ‘slab’ shape represented by the mark is a shape which results from the nature of moulded chocolate bars or moulded chocolate biscuits sold in bar form;

ii) The presence of breaking grooves is a feature which is necessary to achieve a technical result;

iii) An angle of more than 8-10 degrees for the sides of the product, and for the breaking grooves, results from the nature of moulded chocolate products and the depth of the grooves is necessary to achieve a technical result;

iv) The number of breaking grooves and fingers is determined by the desired portion size.”

In finding that the mark consisted of a functional shape, James rejected the submission that the shape was an aesthetic design. The goods sold which incorporate the shape are wrapped in such a way that consumers do not see the shape until after they have purchased them. The fact that the product is designed to be broken up and eaten accounts for the breakability of separate fingers (this breakability features prominently in Nestlé’s classic advertising slogan: “Have a break, have a Kit Kat”). Thus Nestlé’s shape mark could not be registered for the goods applied for, with the exception of cakes and pastries.

The shape was also found to be devoid of distinctiveness, given that it was a shape commonly found for chocolate bars and biscuits (though not for pastries and cakes). However, had this mark acquired distinctiveness through use? Nestlé adduced evidence from two surveys, although its own survey expert admitted that the first survey was so flawed that it would not stand up to serious perusal. James took this as an opportunity to reiterate the purpose of trademarks:

“… trademarks are intended to permit consumers to make informed choices between the competing goods of different undertakings in the course of trade. Therefore showing that the public know who usually makes goods of a particular shape, without also showing that such recognition plays some part in the trade in such goods, does not show that the shape has become a trademark for the goods.”

Plainly, it is not enough to demonstrate that a significant proportion of the public recognises the shape in question without also showing that those consumers rely upon the shape to identify the origin of the goods.

The hearing officer’s final word on acquired distinctiveness was:

“They [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. In his January 17 2014 decision, Mr Justice Arnold gave the plot away in the very first of his 77 paragraphs:

“In what circumstances can a trader secure a perpetual monopoly in the shape of a product by registering it as a trademark? That is the question raised by this appeal by ... Nestlé... and cross-appeal by Cadbury... The shape in issue is essentially that of the well-known Kit Kat four-finger chocolate-coated wafer bar. It is clear that, in principle, European trademark law permits the shape of a product to be registered as a trademark. Surprisingly, however, certain aspects of the relevant law remain unclear... I have concluded that it is necessary to seek clarification of the law from the Court of Justice of the European Union in order to determine the appeals.”

Justice Arnold’s position, however, is revealed in his judgment, where he states:

“54.... I shall refer a question to the [ECJ] which I am provisionally minded to express as follows:

1. In order to establish that a trademark has acquired a distinctive character following the use that had been made of it within the meaning of Article 3(3) of Directive 2008/95/EC, 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 be asked 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?

55. In case it assists the [court], it is my opinion that... the correct answer to the question is that the applicant must prove that a significant proportion of the relevant class of persons rely upon the trademark (as opposed to any other trademarks which may also be present) as indicating the origin of the goods.

75. I consider that it is necessary for the law to be clarified in order to determine whether the [Kit Kat shape mark] is precluded from registration by Article 3(1)(e)(i) and/or (ii). Accordingly I shall refer questions to the [ECJ] which I am provisionally minded to express as follows:

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/EC?

3. Should Article 3(1)(e)(ii) of Directive 2008/95/EC 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?

76. In case it assists the court, it is my opinion that both these questions should be answered in the affirmative for the reasons advanced by counsel for Cadbury.” 

Jeremy Phillips, IP consultant to Olswang LLP, London