Trademark Protection; No Breaks for KIT KAT

Trademark Protection; No Breaks for KIT KAT

The Court of Justice of the European Union (“CJEU”) has reached a decision in the trademark case of C‑215/14- Société des Produits Nestlé SA v Cadbury UK Ltd. 

So what’s it all about?

We all love and know a KIT KAT and in many ways that’s the crux of the issue. The case centers around the four finger shape whether it could be the subject of trade mark protection, which could last indefinitely if renewed every 10 years.  The CJEU decision, (similar to previous ruling), sets out 2 main points:

• the limitations on acquiring distinctiveness through use, under the Trade Marks Directive (2008/95/EC) and;
• clarification on the scope of the prohibitions on the registration of shape marks under the Trade Marks Directive.

We see again a decision that demonstrates the Court’s reluctance to allow manufacturers to maintain monopolies in trade marks which rely on the functional characteristics of the product in question.

Who will this determine business?

a sign which falls within the prohibitions for shape marks under Article 3(1)(e) of the Trade Marks Directive can never acquire a distinctive character by the use made of it;

the technical result prohibition relates to how the shape functions through use and is not relevant to manufacturing issues; and

in order to show acquired distinctiveness, applicants have to demonstrate that the origin of the goods is recognisable, by the average consumer, from the trade mark in respect of which registration is sought on its own and in the absence of any other trade mark which are usually used in conjunction with the mark. SO just the shape, not the sign or any markings ie the four fingers of chocolate.

A bit of background to the trademark case

In July 2010, Nestlé sought to register its well-known four finger shape, minus the KIT KAT logo which is standardly embossed on each finger and the packaging, as a trade mark in the United Kingdom, for various goods in class 30, including chocolate products, chocolate confectionery, pastries, cakes and biscuits.

Cadbury successfully opposed the registration, other than in respect of cakes and pastries, on the grounds that the mark applied for was devoid of inherent distinctive character and that it had not acquired such a character following the use which had been made of it.

The Hearing Officer found 3 important points:

• Consumers may associate the shape with KIT KAT, and therefore with Néstle but  they rely on the word mark KIT KAT and other marks used in relation to the goods to identify the trade origin of the products rather than the shape.
• The other important point was that the rectangular 'slab' shape of the mark fell within the prohibition under 3(1)(e)(i) of the Trade Marks Directive as it was deemed to be a feature that results from the nature of the goods themselves
• The arrangement and number of the grooves fell within the prohibition under 3(1)(e)(ii) as it was deemed necessary to obtain a technical result, i.e to allow the bar to be broken with ease. 

There followed (of course) an appeal by Nestlé to the English High Court and a cross-appeal by Cadbury. Mr. Justice Arnold stayed the proceedings waiting on a ruling by the CJEU on how acquired distinctiveness is to be assessed, and how the prohibitions on certain shape marks are to be viewed, here’s a summary of the main questions:

1. Acquired distinctiveness. The Court ruled is it sufficient for the average consumer to recognise the shape and associates it with the applicant, as opposed to any other trademarks 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” prohibition and two of which fall within the “necessary to obtain a technical result” prohibition, is registration of that shape as a trade mark precluded even though neither exclusion covers all of the essential features of the product?; and
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?

Question 1 means that  KIT KAT must prove that the particular mark ALONE identifies the goods- and not in conjunction with anything else- ie the brand name.

Question 2 relates to the 3 grounds of refusal for SHAPE marks in Article 3(1)(e) must operate independently of one another, in other words- only one ground need to applicable.

Question 3,means that the ruling must be interpreted as referring only to the manner in which the goods at issue function or how they work and not the actual manufacture.

Summary

The case will now be returned to the English High Court for determination. The Trial Judge’s previous findings on fact will most likely mean Nestlé’s application for registration of the KIT KAT shape will not be allowed. However, for now Nestlé will continue to have protection for its ‘KIT KAT shape’ trade mark in the UK as a result of its Community Trade Mark Registration, a registration which has survived an invalidity challenge by Cadbury to the board of Appeal at OHIM.

It remains to be seen if the UK Court provides a conflicting decision and invalidates the same trademark in the UK.

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