In the latest instalment of a ten year battle to register the shape of the Kit Kat bar as a UK trade mark, the Court of Appeal has dismissed Nestlé's appeal in Société des Produits Nestlé v Cadbury UK Ltd  EWCA Civ 358. The Court of Appeal upheld the High Court's decision in finding that Nestlé is not permitted to register a UK mark for the shape of the Kit Kat as Nestlé has failed to demonstrate acquired distinctiveness in the shape.
- In assessing acquired distinctiveness, it is not sufficient that a significant proportion of the relevant class of persons recognises and associates the shape with an applicant's products or that the shape has become very well-known.
- The essential function of a trade mark is to guarantee origin to consumers. Therefore, consumers must perceive the shape alone (as opposed to any other mark which may also be present), as exclusively indicating origin.
- Whilst Cadbury cannot register a UK trade mark to protect the shape of its Kit Kat bars, it still has the benefit of a EUTM covering the same shape in the UK, until the parallel proceedings in relation to that EUTM are determined.
2. Business Impact
- This decision serves as a further reminder that shape marks are difficult to obtain and that the challenge in establishing distinctiveness is often the key barrier to successfully registering a shape mark (as opposed to navigating around the three shape mark exclusions).
- Brand owners should only seek to protect shapes which are unusual and distinctive as there is such a high hurdle to surmount in order to successfully register a 3D shape mark. Whilst the criteria for assessing distinctiveness for all types of trade marks is technically the same, in practice, it is clear that the relevant public's perception is not the same for 3D marks as it would be with word or figurative marks. It is harder to establish distinctiveness for a 3D mark.
- Consider carefully the type of evidence used in order to prove acquired distinctiveness. This will inevitably be more difficult where a shape is marketed in combination with other marks as what matters is perception of the mark as applied for, and not the other marks which it is used in combination with. In order to be useful, any advertising evidence needs to show the product itself. Despite the high advertising spend by Nestlé on Kit Kats, the advertising and promotional material submitted as evidence did not actually show the Trade Mark (as the shape sought to be protected was not visible through its packaging).
- It can be worthwhile having parallel applications or registrations (EUTMs and UK national marks) as registry proceedings involving the same/similar marks may not be determined in the same way.
In 2010, Nestlé applied to register a UK trade mark for the three dimensional sign as represented below for various goods in Class 30 (the "Trade Mark"). The Trade Mark differs from the actual product in that it omits the embossed words 'Kit Kat' on each of the fingers.
Cadbury opposed the application. In deciding the opposition in June 2013, the Hearing Officer found that the Kit Kat shape had not acquired distinctive character for the goods claimed in the application (pursuant to section 3(1)b of the Trade Marks Act 1994) and that the Trade Mark consisted exclusively of a shape necessary to obtain a technical result, except for 'cakes' and 'pastries', where the trade mark was found to be inherently distinctive. Nestlé appealed to the High Court and Cadbury cross-appealed in respect of allowing the application to proceed to registration in respect of 'cakes' and 'pastries'. In deciding the appeals, Mr Justice Arnold sought a preliminary ruling from the CJEU on both technical result issues and acquired distinctiveness (see our ebulletin here for further detail:29 January 2014 )
The CJEU gave its judgment in September 2015 (see our ebulletin here: 16 September 2015). On the issue of acquired distinctiveness, the CJEU said that the applicant must prove that the relevant class of persons perceives the goods or services to be designated exclusively by the mark applied for, as opposed to any other mark which might also be present, as originating from a particular company.
Mr Justice Arnold then gave judgment in the High Court on 20 January 2016, finding that the Hearing Officer had not erred in law on the matter of acquired distinctiveness and he therefore dismissed Nestlé's appeal. In applying the CJEU's decision, Mr Justice Arnold tweaked the test slightly, saying that that the test for determining if a sign has acquired distinctive character was that the relevant class of persons perceives the goods as originating from a particular undertaking because of the sign in question, as opposed to any other trade mark which might also be present. Nestlé appealed the High Court's judgment and the appeal was heard in February 2017.
4. The Court of Appeal's judgment
In light of the CJEU's judgment, there was no dispute between the parties that the registerability of the Trade Mark turned on the issue of its acquired distinctiveness. The Kit Kit is not an inherently distinctive shape, so the appeal focussed on whether the shape had acquired distinctiveness through use.
Nestlé argued that a substantial proportion of relevant consumers, when presented with the 3D shape, identified the shape as a Kit Kat, as a specific product from a single source, which means that the Trade Mark is distinctive. It claimed that there was no basis in law for the further requirement that consumers had come to rely upon the Trade Mark when purchasing the product. Cadbury argued that the correct question was whether consumers had come to perceive the Trade Mark as an indication of origin. It claimed that consumers had just come to associate the Trade Mark with Nestlé, which did not amount to acquired distinctiveness within the meaning of Article 3(3) of Council Directive 2008/95 EC.
In delivering the leading judgment, Lord Justice Kitchin found that the fact that a shape has become very well-known does not necessarily mean the public have come to perceive the shape as a badge of origin. The public might simply regard the shape as characteristic of products of that kind or find that it brings to mind the product and brand name with which they have become familiar. These kinds or recognition do not amount to distinctiveness for trade mark purposes. In his assenting judgment, Lord Justice Floyd helpfully explained it as imagining a basket of unwrapped and otherwise unmarked chocolate bars in the shape of the mark applied for, available for selection in a supermarket. For there to be acquired distinctiveness, the consumer must perceive these goods as being Kit Kats or as originating from makers of Kit Kats, to the exclusion of all others. A perception that they looked like Kit Kats is not enough. Consumers must regard the shape alone (as opposed to any other mark which may also be present), as exclusively indicating origin. The shape of the Kit Kit does not perform this function.
The CJEU used the term "perceive" and not "reliance" in formulating its test. However, perception by consumers that goods designated by the mark originate from a particular entity means that they can rely upon the mark in making or confirming their purchasing decision. Lord Justice Kitchin explained that "reliance is a behavioural consequence of perception" and as such, a mark performs this function through its distinctive character.
For a non-trade mark lawyer, the distinction between recognition and association with perception is not an easy one. The Kit Kat product is of note as it has a brand name which is inherently highly distinctive and over time, the shape has become well known. However, this does not necessarily mean that the public perceive the shape of the Kit Kat as originating from Nestlé. The public might simply find it brings to mind the product and brand name which they are familiar with, or that they regard the shape as characteristic of products of that kind. These kinds of recognition/association are simply not sufficient for asserting distinctiveness under trade mark law.
6. Parallel EUIPO proceedings
Nestlé had previously obtained a EUTM for the same mark (albeit for a more limited selection of goods which does not include chocolate, chocolate products, chocolate confectionary or wafers). Proceedings are ongoing in respect of this EUTM as Cadbury (now Mondelez) seeks a declaration of invalidity in respect of this mark.
The General Court recently gave its ruling on this matter (Mondelez UK Holdings & Services Ltd v EUIPO, Société des Produits Nestlé intervening, T-112/13), annulling the decision of the Board of Appeal of the EUIPO. The General Court found that the mark had acquired distinctive character in the majority of Member States, including the UK, but that the Board of Appeal had failed to make a finding as to how the mark was perceived in the remainder. The EUIPO should now take steps to comply with the General Court's ruling, which may involve a re-examination of evidence of distinctiveness in the Member States it had failed to consider. Mondelez has indicated it will appeal against the General Court's decision to the CJEU.
Whilst the Court of Appeal accepted that decisions of the General Court were binding on it, it was satisfied that the General Court had not in fact made any decision relevant to the appeal. Its view was that the General Court had simply reiterated the principle that where a mark has been used as part of, or in conjunction with a registered trade mark, it must be shown that the relevant class of persons perceive the product, designated exclusively by the mark in issue, as originating from a particular undertaking. Whilst the Court of Appeal took careful consideration of the fact that the General Court had found that the EUIPO Board of Appeal was correct to find that distinctive character had been acquired in the UK, this finding was not binding on the UK courts. The Court felt it was not binding as many passages of the decision of the General Court suggested that, contrary to the decision of the CJEU, it regarded recognition and association of the mark with Kit Kat as being sufficient to establish distinctiveness.
It will be interesting to see what happens with the EUTM and whether Cadbury retains protection for this mark. Whilst the mainstream press has been quick to suggest that we can now expect a raft of copycat products to be launched in the UK, this ignores the fact that, as things stand, Cadbury still has the protection of a EUTM in the UK.