IP Insight is a series by Virtuoso Legal, the intellectual property specialists. This entry concerns the invalidation of the “Capri Sun” shape mark – following the soft drink manufacturer’s cease and desist order against a competitor.
Following lengthy proceedings, on the 28th June 2019 the Dutch Supreme Court declared the Capri Sun shape mark invalid in the Benelux on the basis that the essential characteristics of the mark were determined by technical effect.
The ruling deals a considerable blow to the Swiss drinks giant, who had initially sought to launch proceedings against a rival for trade mark infringement. The decision of the Dutch Supreme Court marks the end to an action which has evidently backfired at some cost, with other European Courts now likely to follow suit.
The matter first stirred in 2014 when Capri Sun Group Holding (“Capri Sun”) pursued a cease and desist order against Riha Wesergold Getranke GMBH & Co KG (Riha) for trade mark infringement and slavish imitation under Dutch law.
Riha countered these allegations by asserting that Capri Sun’s shape mark was invalid based on Article 2.1(2) of the Benelux Convention on Intellectual Property – which states that ‘signs consisting solely of a shape which results from the nature of the goods, which gives a substantial value to the goods or which is necessary to obtain a technical result cannot be considered as being trademarks.’
The Court of the Hague sided with Riha, declaring the Capri Sun mark invalid on absolute grounds, a ruling which was then upheld on appeal at the Court of Amsterdam.
Concerning the assessment for technical effect, the Court took various characteristics of the shape into account, including:
- the rectangular shape;
- welded seams at top and sides;
- rounding at the bottom;
- the pouch tapers off towards the bottom; and
- the reflective material.
These characteristics are justified for technical effect due to reasons pertaining to the manufacturing process and overall user-friendliness.
The shape and size of the packaging is highly practical for a drink predominantly marketed at children, the rounded base allows for it to be stood upright, and the drink is ideally sized to fit in lunchboxes.
The fact that the essential characteristics were deemed necessary to obtain a technical result led the Court of first instance to reject the claim for slavish imitation, as the reproduced elements of the packaging had significant bearing on the overall quality of the goods.
The Supreme Court
The Supreme Court upheld the earlier rulings, reinforcing the importance of the technical necessity exception as a gatekeeper to ensure that trade mark protection is not weaponised to enforce impeding monopolies over technical solutions.
Capri Sun sought to argue various points before the Supreme Court which were duly rebutted.
Firstly, Capri Sun contested that the technical necessity exception was not applicable in this instance as there existed a variety of alternative shapes available, thus negating any possibility of creating perpetual monopolies. The Supreme Court refuted this line of argument in accordance with the earlier ruling in Phillips v Remington, which decreed that a mark will be declared invalid where the shape is necessary to obtain a technical result – even if other available shapes may achieve the same result.
The second major contention of Capri Sun cited inconsistencies in the recent European rulings concerning trade marks and design rights, such as that of Doceram. In Doceram, the CJEU ruled that the existence of alternative designs can be a relevant factor when considering whether a design is dictated entirely by its technical function, although it is not decisive for the exclusion of technical features.
The Dutch Supreme Court took the opportunity to provide a vital distinction between trade marks and design rights, rejecting the argument of Capri Sun due to the existence of schismatic differences in terms of function and term of protection.
The Supreme Court clarified that the concept of technical exception is entirely different in design and trade mark law by nature.
Specifically, in design law it is merely a limit on the scope of protection rather than a ground for invalidity. Therefore, the existence of alternative shapes cannot be taken into account relative to the technical necessity exception in trade mark law.
Our IP Insight: Capri Sun Loses its Shape
The ruling in this case evidences the potential pitfalls when pursuing any litigation based in intellectual property. Companies must be diligent in ensuring that they have their own affairs in order before launching any action, as attack is often the best form of defence in such matters – and the opposition will often look to counterclaim wherever possible. In such cases, obtaining specialist IP advice is instrumental providing a degree of insurance, ensuring that any prospective litigation is launched from a solid foundation and is not liable to backfire.