(Our own Sumi Nadarajah was asked to comment on the recent “KitKat decision” by the UK High Court for an article published by the World Trademark Review. The original article waswritten by Trevor Little on January 20, 2016.)

In the latest development of the long-running dispute over Nestlé’s efforts to secure trademark registration for the ‘four-finger’ Kit Kat shape, the High Court of England and Wales has dismissed the company’s appeal against a UK Intellectual Property Office (UKIPO) finding that the mark was devoid of inherent distinctive character and had not acquired such character through use.

As we reported previously, the dispute dates back to 2010, when Nestlé applied to register the ‘four-finger’ shape as a 3D mark in the UK for various goods in Class 30, including chocolate, chocolate confectionery and chocolate products. Cadbury opposed and the UKIPO rejected the application, finding that the mark was devoid of inherent distinctive character and had not acquired such a character through use. The UKIPO concluded that “[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 and the High Court referred several questions to the ECJ for clarification. The case was then referred back to the High Court, which today dismissed Nestlé’s appeal.

Interestingly, Arnold J expressed some frustration with the translation of one of his questions (“In order to establish that a trademark has acquired distinctive character following the use that had been made of it within the meaning of Article 3(3) of Directive 2008/95 [...], 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 consider 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?”), noting that the translation of ‘rely’ as meaning  ‘regards’ (‘estime que’ in the French text) led to doubts “that the Advocate General and the Court of Justice had correctly understood the issue posed by the question which I referred”. Sumi Nadarajah, partner at FRKelly, notes: “Arnold J stressed heavily on the fact that the ECJ had reformulated the questions that were posed by him and it was apparent that he did not find the responses particularly helpful. He pointed out the ambiguity of the ECJ’s ruling that the “applicant must prove that the relevant class of people perceives the goods or services designated exclusively by the applied-for mark, as opposed to any other mark which might also be present”  by further stating, “the question which remains is what this entails”.

However, while Arnold J noted that “it is tempting to refer the question again”, he instead tries “to understand and apply the answer which the court has given as best I can… Accordingly, I conclude that it is legitimate for the competent authority, when assessing whether the applicant has proved that 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, to consider whether such persons would rely upon the sign as denoting the origin of the goods if it were used on its own”.

Reflecting on the survey evidence cited in this case, he agreed with the hearing officer’s reasoning that “the applicant has shown recognition of the mark amongst a significant proportion of the relevant public for chocolate confectionery (only), but not that consumers have come to rely on the shape to identify the origin of the goods”, adding that “it seems likely that consumers rely only on the word mark KIT KAT and the other word and the pictorial marks used in relation to the goods in order to identify the trade origin of the products. They 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’s appeal was thus dismissed.

Hastings Guise, intellectual property partner at Fieldfisher, comments: “At its heart, the Kit Kat case is about evidence. Nestlé had compelling evidence that consumers already associated the shape of its bar with the Kit Kat brand. However, they did not have evidence showing that consumers already relied upon that that shape when they were identifying the product before purchase. The question to the ECJ was intended to identify whether the first kind of evidence was sufficient to claim acquired distinctiveness or whether the second kind of evidence was also required. Unfortunately, the answer that came back fell somewhere in the middle. The Court confirmed that the first type of evidence was not necessarily sufficient but it did not insist that the second type of evidence was required. Instead, it said that the evidence must show that consumers perceived the trademark as indicating exclusive origin from one commercial source.”

In terms of takeaways for applicants, Joel Smith, head of trademarks at Herbert Smith Freehills, notes: “The critical part of the case is whether, for a mark to registered on the basis of acquired distinctiveness, it is necessary to show that a significant portion of relevant consumers rely upon the mark as indicating the origin of the goods (rather than merely associate it with the applicant’s goods)… [On this point] The UK Court decides that ‘reliance’ by the consumer to denote trade origin is a relevant test for acquired distinctiveness of a mark, with mere recognition or association not sufficient evidence of acquired distinctiveness.”

So what next? First, Smith states that, while the company “has not managed to secure registration of a UK mark for the bare slab and sticks for chocolate (ignoring the embossed Kit Kat on each stick), Nestlé will live to fight again, as it retains a CTM for the shape, as well as the word marks for Kit Kat”. Additionally, it is important to note that the dispute is not yet over, with Nestlé issuing a media statement proclaiming: “We believe the shape deserves to be protected as a trademark in the UK and are disappointed that the court did not agree on this occasion. We are taking the necessary steps to appeal this judgment.” Reflecting on this, Nadarajah, observes: “It will be interesting to see if Nestlé can utilise the ‘ambiguous’ nature of the ECJ’s responses if it decides to appeal this decision.”

Clearly, this is not the last time we will be writing about Nestlé’s efforts to secure protection for the ‘four-finger’ shape in the UK.