South Africa: Another Chapter In The Kit Kat Shape Saga

Last Updated: 29 February 2016
Article by Ilse Du Plessis

Most Read Contributor in South Africa, September 2016

There's seemingly no end to the question of whether or not Nestlé can register the four-finger shape of its Kit Kat chocolate bar as a trade mark.

Except, of course, in South Africa, where we know that it can. We know that because the South African Supreme Court of Appeal came to that conclusion in 2014. The court held that the shape trade mark was not hit by the "technical result" exclusion, because the trade mark did not consist "exclusively" of a shape that's necessary to obtain a technical result. The court felt that, even though there were functional features to the shape, there were also non-functional features. The court also held that the four-finger shape had become distinctive through use. The court accepted that there had been substantial use of the shape in South Africa, and it was happy to assume that people regarded the shape as a trade mark. The fact that the shape had always been used in conjunction with other trade marks, most notably the brand name Kit Kat, was seemingly not considered.

Things are very different in Europe. Nestlé's trade mark application for the four-finger shape in the UK was opposed by Mondelēz (formerly Cadbury), and the UK Registry upheld the opposition. The matter then went on appeal to the UK High Court, which decided to refer certain legal questions to the Court of Justice of the European Union ("the CJEU").

The first step in that process involved the Attorney General ("AG") of the CJEU issuing an opinion. The AG said that the application should be refused because it contravened the technical result exclusion. The argument regarding functionality is twofold, in that the shape makes it easier for the company to remove the chocolate from the mould, and easier for consumers to break it up into manageable chunks. The AG also felt that the application should be refused on the basis that the Kit Kat shape had not acquired the level of distinctiveness that's required for trade mark registration. This, notwithstanding the fact that survey evidence showed that 90% of UK consumers recognise the four-finger shape. In the process, the AG said that there is a distinction between simply recognising a product shape and actually perceiving that shape as a trade mark.

The CJEU then issued its judgment. It said that the technical result exclusion exists to prevent trade mark law from being used as a way of monopolising technical solutions or functional characteristics that a consumer would be likely to look for in the goods of competitors. It went on to say that the exclusion relates only to the way that the goods function (in this case the breaking up by consumers), and doesn't extend to the way in which they're manufactured (the lifting from the mould).

On the issue of acquired distinctiveness, the court said that the trade mark owner must show that, as a result of extensive use, consumers perceive the trade mark as coming from that company. The use must be of the trade mark that the company wants to register. What the company cannot do is simply submit evidence of use of the trade mark that it wants to register in conjunction with other trade marks (the court presumably had the word mark Kit Kat in mind here).

The UK court has now reconsidered this matter in light of the CJEU's decision. As the parties chose not to pursue the technical result issue, Judge Arnold confined himself to the issue of acquired distinctiveness. The judge seemed disappointed that the CJEU had not properly addressed his questions, but he interpreted the judgment to mean that the trade mark owner must establish that a significant proportion of those who buy the product perceive the goods as originating from the trade mark owner because of the shape, and not because of any other trade mark that might have been used, such as the name Kit Kat. He also said that it is permissible to consider whether those people would rely on the shape as denoting origin if it was used on its own. He concluded that Nestlé had failed to prove that consumers rely on the four-finger shape as designating the origin of goods. So, the trade mark application had correctly been refused by the UK registry.

Nestlé still has no trade mark registration for the shape of its Kit Kat chocolate bar in the UK. It can, of course, take this latest decision on appeal. Based on what we've seen so far, there's probably a good chance that it will.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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