Aldi Stores v Societe Des Produits Nestle S.A. 2008 ATMO 76

Synopsis  

This case illustrates the difficulty of obtaining registration of a shape mark. In particular, it highlights the problems a trade mark applicant may encounter in demonstrating that consumers recognise shape as distinguishing origin and the potential problems in relying on survey evidence in illustrating acquired distinctiveness.  

FACTS OF THE CASE  

The opposition proceedings concern an application filed by Nestle to register a trade mark consisting of the shape of its confectionary. The graphical representation of the mark depicted in the trade mark application was as follows: for diagram see original document

The application included the following endorsement:  

“The trade mark consists of the shape of the goods, being four bars attached to one another by a thin base as depicted in the representations attached to the application form”.  

The application was accepted based on evidence of use which satisfied the Examiner that the shape distinguished Nestle's KAT KAT® product at the filing date.  

Aldi Stores opposed registration of the mark. Although several grounds of opposition were pressed by Aldi, the only matters dealt with in the opposition decision were whether the mark was inherently capable of distinguishing and whether Nestle's evidence established that the shape distinguished Nestle's goods at the date of application.  

THE DECISION  

Capacity of the Shape to Distinguish  

Nestle argued that the shape was not functional. In this regard, Nestle relied on a decision of the Intellectual Property Office of New Zealand (IPONZ) in Societe Des Produits Nestle S.A. v Horizon Biscuit Company Limited and Cadbury Confectionary Limited. In that decision, IPONZ conceded that while the shape had some functional aspects it was not entirely functional or so functional that the shape was descriptive of chocolate bars. As an aside, IPONZ nonetheless rejected that application on the basis that a shape was not considered a registrable sign under the New Zealand Trade Marks Act 1953 at the time the application was filed.  

Nestle also led evidence that the process of moulding the chocolate shell into which the biscuit component is placed and then capped with further chocolate was not the most economic method for coating a biscuit with chocolate. Therefore, economic motive had not dictated the shape which supported the position that the shape was chosen deliberately.  

Further, Nestle argued that when originally adopted in England in 1935 the shape was entirely novel. It was submitted that the ability to snap the chocolate into convenient finger-like portions was a “coincidental discovery” of consumers long after the shape had been adopted.  

The Hearing Officer was more convinced by the evidence led by Aldi showing third parties selling their own chocolate bars which may be broken into finger-like shapes. He concluded that whatever the situation in 1935, the shape must now be seen as a functional shape and that the applicant would need to show that the mark was distinctive at the time of filing the application.  

EVIDENCE OF DISTINCTIVENESS  

Nestle provided details of substantial sales of its goods in the relevant shape. The Hearing Officer commented that the extent of use was quite remarkable, a fact not contested by Aldi. From this point, the case turned on whether this extensive use of the shape served to establish the level of distinctiveness required by the Trade Marks Act.

Nestle submitted a survey of 300 respondents conducted in Australian capital cities. The respondents were presented with a block of brown wax in the shape of the Applicant's goods (notably without the words KIT KAT® impressed in the top). The respondents were asked: “This brown shape is product A. Can you recall seeing any product shaped like this before?” In the survey, 86% of respondents recalled the shape. Of those 86%, 89% associated the shape with Nestle's KIT KAT® product. Consequently, the survey concludes that 77% of total respondents (with a confidence range of plus or minus 4.7%) appear to associate the shape with the Applicant.  

Aldi argued that the survey was leading as the wax bar was coloured brown. Aldi also stressed that 22% of the population did not make any connection at all with the KIT KAT® product despite the leading effect of the chocolate colour. Moreover, it was submitted that the detail of the survey did not support a conclusion that the shape was distinctive noting that:  

  1. respondents that did not recall the shape appeared to perceive the shape as being generic to chocolate confectionary;  
  2. some respondents associated the shape with other traders;  
  3. some respondents showed confusion as to the origin of the goods (eg. “looks like chocolate, maybe KIT KAT”); and  
  4. generally, respondents did not associate the shape exclusively with the KIT KAT® product.  

Also, in response to the survey evidence, Aldi led evidence of its own survey. That survey showed that respondents associated the shape of a rectangular chocolate biscuit with the TIM TAM® brand. Aldi used this survey to introduce the concept of “brand salience”, that is where the prominence of one brand in an industry can result in it unduly overshadowing other brands. The Hearing Officer considered this was not a significant factor in Nestle's survey evidence.  

However, the Hearing Officer did consider that even though there was high recognition of the shape in the survey, this did not necessarily indicate that the shape was being used as a trade mark. He stated that even though the shape was not visible at the time the goods were purchased, that alone would not prevent the shape being used as a trade mark. In assessing whether there had been use of the shape in a trade mark sense, the Hearing Officer reviewed the evidence presented by Nestle showing promotion of the shape of the goods. This included, for example, artwork on promotional materials showing a partially removed wrapper revealing the finger shape, sometimes snapped. Also, the evidence included television commercials illustrating how the shape could be broken into fingers with voice-overs of statements and slogans which emphasised the breakability of the bar into individual fingers.  

The Hearing Officer concluded that the evidence left the “overwhelming impression” that Nestle's customers had been educated as to the functionality of the shape rather than of its capacity to distinguish.  

COMMENTARY  

This decision confirms that mere use of a shape over a long period of time does not necessarily mean that the shape has acquired the capacity to distinguish. It presents a lesson to traders that they will need to ensure that they are educating consumers that the shape distinguishes the product. Further, it illustrates that survey evidence, even where there is impressive recognition of a shape, is open to criticism and unless carefully designed may ultimately fail to demonstrate that a shape is functioning as a trade mark.  

The decision has been appealed to the Federal Court.