It has long been possible to seek the registration of (inter alia) “the shape of goods or of their packaging” as a trade mark both in the UK and in the rest of the European Union. Manufacturers have made good use of this entitlement over the past two decades to secure the registration of a wide range of three-dimensional (3-D) marks. Yet the confectionery industry has struggled to take advantage of this entitlement. Thus, in the last few years, Mars, Lindt and Storck have all failed in their respective attempts to register the shape of their confectionery as trade marks.
Now Nestlé has become the latest to be disappointed, for, in recent judgments handed down by British and EU courts, it failed to secure rulings that the shape of its well-known four-fingered KIT-KAT bar was a valid trade mark registration. We shall briefly review these rulings, and explain why Nestlé got its fingers so badly burnt.
The United Kingdom
The background
In 2010 Nestlé applied to the United Kingdom Intellectual Property Office (UKIPO) to register as a UK trade mark for chocolate and a range of other Class 30 goods a 3-D sign consisting of four trapezoidal bars aligned on a rectangular base (the Shape). Its competitor Cadburys[1] objected to the entire application on grounds of non-distinctiveness and lack of technical effect, as a result of which the UKIPO rejected most of the application. Both parties then appealed to the High Court of Justice, which referred to the Court of Justice of the European Union (CJEU) a series of questions for a preliminary ruling.
The CJEU handed down its ruling in September 2015[2], which was then applied by Arnold J in the High Court of Justice in January 2016 (the Decision)[3].
The decision
Both of the principal issues in suit related to Section 3 (“Absolute grounds for refusal of registration“) of the Trade Marks Act 1994 (the Act). The major issue was whether or not the mark was “devoid of any distinctive character”[4] and, if so, whether that prohibition should be disregarded if the trade mark had become distinctive in relation to the goods for which registration had been requested in consequence of the use which had been made of it. The other, and minor, issue was whether the mark was unregistrable on the grounds that it consisted exclusively of the shape of goods which was necessary to obtain a technical result.[5] We shall discuss each of these issues below.
Inherent distinctiveness?
EU jurisprudence recognises that the task of establishing distinctiveness for shape marks is more difficult than for other categories. Average consumers, it holds, are not in the habit of making assumptions about the origin of products on the basis of their shape, in the absence of any graphical or word element. Furthermore, it is not enough to show originality: the shape in question must differ substantially from the basic shape of the goods. And where low-priced goods are involved (like sweets, for example) consumers’ attentiveness tends to be low.
The hurdle to establish inherent distinctiveness in a case such as this was therefore high, and the UKIPO found that Nestlé had failed to clear it. In its opinion a trapezoid was a basic geometrical shape; and the Shape was “a mere variant on common shapes for chocolate bars and biscuits, i.e. rectangular bars with breaking grooves resulting in …. “fingers“”. In summary, Arnold J, in his Decision, agreed with the UKIPO that the mark was devoid of inherent distinctiveness.
Acquired distinctiveness?
But, even if a trade mark is devoid of any inherent distinctiveness, it may still be deemed to be registrable if, before the date of application for registration, it has in fact acquired a distinctive character as a result of the use made of it.[6] How was the test for acquired distinctiveness to be formulated, and had Nestlé satisfied it?
EU jurisprudence holds that, for the argument of acquired distinctiveness to succeed, the proprietor needs to evidence intense use of the mark, and to show that that use has enabled the sign to possess the central function of a trade mark, namely the function of indicating origin. In enunciating this test in its preliminary ruling, the CJEU said that:
“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.”
In his Decision Arnold J accepted this test, as he was bound to do, but placed a gloss on it by saying that he concludedthat:
“it is legitimate for the competent authority, 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.”[7]
This gloss by Arnold J appears, therefore, to suggest that a higher, “reliance-based” threshold may require to be reached in order to show acquired distinctiveness.
Technical result?
Cadburys had argued that the Shape’s three grooves and the joinder of the four bars through a thinner base contributed to making the portioning of those bars easier, that this was “a technical result”, and that the mark was therefore unregistrable. But the argument, though accepted by the UKIPO, was rejected by the CJEU and the High Court of Justice, which held that whilst facilitating the separation of the four fingers by the three grooves was a manner of manufacture, it was not a technical function.
The European Union
But if there is one thing worse than having to witness one’s trade mark application rejected, it is having to witness one’s trade mark registration invalidated; and this is the objective that Nestlé’s arch-rival Cadburys is seeking in the courts and tribunals of the European Union.
The background
Nestlé succeeded in 2006 in persuading the European Union Intellectual Property Office (EUIPO, previously known as “OHIM”) to register the Shape as a Community Trade Mark (since restyled “European Union Trade Mark”) in respect of “sweets, bakery products, pastries, biscuits, cakes, waffles”. This must have been the cause of much celebration, but the celebrations proved a little premature, for Cadburys applied in the following year for the registration to be declared invalid. Various U-turns on the part of the EUIPO then followed, until the case was appealed up to the EU’s General Court (EUGC, previously known as the “Court of First Instance”), which came down shortly before Christmas on Cadburys’ side of the argument.
The ruling of the EUGC[8]
The ruling, essentially, held up two fingers to Nestlé’s registration. Firstly, it peremptorily sliced away bakery products, pastries, cakes and waffles from the scope of the registration’s specification, holding that none of the evidence adduced by Nestlé established use of the mark in respect of those goods.
The court then turned its beady eye on the two surviving categories of goods, namely sweets and biscuits. The EUIPO’s Board of Appeal had been satisfied by Nestlé’s evidence of acquired distinctiveness in ten of the fifteen member states of which the EU was comprised at the date of the applications filing (March 2002), including all the big ones. “Not enough!”, asserted the EUGC. According to its judgment, acquired distinctiveness through use must be shown in all of the Member States concerned, not just in most of them. The case has therefore been remitted back to the EUIPO, and Nestlé will have to strain every nerve to show that the Shape had indeed acquired distinctive character, through use, in each and every one of the fifteen member states concerned.
Conclusion
All of the judgments discussed above represented sweet revenge for Cadburys, whose UK trade mark application to register a purple colour mark for chocolate has been strenuously opposed by Nestlé. But the litigation isn’t yet over for Nestlé’s EUTM. Will it somehow manage a lucky break?
[1] which has since rebranded to Mondelez, but which we shall continue to call “Cadburys” for the purposes of this article
[2] Case C-215/14, 16 September 2015.
[3] Société des Produits Nestlé SA. v Cadbury UK Limited [2016] EWHC 50 (Ch).
[4] Section 3(1)(b) of the Act.
[5] Section 3(2)(b) of the Act.
[6] Section 3(1)(proviso) of the Act.
[7] at paragraph [60] of the Decision.
[8] Mondelez UK Holdings & Services Limited v EUIPO – Société des Produits Nestlé, Case T-112/13, 15 December 2016