The Court of Justice of the European Union has issued its judgment in relation to Swiss chocolate giant Nestlé's EU trade mark for the shape of its KitKat chocolate bar.
In upholding the decision of the General Court, the CJEU held that, in order to prove that a trade mark which is devoid of inherent distinctive character has acquired distinctiveness, the owner of the mark must prove this in every Member State in respect of which the inherent distinctive character is lacking. If inherent distinctiveness is lacking in every Member State, then it must be proved in every Member State.
As Nestlé had not proved that its mark had acquired distinctiveness in every relevant Member State, the Board of Appeal had incorrectly found the mark to be valid.
16 years ago, in March 2002, Nestlé applied for a European trade mark for the shape of its four-fingered KitKat chocolate bar, in class 30 for biscuits, amongst others:
The mark was registered in July 2006. Less than a year later, in March 2007, major competitor Cadburys Schweppes (now Mondelez) filed an application with the EUIPO for a declaration of invalidity in relation to the mark, on the basis that the mark was devoid of distinctive character.
In parallel with the EU litigation, there was ongoing UK litigation between the parties in relation to Nestlé's application for a UK mark for the same shape. In May 2017, the Court of Appeal upheld Mr Justice Arnold's decision at first instance and refused to register the UK mark on the basis that Nestlé had failed to prove acquired distinctiveness in the UK.
By contrast in the EU proceedings, although the General Court agreed that the mark was devoid of inherent distinctive character, it held in its December 2016 judgment that Nestlé had proved acquired distinctiveness not only in the UK, but also in Denmark, Germany, Spain, France, Italy, the Netherlands, Austria, Finland and Sweden. As at the filing date of the mark in March 2002, there were 15 Member States of the EU. The population of the Member States in which Nestlé had proved acquired distinctiveness represented almost 90% of the total EU population at that time. Nevertheless, the General Court found such a 'merging' of territories was not permissible. The relevant question was whether, throughout the Union, a significant proportion of the relevant public perceive a mark as an indication of origin. A lack of recognition in one part of the territory could not be offset by a higher level of awareness in another. The General Court accordingly considered that the approach of the Board of Appeal, in concluding that distinctive character had been acquired through use, without adjudicating on whether the mark had acquired distinctive character in Belgium, Ireland, Greece and Portugal, was incorrect. Strangely, the General Court seems to have forgotten about Luxembourg!
In yesterday's judgment, the CJEU upheld the decision of the General Court. Nestlé's mark, the simple four-fingered shape of its chocolate bar without the embossed 'KitKat' seen on the marketed product, was not inherently distinctive in any part of the EU. Nestlé therefore had to prove acquired distinctiveness in every Member State. As Nestlé had not done this, it was incorrect for the Board of Appeal to have found its mark to be valid.
The decision clearly sets a high bar for proving the acquired distinctiveness for marks which are not inherently distinctive in any part of the EU. Nevertheless, depending on the structure of a trade mark owner's operations, they might be able to rely on the same evidence to show acquired distinctiveness across several Member States. The CJEU highlighted this might be possible where the trade mark owner has grouped more than one Member State together in the same distribution network and treated them as if they were one and the same national market, for example for marketing strategy purposes. Equally, the CJEU recognised that there may be situations where due to a geographic, cultural or linguistic proximity between two Member States, the relevant public of the first has a sufficient knowledge of the products and services that are present on the national market of the second. However, the evidence will still need to demonstrate that the mark is distinctive across the EU.
It remains to be seen how Nestlé will take the matter forward procedurally. In a quote on the BBC, Nestle said that it believed its evidence was strong enough for the EUIPO still to keep the mark on the register, but time will tell. It is presumably too late to file additional evidence in relation to the March 2002 application, but if the existing evidence is not, in fact, sufficient, Nestlé could still file a new application. If it did this, Nestlé would have to prove acquired distinctiveness across each Member State of what is now a significantly larger Union.