ECJ rules on Kit Kat shape mark case

The European Court of Justice (ECJ) has issued its decision in Nestlé v Cadbury (Case C-215/14), which concerned Nestlé’s attempt to protect the ‘four-finger’ shape of its Kit Kat bar as a trademark in the United Kingdom. The decision has divided opinion as to its potential implications for Nestlé.

In 2010 Nestlé applied to register the four-finger shape as a 3D mark in the United Kingdom for various goods in Class 30. Cadbury opposed.

The UK Intellectual Property Office found that the mark was devoid of inherent distinctive character and had not acquired such a character through use. In particular, it found that the shape has three essential features:

• the basic rectangular shape;
• the presence, position and depth of the grooves; and
• the number of grooves.

Nestlé appealed. The High Court referred several questions to the ECJ for clarification:

(1) In order to establish that a trademark has acquired distinctive character [through use] within the meaning of Article 3(3) of Directive 2008/95..., is it sufficient for the applicant… to prove that… a significant proportion of the relevant class of persons recognise the mark and associate it with the applicant’s goods…; or must the applicant prove that a significant proportion of the relevant class of persons rely upon the mark (as opposed to any other trademarks which may also be present) as indicating the origin of the goods?

(2) Where a shape consists of three essential features, one of which results from the nature of the goods themselves and two of which are necessary to obtain a technical result, is registration of that shape… precluded by Article 3(1)(e)(i) and/or (ii)...?

(3) Should Article 3(1)(e)(ii)... be interpreted as precluding registration of shapes which are necessary to obtain a technical result with regard to the manner in which the goods are manufactured as opposed to the manner in which the goods function?

The ECJ held as follows:

• For the purposes of registration, the applicant must prove that the mark alone – as opposed to any other mark which may also be present – identifies the undertaking from which the goods originate. Mere recognition of the shape is insufficient to prove acquired distinctiveness.
• A shape mark shall be precluded from registration where that shape has three essential features, one of which results from the nature of the goods and two of which are necessary to obtain a technical result, provided that at least one of the grounds for refusal is fully applicable to the shape at issue.
• Article 3(1)(e)(ii) must be interpreted as referring only to the manner in which the goods function and does not apply to the manner in which the goods are manufactured.

How the English High Court ultimately decides the case remains to be seen.

Counsel comment:

The decision is much better for Nestlé than expected. In relation to Article 7(1)(e), Cadbury’s arguments are unlikely to succeed, since none of the subsections applies to the Kit Kat shape in its entirety. On acquired distinctiveness, the ruling is also favourable. The traditional UK position requires evidence that consumers rely on the specific trademark when buying the product – this is virtually impossible to show when multiple distinctive brand identifiers are used together. However, the ECJ has rejected this position and instead found that Nestlé must show how consumers perceive the trademark – a much more achievable goal.

Hastings Guise, partner at Fieldfisher

Counsel comment:

The answer to the third question is interesting. While consumers are generally not concerned by manufacturing processes, the finding that the exclusion from registration applies only where the shape is dictated by the function of the product itself, and not where it is an inevitable result of the manufacturing process, may enable sophisticated businesses (and their sophisticated lawyers) to use trademark law to prevent competitors from using the same manufacturing process. In my view, the exclusion from registration of shapes dictated by function was intended to prevent businesses using trademarks to create monopolies that extend beyond the protection of indicators of origin.

Nick Bolter, partner at Cooley (UK) LLP

Counsel comment:

On the key issue of whether it is enough for people to associate the four-finger shape with Kit Kat, the ECJ ruled that more is needed, and that the shape on its own (without any branding or packaging) must allow people to identify the particular company from which the Kit Kat originates. The decision will still need to be interpreted by the High Court in light of the specific facts, but on the basis of this opinion it is bad news for Nestlé and good news for Cadbury.

Georgie Collins, partner at Irwin Mitchell