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

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

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

Another Break - Justice Arnold Settles the Kit Kat Case After CJEU Decision

After quite an unsatisfying Court of Justice decision earlier in September in the Kit Kat case, many of us invested in the world of IP were waiting for the decision by the High Court of Justice in the UK applying the CJEU's considerations. The case has since been decided by Justice Arnold, finally settling (for now?) the debate around the the-dimensional marks.

By way of a short introduction, the case of Société Des Produits Nestlé SA v Cadbury UK Ltd dealt with the arguably iconic Kit Kat chocolate bar. The bars comprise four individual chocolate wafer fingers connected to each other with a solid chocolate base. Nestle applied to register the three-dimensional shape of the bar as a trademark without the Kit Kat logo embossed on the top of each finger, which was subsequently opposed by Cadbury. The case was referred to the CJEU by Justice Arnold (discussed more here), leading to the decision in question.

Justice Arnold post the CJEU decision (approximation)

The biggest issue in the case was the apparent mistranslation of Justice Arnold's question, who, in essence, asked whether an applicant needed to only prove recognition (and subsequent association to the applicant) of the mark by a significant portion the relevant public, or whether they have to rely on the mark to indicate the origin of the goods for a mark to have acquired distinctiveness. One has to note that this has to be in isolation of any other marks present in that product, and that particular feature has to identify the origin of the goods by themselves (i.e. the shape of the bar rather than the embossed logo on the top of it). The questions were, however, partially mistranslated during the proceedings, with the latter question being changed to a matter of perception rather than reliance.

Both the Opinion of Advocate General Wathelet and the judgment by the CJEU failed to address Justice Arnold's question in full, rejecting the first part of the question but leaving the matter of reliance unanswered.

Having considered the possible answer to his question, Justice Arnold summarized what he perceived the accurate consideration to be: "...in order to demonstrate that a sign has acquired distinctive character, the applicant or trade mark proprietor must prove that, at the relevant date, a significant proportion of the relevant class of persons perceives the relevant goods or services as originating from a particular undertaking because of the sign in question (as opposed to any other trade mark which may also be present)". (emphasis the court's)

Additionally, he concluded that "...when assessing whether the applicant has proved that a significant proportion of the relevant class of persons perceives the relevant goods or services as originating from a particular undertaking because of the sign in question, to consider whether such persons would rely upon the sign as denoting the origin of the goods if it were used on its own".

The focus on provenance is therefore on both perception of a particular mark as the indicator of the origin of certain goods or service, and whether the same public subsequently relied on that mark to indicate that very origin, irrespective of any other marks that might be present on those goods.

Justice Arnold then answered the question, agreeing the initial decision of the Hearing Officer. In his mind, although he referred to reliance on the mark, his rationale was in line with the CJEU decision. He correlated reliance with perception, which would fulfill the requirement set by the CJEU. Although survey evidence showed identification of the Kit Kat bar, it merely displayed recognition and not that they perceived it as the exclusive designation of the origin of the goods in question. Therefore he dismissed Nestle's appeal due to a lack of concrete evidence establishing acquired distinctiveness.

The Kit Kat saga has been a curious one, and does highlight some issues that surround CJEU referrals and linguistic nuances. Even so, this writer thinks Justice Arnold applied the law as well as he could in the light of the answer given by the CJEU. This does, however, raise questions on evidence, especially with the survey evidence shown by Nestle and the uncertainty as to what would be sufficient to establish 'perception' and subsequent reliance.

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