Following on from our briefing on 3D marks in July 2015, in which we discussed Nestlé’s application to register as a trade mark the shape of its famous four-finger chocolate bar (without showing KIT KAT embossed on the fingers), we now provide an update on developments in the case. On 16 September 2015, the CJEU ruled on the three questions which had been referred to it by the High Court (case reference C-215/14), following the Opinion of the Advocate General Wathelet which was delivered on 11 June 2015. 

By way of reminder, the three questions referred to the CJEU were: 

  1. In order to establish that a trade mark 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 (the Directive), 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 the 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 [emphasis added] the mark (as opposed to any other trade marks which may also be present) as indicating the origin of the goods?
  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 trade mark precluded by Article 3(1)(e)(i) and/or (ii) of the Directive? 
  3. Should Article 3(1)(e)(ii) of the Directive 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? 

The Decision

The CJEU chose to consider initially the second and third questions, and then the first. According to the CJEU, it chose to address the questions in this order because this would be the order in which anyone  would normally assess a trade mark application. 

Article 3(1) of the Directive sets out certain absolute grounds under which a mark should be refused registration. Part (e) of Article 3(1) states that a sign shall not be registered if the sign applied for consists exclusively of (i) the shape which results from the nature of the goods themselves; (ii) the shape of goods which is necessary to obtain a technical result; or (iii) the shape which gives substantial value to the goods. If a sign falls foul of one of these categories for an absolute refusal, it can never be registered, even if it has acquired distinctive character through extensive use (see Article 3(3) of the Directive). Therefore the CJEU explained that it would be prudent to address the second and third questions regarding absolute grounds of refusal, before proceeding to consider the first question of what impact the shape might make on the average consumer. 

In addressing the second question, the CJEU reiterated that it is clear from the wording at Article 3(1)(e) of the Directive that the three grounds for the refusal of registration operate independently of each other and must therefore be assessed separately. Whether more than one of the grounds applies to the sign is largely immaterial; the sign cannot be registered if any one of the criteria is grounds is fully applicable to the sign. Therefore, in agreement with Advocate General, the CJEU held that registration of a trade mark will be precluded where at least one of the grounds for refusal of registration under paragraph (e) relates fully to shape at issue.  

On the third question, the CJEU looked at the specific wording of the provision, which refers expressly to the shape of goods necessary to obtain a “technical result” [emphasis added], without mentioning the process by which the goods are manufactured. The CJEU considered the underlying policy for this ground for refusal, namely to prevent manufacturers from being granted a monopoly on technical solutions for the types of competing products in the sector.  It was held that consumers would not care about the method by which the products were manufactured, but the manner in which the goods functioned would be a decisive factor. Disagreeing in part with the Advocate General’s opinion, the CJEU decided that the ground must be interpreted as referring only to features of the shape which were determined by the manner in which the goods functioned and not by the manner in which the goods are manufactured.  In this instance of the four finger biscuit, there were some features where the shape was determined as a result of the production process as opposed to other features, e.g. the perforations running between the intersections which made it easier for the consumer to snap off individual fingers, which were features which related clearly to how the product was consumed.   

As regards the first question, the CJEU reiterated that “the essential function of a trade mark is to guarantee the identity of the origin of the designated goods or services to the consumer or end-user by enabling him… to distinguish the goods or services from those which have another origin”. Previously, the Court has acknowledged that acquisition of the distinctive character may be as a result of the use as part of a registered trade mark, or a component thereof and of the use of a separate mark in conjunction with a registered mark. The Court has, however, in this ruling now made it clear that in consequence of such use, the relevant class of persons must actually perceive the goods or services as originating from a given undertaking designated exclusively by the mark applied for. The CJEU stated that the fundamental condition is that “the sign for which registration as a trade mark is sought may serve to identify, in the minds of the relevant class of persons, the goods to which it relates as originating from a particular undertaking”. 

Therefore, in order to obtain registration of a trade mark on the basis that it has acquired a distinctive character following the use to which it has been put, the sign must be considered regardless of whether that use is as part of another registered trade mark or in conjunction with such a mark. The CJEU stated that, in order to be granted registration, the trade mark applicant must necessarily prove that the relevant class of persons perceive the goods or services designated exclusively be the mark applied for, as opposed to any other mark which might also be present, as originating from a particular company. 

Comment 

The CJEU seems to have taken a sensible and relatively strict approach to the interpretation of the wording of Article 3(1)(e) of the Directive, relying on the policy reasons behind the inclusion of the grounds for refusal. Construing Article 3(1)(e)(ii), emphasising the word “result”, to the exclusion of considering the manufacturing process, takes account not only of the decisive element in the consumer’s mind (i.e. the function the product carries out), but also the fact that the aim of the ground is to prevent a manufacturer’s monopoly in a technical function, not a manufacturing process. 

The discussion surrounding the application of Article 3(1)(e) more generally is interesting. The CJEU has confirmed that (i) the grounds should be considered independently and (ii) for the mark to be refused, at least one ground must be “fully applicable” to the sign at issue. This will impact upon the current line of argument being run against Nestlé’s UK application, which has been based on the idea that the sign is made up of three distinct features, one of which arguably results from the nature of the goods and two of which are arguably necessary to obtain a technical result. 

If this approach were permissible, opponents could try to prevent registration of a sign by identifying its component parts and raising a ground for refusal in respect of each element of the sign applied for, in an attempt to knock the mark in its entirety outside the scope of protection. For example, here, it is widely considered that the presence of the grooves in the bar is necessary to achieve the technical result of enabling the product to be broken into individual bars for consumption. This could take the grooves out of trade mark protection, and the remainder would survive (unless other objections were raised, which Cadbury has attempted to do). 

However, the CJEU’s decision clearly disallows this ‘mosaic’ approach to making trade mark objections, which is reminiscent of decisions in invalidation proceedings for other intellectual property rights, such as patents and designs. It has been unequivocally stated that the objection raised must apply in respect the whole of the mark applied for in order to fulfil the criteria under Article 3(1)(e) of the Directive. 

The answers from the CJEU to questions two and three are favourable, and will seemingly remove two obstacles to registration of Nestlé’s proposed mark. Yet, in respect of the first question, the commentary interpreting the CJEU’s judgment, which is in agreement with the Advocate General’s Opinion, is somewhat divided as to what this will mean for Nestlé. 

Arnold J’s first question posed to the CJEU has been rephrased, so that no reference to “reliance” (as opposed to “recognition”) is made. This makes it difficult to know for certain how the CJEU’s guidance will be interpreted – whether “perceiving” amounts to reliance or recognition – when the decision is handed back to the national courts for application to the case at hand. 

Some commentators have speculated that the CJEU is setting a much lower bar than “reliance” to prove acquired distinctiveness. If this is the case, it may be that Nestlé’s overwhelming survey evidence on the general public’s association between the four-finger shape and KIT KAT will enable the registration to proceed. 

Yet, there is some difficulty with this, beyond the fact that there has been no definitive answer as to whether “reliance” is too high a bar. 

In reality, the assessment of the sign applied for is completely artificial, given that the four-finger chocolate bar is very rarely seen without one of its associated trade marks. The bar is not in fact sold unwrapped or advertised without the red packaging marked with the KIT KAT logo, and there is also, embossed on each finger, the KIT KAT logo. Moreover, as with many judgments, public policy must be given consideration, as allowing registration of the 3D mark would give Nestlé an incredibly valuable monopoly, which the UK courts may not be prepared to grant, particularly in light of the fact that the mark applied for is not the use made by Nestlé (because the fingers are normally embossed, not plain). 

There is clearly some difficulty with the decision given by the CJEU. Where “perception” falls between “reliance” and “recognition” are will only come out when the case is referred back to the UK courts, and Nestlé (even in spite of its staggering evidence of acquired distinctiveness) may fail to secure its registration if policy considerations win out.