UK: Still No Break for Nestlé as Kit Kat Case Goes to ECJ

Société des Produits Nestlé SA v Mars UK Ltd
[2003] EWCA Civ 1072 (CA)

In December 2002 we reported on the High Court decision to exclude from registration Nestlé’s application for the mark HAVE A BREAK on the basis that it was devoid of any distinctive character (Article 3(1)(b) First Council Directive No. 89/104 EEC). Central to the case was the issue of whether HAVE A BREAK had acquired distinctiveness through its extensive use in the phrase "HAVE A BREAK, HAVE A KIT KAT". The case has now come before the UK Court of Appeal which has referred to the European Court of Justice (ECJ) the question of whether distinctiveness may be acquired "following or in consequence of the use of that mark as part of or in conjunction with another mark".

In 1995 Nestlé applied to register the mark HAVE A BREAK in class 30 in respect of chocolate; chocolate products; confectionery; candy; biscuits. The hearing officer rejected an opposition by Mars based on Articles 3(1)(a), (c) and (d) but accepted it in relation to Article 3(1)(b). The mark was held to be "devoid of any distinctive character" and therefore not inherently distinctive - the hearing officer considered the mark to be origin neutral. Nestlé’s alternative argument, that the mark had acquired distinctiveness (in accordance with the proviso to Article 3(1)(b)) through use of the mark in the phrase "HAVE A BREAK, HAVE A KIT KAT", also failed.

On appeal to the High Court, the judge affirmed the hearing officer’s findings both on inherent distinctiveness and acquired distinctiveness. Inherent distinctiveness is a question of whether the mark is able to perform the essential function of a trade mark, namely to be capable of distinguishing goods of one undertaking from those of another. The High Court held that the mark was a slogan and, although slogans should be treated no differently from any other mark, this particular slogan did not have the requisite distinctive character. Further, just because a mark was not disqualified under Article 3(1)(c) it did not entitle the mark to automatically pass the test in Article 3(1)(b). Article 3(1)(b) required separate and independent consideration. On acquired distinctiveness, the High Court agreed with the hearing officer that the use of the mark in the phrase "HAVE A BREAK, HAVE A KIT KAT" was not use of the mark HAVE A BREAK. Acquired distinctiveness required use of the mark as an independent mark. Nestlé appealed the decisions on both inherent and acquired distinctiveness.

Nestlé argued that the test in Article 3(1)(b) was whether a mark was "devoid of any" distinctive character and HAVE A BREAK was not so devoid. The Court of Appeal emphasised that the relevant distinctiveness is that which identifies a product as originating from a particular undertaking. It also confirmed that, although the two grounds for refusal under Articles 3(1)(b) and 3(1)(c) do overlap to some extent, they are independent grounds for refusing registration. The Court of Appeal did not think that the hearing officer erred in applying the law and so affirmed the High Court decision on this point. Nestlé’s appeal on inherent distinctiveness failed.

On acquired distinctiveness, the issue was whether use of HAVE A BREAK within the phrase "HAVE A BREAK, HAVE A KIT KAT" was use of "it [the mark]" for the purposes of the proviso to Article 3(1)(b). Nestlé referred to the decision of the OHIM Board of Appeal in Ringling Bros - Barnum & Bailey Combined Shows Inc. (Case R 111/2000-2, 23 May 2001) in which the mark THE GREATEST SHOW ON EARTH was registered on the basis that it had acquired distinctiveness, even though its use had always been in conjunction with another registered trade mark. The Court of Appeal held that, given the contrasting views of the UK High Court and the Board of Appeal and the importance of resolving this disparity for the European Community as a whole, it was necessary to make a reference to the ECJ. The ECJ will now have to decide whether distinctiveness may be acquired "following or in consequence of the use of that mark as part of or in conjunction with another mark".

If the ECJ affirms the UK High Court’s position, Nestlé’s appeal will fail. If the ECJ affirms the Board of Appeal’s position, this case will be remitted to a different hearing officer to re-evaluate based on the evidence. However, the indication from the Court of Appeal is that, given the evidence of use presented by Nestlé, the mark may still be barred from registration for lack of acquired distinctiveness.

It is interesting to note that Nestlé’s citation of a contrary decision of the Board of Appeal was the instrumental factor in obtaining the reference to the ECJ.

The most likely finding of the ECJ (which is unlikely to be published until summer 2004 at the earliest) is that it is possible for a mark to acquire distinctiveness from its use as part of or in conjunction with another mark. However, whether distinctiveness has in fact been acquired will turn on the particular facts of each case.

As always, we would be interested to hear your views on this.

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