Break it Up

The High Court rules that Nestlé’s KIT KAT shape mark has not acquired distinctiveness - but how does one prove distinctiveness?

The latest judgement concerning Cadbury’s opposition to Nestlé’s application to register the shape of their four fingered KIT KAT chocolate bar as a UK Trade Mark for various types of confectionery (including chocolate, cakes and biscuits) has been handed down.

Following the CJEU’s ruling on the questions referred in Nestlé’s appeal to the High Court, Cadbury accepted that only remaining issue was whether Nestlé’s mark had acquired distinctive character and therefore was registrable as a Trade Mark. The judge’s task was to interpret the CJEU’s answer on what a Trade Mark Applicant must show to prove this.

 

Background
Cadbury argued that the shape of Nestlé’s KIT KAT chocolate bar was non-distinctive, i.e. as it was a common shape for confectionery, it did not fulfil the essential function of distinguishing Nestlé’s goods and services from those of others, and so could not be registered as a Trade Mark. It is well established that UK and European courts hold the view that consumers typically do not identify the origin of goods by their shape, and therefore shape marks are typically  deemed unregistrable. When Nestlé’s appeal was first heard in the High Court, the judge held that the shape mark applied for by Nestlé was inherently devoid of distinctive character in relation to all of the Class 30 goods applied for.

An objection that a Trade Mark is inherently non-distinctive can be overcome by showing that at the time of application, owing to longstanding use of the mark, a significant proportion of consumers would identify goods/services bearing the mark as coming from a particular origin, so that the mark had “acquired distinctiveness”. Nestlé’s application had passed through the initial examination stage and had been accepted for publication on this basis. Cadbury contended that at the time of application, the mark had not acquired distinctiveness and therefore should not be accepted for registration.

Nestlé’s hurdle in showing that their shape mark had acquired distinctiveness was that, although the KIT KAT product was noted by the High Court to have been sold in the same shape since the 1930s, unsurprisingly they have not been sold in clear plastic bags, but in a wrapper bearing the ‘KIT KAT’ word mark. This made it difficult for Nestlé to show that consumers relied upon the shape of Nestlé’s product to designate the origin of the goods, instead of the word mark ‘KIT KAT’, as the shape is only seen by consumers after the purchase has been made.

Nestlé had tried to overcome this obstacle by submitting survey evidence. In the second survey conducted, respondents were shown a picture of the shape mark applied for by Nestlé and asked a series of questions, the first being “what, if anything, can you tell me about this?” The Hearing Officer found that this survey showed that at least 50% of people believed the product shown to them to be Nestlé’s KIT KAT. However, when the case first came before the High Court, the judge agreed with the Hearing Officer’s view that this survey was only sufficient to show that a proportion of consumers “recognise” the mark and “associate” it with Nestlé, not that a proportion of consumers rely on the shape mark applied for (as opposed to any other Trade Mark that may be present) as indicating the origin of the goods.

Nestlé argued that showing that a proportion of consumers recognise their shape mark and associate it with them was enough, bringing into sharp focus an uncertainty in the law of ‘acquired distinctiveness’. Was this enough? Or must an applicant prove that a significant proportion of consumers rely on the shape mark applied for (as opposed to any other trade mark present) as indicating the origin of the goods? The judge thought it necessary for the law to be clarified and referred the question to the CJEU.

 

The CJEU ruling
The CJEU reformulated the referred question as follows:

“…whether an applicant to register a trade mark which has acquired distinctive character following the use which has been made of it 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 associates it with the applicants  goods.”

The CJEU concluded that the correct test was the first of the two options, underlined above.


The High Court decision
In essence, whilst the CJEU’s answer implied that the “recognition and association” test (explained above) was not the correct test, it was not obvious that the answer given by the CJEU corresponded with the judge’s alternative.

Taking the view that referring the question again would prove fruitless, the judge looked elsewhere in the judgement as to what is needed to 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”. Drawing from the Advocate General’s opinion, as well as references to previous authorities cited in the CJEU’s ruling, he concluded that to prove that a mark has acquired distinctive character the applicant must:

“…prove that, at the relevant date, a significant proportion of the relevant class of persons perceive 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 be present)”.

After stating that “…it cannot be assumed that this test is the same as a test of reliance”, the judge considered Cadbury’s submission that implicit in perceiving a mark as a Trade Mark (identifying the undertaking from which the goods originate), is relying on that sign to distinguish the goods and services from those of other undertakings. The judge seemed to accept that reliance is implicit in perceiving a mark as a Trade Mark, ruling:

“…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 service 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

Applying this to the facts of the case, the judge held that the Hearing Officer had not erred in law by asking if consumers had come to rely on the shape of Nestlé’s KIT KAT to identify the origin of the goods, a question the Hearing Officer had answered in the negative for the following reasons:

1. There was no evidence the shape had appeared in Nestlé’s promotions prior to the date of application
2. The product was sold in a wrapper that did not show the shape of the goods
3. The lack of evidence that consumers use the shape of the goods after purchase to check they had chosen the product from their intended trade source.

 

Conclusion
One might conclude that, if when examining whether a significant proportion of consumers would perceive a mark in a Trade Mark sense, one must consider whether a consumer would rely (emphasis added) on the mark as identifying the undertaking from which the product originated; the High Court Judge in fact determined that the CJEU’s answer is essentially the same as the judge’s second alternative. Put simply, evidence that a consumer relies on a mark, (as opposed to any other mark that may be present), as indicating the origin of the goods, is required to demonstrate that a consumer perceives a mark in a Trade Mark sense and therefore that a mark has acquired distinctiveness.

Recent reports in the media suggest that Nestlé intend to appeal the decision, so a final interpretation of the CJEU’s judgement may be some way off, and so the Chocolate War will be continued. However, for now at least, the threshold for establishing that a shape mark has acquired distinctiveness remains a high one.
 

Timothy Lancaster
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