Cadbury's Color Conundrum - UK High Court Considers Registration for the Color Purple for Cadbury's After Settlement with Nestle

Sometimes a specific color is really important. Nothing highlights this more than the seemingly never-ending story of Cadbury's fight to register the color purple (or more specifically, Pantone 2685C) in relation to its iconic chocolate products. The fight over the color started nearly 20 years ago in 2004, so those born in the same year can now legally buy alcohol in the UK - which really puts the time spent in perspective. Nevertheless, color marks have always been difficult to register, however, in a highly anticipated victory Cadbury have done just that, potentially putting this matter to bed once and for all.

The case of Societe des Produits Nestle SA v Cadbury UK Ltd concerned an appeal against a decision by the UKIPO Hearing Officer, in which they rejected the registration of three trademarks (specifically applications 3019362, 3025822 and 3019361). Nestle opposed all three applications on the grounds that: (i) the marks did not fulfil the requirements of a "sign" under section 1(1) of the Trade Marks Act 1994, challenged under section 3(1)(a) of the Act; and (ii) whether the marks had distinctiveness under section 3(1)(b) of the Act. The oppositions against marks '361 and '822 were successful. Cadbury then appealed the decision against those two marks to the High Court, which handed down its decision this Summer.

Justice Meade initially focused on the core cases that were argued to be central to the matter. 

The first case was CJEU decision in Libertel Groep BV v. Benelux-Merkenbureau, which set out that "a colour per se, not spatially delimited, may... have a distinctive character within [the Trade Mark Directive then in force] provided that... it may be represented graphically in a way that is clear, precise, self-contained, easily accessible, intelligible, durable and objective". The key here is that a color mark has to be represented graphically clearly for it to be distinctive, and not merely set out as e.g. 'purple' without any distinction as to the hue or use of the color in packaging or otherwise. The case also noted that "...the latter condition could not be satisfied merely by reproducing on paper the colour in question; there had to be a designation using an internationally recognised code" (such as Pantone). 

The second case was the Court of Appeal decision in the Cadbury saga itself in 2013, where the Court of Appeal saw that the mark that was being applied for registration did not meet the requirements for registration, because it was not a "sign".

Justice Meade then discussed the legislative position in the matter, namely Article 2 of the Trade Mark Directive. Article 2 requires that, for a mark to be registered as a trademark, it has to: (i) be a sign; (ii) be capable of graphical representation; (iii) be capable of distinguishing the goods or services of one undertaking from those of other undertakings. 

"I wish I had any idea who owned this color..."

The main issue at hand in the Court of Appeal decision was whether the mark was indeed a 'sign', largely focused on its description as "applied to the whole visible surface, or being the predominant colour applied to the whole visible surface, of the packaging of the goods". The latter part of the description left a lot of leeway in the application of the color, so long as it was the "predominant colour" being applied to the packaging. The Court of Appeal rejected the mark as not being a 'sign' as it couldn't be clearly graphically represented and therefore lacks "clarity, precision, self-containment, durability and objectivity".

Justice Meade then moved on to the Hearing Officer's decision. 

The Hearing Officer noted, in relation to mark '361, that although it only referred to the application to packaging of the goods without any limitation to the surface area covered, it still didn't mean the mark would be a single color with no variation and would cover the representation of the trade mark that the Court of Appeal rejected. 

Justice Meade agreed with this position and set out that the formulation of the ‘361 mark is indeed worse than what was rejected by the Court of Appeal, nothing that "[r]emoving the wording held by the Court of Appeal to let in multiple forms and to be objectionably ambiguous is cosmetic at best and does not help".

In relation to mark '822, the Hearing Officer aligned its position to that of the above '361 mark, since it does not explain the use of the color and where it will be in the packaging or advertising materials. Justice Meade, however, disagreed with the Hearing Officer. 

He determined that the mark was for the color, which can include its application on the packaging or otherwise. He also distinguished the wording "predominant" from simply the color, which does not cause the same issues. There is no need to specify a simple color mark in relation to, for example, an area of packaging, since requiring that would limit color marks significantly. 

The appeal therefore succeeded in relation to the '822 mark, but not the '361 mark. 

Justice Meade did give some parting words on the issues around the '361 mark, highlighting that it "…leaves it significantly, undesirably and unnecessarily unclear whether combination marks including purple and other colours would be within the scope of the right applied for (and in particular whether they would be identical to ‘361)". How he distinguished the '822 mark from this is through its simplicity; only covering the color purple. 

Although the case is not a huge upheaval of the world of color marks, it does give some clarity as to appropriate wording for similar marks in the future and notes the pitfalls that can befall any application drafter. The key is sufficient specificity so as to not make the mark very difficult or impossible to understand but considering the '822 mark there is clearly room for some degree of generality. If anything Cadbury will be happy that the saga might just be over now, but who knows what the future will bring. 

KitKat Snapped - UK Court of Appeal Rejects KitKat Trademark

Having discussed the KitKat chocolate bar saga near ad nauseum, this writer was content that things might've just settled down and the matter finished its course through the courts. To my chagrin, this was not correct, and the fight over everyone's favorite four-fingered chocolate bar rages on. After a spell in the EU courts (discussed here and here), the matter moved on to ultimate determination in the UK courts (here), with the latest decision appealed to the Court of Appeal. Will Nestle be successful on their appeal after a slew of losses?

As a basic primer for the case, Societe Des Produits Nestle SA v Cadbury UK Ltd concerned the application to register the shape of the KitKat chocolate bar made by Nestle (TM 2552692), which comprised of a four-fingered bar with no markings on the surface (although commonly includes the KitKat logo on each finger). Cadbury opposed the application, and since the opposition proceedings the case has bounced between the UK and EU courts, having been decided on by the CJEU and applied by Justice Arnold in the High Court. The matter was then appealed to the Court of Appeal.

The Court's decision concerned acquired distinctiveness, which was extensively discussed in both the CJEU and the High Court, and in particular, whether the mark can have acquired distinctiveness in the absence or in the presence of an already registered trademark (i.e. the embossed KitKat logo on the fingers, but not the registration). Lord Justice Kitchin noted that, even if a three-dimensional shape is sold in conjunction with another registered trademark does not mean that the shape in itself will acquired distinctiveness, or, in other words "..[consumers] might simply regard the shape as a characteristic of products of that kind or they might find it brings to mind the product and brand name with which they have become familiar".

Lord Justice Kitchin then moved on to applying the test for acquired distinctiveness to the sign at hand, which looks at "...whether the applicant has proved that a significant proportion of the relevant class of persons perceive the goods or services designated exclusively by the mark applied for, as opposed to any other mark which might also be present, as originating from a particular undertaking", i.e. the shape acts, by itself, as the badge of origin.

With bloodlust in his eyes, Conker devoured his KitKat

What remains important is the consumers' perception of the mark (seeing it and knowing where the product comes from) and reliance on the same when purchasing the product. As discussed above, Lord Justice Kitchin concluded that the main test to resolve the question above would be "...whether [a] person would rely upon the sign as denoting the origin of the goods or services if it were used on its own". This would have to be evidenced somehow, for example, through surveys. The difficulty is in showing, through evidence, the distinction of reliance on the other mark (e.g. the KitKat logo) or on the shape of the chocolate bar. Mere association of the latter with the former is not enough.

The Court didn't disagree with the initial hearing officer in their decision, as Nestle had failed to establish acquired distinctiveness, since there was no evidence that the shape of the product had featured in promotional and advertising material, that it has it never been sold in opaque packaging, or had been featured on the packaging itself (bar for a short time). Survey evidence was also inconclusive on the recognition and reliance on the shape as an indicator of a KitKat product specifically, even though identified by many by the brand.

Although the EU General Court (discussed more here) and CJEU (discussed here) decisions shed some doubts over the need for 'reliance' on the mark (allowing for it to be used in conjunction with other marks and still be distinctive), Lord Justice Kitchin rejected this argument quite straightforwardly. In his mind, the decisions simply reiterated the requirement above on perception and reliance by consumers, and while reliance is not a requirement under the CJEU decision (discussed more here), it still remains an important consideration.Reliance demonstrates that a non-distinctive mark has become distinctive in its own right.

The Court of Appeal therefore was satisfied that the mark had not acquired distinctiveness and dismissed the appeal.

The case is a big blow for Nestle, and it'll be interesting to see whether they appeal the decision further to the Supreme Court. With a CJEU decision and a strong affirmation of the same by the Court of Appeal, success on appeal would seem unlikely, and permission would probably not be granted; however, the brand and the chocolate bar itself is hugely valuable and is potentially worth fighting for. The decision also highlights the importance of reliance on a mark, even if it's not required by EU legislation. Companies should heed the need to use a shape to actively market their goods, should it be something they want to defend, and simply not assume that association with another brand will bring in distinctiveness.

Source: BBC

Not Taking a Break - EU General Court Sends Kit Kat TM for Reconsideration at EUIPO

The Kit Kat chocolate bar trademark saga is one that seems to just keep on giving and giving to the IP community, offering new and fangled ways where the iconic (or dare we might now say the opposite) chocolate bar has been fought over in Europe. After a hard-fought several rounds in the CJEU and the UK courts, it all seemed all over; however, the EU General Court offered us a new judgment as an early Christmas present in mid-December.

The case of Mondelez UK Holdings & Services Ltd, formerly Cadbury Holdings Ltd v EUIPO dealt with an EU registered trademark (2632529) for a three-dimensional mark comprising of the Kit Kat chocolate bar without any markings. The mark was subsequently challenged by Nestle's favorite candy competitor, Cadbury (now owned by Mondelez), and the matter has since ultimately ended up in the General Court, largely dealing with lack of use and distinctive character.

The GC only concerned itself with Article 52(2) of the Community Trade mark Regulation, in conjunction with Article 7(3), which set out that a trademark, even if potentially found invalid, might still be registrable should the mark have acquired a distinctive character with respect to the goods and services covered. Mondelez argued that the EUIPO had failed to correctly assess this distinctive character (allowing the mark to be registered), and directed their argumentation in four separate parts.

The Court initially dealt with the second part of their plea argues that the mark had not been used for all of the relevant goods it was registered for. The Board of Appeal had seen that, based on the evidence submitted, the mark had been used for all of the goods listed above. This assessment, according to the GC, would be done "...in relation, on the one hand, to the goods or services in respect of which registration has been sought and, on the other, to the presumed perception of the mark by an average consumer of the category of goods or services in question, who is reasonably well informed and reasonably observant and circumspect". Any proof employed would have to be viewed independently within the context of sub-sections within the broad terms of goods to identify whether the mark has been used for those goods.

Gilbert always forgot what his chocolate bars looked like

Under the evidence supplied, the GC did concede that the Kit Kat mark had been used for the majority of the goods listed; however, saw that it had equally not been used for bakery products, pastries, cakes and waffles, since the advertising materials only showed biscuit-like, chocolate treats with no real bakery goods included at all. This was deemed an error on the part of the Board of Appeal.

The first part of the plea dealt with a lack of use of the mark in the form as registered, and therefore would only stem from the branding or the use of other marks in conjunction with the contested mark. The EU courts have previously held that a 3D mark can acquire distinctive character even if used with other marks, as long as the public distinguishes the product from originating from a particular source as a result. The GC quickly rejected this argument, as surveys indicated a high percentage of individuals identifying the brand from just the shape alone.

They then moved onto the third part of the plea, which argues that there is a lack of use of the mark as an indicator of origin and insufficient evidence to that effect. The latter point would be assessed based on evidence showing that a significant portion of the public identifies the mark as an indicator of origin, which entails in it several factors, including market share and duration of use. The GC rejected this argument as well, having extensively discussed the evidence submitted and its application to the matter at hand, illustrating a clear recognition of the mark as an indicator of origin for those particular goods, and that it was sufficient to overcome this plea.

Finally, the fourth part of the plea asserted a lack of proof of distinctive character acquired through use of the contested trade mark throughout the European Union. Mondelez contested that, as Nestle only provided evidence with respect to 10 Member States out of 15, the Board of Appeal should not have extrapolated from that evidence applicable to the entire EU (with the Board only finding evidence of distinctive character for 5 being sufficient for the whole of the EU). According to established EU case law, a mark needs to have distinctive character in the whole of the EU, and would fail to be registered should it not have it for a part of the EU, even one single Member State. Evidence provided needs to be quantitively sufficient to prove distinctive character in the Member States concerned. The GC corrected the Board of Appeal's approach in assessing this, and set out that "…the relevant question is not whether it was shown that a substantial proportion of the public in the European Union, merging all the Member States and regions, perceived a mark as an indication of the commercial origin of the goods designated by that mark, but whether, throughout the European Union, it was proved that a significant proportion of the relevant public perceived a mark as an indication of the commercial origin of the goods designated by that mark".

The GC allowed this part of the first plea, determining that a lack of evidence for the rest of the Member States would mean that the mark has not been established to have distinctive character in the entire EU, and the registration is therefore invalid and would have to be re-examined.

The case is a very curious one, and highlights a potential big issue for applicants when it comes to evidencing the distinctive character in the entire EU. With surveys and other evidence gathering exercises being costly both monetarily and time wise, and newer launches in other territories being a hindrance for proving distinctive character. In the end, the threshold should be high; however, this writer would be a firm believer in statistics, especially for more notable, established brands, and would want more flexibility at the EUIPO (although, understanding the risks associated with giving away trademarks like candy). It will remain to be seen whether the case is appealed, and this writer would not want to see the fight for chocolate bars to ever end.

Source: Reuters

Taking a Break - Kit Kat Decision Issued by ECJ

For all lovers of confectionery goods the name Kit Kat will undoubtedly be a familiar one, even without its highly memorably slogan. The iconic British chocolate bar has been around since the 1930s, and above all else what many will remember is its shape, comprising of five individual chocolate covered wafer 'fingers' connected at the base by a lawyer of chocolate. As such shapes can be protected through intellectual property law, but whether Kit Kat's design is truly distinctive enough to be protected as a trade mark, has been a contested question here in the UK for several years, ultimately being referred to the European Court of Justice by Justice Arnold nearly two years ago in Société Des Produits Nestlé SA v Cadbury UK Ltd [UK High Court of Chancery]. As a result the ECJ handed down its judgment in September this year.

The case of Société Des Produits Nestlé SA v Cadbury UK Ltd [European Court of Justice] dealt with an application for a trademark by Nestle for a three-dimensional representation of the Kit Kat bar, omitting the embossed words "Kit Kat" from the top of the chocolate bar's individual fingers. After the application's publication Cadbury submitted an opposition against its registration, arguing a lack of distinctive character, initially having the mark rejected by the UK Intellectual Property Office, ending in Nestle's appeal to the UK High Court.

Justice Arnold submitted three questions to the ECJ prior to his later judgment applying the Court's consideration.

The ECJ started by answering the second question posed by Justice Arnold. What was asked was seen as "...whether Article 3(1)(e) of Directive 2008/95... must be interpreted as precluding registration as a trade mark of a sign consisting of the shape of goods where that shape contains three essential features, one of which results from the nature of the goods themselves and two of which are necessary to obtain a technical result".

After a very brief consideration of precedent, especially relating to the prevention of any registration monopolizing a technical solution or functional characteristics, the Court determined that "...Article 3(1)(e)... must be interpreted as precluding registration as a trade mark of a sign consisting of the shape of goods where that shape contains three essential features, one of which results from the nature of the goods themselves and two of which are necessary to obtain a technical result, provided, however, that at least one of the grounds for refusal of registration set out in that provision is fully applicable to the shape at issue". What remains key is the refusal of registration based on a single ground under Article 3(1)(e), even if, predominantly, the shape does not fall under all of the grounds. Public interest in the strict enforcement of the grounds of refusal was important in the Court's view, as a contrary position would allow for the monopolization of the very subject matter the Article seeks to disallow. What is uncertain is how this applies to a shape as whole and its respective components. Would a shape be negated as a whole if it contains a part that would fall under the grounds (negating the registrability of the whole design)? Arguably, this would be the case, but the decision leaves this unclear.

Terry's take on Halloween was more diabetes inducing

The Court then moved on to the third question, which it saw as asking "...whether Article 3(1)(e)(ii)... under which registration may be refused of signs consisting exclusively of the shape of goods which is necessary to obtain a technical result, must be interpreted as referring only to the manner in which the goods at issue function or whether it also applies to the manner in which they are manufactured". As the wording of the sub-section does not discuss the manner of manufacture for the goods, the Court had to decide whether it implicitly does so. They quickly decided against this, setting out that "...that Article 3(1)(e)(ii)... must be interpreted as referring only to the manner in which the goods at issue function and it does not apply to the manner in which the goods are manufactured". The inclusion of manufacturing methods, in this writer's mind, would encroach onto the territory of patents, and how a product is made does not designate its origin; the primary function of trademarks.

Finally, the Court proceeded to question one, which was set out as "...whether an applicant to register a trade mark which has acquired a distinctive character following the use which has been made of it within the meaning of Article 3(3)... must prove that the relevant class of persons perceive the goods or services designated exclusively by that mark, as opposed to any other mark which might also be present, as originating from a particular company, or whether it is sufficient for that applicant to prove that a significant proportion of the relevant class of persons recognise that mark and associate it with the applicant’s goods".

Again, considering precedent in brevity, the Court saw that "...in order to obtain registration of a trade mark which has acquired a distinctive character following the use which has been made of it within the meaning of Article 3(3)... regardless of whether that use is as part of another registered trade mark or in conjunction with such a mark, the trade mark applicant must prove that the relevant class of persons perceive the goods or services designated exclusively by the mark applied for, as opposed to any other mark which might also be present, as originating from a particular company". What the question therefore requires is that the proprietor of the mark has to prove that the relevant class of people perceive their mark, in this case "Kit Kat", to only originate from them and not other proprietors selling similar goods, even if the goods contain other registered trademarks (or a design, in this case). The onus would be on Nestle to show that the shape of the chocolate bar, regardless of the inclusion of the words "Kit Kat", would be indicative of the source of the bar by itself (i.e. a distinctive feature). The Court did omit Justice Arnold's question on reliance on the mark, focusing on their 'perception' and 'recognition' of the mark. Arguably reliance does not necessarily follow the two, but this writer thinks, in the Court's mind, their intention is to include reliance through perception, as seeing and knowing a mark in conjunction with another would still carry some weight in the purchase decision, effectively creating a level of 'reliance'.

The case has since been referred back to the High Court for ultimate decision, but this writer thinks, based on earlier considerations, that the shape of the Kit Kat bar might not be enough to distinguish it from other similar ones to allow for the registration of the mark. The ECJ's answers to the questions seemed unsurprising, however leaving many things uncertain or somewhat unanswered, but give more nuanced guidance, which is never too abundant in today's legal sphere. How the case will be applied in the future is uncertain, but hopefully this application will manifest even more clarity as a result.

Source: IPKat

Color Me Purple - Cadbury Trademark Ends on Appeal

Colors have always been an interesting area of trademark legislation, and to the layman more often than not, something which proves to be inconceivable. In a world where distinguishing your goods from other similar ones is imperative, and can prove to be a vehicle of imitation if you are not careful (more of which can be read here). In the latter part of 2012, Cadbury successfully had their trademark on the color purple (a variant of the color to be more specific) upheld by the court, in the field of chocolate, which was subsequently appealed by the initial challenging party, Nestle.

On appeal, which was decided earlier this month, the court had a further look at the issue of whether the color purple could be trademarked in this instance. In the Court of Appeal's opinion the Hearing Officer, the initial body responsible for the approval of trademarks in the UK, erred in his decision to allow the color to be registered. More specifically, the error "...stems from the misinterpretation of the verbal description of the graphic representation of the mark for which application is made... i.e. being the predominant colour applied to the whole visible surface".

In the Court of Appeals judgment, the description given by Cadbury "...[when] properly interpreted, does not constitute "a sign" that is "graphically represented" within Article 2 [of the Trade Marks Directive 2008/95/EC of 22 October 2008]. If the colour purple is less than total, as would be the case if the colour is only "predominant", the application would cover other matter in combination with the color, but not graphically represented or verbally described in the specific, certain, self-contained and precise manner required". Due to the fact that Cadbury had used the word 'predominant' in their description, the description was not sufficiently clear to be accepted as a 'sign' under the UK Trade Marks Act 1994 and the EU Directive. Cadbury used the color purple in a multitude of products, associating other elements with it along with the color purple, thus creating a multitude of variants of that sign,  making the sign unclear.

Purple was George's favorite color. No one could've guessed.

To summarize the Court saw that "[t]o allow a registration so lacking in specificity, clarity and precision of visual appearance would offend against the principle of certainty. It would also offend against the principle of fairness by giving a competitive advantage to Cadbury and by putting Nestlé and its other competitors at a disadvantage". Clearly one can agree with the Court in their decision, as the registration of a color in itself is acceptable; however should it only be an element amongst other elements, it would not be a sign that distinguishes that product by itself. This is highlighted by such cases as Mars Australia Pty Ltd v Société des Produits Nestlé SA, where the color used was clearly the sign used (although the case in question did include other factors, such as the color's creation by Mars) and would distinguish the goods from others.

Source: Bloomberg