31 July, 2018

KitKat Cut - The KitKat Shape Trademark Ultimately Rejected by CJEU

The KitKat shape trademark saga has been detailed on this blog in great detail, going back several years (e.g. here, here and here). The fight over the chocolate bar shape seems to have gone on forever, and this writer thought he would be old and grey before the matter ultimately concluded. After Advocate General Wathelet's opinion in April, the CJEU has finally taken the matter on, and the decision will decide the fate of the current KitKat shape registration.

While the facts of the case have been discussed extensively, it is still useful to recite the basics to anyone not familiar with the background. The case of Société des produits Nestlé v Mondelez UK Holdings & Services concerns the registration of the shape of the KitKat chocolate bar (EUTM 2632529), owned by Nestle. Cadbury challenged the registration, seeking to invalidate it, with the matter ending up with the CJEU 11 years later.

The case revolves around Article 52(2) of the CTM Regulation, which allows for the registration of marks that have acquired distinctiveness through the use of the mark in conjunction with the goods or services. The distinctive character of the mark has to exist in the entirety of the EU for it to avoid invalidation.

What underpinned the matter was whether evidence has to be proved for the entirety of the EU, and not just a select sample of countries. In the case of August Storck KG v OHIM, the CJEU saw that a mark can be registered under Article 7(3) (which has to be read in conjunction with Article 52 above) "…only if evidence is provided that it has acquired, in consequence of the use which has been made of it, distinctive character in the part of the [EU] in which it did not, ab initio, have such character". If no distinctiveness exists in relation to the mark from the very beginning, acquired distinctiveness would have to be shown in the EU.

When it comes to acquired distinctiveness, the Court emphasised that, for any mark devoid of inherent distinctiveness, "…evidence be submitted, in respect of each individual Member State, of the acquisition by that mark of distinctive character through use, the evidence submitted must be capable of establishing such acquisition throughout the Member States of the European Union". Evidence therefore does not have to be produced for each individual Member State, but can be produced in a way that shows acquired distinctiveness due to proximity in geography, culture or linguistics, and therefore acquired via another Member State even in the absence of evidence for that particular Member State.

The assessment of whether the evidence produced is enough to give the mark acquired distinctiveness in the EU is a matter for the EUIPO or its appellate courts in any given case.

The CJEU agreed with the General Court's decision, which rejected the argument by Nestle that the evidence covered the entirety of the EU, or a substantial part of it, leading to sufficient coverage. The Court therefore rejected all of Nestle's appeals, and the mark was invalidated.

The decision is a huge culmination of years of litigation, but by no means is the end of the KitKat shape trademark. While evidence was lacking for the current registration with regards to Belgium, Ireland, Greece and Portugal, Nestle are still within their rights to apply for a new registration, producing evidence to cover any missing Member States. Due to the clear monetary value of the mark, it is clear that Nestle will pursue to register the shape one way or another; however, this might just be the beginnings of a reboot for this particular litigation series

24 July, 2018

Victory Plain and Simple - Australia Triumphs on Tobacco Plain Packaging Law Challenge at WTO

Discussion around plain packaging laws in relation to tobacco products has gone quite in recent times, and the slow movement towards more plain packaging laws hasn't helped this movement. Nevertheless, this blog has discussed the topic to some degree (more here, here and here), and one particular issue in the back burner has been a WTO challenge against the Australian plain packaging legislation. The matter started nearly 5 years ago, and only recently found its ultimate conclusion. The decision by the WTO panel is a behemoth at nearly 900 pages, so this blog post will endeavour to only focus on the main parts, rather than summarise the whole decision. For anyone wanting to know more, please refer to the full decision.

By way of a primer, the case of Australia v Indonesia and others concerned WTO proceedings with regards to the Australian Tobacco Plain Packaging Act 2011, which set certain rules on the packaging of tobacco products. According to Indonesia (and other countries such as Honduras, Cuba and the Dominican Republic) the law contravenes a number of WTO agreements, including the TRIPS Agreement, TBT Agreement and GATT 1994.

The panel first looked at whether the Australian Act contravened Article 2.2 of the TBT Agreement, which prohibits regulations that create unnecessary obstacles for trade that go beyond what's necessary to protect a legitimate objective, including "…protection of human health or safety, animal or plant life or health, or the environment". The panel concluded that the objective of protecting people's health by reducing smoking rates, as put forth by Australia, was a legitimate objective, and didn't restrict trade beyond achieving that legitimate objective (although did potentially restrict trade volumes). They made a 'meaningful contribution' to those ends, and the risk of the non-fulfilment of the objectives by declaring the measures unlawful under Article 2.2 would potentially have grave consequences.

Tobacco manufacturers yearn for the 'good old days'
In relation to the arguments under Article 15 of the TRIP Agreement, which prevents the prohibition of the registration of trademarks where the application of the mark would form an obstacle for registration of the mark. The panel rejected this argument, as the Act does not prevent the registration of marks, even if might impact the level of protection to those marks. They can be registered just as well, just not applied to tobacco products. In terms of Article 16.1 of the TRIPS Agreement, the panel saw that the reduced likelihood of confusion between brands was not an infringement of the article, as "…Article 16.1 does not require Members to refrain from regulatory measures that may affect the ability to maintain distinctiveness of individual trademarks or to provide a "minimum opportunity" to use a trademark to protect such distinctiveness". Article 16.1 is only concerned with the rights afforded to rightsholders relating to trademarks, and not their efficacy (or reduction thereof) through legislation. Rightholders still have the capability to prevent unauthorized use of identical or similar tobacco trademarks on identical or similar products where such use would result in a likelihood of confusion.

Similarly, the Panel saw that Article 16.3 was not infringed either (mandating the protection of 'well-known' trademarks), as the possibility of a reduced knowledge of previously well-known trademarks in the market does not, in itself, constitute a violation of Article 16.3. The panel emphasised that "…Article 16.3 does not require Members to refrain from taking measures that may affect the ability of right owners to maintain the well-known trademark status of individual trademarks, or to provide a "minimum opportunity" to use a trademark in the market".

The Panel then moved onto Article 20 of the TRIPS Agreement, which prevents the unjust encumbering of trademark use through special requirements. They ultimately concluded that Australia's public policy considerations offered an appropriate intervention in the use of tobacco related trademarks through special requirements, i.e. plain packaging. The Panel acknowledged the economic value in the trademarks themselves, but the efforts to curb smoking in Australia through plain packaging have had a genuine impact on smoking rates, and are therefore justifiable under Article 20.

Ultimately the panel saw no infringement of Australia's international obligations under the treaties, and allowed the law to stand.

The decision goes into great detail in many aspects of trade and international legislation surrounding trademarks – well beyond what this blog can, and should, discuss. The decision is hugely important, and will undoubtedly encourage other countries in their adoption of plain packaging measures. Honduras has already stated that they have appealed the decision, so the plain packaging saga will go on for a further number of years, due to the sheer value of the marks and brands at stake.

Source: BBC News

18 July, 2018

A Barrel of Joy - CJEU Sets Limits on the Assessment of Infringement of Geographical Indicators

Whisky is a point of pride for Scotland (enough where the addition of an extra letter gets some people's blood boiling), and as such there is a huge incentive to protect both the product and its name. This blog recently discussed a case in the European courts where the very name was the focus of the matter, and after an opinion from Advocate General Øe, the case has finally ended up on the lap of the CJEU, which gave its judgment only last month.

As a short primer, the case of Scotch Whisky Association v Michael Klotz concerned the sale of a whisky called "Glen Buchenbach" by Mr Klotz, which was produced in Germany. The name is derived from the Buchenbach, a valley in Swabia, and the addition of the word 'Glen' at the front of it. The Scotch Whisky Association, whose objectives include protecting the trade in Scottish whisky both in Scotland and abroad and the use of the PDO for whisky. The SWA objected to the use of the word 'Glen' in conjunction with a whisky not originating from Scotland.

The referring court asked the CJEU four different questions, all of which related to the Geographical Indications Regulation.

The first question, in essence, asked whether "…Article 16(a) of Regulation No 110/2008 must be interpreted as meaning that, for the purpose of establishing that there is ‘indirect commercial use’ of a registered geographical indication, the disputed element must be used in a form that is either identical to that indication or phonetically and/or visually similar to it, or whether it is sufficient that that element evokes in the relevant public some kind of association with the indication concerned or the geographical area relating to it".

The court determined that, for the use to be covered by Article 16(a), the use needs to be in an identical form or at least in a form that is phonetically and/or visually highly similar to the geographical indicator. The use, however, still can be both direct and indirect to potentially fall under the provision. The Advocate General distinguished the uses as "…‘direct’ use, which implies that the protected geographical indication is affixed directly to the product concerned or its packaging, ‘indirect’ use requires the indication to feature in supplementary marketing or information sources, such as an advertisement for that product or documents relating to it".

With this in mind, the court still rejected the argument that all that is necessary is a simple association in the mind of the relevant consumer for there to be infringement. This would deprive Article 16(b) of any practical effect (the provision precludes any "any misuse, imitation or evocation" of a GI), and therefore should not be applicable to Article 16(a). A simple 'impression' would also fail in being indirect use, which would not be identical or phonetically/visually similar to the GI being protected. A simple 'association in the minds of the public' would not be an infringement.

Glenn's budding fake beverage business took a beating that night
The court then moved onto the second question, which asked "…whether Article 16(b)… must be interpreted as meaning that, for the purpose of establishing that there is an ‘evocation’ of a registered geographical indication, the disputed element must be phonetically and/or visually similar to that indication, or whether it is sufficient that that element evokes in the relevant public some kind of association with the indication concerned or the geographical area relating to it". The question focusses on the context of the use of the mark, and not just the mark itself, i.e. what the impression is that the mark gives in its full context to the relevant consumer, or the use of wording that associates the goods with a GI.

Previous case law, particularly the case of Viiniverla, has determined that 'evocation' covers situations where "…the term used to designate a product incorporates part of a protected [GI], so that when the consumer is confronted with the name of the product in question, the image triggered in his mind is that of the product whose indication is protected". This is assessed through a decision on the presumed reaction of the consumers in the light of the term used, and that there is a link between the term and the GI. The appearance of the goods and the similarity of the name and the GI can be taken into account.

In short, the court set out that "…for determining whether there is an ‘evocation’ within the meaning of Article 16(b)… the decisive criterion is whether, when the consumer is confronted with a disputed designation, the image triggered directly in his mind is that of the product whose geographical indication is protected… taking into account, as the case may be, the partial incorporation of a protected geographical indication in the disputed designation, any phonetic and/or visual similarity, or any conceptual proximity, between the designation and the indication". They did, however, reject the argument that evocation as to geographical region should be included, as this does not create a sufficient link with the GI and the goods being sold.

The court did also reject the argument of including context within the assessment, setting out that "…for the purpose of establishing that there is an ‘evocation’ of a registered geographical indication, account is not to be taken either of the context surrounding the disputed element, or, in particular, of the fact that that element is accompanied by an indication of the true origin of the product concerned".

Finally the court moved onto the third question, which asked "…whether Article 16(c)… must be interpreted as meaning that, for the purpose of establishing that there is a ‘false or misleading indication’, as prohibited by that provision, account must be taken of the context in which the disputed element is used, in particular where that element is accompanied by an indication of the true origin of the product concerned".

After brief consideration, the court set out that "…Article 16(c)… must be interpreted as meaning that, for the purpose of establishing that there is a ‘false or misleading indication’, as prohibited by that provision, account is not be taken of the context in which the disputed element is used". This follows their logic in the above question, where context was also disregarded. The addition of further information, and therefore avoiding infringement through its inclusion, could compromise the protection offered by GIs.

Overall the decision is important, particularly in establishing the remit through which GI infringement is assessed. Thinking of the issues further, this writer agrees with the court, as the inclusion of context could indeed compromise the protection offered, and allow for the sale of 'infringing' goods with enough contextual information to avoid infringement (whether consumers notice it at all or not).