Nestlé loses its European trade mark for the shape of the KitKat

The Court of Justice of the European Union (CJEU) has today handed down its decision in Nestlé’s long-running fight with Cadbury to protect the shape of its KitKat bar. This case concerns Nestlé’s European trade mark registration (originally applied for in 2002) for the 3D shape of the four-fingered chocolate bar in respect of ‘sweets, bakery products, pastries, biscuits, cakes, waffles’.

Mondelez (formerly Cadbury) argued it was an invalid registration and the CJEU today agreed. It upheld the General Court’s decision that the registration was invalid because it had not acquired distinctiveness across the EU, examining the evidence in each member state. This arguably changes the law whereas it was previously understood to be sufficient to demonstrate distinctiveness through use in a substantial part or the majority of the EU (Chocoladefabriken Lindt v OHIM).

The issues in dispute

Today’s decision turns on whether consumers in every EU member state (looking at each state separately) need to consider that the shape of the bar means it comes from Nestlé or a connected company (i.e. is ‘distinctive’) or whether it is sufficient for it to have become distinctive only in some member states or to look at the evidence in the round and across borders. The Court has already held that the shape is relied on by consumers in all member states (including the UK) other than Ireland, Belgium, Greece and Portugal.

What’s interesting from an English law perspective is that the General Court held that the shape of the KitKat is ‘distinctive’ through its use in the UK whereas in May 2017, the English Court of Appeal held that it is not and therefore refused a UK registration for the bar.

Legal protection for shape marks

Any sign which is capable of distinguishing goods and services of one undertaking from that of another can be registered as a trade mark under section 1 of the Trade Marks Act 1994 (“the TMA”). It can consist of words, designs, letters, numerals or the shape of goods or their packaging. Under section 3(1)(a) of the TMA, it is only marks that are capable of distinguishing goods and services which are registrable. In 2002, the electric three-headed rotary shaver case of Philips v Remington established that there is no group of signs inherently incapable of distinguishing goods or services. So that is an easy hurdle for a potential shape mark to overcome (or no hurdle at all).

The next hurdle for a shape mark is whether it is ‘distinctive’ or in fact lacks distinctiveness under section 3(1)(b) of the TMA. The test for distinctiveness is whether the average consumer would recognise the mark as distinguishing the goods and services of one proprietor from those of another. The CJEU held that no trade mark monopoly was available for Philips’ three-headed rotary shavers, nor for the shape of Henkel dishwasher tablets. In Henkel, the CJEU said the public was not used to shapes conveying trade origin and there was insufficient evidence that the dishwasher tablet was distinctive. In 2004, the shape of Bongrain cheese also did not pass the threshold for protection as a registered trade mark in the English courts. In that case, Lord Justice Jacob warned of the dangers of depleting the ‘intellectual common’ by allowing monopolies over shapes and stated: “I do not accept that just because a shape is unusual for the kinds of goods concerned, the public will automatically take it as denoting trade origin … as being the badge of the maker”. These cases show that it is difficult for shape marks to be distinctive in a trade mark sense, in and of themselves.

‘Acquiring distinctiveness’

In certain circumstances, however, brand owners can secure trade mark protection for shapes if they can demonstrate that the mark has ‘acquired distinctiveness’ through use. The Court makes an overall assessment of the evidence and concludes whether or not the mark has come to identify the goods/services as originating from a particular company amongst a significant proportion of relevant consumers. If it has, it must be registered. Opinion poll evidence is sometimes used by brand owners to try to muster this evidence. Two such polls were used in the KitKat case.

The English approach to the four-fingered shape registration

In 2016, following a reference from the High Court to the CJEU on the issue of whether Nestlé needed to show that consumers relied upon the shape as meaning the goods originated with Nestlé (or a related company) or simply perceived the shape as being linked to Nestlé, the High Court concluded the CJEU guidance was unclear and held that the trade mark application should fail. The Court of Appeal upheld that decision and concluded that the shape of the bar cannot be registered as a trade mark in the UK because it is not relied upon by the public in order to signify the origin of the goods. At its simplest, the dispute rests on the difference between whether, when we buy a KitKat, we simply perceive the shape of it as indicating it was made by or for Nestlé or we rely on its shape as indicating it was made by or for Nestlé. The shape is, of course, no longer visible at the point of sale unlike previously when you could see the silver foil covered four-fingers.

The Court of Appeal concluded that it is relevant, where the mark is used alone, that relevant consumers would perceive the goods as originating from a particular undertaking and rely upon it for making or confirming their transactional decisions. If that applies, the mark will have acquired distinctiveness. The Court stated that it may, however, be difficult to prove this where the mark has been used in conjunction with a registered trade mark and where the mark cannot be seen at the point of sale (as in this case). Arguably, this introduced a concept of reliance into consumers’ transactional decisions that does not have any clear basis in European case law.

The European approach to the four-fingered shape registration

The CJEU has now upheld the previous decision of the General Court, denying Nestlé trade mark protection across the EU but on a different ground. It has concluded that because of the unitary nature of EU trade marks, they must have acquired distinctiveness through use across the EU (under Article 7(3) of Regulation 207/2009) and, in particular, in the part of the EU in which it was not previously distinctive. Thus, if it was not distinctive through use across the whole EU, then it failed as a registration. This appears to put the decision at odds with that of the CJEU in Chocoladefabriken Lindt & Sprüngli v OHIM where it held that it would be unreasonable to have to prove such distinctiveness in each EU member state. The CJEU sought to distinguish that case by stating that it may be possible to secure protection using evidence that is not simply from individual member states (for example, showing a cross- border marketing strategy for a particular mark or if there is geographic, linguistic or cultural proximity to another member state where there is clear evidence of distinctiveness) but this would still need to be considered for the whole territory of the EU.

Conclusion

In Nestlé’s long-running KitKat-shape war, it has failed in the UK and EU courts on different grounds. Ultimately, after 16 years, the KitKat shape is not ‘coming home’ with any registered trade mark protection, either English or European. Ironically, the European courts concluded that the KitKat shape is distinctive in the UK (while the English courts did not). The shape is not, however, distinctive enough across the EU to be protected via a European trade mark registration.