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

Kit Kat Kontinues - Advocate General Wathelet Dismisses Appeal on Kit Kat Shape Trademark

One would've never imagine a chocolate bar could be litigated over for many years, but the Kit Kat saga has proven that even the most seemingly mundane things can be worth a tremendous monetary investment. After the EU General Court decision last year (discussed more here) you could have imagined the matter has been largely concluded. This was clearly not the case, as Mondelez appealed the decision, which has now reached the desk of Advocate General Wathelet. They issued their opinion only last week, which will give direction to the CJEU who will decide the matter once and for all later this year.

Although discussed extensively on this blog, the case still merits a short introduction. The matter Société des produits Nestlé v Mondelez UK Holdings & Services concerns the design of the Kit Kat chocolate bar, which Mondelez has registered as a trademark (EUTM 2632529). Cadbury, now Mondelez, filed for an application of invalidity regarding the mark sometime after, with the matter being decided by the General Court last year. Nestle appealed the decision (which went against them), ending up heading to the CJEU via the Advocate General.

The case on appeal hinges on the extent of the territory that you need to show distinctive character that is acquired through use of the trade mark under Article 7(3) of the CTM Regulations. In the General Court Nestle failed to show use throughout the EU, not just in a substantial part of it, and therefore the mark was invalidated.

A Kit Kat Kounterfeit

Per the decision in August Storck KG v OHIM, the CJEU set the bar for the acquisition of distinctive character through use as requiring "…evidence… that [the mark] has acquired, through 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". Adding to this, the CJEU noted that an argument for acquired distinctiveness could be rejected if there is no evidence of use, as detailed above, in a single Member State. Subsequent cases have shown that partial acquisition of distinctive character within the EU is not enough, as there needs to be 'quantitatively sufficient evidence' of acquired distinctiveness.

Looking at the above, the AG did, however, not shut the door entirely on partial acquisition of distinctiveness. They added that a mark could have acquired distinctiveness in the entire EU if evidence is provided for "…a quantitatively and geographically representative sample" of the EU. This means taking into account the various links between the national markets of Member States, and whether those links negate a lack of evidence for acquired distinctiveness in the bigger picture within Europe. Potentially a more regional approach has to be taken and therefore acquired distinctiveness could be extrapolated for any missing countries, i.e. produce evidence for the Nordics and other such 'collectives' of countries if evidence for all Member States is missing for others within those 'collectives'.

Having considered the missing evidence discussed in the General Court's decision, the AG concluded that Nestle's appeal should be dismissed.

While we are still awaiting the CJEU's decision on this matter, things don't look great for Nestle, or 3D marks in general. It will be difficult for many proprietors of such marks to show acquired distinctiveness within the EU, or most of it. It remains to be seen whether the CJEU will go in a different direction, but it seems very unlikely considering the General Court's decision and now the AG's opinion.

Toblenone - The Battle of the Peaks Begins Over the Toblerone Shape

Imitation is thought to be the greatest form of flattery, but in the world of IP, this is often the opposite of the case. Copying the looks of a product can be quite beneficial for the copying company, riding on the coattails of a potentially well-known look of a product, especially if they are undercutting the price of the original. This blog has discussed issues of generic packaging before, and the notorious KitKat saga, but none of the cases have looked at the matter of changing the shape of the original product, yet still seeking protection over the shape.

A recent case discussed in the Guardian has shed a new perspective, as discussed above, relating to the Toblerone chocolate bar. Poundland, a UK discount retailer selling products predominantly at £1, launched their Toblerone competitor Twin Peaks earlier this summer, aiming to compete against the reduced size Toblerone bar. This change featured bigger gaps in the Toblerone bar between the iconic triangular peaks, due to rising ingredient prices.

The matter has since gone to court, with Mondelez (the company that owns the Toblerone brand) arguing (possibly among other grounds) trademark infringement. Poundland have counterclaimed (possibly among other grounds) for invalidity and argued that "…the triangular prism shape of the Toblerone bar, which was registered under an EU trademark in 1997, is no longer distinctive partly because of the existence of the new version". Adding to this, they argued that "…any good reputation enjoyed by the Toblerone bar trademark has been “irretrievably abandoned” by the launch of the product with bigger gaps between its nine chunks, which the public “consider unfavourably in comparison”".

Mondelez put a wholly different spin
on the change to the Toblerone bar

The crux of the question is therefore whether the trademark registered by Toblerone (EUTM 31237) would no longer be distinctive due to the change in the Toblerone chocolate bar, and even if it's distinctive, whether the Twin Peaks bar creates a different impression so as to not infringe on the trademark or other possible rights under common law.

Arguably, Poundland potentially do have a point. The Toblerone bar has reduced its size by about 10%, and changed its shape from the registered 12 peaks to 11, with the gaps between the peaks has doubled by this writer's estimate. The base of the bar has also arguably become thinner. The Twin Peaks bar does not feature the wider gaps of the new Toblerone bar, including having a curved gap rather than a flat one, and splits the peaks into two. The Twin Peaks bar is also sold in a loosely fitting wrapper packaging, rather than a hard triangular cardboard package.

Case law has looked at changes to earlier registrations, and it does not necessarily bode well for Toblerone. In The Coca-Cola Company v OHIM the cola manufacturer changed the look of their iconic bottle, removing its distinctive fluting, and due to this change the EU General Court rejected their application for a lack of acquired distinctiveness, as "…[the bottle] was a mere variant of the shape and packaging of the goods concerned, which would not enable the average consumer to distinguish the goods from those of other undertakings". It is possible for the registration to be attacked (although the name and the triangular packaging will still arguably remain protected), so Toblerone would benefit from a new registration for the reduced size bar, unless it is simply treated as a stop-gap while prices are still high for some ingredients.

The Toblerone question is a very curious one, and this writer for one would love to see the case actually go to court (but heavily doubts this will happen). The point of changing the shape of a product with an existing trademark registration hasn't been dealt with by the judiciary much at all, so more light on this issue would be very helpful for both would-be registrants and competitors alike.

Source: The Guardian

Question Solved - CJEU Rejected Rubik's Cube TM due to Technical Functionality

Trademarks are a very flexible tool to protect a variety of interests in goods, be it looks or the design of an object. One thing it cannot, and should not protect is technical functionality, which is better suited for protection through patents. Many have tried to use trademarks as quasi-patents that last forever, but the courts are quite reluctant to allow such registrations one challenged (if even registered in the first place). One such trademark has been the subject of a 10 year legal battle, namely the Rubik's Cube. The saga has finally come to its (current) conclusion, with a long-awaited decision handed down by the CJEU in late 2016.

The case of Simba Toys GmbH & Co. KG v EUIPO dealt with a registered trademark for the design of the Rubik's Cube (No. 162784), which is owned by Seven Towns Ltd. The mark consists of a 3D rendition of the Cube, showcasing the grid pattern on all sides of the Cube. Simba Toys challenged the mark in 2006, and ultimately alleged an infringement of Article 7(1)(a) to (c) and (e) of the old Community Trade Mark Regulation (No 40/94), which set out the absolute grounds of refusal for trademark applications.

While Simba Toys put forth six arguments, the CJEU focussed only on the first, which alleged a misapplication of Article 7(1)(e)(ii) of the Regulation (which prevents the registration of a shape of goods which is necessary to obtain a technical result), under which the General Court deemed that the essential characteristics of that shape do not perform a technical function of the goods at issue.

The CJEU first had to identify what the essential characteristics of the mark are, and the Court followed the General Court's rationale, setting them out as "...a cube and a grid structure on each surface of the cube". The essential characteristics then have to be assessed in the light of the technical function of the actual goods concerned, i.e. a three-dimensional puzzle. This has to be done using the representation given in the application, namely the drawing of the Cube, along with any descriptions of the same.

Solving a Rubik's Cube can be just as challenging as protecting it

The Court deemed that the General Court had erred in their assessment of the criteria in relation to the Cube that "...for the purpose of examining the functionality of the essential characteristics of the sign concerned, in particular the grid structure on each surface of the cube, the shape at issue, as represented graphically, should have been taken as a basis, without necessarily having to take into consideration any additional circumstances which an objective observer would not have been able to ‘fathom precisely’ on the basis of the graphic representations of the contested mark, such as the rotating capability of individual elements in a three-dimensional ‘Rubik’s Cube’-type puzzle". While these 'hidden circumstances' that are not fathomed precisely by an objective observer (i.e. the rotation is not, at least arguably, evident from the drawing of the Cube), this "...cannot preclude account from being taken of the technical function of the actual goods represented by the sign at issue for the purpose of examining the functionality of the essential characteristics of that sign, as the proprietor of that mark would otherwise be allowed to broaden the scope of the protection arising from the registration thereof to cover every type of puzzle with a similar shape, namely any three-dimensional puzzle with cube-shaped elements, regardless of the principles by which it functions".

What the CJEU therefore was concerned about was that these 'hidden' features could be used almost without limit to prohibit others from using the technical functionality of, for example, rotation for 3D puzzles, simply based on the look of the puzzle itself. This makes sense, as one can appreciate that the broadening of trademarks beyond their typical protection would mean a near monopoly on some features that are not immediately apparent based on a graphical representation. The CJEU therefore rejected the appeal, and didn't refer the matter back to the General Court.

The case sets a very important precedent, and rightsholders need to be more careful in their applications for trademarks, especially when they contain, or might contain, technical functionalities. Clearly one can appreciate the defence of legitimate trademarkable features; however, overextending your rights just might lead to the loss of your mark.

Source: IPKat

Tripping the Trapp - Trademarks in the Third Dimention

Trademarks can be an interesting novelty, especially when it comes to what is actually sought to be protected through trademarks. This ranges from trademarking the color of your football field to the phrase "Let's Get Ready to Rumble!", and only illustrates just how complex and varied trademarks can be, while offering a near perpetual right to protect what you have registered. With this kind of longevity, having a strong trademark, especially in an area where it could benefit you beyond just one product or product line, is incredibly valuable and desired by many (a lengthy legal battle over the color purple is a great example of just how much it can mean to a company). Most of the time though, trademarks are registered as one-dimensional items, which poses the question: could you register a three-dimensional trademark? The European Court of Justice aimed to answer this very question in the latter part of 2014, in a case anticipated by many.

The case in question was Hauck GmbH & Co. KG v Stokke A/S, in which the dispute centered around children's chairs. Peter Opsvik, a co-defendant in the case, had designed a children's chair called "Tripp Trapp", being sold under the Stokke brand since the early 1970s. The chair itself consisted of two L-shaped upright pieces, which contained slots, into which platforms and other pieces could be slotted into, forming the chair. The company sought to protect the highly-regarded chairs, and their look, by lodging a trademark application in 2003 (for example application 003514171). Hauck have also been involved with the production and sale of children's articles, including two chairs, Alpha and Beta. Hauck were subsequently taken to court for trademark infringement, due to the sale and manufacture of its Alpha chair in the German courts (with Stokke winning in the German courts), and also in the Netherlands, culminating in the ECJ some years later.

What the Court of Justice faced was a decision under Directive 89/104/EEC, which governs the registration of certain marks within the EU, as to whether the registered mark would be considered invalid under the Directive.

The first question posed to the Court sought to clarify "[d]oes the ground for refusal or invalidity in [the Directive], namely that [three-dimensional] trade marks may not consist exclusively of a shape which results from the nature of the goods themselves, refer to a shape which is indispensable to the function of the goods, or can it also refer to the presence of one or more substantial functional characteristics of goods which consumers may possibly looks for in the goods of competitors?" The question poses, in more simplistic terms, the conundrum of whether the grounds for refusal would encompass either a three-dimensional shape. which is indispensable to the function of the item and exclusively being only that shape, or would it include the functional shape of the item containing one or more parts that are integral to the function of that item, which consumers find desirable in that type of item.

The Court quickly clarified that, for a shape to be ineligible to be registered, due to the shape resulting from the nature of the goods themselves (Article 3), the shape has to be one which would unduly prevent competitors from using a similar shape, effectively giving a monopoly for similar items; or to put in better terms: "...[the Article's aim is to] prevent trade mark protection from granting its proprietor a monopoly on technical solutions or functional characteristics of a product which a user is likely to seek in the products of competitors".  This also applies to efforts in extending protection through trademarks to subject matters, which should be protected through other means (e.g. patents), or have been exhausted prior to the mark's registration. In the end, the Court poignantly answered the first question: "...[the] directive must be interpreted as meaning that the ground for refusal of registration set out in that provision may apply to a sign which consists exclusively of the shape of a product with one or more essential characteristics which are inherent to the generic function or functions of that product and which consumers may be looking for in the products of competitors"; meaning a trademark cannot claim a monopoly on e.g. adjustable children's chairs, through registering that functional shape as a trademark.

Kids should not be placed on all traps.

The second question referred to the Court necessitated the assessment of whether a registered sign, consisting of several elements adding value to the product itself, much like the changeable pieces of the Tripp Trapp chair. Value does not, by itself, only mean aesthetic qualities, and the distinction between aesthetic and functional can often be blurry as well. The Court saw that the Directive must be interpreted "...as meaning that the ground for refusal of registration set out in that provision may apply to a sign which consists exclusively of the shape of a product with several characteristics each of which may give that product substantial value. The target public’s perception of the shape of that product is only one of the assessment criteria which may be used to determine whether that ground for refusal is applicable". The public's perception of the mark is not the sole deciding factor, as was seen by the Court, but is one of a number of factors, such as ones described by the Attorney General: "...such as the nature of the category of goods concerned, the artistic value of the shape in question, its dissimilarity from other shapes in common use on the market concerned, a substantial price difference in relation to similar products, and the development of a promotion strategy which focuses on accentuating the aesthetic characteristics of the product in question". Whether a mark would be rejected as only adding substantial value to the item is a case-by-case assessment, with no clear deciding criteria as the only guidelines in this question.

Finally, the Court faced its third question, essentially asking whether a mark can be rejected based on a combination of the first and third indent in the Article (questions one and two, respectively, deal with the first and then the third indent). The Court put things bluntly, as, even from a prima facie assessment, the three indents are wholly separate from each other, and thus operate differently in each given argument. If a product fails over one indent, it will fail overall; an assessment based on the two other indents is wholly irrelevant past that point, and failing in more than one indent will not make the invalidity any more serious - the mark will fail either way. In the end the question of whether Stokke's mark will fail is up to the Dutch courts, as the answer has since been sent back for a final decision.

The Directive has been applied to domestic UK legislation, within the Trade Marks Act 1994, and thus is fully relevant within a UK scheme of things. In the United States the protection of three-dimensional marks falls under trade dress (defined in 15 USC 1127), and is more mailable than legislation applying purely to registered trademarks.

Overall the world of 3D marks is interesting, but a question filled with a lot of uncertainties. As the regime is not in place to protect patentable subject matter, or even registerable designs, the provisions serve as a protective means for items falling outside of those regimes. Whether a registrant would be successful depends largely on the mark for which protection is sought for, and is an assessment done on a case-by-case basis, with no clear bright line rules to follow.

Source: JDSupra

3D Printing and Potential Intellectual Property Issues

Who would have thought that the day would ever come when a person could create a three-dimensional model on a computer of basically anything your mind can conjure up, and a machine would make a physical version of that item in hours. This was the stuff science fiction was made only a few decades ago, but has since become a reality. Not only that, but with the emergence of sub-100 dollar 3D printers this is clearly an option for any domestic printing aficionados to use without the bulk and expense of older versions of this technology. This progression does however raise the question in any legal professional's mind; can 3D printing infringe intellectual property laws?

3D Printing and Copyright

Rick was not happy with his real face

As most objects which are printed using the aforementioned technology are small  figurines or sculpture type objects, items which have no functional use but only serve as aesthetically pleasing or to fulfill the need to have a physical representation of a certain character or shape. Objects like this are protected under copyright as sculptures, or any equivalent, with most common law countries having provisions protecting them (Australia, UK, US and Canada). Clearly should a person endeavor to print a 3D object representing a character or object which is protected by copyright, they would be liable for infringement. One has to note that this is still subject to enforcement, and arguably no copyright holder would bother in enforcing their rights over individuals should they print a figurine or two for their own personal enjoyment. Where the issue changes into a viable one in terms of enforcement is when the technology is used for the production and selling of such items, with a recent example being 3D figurines from the popular video game franchise Final Fantasy. In such instances there is incentive to protect the rights that are given to copyright owners, and rightfully so.

This protection can potentially be avoided however, as in the UK afford all artistic works (which includes sculptures) protection for a term of 25 years from its initial exploitation, after which their copying would be wholly legal. This period ends on the last calendar day after the period has ended, starting from the day it was first marketed. Looking at this any artistic works which have been marketed, figurines and such, after 1988 would be okay to print. No such provisions exist in other common law countries.

3D Printing and Trademarks

In Australia and the UK for example trademark legislation largely deals with the use of trademarks and not their creation per say. This use refers to its use in conjunction with different goods or services from the original, and not just their creation for personal enjoyment. This 'personal use' of trademarks has not been directly argued in court; however the rejection of commercial use has been noted in the creation of any registered trademarks. In the judgment of Arsenal v Reed, mentioned above, the Advocate General took the position that trademarks could be used for the creation of items where the person gains no material advantage in their creation. Clearly therefore the printing of any trademarked object for personal use would not infringe trademark legislation, at least in such instances.

Conclusion

3D Printing even enables the creation of cars

Although discussed very briefly above, one can note that 3D printing does pose a challenge to both the judiciary and the legislature in the protection of intellectual property. At the time of their creation no legislature would have conceived that 3D printing would ever become a reality, and rightfully so; even today this seems like complete science fiction, at least to this writer. In addition to copyright and trademarks the technology does pose challenges to patents and designs, albeit more on the latter than the former, due to the possible creation of both unregistered and registered designs.

As the technology becomes more common and the quality of the goods it produces get better the judiciary will eventually have to deal with the subject matter more extensively. Arguably some level of personal 'creation' should be allowed without it infringing intellectual property rights, but that does still undermine the economical interests of parties wishing to benefit from the sale of such items. Will 3D printing ever become a household commonality? Arguably this will take years, even decades, but as it stands today the technology is more of a niche curiosity than a prevalent tool for domestic replication. Until then the need for extensive judicial consideration remains minor.