UK: The Chocolate Wars (Part II) And The Taxi Wars

Last Updated: 11 February 2016
Article by Andrew Hawley

The chocolate confectionary market is arguably one of the most competitive within the UK. There are many different types, flavours and shapes of chocolate for us to enjoy, which are sold under numerous well-known household brands. However, although many of these brands are well known, are the chocolate bars themselves? Is it possible for a chocolate bar to be instantly recognisable and distinctive purely thanks to its shape alone, irrespective of any other branding?

The issue regarding whether the actual shape (alone) of a chocolate product is sufficient to identify the product to the relevant consumer was decided in the English High Court in the on-going Nestlé v Cadbury saga (referred back to the English Courts, with questions, by the Court of Justice of the European Union last year). This case specifically dealt with the question over whether Nestlé should be entitled to enjoy exclusive trade mark rights for the shape of its KitKat trade mark in the UK.

In summary, Nestlé sought to register its well known four finger shape, minus the KitKat logo, which is usually embossed on each finger and the packaging, as a trade mark in the UK for various goods in class 30, including chocolate products, chocolate confectionery, pastries, cakes and biscuits.

Rivals Cadbury successfully opposed this application on the basis that the shape of the KitKat mark was a feature of the nature of the goods and that it was necessary to achieve a technical result (to allow the consumer to easily break the bar). In the opposition proceedings, Nestlé filed evidence that the KitKat shape had acquired a distinctive character due to the use made of it in the UK which allowed the consumer to identify the product as a "KitKat" without any additional packaging or branding (which, if successful, would have allowed Nestle to successfully resist the opposition).

Nestlé appealed the decision to the English High Court and Mr Justice Arnold stayed the appeal proceedings pending a ruling from the CJEU on how acquired distinctiveness is to be assessed in relation to trade mark applications for shape marks. The following specific questions were raised:

  1. In order to acquire distinctiveness, is it sufficient that the average consumer recognises the shape and associates it with Nestlé (the applicant), as opposed to any other trade marks which may also be present, as indicating the origin of the goods?
  2. Where a shape consists of a number of essential features, one of which falls within the "nature of the goods" restriction and two of which fall within the "necessary to obtain a technical result" restriction, is registration of that shape as a trade mark precluded even though neither exclusion covers all of the essential features of the product?
  3. 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?

The judgement of CJEU in relation to the specific questions raised by Mr. Justice Arnold can be summarised as follows:

  1. For the KitKat shape mark to be registrable as a trade mark, Nestle must be able to show that the relevant consumer can easily identify the goods as originating from that specific undertaking (i.e. Nestle) without any additional branding or packaging (either on the product or packaging around the product).
  2. With regards to the specific shape objections, the CJEU opined that it is only necessary for one of these grounds to apply for the trade mark application to be refused.
  3. If the shape of the trade mark is such that it is necessary to achieve a technical result, this should only apply where consumers relate this to the products function and not its manufacture.

The case was returned to the English High Court where Mr. Justice Arnold has now issued his ruling. In essence, Mr Justice Arnold has refused Nestlé's appeal and has ruled that the "KitKat" shape mark is not capable of registration in the UK. In his judgment, Mr Justice Arnold refused the arguments of Nestlé for the following reasons:

  • Nestlé had not promoted the chocolate bar's shape as one of its unique selling points and had distributed it in an opaque wrapping that did not reveal its design;
  • He specifically said "In these circumstances it seems likely that consumers rely only on the word mark KitKat and the other word and the pictorial marks used in relation to the goods in order to identify the trade origin of the products. They associate the shape with KitKat (and therefore with Nestlé), but no more than that";
  • "Therefore, if it is necessary to show that consumers have come to rely on the shape mark in order to distinguish the trade source of the goods at issue, the claim of acquired distinctiveness fails."
  • Therefore, the arguments from Nestlé that association (to the shape mark) is sufficient to demonstrate the acquisition of a distinctive character were deemed incorrect.
  • Despite the decision, Nestlé has indicated that it intends to further appeal this decision as they remain of the opinion that its iconic "four fingered bar" is well known by UK consumers and, as such, deserves to enjoy trade mark protection in the UK.

This decision appears to confirm the feeling that the courts are usually reluctant to allow manufacturers to obtain a monopoly (through a trade mark registration) for shape marks alone. Although the decision reinforces the opinion that consumers tend to be influenced by branding and packaging rather than the shape of the product alone, it must be noted that obtaining trade mark registration in the UK for a shape mark alone is not impossible (as the successful registrations for the Toblerone bar and Nestlé's own Walnut Whip will testify).

When a black cab is not a black cab (or is it?)

The question of whether a shape mark alone is inherently distinctive was also the primary issue in the recent case of London Taxi Company v Frazer-Nash.

In this case, LTC claimed that Frazer-Nash had intentionally copied the shape of its iconic "London black cab" and that the new "Metrocab" of Frazer-Nash was specifically designed to deceive both the London public and existing taxi drivers into thinking that this was and LTC taxi. As a result, LTC launched both trade mark infringement and passing off action in the UK courts based on its registered and unregistered rights in the shape of its "black cab".

Below is an image of the respective taxis in question, with the Frazer-Nash "Metrocab" on the left and the LTC "black cab" on the right:

In this case, Mr. Justice Arnold rejected all of the arguments by LTC and dismissed the infringement claims on a number of grounds, including that the shape marks (of the taxi) adds substantial value to the goods, one of the shape marks had not been put to genuine use in the UK for at least five years and that Frazer-Nash had not taken unfair advantage of LTC's registered trademarks.

Mr Justice Arnold also stated that the shape marks owned by LTC should not have been registered as they lack the required level of distinctiveness (being merely the shape of a taxi) and that they had not acquired a distinctive character through use of the marks. He also applied his reasoning in the recent KitKat case in that consumers did not use or identify the LTC taxi because of its shape, rather due to other branding such as the prominent "LTC" badge. Also, the may associate the shape of the taxi as originating from LTC, but this mere association is not enough as further branding is needed to fully allow the consumer to determine that the taxi originates from LTC and to distinguish their taxi from other such goods.

With regards to the passing off action, Mr Justice Arnold reaffirmed that it is very difficult to establish the necessary goodwill in a shape and that, in this instance, LTC had failed to show that the shape of their taxis had acquired a distinctive character which allowed the public to easily identify the overall shape as being an LTC taxi. As such, no goodwill could possibly accrue in the shape itself.

Mr Justice Arnold also commented that there was also no evidence of misrepresentation as Frazer-Nash had not intended to deceive the relevant consumer into thinking that its "Metrocab" came from the same source as the LTC taxis.

This decision reinforces the opinion that obtaining registered rights in shape marks, and enforcing such rights against third parties, remains highly problematic in the UK unless it can be shown that the shape itself has acquired a substantial level of distinctiveness through use which is not due to an association with any other branding on the goods in question.

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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