Nestlé loses trademark battle for four-fingered Kit Kat shape

On Wednesday 25 July 2018 the European Court of Appeal ruled that Nestlé’s Kit Kat’s shape was not sufficiently distinctive in all European countries to successfully acquire trademark protection across the EU.

It was held that it is not enough to prove that the "four trapezoidal bars aligned on a rectangular base" had become well-known in a “significant part” of the EU; rather, it must be proven across all Member States.

In this case, Nestlé had not shown the product’s shape as a mark of distinctive character in Belgium, Ireland, Greece and Portugal, therefore vitiating any trademark it had attempted to acquire.

Background

In 2002 Kit Kat applied for protection of its design at the EU’s intellectual property office. Protected status was granted in July 2006 for a three-dimensional sign with EUIPO showing the four-fingered Kit Kat shape.

This was then contested by Cadbury Schweppes in 2007, relying on Article 7(1)(b) of Regulation No 207/2009: “trademarks which are devoid of any distinctive character”. The mark was declared invalid in January 2011 as it was held that the chocolate bar itself was not distinctive.

This decision was then annulled by the Second Board of Appeal, determining that the mark had acquired distinctive character through its use in the EU. Mondelez, the makers of Kvikk Lunsj (a Norwegian Kit Kat-esque chocolate bar) and owners of Cadbury, took up the case, lodging an application at the General Court Registry in February 2013 seeking annulment of the decision. The General Court held that the Board of Appeal had erred in concluding that, for the purposes of proving distinctive character acquired through use in the EU, it was sufficient to show a substantial proportion of the relevant public of the EU (merging all the Member States and regions) perceived the mark having acquired a distinctive character, rather than every EU Member State individually.

The General Court concluded that in France, Italy, Spain, the United Kingdom, Germany, the Netherlands, Denmark and Sweden, Finland, and Austria, the mark had acquired a distinctive character. However, this did not mean that distinctiveness of the Kit Kat shape had been acquired throughout all the member states, even though the population of those where it had been acquired amounted to almost 90% of the EU’s population.

In 2017 the English Court of Appeal ruled in separate proceedings that the four-finger KitKat shape was not capable of registration as it lacked distinctiveness and had not acquired distinctiveness through use in the UK.

Appeal

Nestlé appealed in the European Court on a single ground, alleging infringement of Article 52(2) of Regulation No 207/2009 read in conjunction with Article 7(3) of that regulation:

“52(2) Where the Community trade mark has been registered in breach of the provisions of Article 7(1)(b), (c) or (d), it may nevertheless not be declared invalid if, in consequence of the use which has been made of it, it has after registration acquired a distinctive character in relation to the goods or services for which it is registered.”

-

“7(3) Paragraph 1(b), (c) and (d) shall not apply if the trade mark has become distinctive in relation to the goods or services for which registration is requested in consequence of the use which has been made of it.”

Nestlé argued that the General Court was wrong to hold that the Board of Appeal had erred in law in deciding that the mark had acquired distinctive character without analysing the evidence of Belgium, Ireland, Greece and Portugal. It was argued that the General Court’s decision was “incompatible with the unitary character of the EU trade mark and the very existence of a single market” [63].

Mondelez also appealed that it was not sufficient for an EU trade mark to be distinctive in a substantial part of the European Union if it is not distinctive in another part of the European Union – even if that part consists of only one Member State [64].

Judgment

The CJEU considered the starting point to be Article 1(2) of Regulation No 207/2009, which states that “an EU trade mark is to have a unitary character and is to have equal effect throughout the EU”.

Whilst the Court agreed that a mark could acquire distinctive character through use, despite not, ab initio, having such character (Article 7(3)), it does not follow that it is sufficient for distinctive character to be shown to exist in a “significant part of the European Union” when evidence has not been provided in respect of every Member State [78].

The CJEU held that the issue was not whether a non-distinctive mark had come to acquire distinctiveness in a significant part of the EU but whether it had done so in those parts where it did not “previously have such character…”.

The evidence submitted must be capable of establishing the acquisition of the mark’s distinctive character in all parts where it was previously devoid of it, which may in practice mean the whole of the EU [83]. The CJEU therefore found that the General Court did not err in law.

Finally, the Appeal Court stressed that “it is not…sufficient that the party with the burden of providing such evidence merely produces evidence of such acquisition that does not cover part of the European Union, even a part consisting of only one Member State.” [87] Without fully considering evidence from Belgium, Ireland, Greece and Portugal, it was impossible to know whether the mark had acquired a distinctive character in every Member State.

Commentary

The most obvious consequence of this judgment is that for any product that companies are attempting to trademark that were not originally found to be of distinctive character, the company must obtain supporting evidence for each EU country. Marketing strategies may be sufficient evidence of this.

This judgment may lead to more attempts by companies at trademarking unusual shapes at a product’s inception so as to acquire obvious distinctiveness.