The Court of Justice of the European Union ("CJEU") has today handed down its much anticipated decision in Case C‑215/14- Société des Produits Nestlé SA v Cadbury UK Ltd.
The case concerned the renowned four finger shape of the KIT KAT chocolate bar and whether it could be the subject of trade mark protection, which could last indefinitely if renewed every 10 years. The CJEU decision, which largely follows the previous Opinion of Advocate General Wathelet, clarifies the limitations on acquiring distinctiveness through use, under the Trade Marks Directive (2008/95/EC). It also provides further clarification on the scope of the prohibitions on the registration of shape marks under the Trade Marks Directive.
This decision is another example of the Court's reluctance to allow manufacturers to perpetuate monopolies in respect of trade marks which are the result of technical solutions or functional characteristics of the product.
The business impact of the decision is:
- a sign which falls within the prohibitions for shape marks under Article 3(1)(e) of the Trade Marks Directive can never acquire a distinctive character by the use made of it;
- the technical result prohibition relates to how the shape functions through use and is not relevant to manufacturing issues; and
- in order to show acquired distinctiveness, applicants have to demonstrate that the origin of the goods is recognisable, by the average consumer, from the trade mark in respect of which registration is sought on its own and in the absence of any other trade mark which are usually used in conjunction with the mark.
In July 2010, Nestlé sought to register its well-known four finger shape, minus the KIT KAT logo which is standardly embossed on each finger and the packaging, as a trade mark in the United Kingdom, for various goods in class 30, including chocolate products, chocolate confectionery, pastries, cakes and biscuits. Cadbury successfully opposed the registration, other than in respect of cakes and pastries, on the grounds that the mark applied for was devoid of inherent distinctive character and that it had not acquired such a character following the use which had been made of it.
The Hearing Officer found that while consumers associate the shape with KIT KAT, and therefore with Néstle, they rely on the word mark KIT KAT and other marks used in relation to the goods to identify the trade origin of the products. Further, the hearing officer determined that the rectangular 'slab' shape of the mark fell within the prohibition under 3(1)(e)(i) of the Trade Marks Directive as it was deemed to be a feature that results from the nature of the goods themselves. Also, the arrangement and number of the grooves fell within the prohibition under 3(1)(e)(ii) as it was deemed necessary to obtain a technical result, i.e to allow the bar to be broken with ease.
Following an appeal by Nestlé to the English High Court and a cross-appeal by Cadbury, Mr. Justice Arnold stayed the proceedings pending a ruling by the CJEU on how acquired distinctiveness is to be assessed, and how the prohibitions on certain shape marks are to be interpreted, which can be summarised as follows:
- In order to acquire distinctiveness, is it sufficient that the average consumer recognises the shape and associates it with the applicant, as opposed to any other trade marks which may also be present, as indicating the origin of the goods?;
- Where a shape consists of a number of essential features, one of which falls within the "nature of the goods" prohibition and two of which fall within the "necessary to obtain a technical result" prohibition, is registration of that shape as a trade mark precluded even though neither exclusion covers all of the essential features of the product?; and
- Should the prohibition be interpreted as precluding registration of shapes which are necessary to obtain a technical result with regard to the manner in which the goods are manufactured as opposed to the manner in which the goods function?
In relation to the first question, the CJEU held that although the trade mark for which registration is sought may have been used as part of a more elaborate product get up with use of the trade mark, e.g. KIT KAT, or in conjunction with such a mark for the purposes of the registration of the mark itself, the trade mark applicant must prove that particular mark alone, as opposed to any other trade mark which may also be present, identifies the particular undertaking from which the goods originate.
In relation to the second question, the CJEU held that the three grounds for refusal of registration of shape marks in Article 3(1)(e) operate independently of one another, and it does not matter whether the sign in question could be denied registration on the basis of a number of grounds for refusal, so long as any one of those grounds is fully applicable to that sign.
In relation to the third question, the CJEU held the prohibition must be interpreted as referring 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.
The case will now be returned to the English High Court for determination. While today's ruling does allow some scope for Nestlé to argue in favour of the registration, the Trial Judge's previous findings on fact will likely render Nestlé's application for registration of the KIT KAT shape precluded. In any event, for now Nestlé will continue to have protection for its 'KIT KAT shape' trade mark in the UK as a result of its Community Trade Mark Registration, a registration which has survived an invalidity challenge by Cadbury to the board of Appeal at OHIM. It will be interesting to see whether the UK Court provides a conflicting decision and invalidates the same mark at a national level.
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