Have a break ... Have a trademark?

18 September 2015


The Court of Justice of the European Union (CJEU) has issued its judgment (C-215/14) concerning Nestlé's application to register a shape mark for its four finger chocolate bar, otherwise branded as KitKat. The shape that Nestlé were trying to seek protection for is below:

So, what happened? Did they get the trademark or not? The CJEU's answer is a classic lawyer's answer: "it depends". But depends on what? In essence, provided you don't fall foul of the absolute grounds for refusal, then consumer perception is the key to success.

It is an answer which raises the need to educate would-be shape mark proprietors to use and create archives of evidence regarding use of the shape as a trademark, marketing spend on promoting the shape as a trademark, promotional activities and consumer reaction. It is also freighted with the prospect of survey evidence should you need to prove your case.

The good news is that use of the shape as a trademark can run alongside, or be part of, the use of other marks on a single product. This is a relief given that the reality of commercialising products and services often encompasses layers of brand indicators - house brands, item brands, sub-brands, slogans, jingles, shape, product colour-ways and so on.

The law:

The CJEU's judgment of 16 September 2015 focuses on Articles 3(1)(b) and (e)(i) and (ii) of Directive 2008/95/EC (the Directive). Those provisions state, in summary, that:

  • (Art 3(1)(b)) A trademark shall not be registered if it is devoid of distinctive character
  • (Art 3(1)(e)) A trademark shall not be registered if it consists exclusively of:
    1. the shape which results from the nature of the goods themselves;
    2. the shape of the goods which is necessary to obtain a technical result;
    3. the shape which gives substantial value to the goods;
  • (Art 3(3)) A trademark shall not be refused registration … in accordance with paragraph 1(b), (c) or (d) [N.B. not (e)] if, before the date of application … and following the use which has been made of it, it has acquired a distinctive character . Any Member State may in addition provide that this provision shall also apply where the distinctive character was acquired after the date of application for registration or after the date of registration.

The facts of the case:

1935 - Rowntree & Co Ltd put the four fingered chocolate bar onto the UK market under the brand "Rowntree's Chocolate Crisp"

1937 - product renamed "Kit Kat Chocolate Crisp" and then shortened to "Kit Kat"

1988 - Rowntree plc (as it was by then) was acquired by Nestlé

2010 - Nestlé apply to register the 3D shape mark as shown above at the UK Intellectual Property Office (UK IPO) in Class 30 covering, essentially, chocolate, cakes and biscuits. It is worth noting that the chocolate bar had been continuously on the UK market since 1935 and had not changed its shape during that time (only its size). The commercialised product also has the KitKat brand embossed into each of the four fingers of the chocolate bar.

2010 - The UK IPO accepted the application and published it for the purposes of opposition on the basis of acquired distinctiveness through use.

2011 - Cadbury filed a notice of opposition relying on Art 3(1)(b), Art 3(1)(e)(i) and (ii) and Art 3(3).

2013 - The UK IPO found that the trademark was devoid of distinctive character and that it had not acquired such character through use. The Examiner also noted that the shape as applied for had three basic features:

  1. the basic rectangular slab shape
  2. the presence, position and depth of the grooves running along the length of the bar
  3. the number of grooves which together with the width of the bar determine the number of fingers.

The Examiner took the view that the slab feature is a shape which results from the nature of the goods themselves and cannot be registered except for cakes and pastries for which the slab shape departs from the norms of the sector. He further held that the other two features are necessary to obtain a technical result and so rejected the application for registration save in relation to cakes and pastries.

2013 - Nestlé appealed to the High Court and Cadbury also cross-appealed the cakes and pastries registration decision.

2014 - Mr Justice Arnold in the High Court stayed the proceedings and referred various questions to the CJEU. You can read our detailed analysis of this decision here.

2015 - The CJEU held an oral hearing, which was followed by AG Wathelet's opinion. The AG's opinion has been summarised here. We now have the judgement of the CJEU.

The CJEU's decision:

The CJEU started from first principles. Shape marks are permitted under the Directive and any trademark must be able to perform the essential function of a trademark, namely of guaranteeing the origin of the goods and services for which it is registered. It also reminded the reader that shape marks should not be used to indefinitely prolong monopolies which are intended to be protected by other IP rights with definite life-spans.

The second question - the three criteria of Art(3)(1)(e)

With regard to the second question referred by the UK Court, which focuses on the interoperability of the three criteria which preclude registration of a shape mark, the CJEU was keen to point out that the criteria are to be considered separately. Refusal of registration can take place where only one of the criteria is fulfilled - you don't need to fulfil all three.

In this particular case it was clear that the three features identified by the Examiner might be covered by one or more of the three criteria, but the correct assessment to make is - is at least one of the grounds "fully applicable" to the sign in issue? If none of the three grounds is fully applicable then the public interest dictates that the registration should not be refused based on Art 3(1)(e).

The third question - function of the goods or method of manufacture - Art 3(1)(e)(ii)

The third question referred by the Court relates to Art 3(1)(e)(ii) and the refusal of registration where the mark concerned consists exclusively of the shape of the goods which is necessary to obtain a technical result. The referring court was keen to understand if this preclusion related to the manner in which the goods function or whether it also applies to the manner in which they are manufactured.

The CJEU noted that the purpose of Art 3(1)(e)(ii) is to prevent a monopoly being granted on technical solutions which a user is likely to seek in the goods of competitors. It opined that from the consumer's perspective the manner in which the goods function is decisive and their method of manufacture is not important.

It is not clear if this statement is borne out of evidence produced in the case or whether the CJEU is, yet again, determining in the absence of evidence what the habits of consumers are and how they think. (As to this, see the CJEU's commentary about internet consumers in the adwords decisions). The Court referred back to the three-headed razor case (Philips C-299/99) and reminded us all that the registration of a sign consisting of a shape attributable solely to the technical result must be refused even if that technical result can be achieved by other shapes and consequently by other manufacturing methods.

Consequently, the CJEU decided that Art 3(1)(e)(ii), which relates solely to signs "consisting exclusively of the shape of goods which is necessary to obtain a technical result", is "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. "

This answer does rather beg the question of whether a chocolate bar can ever be said to have a manner of functioning - surely they are just different shapes which are eaten? There is an argument of course that the fingers of chocolate are there to enable the user to snap off sections of chocolate for easier eating or sharing, but this particular consumer of chocolate would beg to differ. They are there to look different to other chocolate bars, surely? It is, after all, not difficult to snap bits off a bar of chocolate and share it or eat it.

The first question - acquisition of distinctive character - Art 3(3)

When assessing distinctive character you must assess it in relation to the relevant goods and services and through the eyes of the relevant class of persons, that is to say "an average consumer of the category of goods or services in question who is reasonably well-informed and reasonably observant and circumspect".

In order to build a case of acquired distinctiveness, the court is looking for evidence of use of the mark as a trademark. This is the "use of the mark for the purposes of the identification, by the relevant class of persons, of the goods or services as originating from a given undertaking".

The CJEU was keen to point out that such use could be (i) as part of a registered trademark or component thereof or (ii) of a separate mark in conjunction with a registered trademark. In other words, you do not have to prove that you have used only the shape as a trademark in relation to your goods and services. But the shape mark applied for must, on its own, be capable of fulfilling the essential function of a trademark.

Where does this leave Nestlé?

Probably breathing a sigh of relief that it appears (subject to Mr Justice Arnold) to have avoided the absolute grounds for refusal given that the case to date does not indicate that any of the three criteria are fully satisfied by the shape in issue (as opposed to one of the features of the shape). But then again it must be scratching its head - if the evidence before the UK IPO of acquired distinctive character wasn't enough then what will be enough? And can they produce it?

For example, if you consider the use made of the shape to date by Nestlé, it is not visible from the packaging of the goods. The wrapper for the KitKat is opaque and does not feature an image of the chocolate bar. Nestlé's 2015 TV advertisements on YouTube show people breaking off a finger of chocolate but mainly from a wrapped bar of chocolate and focus, visually, on the red and white packaging with the KitKat word mark and logo on it. The four finger shape is not shown.

The case will now be referred back to the UK High Court and we await further developments


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