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ASEAN special report: the Kit Kat case

30-09-2015

Andy Leck and Cheah Yew Kuin

ASEAN special report: the Kit Kat case

ANKE VAN WYK / SHUTTERSTOCK.COM

The outcome of the appeal against the Nestlé v Petra Foods decision is keenly awaited in Singapore, as Andy Leck and Cheah Yew Kuin of Baker & McKenzie.Wong & Leow report.

In the landmark 2014 case of Nestlé v Petra Foods the High Court of Singapore accepted Petra Foods’ application to invalidate Nestlé’s shape marks. The subsequent appeal was heard before the full five-judge Court of Appeal of Singapore on July 31, 2015.

The key issue being considered was Petra Foods’ attempt to invalidate Nestlé’s shape marks protecting the two-finger and four-finger shapes of its Kit Kat chocolate bars for non-registrability under the Trade Marks Act. The argument revolved around statutory exceptions that bar registration of shape marks.

Under the technical result exception, a shape cannot be registered where it consists exclusively of a shape which is necessary to obtain a technical result. The high court identified that the essential characteristics of the shapes were the rectangular slab, the presence of breaking grooves, and the number of grooves and fingers, and that each of these features was necessary for a specific, though different, technical result.

The rectangular slab was necessary for efficient manufacture; the breaking grooves for facilitating the breaking up of the chocolate bar; and the number of grooves and fingers to achieve the desired portion size. It was held in the high court that the technical result exception applied and Nestlé’s shape marks were vulnerable to invalidation.

The nature exception applies where the mark consists exclusively of the shape which results from the nature of the goods themselves. On the facts, Nestlé’s shape marks were registered for “chocolate-coated bars and wafers”. The high court had found that there is no natural shape for a chocolate-coated bar or wafer, so the nature exception does not apply.

The substantial value exception applies where the mark consists exclusively of the shape which gives substantial value to the goods. In applying this exception, the high court considered whether Nestlé’s shape marks had such an eye-catching design as to give them substantial value, and concluded that the taste and feel of the Kit Kat product depended on many factors, and its shape was but one of the considerations.

Among the key points argued before the appeals court was whether manufacturing process should be considered when deciding on the technical result exception. Nestlé argued that considerations of the manufacturing process necessary for achieving the shape should not be a relevant factor, as the manufacturing process was distinct from any technical result that could be achieved by the shape itself. This was countered by Petra Foods’ argument that if it were established that the shape was dictated by a function, the real monopoly is not over the shape but over the function and the technical solutions, which would be against public policy.

Nestlé also argued that the shape of its Kit Kat bars have acquired distinctiveness through years of use, and performed the function of a trademark as a badge of origin. However, Petra Foods disputed this, contending that Nestlé’s marketing of its chocolate bars has always focused on the name Kit Kat, not the shape of the bars.

The parties also argued over the extent to which results of a survey conducted by Nestlé were helpful to its case. While Nestlé focused on the fact that the survey showed that members of the public would recognise the shape of its Kit Kat product even without any marks imprinted on the shape, Petra Foods argued that the survey was flawed as it does not address the fact that at the point of sale, all that members of the public are able to see is the wrapper along with the marks set out on the wrapper.

The parties’ arguments repeated the age-old conflict between IP protection and market competition, with each party attempting to convince the court that policy demands a ruling in its favour. The industry is eagerly awaiting the judgment to be issued, hoping that the appeals court will clarify the position on the registration of shape marks and scope of exceptions in Singapore.

Andy Leck is managing principal at Baker & McKenzie.Wong & Leow in Singapore. He can be contacted at:andy.leck@bakermckenzie.com

Cheah Yew Kuin is local principal at Baker & McKenzie.Wong & Leow in Singapore. He can be contacted at:
yewkuin.cheah@bakermckenzie.com

ASEAN, Nestlé, Kit Kat, trademark, Court of Appeal of Singapore

WIPR

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