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The Court of Justice of the European Union (CJEU) recently issued another decision concerning registration of the shape of a Kit Kat bar as a three-dimensional trade mark in the long-running, complex dispute between chocolate giants Nestlé and Cadbury.
In this decision, the CJEU has dealt a significant blow to Nestlé. Whilst aspects of the decision were in Nestlé’s favour, in finding that a trade mark can only acquire distinctive character if consumers use that particular trade mark to indicate the origin of the goods, rather than any other trade marks present on the product or its packaging, the CJEU has made it very difficult for Nestlé to register their mark.
Back in 2010, Nestlé filed a UK trade mark application for the three-dimensional shape corresponding to their four-fingered Kit Kat chocolate bar. Cadbury filed an opposition on the grounds that the mark a) lacks distinctive character, b) consists exclusively of a shape which results from the shape of the goods themselves, and c) consists exclusively of a shape which is necessary to obtain a technical result. A lack of inherent distinctive character (ground a)) can be overcome if the applicant can show that the mark has acquired distinctive character (also known as ‘secondary meaning’) through use. However, acquired distinctive character cannot overcome the shape grounds (grounds b) and c)).
The UKIPO’s Hearing Officer agreed with Cadbury, finding that the trade mark is devoid of inherent distinctive character and that it has not acquired distinctive character through use. He also found that the opposition succeeded on the shape grounds b) and c). He said that the shape has three essential features:
- the basic rectangular slab shape;
- the presence, position and depth of the grooves running along the length of the bar; and
- the number of grooves, which, together with the width of the bar, determine the number of ‘fingers’.
The Hearing Officer took the view that the first of those features is a shape which results from the nature of a bar of moulded chocolate (which may, or may not, contain a wafer or some other filing) or of a moulded chocolate biscuit sold in bar form. He said that the other two features are necessary to obtain a technical result, namely to permit the product to be broken up before consumption and to determine portion size. The opposition therefore succeeded and the application was refused.
Nestlé appealed the decision to the High Court of England and Wales. When considering the case, the High Court judge decided to refer a number of questions to the CJEU.
ACQUIRED DISTINCTIVE CHARACTER (SECONDARY MEANING) MUST RELATE TO THE SPECIFIC MARK FOR WHICH REGISTRATION IS SOUGHT
Nestlé had conducted a survey of members of the public to try and prove that the public recognises the shape of a four-finger Kit Kat, and therefore the mark has acquired distinctive character. The Hearing Officer summarised the results by saying that it was safe to conclude that at least half the respondents thought that the shape shown to them was a Kit Kat bar. However, the Hearing Officer didn’t think this was enough for acquired distinctive character. He said that people recognise the shape if they think about it, but they do not buy the product based on the shape, particularly as a Kit Kat is sold in an opaque wrapper. Instead, they look to the name Kit Kat.
In considering this, the High Court judge reminded us that a mark can acquire distinctive character even if it is not visible to consumers at the time of purchase. However, he agreed that it was unlikely that consumers relied upon the shape of the four-fingered Kit Kat to confirm that the products were authentic Kit Kat products. He said that the fact that Nestlé ensures that each finger is embossed with the words Kit Kat is evidence that consumers rely upon the trade mark Kit Kat rather than the shape of the product.
He decided to ask the CJEU to confirm whether a mark can be accepted for registration on the grounds of acquired distinctive character if the applicant proves that a significant proportion of the relevant public recognises the mark applied for, or if instead the applicant must prove that a significant proportion of the relevant public relies only upon the mark to indicate the origin of the goods, as opposed to any other marks which might be present (in this case the word mark Kit Kat).
The CJEU has previously acknowledged that distinctive character may be acquired as a result of the use of a mark as part of a registered trade mark, and as a result of use in conjunction with a registered trade mark. However, in both cases it is important that the relevant public perceives the goods and services as originating from a given undertaking.
Having considered this point further, the CJEU concluded that it is fundamental that, as a consequence of use, the mark for which registration is sought identifies the origin of the applicant’s goods or services. This means that the applicant must prove that the relevant public perceives the goods and services as originating from a particular company, as a result of the mark applied for, as opposed to any other mark which might also be present.
This is likely to make things more difficult for Nestlé. Consumers will typically look to the distinctive trade mark Kit Kat as indicating the origin of Nestlé’s goods, rather than the shape of the Kit Kat bar, which is obscured by a wrapper at the point of sale, so that consumers do not see the shape of the bar until they remove the packaging. Indeed, the High Court judge made it clear when referring his question to the CJEU that he considers that there is no evidence, and it is inherently unlikely, that consumers of four-finger Kit Kats rely upon the shape of the product to indicate the origin of the goods. It seems highly unlikely that, when he considers the matter again in the light of the CJEU’s decision, he will conclude that the 3D mark has acquired distinctive character. Therefore, it is likely that Nestlé’s application will ultimately be refused.
REFUSAL OF REGISTRATION UNDER THE SHAPE OBJECTIONS ONLY APPLIES WHERE AT LEAST ONE OF THESE OBJECTIONS IS FULLY APPLICABLE TO THE MARK
The High Court judge also had some questions for the CJEU about the scope of the specific grounds for refusing shape marks. These grounds are designed to prevent trade mark owners from getting a potentially permanent monopoly on technical solutions or functional characteristics of goods which can be protected for a shorter period by designs or patents.
He first asked whether a shape mark should be refused if it has 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. This assessment of the shape was the Hearing Officer’s original conclusion about the shape of the four-finger Kit Kat product.
The grounds for refusal of shapes/3D marks must be applied independently of one another. It is therefore possible that the essential features of a mark may be covered by one or more grounds for refusal. However, in considering this matter, the CJEU concluded that registration can only be refused where at least one of the grounds is fully applicable to the mark.
This aspect of the decision is, perhaps unexpectedly, in Nestlé’s favour. The High Court judge originally thought that a shape should be refused if all the essential features of the shape are covered by the grounds for refusal. He was inclined to agree with Cadbury’s arguments that it would be bizarre if a shape could be registered simply because neither objection applied to all three essential features. He will now have to reconsider his position.
TECHNICAL RESULT DOES NOT REFER TO MANUFACTURE
The High Court judge also asked the CJEU if a shape should be refused if it is 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. The Hearing Officer had originally said that some of the features of the Kit Kat shape were necessary for the product to be manufactured correctly, for example, the grooves have to be a certain depth in order for the product to retain structural integrity in manufacture and transit, and the angle of the sides of the product, and of the breaking grooves, is also constrained by the method of manufacture.
The CJEU said that the manner in which the goods function is decisive and their method of manufacture is not important. As a result, the ground which allows refusal of shapes necessary to obtain a technical result only applies to the manner in which the goods are used by the consumer, and it does not apply to the manner in which the goods are manufactured.
Again, this aspect of the decision works in Nestlé’s favour, although it is unlikely to have a significant impact on the eventual outcome of the case.
This case will now go back to the High Court for a decision on whether Nestlé’s UK application should be accepted for registration. It seems likely that the application will be refused, considering the CJEU’s decision about acquired distinctive character, and the previous comments on this from the High Court judge.