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Is Nestlé in better shape to register Kit Kat mark after the Court of Justice ruling?

The CJEU has today given its long-awaited ruling on the registration of the 3D trade mark for the KitKat shape. The ruling may give Nestlé more hope for registering its mark than had been feared The CJEU has today given its long-awaited ruling on the registration of the 3D trade mark for the KitKat shape. The ruling may give Nestlé more hope for registering its mark than had been feared following the Advocate General's opinion earlier this year.  The Court confirmed that the exclusion for technical shape marks should be construed narrowly and also set out a test for acquired distinctiveness based on consumer perception rather than the more stringent "reliance" criterion popular among UK judges.

Background

To recap, Nestlé applied to register the 3D trade mark depicted below in the UK in respect of goods in class 30, including "chocolate confectionery; cakes; pastries; biscuits; biscuits having a chocolate coating; chocolate coated wafer biscuits".

 

Kit Kat

 

The UK IPO initially accepted the application, on the basis that Nestlé had shown evidence of acquired distinctiveness, but Cadbury won a subsequent opposition. Nestlé appealed to the High Court and Mr Justice Arnold asked the Court of Justice of the European Union ("CJEU") for clarification of the law of shape marks and acquired distinctiveness.

Article 3 of Directive 2008/95 (the Trade Marks Directive) provides that the following shall not be registered or, if registered, shall be liable to be declared invalid:

(b) trade marks which are devoid of any distinctive character;…

(e) signs which consist exclusively of:

  • (i) the shape which results from the nature of the goods themselves;

  • (ii) the shape of good which is necessary to obtain a technical result;

  • (iii) the shape which gives substantial value to the goods.


A trade mark will not necessarily be refused registration under Article 3(b), distinctive character, if it has already acquired a distinctive character as a result of the use made of it in the market place.

Advocate General's opinion

Please see earlier article published in IP Magazine discussing Advocate General Wathelet's opinion in this case.

Court of Justice Decision

Article 3(1)(e)

The CJEU held that at least one of the criteria for refusal set out in Article 3(1)(e) has to be "fully applicable" to the shape at issue. However, like the Advocate General and the previous CJEU judgment in Hauck, the Court used the rather vague phrase "fully applicable". While it is not entirely clear what is intended, it appears that the criteria in Art 3(1)(e) operate independently of one another but that at least one of the criteria must apply equally to all of the essential features of the shape.

The result is reassuring for brand owners as it means that you can't "salami slice" a shape trade mark by applying different criteria in Article 3(1)(e) to different elements of the shape. This approach would have created uncertainty for many 3D trade marks. The Court considered that it would be against the public interest to preclude registration of a shape mark if each of the grounds were only partially established.

Manner of Manufacture

The CJEU disagreed with the Advocate General on this point and ruled that the manner of manufacture of a product is irrelevant to the determination of whether the shape is necessary to obtain a technical result. Art 3(1)(e)(ii) refers only to the manner in which the goods function. This narrow interpretation of the exclusion will again be reassuring for brand owners.

Acquired Distinctiveness

The CJEU confirms that, in order to prove the acquisition of a distinctive character following use, the applicant must prove that the relevant class of persons perceive that the mark alone (as opposed to any other trade mark that is present) identifies the particular undertaking from which the goods originate.

The CJEU didn't specifically answer the question posed by Arnold J on whether it is necessary to establish consumer reliance on the shape of the mark. However, while a mere association with the shape will not suffice, the Court has not required evidence that consumers are actually relying on the shape as a sole indicator of origin. This is good news for 3D trade mark owners.

Comment

There is a significant glimmer of hope here for Nestlé.  The Court has pulled the test back towards consumer perception as a key factor, which is a point that had been lost both in AG Wathelet's opinion and in the earlier UK decisions. Those earlier decisions focused on actual consumer behaviour in the marketplace. However, consumer reliance is not the same as consumer perception.

The test for inherent registrability asks whether a mark can be perceived as an indication of origin and not, obviously, whether it is already being relied upon as an indication of origin.  Distinctiveness, in a trade mark sense, therefore means the potential for a mark to distinguish the trade origin of goods.  So the acquired distinctiveness test must address whether, through use, a mark now has that potential.  This is not the same as asking whether the mark has already been relied on by consumers as an exclusive indication of origin, which would be a tougher test.

It seems that Nestlé, by showing that over 90% of their survey sample identified the KitKat shape as originating from them, with 50% having a high degree of confidence, have already shown that consumers perceive the shape alone as indicating origin, even if those consumers have not yet had to rely on the shape in this way due to the additional branded packaging used.  This perception, which shows that the shape at least has the potential to indicate trade origin, would arguably satisfy the Court of Justice's formulation of the test.

Finally, it is interesting that Nestlé had asked the CJEU to reopen oral proceedings because it thought that the Advocate General had failed to adequately answer Arnold J's questions. The Court refused and proceeded to deal with the issue in its own way, providing an answer that reflected neither of the two alternatives proposed by Arnold and also applied greater nuance than the analysis of AG Wathelet. This serves as a reminder of the uncertainties of a CJEU reference and the inherent risk for litigants – and judges – in referring questions that may not be answered as expected.

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