Nestlé v Cadbury – the tale of the Kit Kat shape trade mark

04/02/2014

The ongoing battles between Nestlé and Cadbury have provided Mr Justice Arnold with the opportunity to request long sought after clarification from the Court of Justice of the European Union (CJEU) on when a shape mark acquires distinctiveness through use.

Background

In 2010, Société des Produits Nestlé SA (Nestlé) applied to register the following shape as a trade mark in the UK (the ‘Kit Kat shape’):

The Application was made in respect of the following goods in class 30:

Chocolate; chocolate confectionery; chocolate products; confectionery; chocolate-based preparations; bakery goods; pastries; biscuits; biscuits having a chocolate coating; chocolate coated wafer biscuits; cakes; cookies; wafers

The UK Intellectual Property Office (UKIPO) found that although the mark lacked inherent distinctive character, it had been shown that the mark had acquired distinctive character through use. The evidence produced by Nestlé showed that Kit Kat was one of the top six best-selling chocolate products in the UK in 2005 to 2007 and had sales of £25 to over £40 million per annum between 2005 and 2010. Moreover, Nestlé spent between £850,000 to £11 million per annum promoting Kit Kat in the UK between 1996 and 2010, most of which was directed at the four-finger version. Accordingly, the mark was accepted for registration based on acquired distinctiveness.

Cadbury UK Ltd (Cadbury) opposed the Application on two bases:

1. That the mark lacked any distinctive character; and
2. The mark consisted of no more than a shape which was necessary to achieve a technical result.

Distinctive Character

The Hearing Officer found that the mark lacked an inherently distinctive character for all goods except “cakes” and “pastries”. In coming to this decision, he relied on evidence showing that products consisting of a similar shape were present on the market prior to 2010.

The Hearing Officer also concluded that the evidence provided had not shown that the mark had acquired distinctive character. The Hearing Officer concluded that Nestlé had shown recognition of the mark amongst a significant proportion of the relevant public for chocolate confectionary, but not that consumers have come to rely on the shape to identify the origin of the goods. This was because the chocolate bar was sold in an opaque wrapper, the shape had not featured in advertisements for many years and there was no evidence that consumers use the shape post purchase to check they have chosen the right product.

Technical Result

The Hearing Officer also found that the trade mark consisted exclusively of a shape which is necessary to obtain a technical result in that:

1. The basic rectangular ‘slab’ shape represented by the mark is a shape which results from the nature of moulded chocolate bars or moulded chocolate biscuits sold in bar form;
2. The presence of breaking grooves is a feature which is necessary to achieve a technical result;
3. An angle of more than 8-10 degrees for the sides of the product, and for the breaking grooves, results from the nature of moulded chocolate products and the depth of the grooves is necessary to achieve a technical result;
4. The number of breaking grooves and fingers is determined by the desired portion size.

High Court Decision & Reference To The CJEU

Nestlé appealed the Hearing Officer’s decision. Cadbury also cross appealed on the basis that the mark was not inherently distinctive for “cakes and pastries”. The cross-appeal was upheld by Justice Arnold.

In relation to Nestlé’s appeal, Justice Arnold noted that issues in this area had previously been referred to the CJEU on a number of occasions, the first being in 2002 in Unilever plc’s Trade Mark Application [2002] EWHC 2709. However, in each occasion the matter was settled or withdrawn prior to a CJEU decision being made. As such, the law remained unclear and needed to be clarified. In order to get this clarification, Justice Arnold referred the following questions to the CJEU:

Acquired Distinctive Character

1. In order to establish that a trade mark has acquired a distinctive character following the use that had been made of it within the meaning of Article 3(3) of Directive 2008/95/EC, is it sufficient for the applicant for registration to prove that at the relevant date a significant proportion of the relevant class of persons recognise the mark and associate it with the applicant’s goods in the sense that, if they were to be asked who marketed goods bearing that mark, they would identify the applicant; or must the applicant prove that a significant proportion of the relevant class of persons rely upon the mark (as opposed to any other trade marks which may also be present) as indicating the origin of the goods. (para 54)

In Justice Arnold’s opinion “the correct answer to the question is that the applicant must prove that a significant proportion of the relevant class of persons rely upon the trade mark (as opposed to any other trade marks which may also be present) as indicating the origin of the goods.”

Nature Of The goods / Necessary To Obtain A Technical Result

2. Where a shape consists of three essential features, one of which results from nature of goods themselves and two of which are necessary to obtain a technical result, is the registration of that shape precluded under Article 3(1)(e)(ii) of the Directive/Article 7(1)(e)(ii) of the Regulation?

3. Should Article 3(1)(e)(ii) of the Directive 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?

It is Justice Arnold’s opinion that these questions should be answered in the affirmative.

Conclusion

If the CJEU follows Justice Arnold’s opinion then it appears unlikely that Nestlé’s ‘Kit Kat shape’ trade mark will be registered in the UK. However, Nestlé own a CTM Registration for the same ‘Kit Kat shape’ trade mark and have already successfully fought an invalidity challenge against this Registration by Cadbury. Accordingly, despite the outcome for the UK Application, Nestlé will continue to have protection for their ‘Kit Kat shape’ trade mark in the UK through their CTM Registration.

This case is indicative of a change in how Registries are dealing with non-conventional trade marks. Over the past two decades there had been a global trend to recognise and protect non-conventional trade marks. However, recent case law suggests that the pendulum is swinging back in the other direction as the Courts are finding many non-conventional trade marks do not serve to indicate the origin of the goods or services, which is the essential function of any trade mark, and therefore are not registrable.

This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice. Please contact Reddie & Grose LLP for advice before taking before any action in reliance on it.