UK: Another Blow For Nestle

Last Updated: 2 August 2018
Article by Andrew McWhirter

CJEU agrees that KitKat shape should not be registered as a trade mark

The Court of Justice of the EU ("CJEU") has handed down yet another complex judgement in the trade mark "chocolate wars" between Cadbury and Nestle.

This latest instalment is separate to Cadbury's opposition to Nestle's UK trademark for the shape of a KitKat. You may remember that Nestle applied in 2010 to register the four fingered shape as a UK trademark. The application was rejected by the UK IPO on the basis that the shape lacked distinctiveness in the UK and fulfilled a technical function – the shape made the chocolate snap easily. In 2015 the CJEU, on a referral from the High Court in England, explained that the shape of the chocolate bar must of itself be sufficient to allow consumers to identify it as being an original Nestle KitKat, without any regard to the packaging or other branding. For more on this decision read our blog here. The case was then sent back to the High Court for a decision.

In 2016 the High Court, taking into account the CJEU's, explanation ruled that the KitKat shape could not be registered as a trade mark in the UK on the basis that the shape alone was not the indicator of origin. Instead, it was the KitKat name embossed on the chocolate and the packaging. You can read about that decision here. The Court of Appeal upheld the decision of the High Court in 2017.

The CJEU's most recent decision relates to the separate EU Trade mark ("EUTM") for the same three dimensional four fingered shape this time actually registered in 2002. In 2007 Cadbury applied to invalidate the EUTM for non-distinctiveness. Initially it was successful and it was declared invalid. On appeal, the Board of Appeal disagreed with this on the basis that the three dimensional mark had acquired distinctiveness. However the General Court disagreed. It found that although KitKat had acquired distinctiveness in 10 out of the then 15 Member States, it had failed to produce evidence that showed acquired distinctiveness throughout the EU and specifically in Belgium, Greece, Ireland, Portugal and Luxembourg. Notably the UK was not included in this list which is somewhat contradictory to the UK Court of Appeal's view as above on the correlated UK trade mark.

All parties involved during the General Court proceedings appealed the CJEU decision. Cadbury appealed on the basis that the Court was wrong to find acquired distinctiveness at all. Nestle and the EU Intellectual Property Office ("EUIPO") appealed on the basis that, in deciding that acquired distinctiveness had to be shown in every EU Member State, the General Court failed to take into account the unitary character of the European Union and gave too much weight to national and regional markets. The EUIPO in particular was concerned that if this was the correct approach it would present a high hurdle that an applicant would have to overcome to get a mark registered.

The decision

The CJEU refused all of the appeals and upheld the General Court's finding that the mark was invalid. The Court concluded that it is not sufficient, in order for a mark to be registered as an EU trade mark, to prove that it has acquired distinctive character through use only in a significant part of the EU. In other words, only evidence of acquired distinctiveness throughout the EU will suffice.

However, the Court explained that this does not require that the applicant produce separate evidence of acquired distinctiveness in each Member State. For certain goods or services, it stated that economic operators group several Member States together in the same distribution network and treat those Member States as if they were one and the same national market. Here, evidence in respect of one cross -border market is likely to be relevant for all Member States concerned in that market provided that market comparison evidence is submitted.

Is this the end of EU Shape marks?

The EUIPO's concern was that where a sign is naturally devoid of distinctive character, such as may more readily apply to a three dimensional shape or a colour, forcing an applicant to produce evidence of acquired distinctiveness in every single Member State would be extremely difficult.

However, the CJEU is very careful to emphasise that certain Member States can be treated together as one market. In this case, Nestle failed to produce evidence of distinctiveness in Belgium, Greece, Ireland, Portugal and Luxembourg.

It seems that all Nestle needed to do was file evidence of market comparison in relation to these Member States. The Advocate General commented that evidence in Germany, Belgium or France would have sufficed to cover Luxembourg with appropriate market comparison evidence. Likewise, it could be suggested that evidence from the UK could cover Ireland (for now at least!) Following Brexit, acquired distinctiveness in the UK is unlikely to be taken into account.

Take Home points

So what can be taken from this judgement? The important point is that those applying for an EU trademark that lacks inherent distinctiveness, such as a colour or shape, need to take care to show that they have acquired distinctiveness throughout the EU. This can be done by separate evidence of acquired distinctiveness in each Member State or, more likely, evidence of acquired distinctiveness in most Member States together with market comparison analysis showing that the evidence submitted applies to other Member States. This is likely to make the process more burdensome and costly but at least opens the door to lowering the hurdles.

Nestle's loss of the three dimensional EU trade mark for the KitKat means that we are likely to see more four fingered chocolate products entering the EU market. Mondelez, Cadbury's parent company, has its own Norwegian four fingered bar which may make an appearance soon. Mondelez also owns Toblerone – the shape of which, interestingly, is registered as a trademark.

This case is just the latest instalment in litigations between the two entities that have lasted nearly two decades. Prior to arguing about the shape of a KitKat the confectionary giants were embroiled in a dispute about whether Cadbury could register the colour purple, or Pantone 2685C as a trademark. The decision in that dispute went against Cadbury. Where will the next chocolate related dispute come from? Maybe even a renewed application by Nestle for the 4 finger shape mark but this time with the required evidence?

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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