European Union: Acquired Distinctiveness Must Be Shown Throughout All EU Member States

Mondelez UK Holdings & Services Ltd v. EUIPO (Judgment of the General Court Fifth Chamber, 15 December 2016, Case T-112/13)

Applying Article 7(3) of Regulation No. 207/2009, the European Union General Court (EUGC) invalidated an EU trademark registration because the registrant had not demonstrated that the mark had a distinctive character throughout the EU.

Background: In 2006, Societé des produits Nestlé SA (Nestlé) obtained an EU registration for the following three-dimensional mark for "Sweets; bakery products, pastries, biscuits; cakes, waffles" in Class 30 ("the Mark"):

On March 23, 2007, Cadbury Schweppes plc, now Mondelez UK Holdings & Services Ltd ("Cadbury") applied to invalidate the Mark with respect to all goods covered, on the basis of Article 7(1)(b), (c),(d), and (e)(ii) of Regulation No 207/2009. On January 11, 2011, the Cancellation Division declared the Mark invalid. Nestlé appealed this decision, and on December 11, 2012, the Second Board of Appeal of EUIPO (the "Board") ruled in Nestlé's favor and annulled the Cancellation Division's decision. In its decision, the Board found that (a) the Cancellation Division was entitled to conclude that the Mark was devoid of distinctive character; (b) but that Nestlé had shown that the Mark had acquired distinctiveness through use; and (c) that the Mark was not precluded from protection under Article 7(1)(e)(ii), as it did not consist exclusively of the shape of the product. Cadbury appealed to the EUGC, seeking annulment of the Board's decision, except with respect to the finding that the Mark is devoid of inherent distinctive character. The EUGC issued its decision on December 15, 2016.

Decision:

1) The EUGC first assessed Cadbury's claim that the Mark was not used for all the goods for which it was registered (Nestlé had submitted evidence of the Mark in use in the form of its iconic KIT KAT bar) and concluded that the Board erred in finding that it had, since the KIT KAT bar did not fall in the category of "bakery products, pastries, cakes, and waffles."

2) The EUGC then considered Cadbury's claim that the Board failed to consider whether the Mark had been used in the form registered. Cadbury argued that any distinctive character in the KIT KAT bar came from the word mark KIT KAT, and not the Mark in question. The EUGC dismissed this claim, confirming that the fact that the shape of a product has always been used with a word element does not mean that the shape of the product cannot be perceived as an indication of commercial origin.

3) The EUGC then dismissed Cadbury's challenge to the form of Nestlé's survey evidence.

4) Finally, the EUGC reviewed Cadbury's contention that the Board did not correctly assess the territorial scope of the acquired distinctiveness evidence submitted by Nestlé as required by Article 7(3) of Regulation No 207/2009, which reads:

Article 7
1. The following shall not be registered:

(a) signs which do not conform to the requirements of Article 4;

(b) trade marks which are devoid of any distinctive character;

(c) trade marks which consist exclusively of signs or indications which may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, geographical origin or the time of production of the goods or of rendering of the service, or other characteristics of the goods or service;

(d) trade marks which consist exclusively of signs or indications which have become customary in the current language or in the bona fide and established practices of the trade;

...

3. Paragraph 1(b), (c) and (d) shall not apply if the trade mark has become distinctive in relation to the goods or services for which registration is requested in consequence of the use which has been made of it.

First, the EUGC confirmed that when applying Article 7(3), the acquired distinctiveness of a mark should be established prior to the application filing date; however, if the evidence shows acquired distinctiveness through use after registration, then an EUTM need not be declared invalid. Accordingly, the relevant time period in the subject action was whether the Mark had acquired distinctiveness through use either (a) prior to its filing date, or (b) between the date of its registration and the date Cadbury filed the invalidation action.

Second, the EUGC explained that Article 7(3), which provides for registration upon acquired distinctiveness, must be read in light of Article 7(1)'s requirement that a mark not be devoid of distinctive character in part of the EU, including even a single member state. Accordingly "in order to be accepted for registration, a sign must have distinctive character, whether inherent or acquired through use, throughout the European Union" (¶ 120, citing judgment of 17 May 2011, Diagnostiko kai Therapeftiko Kentro Athinon 'Ygeia' v OHIM(υγεία) T-710, not published, EU: T:2011:21, ¶ 41).

Relying on prior case law, the EUGC declared that in the case of non-word marks such as the three-dimensional Mark at issue, it is appropriate to assume the assessment of whether the mark is inherently distinctive will be the same throughout the EU, absent concrete evidence to the contrary. Thus, in order to be registrable under Article 7(3), the Mark must have acquired distinctiveness through its use throughout the EU, which must be sufficiently shown through quantitative terms. The EUGC then examined the specific evidence submitted by Nestlé and relied upon by the Board to determine whether Nestlé had met this burden. It noted that Nestlé only had to show use throughout the EU in the fifteen member states that existed at the time the Mark was filed, but cautioned that if the evidence submitted did not cover any part of the EU – even if not substantial or consisting of only one member state – Nestlé would not have met the Registrability requirement.

The Board had found that it was sufficient for Nestlé to show that the Mark had acquired distinctiveness among a substantial portion of the public in the EU, merging all the member states together. However the EUGC disagreed with this approach, and found that although Nestlé had established acquired distinctiveness through use of the Mark in Austria, Denmark, Finland, France, Germany, Italy, the Netherlands, Spain, Sweden, and the U.K., whose populations represented almost 90% of the population of the EU, this was not enough as it had not proven such acquired distinctiveness in Belgium, Ireland, Greece, and Portugal, which were also EU member states during the relevant time period. Accordingly, the EUGC nullified the Board's decision and invalidated Nestlé's registration for the Mark.

This ruling imposes a significant burden on trademark applicants who rely on acquired distinctiveness to obtain protection for their marks in the EU, particularly when such marks are three-dimensional shapes, and will likely require costly evidence collection to meet the high threshold of showing use in every member state where the mark is considered inherently non-distinctive.

The UK Court of Appeal recently also held that Nestlé's three-dimensional shape for its four-fingered chocolate-coated KIT KAT wafer bar was unregistrable. Our detailed discussion of that decision can also be found in this Newsletter.

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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