22 January 2016

Nestlé v Cadbury – No Break for Kit Kat

Nestlé was dealt a blow this week when the English High Court rendered its decision in the ongoing trade mark dispute saga between Nestlé and Cadbury in relation to trade mark protection for the three-dimensional shape of the four-finger Kit Kat chocolate bar.

Nestlé applied to register the shape of its four-finger Kit Kat chocolate bar as a three-dimensional trade mark in the UK in 2010. The UK Intellectual Property Office (UK IPO) accepted the trade mark for registration and it was subsequently opposed by Cadbury, resulting in a decision by the UK IPO to refuse the trade mark on the basis that (a) the mark had not acquired a distinctive character as a result of the use made of it for the majority of the goods contained within the application; (b) the mark consisted exclusively of the shape which results from the nature of the goods themselves; and (c) the mark consisted exclusively of the shape of the goods which is necessary to obtain a technical result.

It is a well-known fact that in order to achieve registration a trade mark must be distinctive since the brand owner is in effect obtaining a monopoly for the particular trade mark. A brand owner can overcome such an obstacle if before the date of application for registration, the mark has in fact acquired a distinctive character as a result of the use made of it. Nestlé was banking on this.

Both parties appealed the UK IPO decision to the English High Court resulting in the Judge, Mr Justice Arnold, referring various questions to the European Court of Justice (CJEU) for further clarification on certain points given that this was a complex area of trade mark law.

The CJEU addressed the issues but did not answer the questions in a suitable manner for Mr Justice Arnold who decided notwithstanding to issue his decision. The Judge decided the case by concluding that “in order to demonstrate that a sign has acquired distinctive character, the applicant must prove that, at the relevant date, a significant proportion of the relevant class of persons perceives the relevant goods or services as originating from a particular undertaking because of the sign in question (as opposed to any other trade mark which may also be present)”.

Furthermore, the Judge decided that, it is likely that a number of similarly shaped products have been produced by other companies but which consumers have not necessarily recognised as being Kit Kats. This, he said, is inconsistent with the view that the three-dimensional shape of the four-finger Kit Kat chocolate bar had acquired distinctive character sufficient to achieve trade mark protection, and as such, it is not eligible for trade mark registration.

This is a reminder to brand owners that, while the criteria for assessing the distinctive character of three-dimensional trade marks consisting of the appearance of the product itself are no different from those applicable to traditional categories of trade marks (i.e. word or figurative marks), the perception of the average consumer is not necessarily the same in relation to three-dimensional trade marks as it is in relation to a word or figurative trade mark consisting of a sign which is independent of the appearance of the products it designates. Therefore, it generally tends to prove more difficult to establish distinctive character in relation to such a three-dimensional trade mark as opposed to a word or figurative trade mark. As the Court has pointed out on numerous occasions, the public is not used to mere shapes conveying trade mark significance.

It remains to be seen whether a further appeal will be granted to the English Court of Appeal and any additional questions sent to the CJEU delaying a final decision further.

Nestlé has indicated that it intends to appeal the decision and continue the legal fight to protect its iconic Kit Kat shape as a trade mark and so the saga continues.

 

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