Nestlé loses Kit Kat trademark battle against Cadbury

The English High Court has dismissed Nestlé’s appeal against a decision to reject its trademark application for the 3D shape of the four-finger Kit Kat chocolate bar.

In a decision handed down this morning, January 20, Mr Justice Arnold said the proposed trademark had not acquired distinctive character and that the Court of Justice of the European Union (CJEU) had not sufficiently answered a question he had asked.

Arnold was ruling on the case after the CJEU had attempted to answer three questions he had posed about whether the trademark application should be able to proceed.

Both Nestlé and Cadbury had appealed against aspects of a decision by the UK’s Intellectual Property Office (IPO) in 2013 to reject Nestlé’s application for the 3D shape of the four-finger variety of the Kit Kat bar.

Allan James, an IPO examiner, said that the trademark could not be registered on the basis that the mark had not acquired distinctive character and that it consisted exclusively of a shape which results from the nature of the goods themselves.

Nestlé appealed against the decision to the English High Court, prompting Arnold to ask the CJEU for further clarification.

Arnold first asked whether, when determining distinctive character, it is sufficient for the applicant to prove that a significant proportion of ‘relevant’ people associate the mark with the applicant.

Second, he asked, “if a shape has three essential features, two of which are necessary to obtain a technical result, should trademark registration be denied?”

The third question concerned whether Directive 2008/95/EC (trademark directive) should be interpreted as preventing registration of shapes that are necessary to obtain a technical result.

In its September ruling, the CJEU said that in order to be granted a trademark that has allegedly acquired distinctive character, an applicant must prove that the “relevant class of persons” perceives the goods or services as being designated exclusively by the applied-for mark, as opposed to any other mark which might also be present.

The CJEU added that the trademark directive precludes the registration of a shape containing three essential features, “one of which results from the nature of the goods themselves and two of which are necessary to obtain a technical result”.

On the third question, the court said that legislation barring 3D trademark registration refers only to “the manner in which the goods at issue function and it does not apply to the manner in which the goods are manufactured”.

In today’s judgment Arnold said that the CJEU’s answers to questions two and three had been accepted by both parties, but that they disagreed on the effect of the court’s answer to question one—on acquired distinctiveness. As a result, the judgment only referred to acquired distinctiveness.

Addressing the issue, Arnold said the CJEU, “as it so often does”, had reformulated the question he asked.

“If a referring court asks whether the answer to a question is A or B, the [responding] court is perfectly entitled to say that the answer is neither A nor B, but C.

“The problem in the present case is that the court has said that the answer is not A, but C. Since the court has not explicitly addressed B it is not clear whether C is different from B.”

Arnold said the CJEU’s ruling that the applicant must prove that the relevant class of people perceives the goods or services designated exclusively by the applied-for mark, as opposed to any other mark which might also be present, was ambiguous.

“The question which remains is what this entails,” Arnold wrote.

“I conclude that, in order to demonstrate that a sign has acquired distinctive character, the applicant must prove that, at the relevant date, a significant proportion of the relevant class of persons perceives the relevant goods or services as originating from a particular undertaking because of the sign in question (as opposed to any other trademark which may also be present),” he added.

Furthermore, Arnold wrote, it is likely that a number of similarly shaped products have been produced by other companies but which consumers have not necessarily recognised as being Kit Kats.

This, he said, is inconsistent with the view that the 3D Kit Kat trademark had acquired distinctive character.

A spokesperson for Nestlé told WIPR it was planning to appeal against the decision.

“Kit Kat is much loved and the iconic shape of the four-finger bar, which has been used in the UK for more than 80 years, is well known by consumers.

“We believe that the shape deserves to be protected as a trademark in the UK and are disappointed that the court did not agree on this occasion.”

Asked for its reaction, a spokesperson for Mondelez, which owns Cadbury, said: “We are pleased by this ruling by the UK High Court, which is in line with our contention that the shape of the Kit Kat bar is not distinctive enough to be protected as a trademark.”