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16 September 2015Trademarks

CJEU issues mixed ruling in Kit Kat shape row

Europe’s highest court has ruled that a trademark cannot be registered for a shape of which some features are necessary to obtain a technical effect, in a dispute concerning the Kit Kat chocolate bar between Nestlé and rival Cadbury.

In a decision handed down today, September 16, the Court of Justice of the European Union (CJEU) was ruling on a row focusing on the 3D shape of the four-finger Kit Kat.

The court said that EU Directive 2008/95/EC 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”.

But the court said the 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”.

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

The CJEU was ruling on a five-year dispute between the chocolate makers which has made its way from the UK’s Intellectual Property Office (IPO) all the way to Europe’s highest court.

In July 2010, Nestlé sought to register the 3D shape of a Kit Kat with four ‘fingers’ of chocolate as a UK trademark at the IPO.

Cadbury opposed the application in January 2011.

In a decision handed down in 2013, an IPO examiner said that Nestlé’s proposed mark was “devoid of inherent distinctive character”. The examiner said that the shape had three features overall, two of which cannot be granted registration.

The examiner said that the first feature, the Kit Kat’s rectangular shape, “resulted from the nature of the goods” and was eligible for protection, but only in relation to cakes and pastries.

But the other two features—the presence, position and depth of grooves along the bar, as well as the number of the grooves, which determine how many ‘fingers’ of chocolate there are—are necessary to obtain a technical result, the IPO said.

As a result, Nestlé’s application was rejected.

Both Nestlé and Cadbury appealed against that decision to the English High Court. Hearing the dispute, Mr Justice Arnold stayed the case and asked the CJEU to review three questions.

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

Second, the high court 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 concerned whether the EU’s Trade Marks Directive should be interpreted as preventing registration of shapes that are necessary to obtain a technical result.

Law firm HGF said the decision suggests that the shape of the Kit Kat bar ultimately will not be able to be trademarked.

In a blog post on the firm’s website, it said: “The CJEU effectively found that mere recognition of a sign is not enough to enable the registration of a shape as a trademark. The CJEU found that the shape must act as a badge of trade origin in its own right.

“Based on the original IPO hearing officer’s assessment of the evidence submitted by Nestlé in support of its application, some initial comments by the high court judge on this case, existing UK case law and indeed the confirmation by the CJEU of the legal principles applying to the case today, it might well suggest that the high court will find against Nestlé on this question.”

Sally Britton, a partner at law firm Mishcon de Reya, said: "This judgment is something of a mixed result for Nestlé —it succeeded on some points, but appears to have lost on one key one.

“Most notably, the court has stipulated that an applicant for a trademark protecting the shape of goods will have to prove that the public rely on that shape alone to identify its goods with the trademark owner.

“If the goods display any other trademarks then it will be very difficult for brand owners to show that the public rely on the shape of the goods alone, as opposed to the brand name, to identify them,” she said.

Britton added: “Nestlé is likely to continue fighting this point even if, as now appears likely, the English court decides that the Kit Kat shape should not be registered as a trademark.”

But Joel Smith, partner at Herbert Smith Freehills, said today's judgment is good news for brand owners seeking to register shape trademarks.

"Shape marks can be refused protection if they are necessary to obtain a technical result or result from the nature of the goods themselves. But the court has decided that the shape as a whole may still be protectable as a trademark even if there are individual elements of the shape which fall foul of these precluded categories."

He added: "Nestlé is likely to be encouraged by the court's decision, although it's worth noting that it already has protection for the shape of its Kit Kat bars by way of a Community trademark. This case is about a UK national trademark so the key issue is whether Nestlé can extend its existing monopoly on the Kit Kat shape."

The case will now return to the high court.

In June, Melchior Wathelet, an advocate-general at the CJEU, said that the shape of the four-finger Kit Kat bar does not qualify for trademark protection.

Both Nestlé and Mondelez, which owns Cadbury, said they were pleased with the decision and are awaiting the judgment of the high court.

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More on this story

Trademarks
22 June 2015   An advocate-general was wrong to recommend that the Court Justice of the European Union should reject Nestlé’s attempt to trademark its four-finger Kit Kat shape, according to a majority of respondents to the latest WIPR survey.
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20 January 2016   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.
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21 January 2016   Nestlé’s failure to register the 3D shape of the Kit Kat in the UK will not be the end of the story, as there is uncertainty following yesterday’s court decision, lawyers have told WIPR.