Payback time for Cadbury in Kit Kat trade mark battle with Nestlé?

Who: Societe des Produits Nestlé SA v Cadbury

Where: Court of Justice European Union

When:16 September 2015

Law stated as at: 5 October 2015

What happened: Trade mark law prevents registration of a sign as a trade mark if it consists exclusively of:

1. the shape which results from the nature of the goods themselves,
2. the shape which is necessary to obtain a technical result, or
3. the shape which gives substantial value to the goods.

In this case, the exclusions, 1 and 2 above were considered.

Nestlé applied to register the shape of its 4-finger Kit Kat bar as a trade mark. The application was opposed by Cadbury and the Trade Mark Registry refused the registration. The examiner found that the sign was devoid of inherent distinctive character and that it had not acquired such a character following use. The examiner found that the shape had three features:

•  basic rectangular slab shape
• the presence, position and depth of the grooves running along the length of the bar
• the number of grooves

Nestlé appealed the decision to the High Court where Arnold J made a reference to the CJEU on interpretation of provisions relating to shape registrations and acquired distinctiveness in the Trade Mark Directive 2008/95/EC. The following questions were asked:

1. What is required to show that a trade mark has acquired distinctiveness through use?
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 as a trade mark precluded?
3. Whether the technical function exclusion is to be assessed both when the consumer purchases or uses the goods and also to be assessed at the time of manufacture of the goods. This question was only relevant to one of the elements of the shape- the position, presence and depth of the grooves.

The CJEU responded as follows:

1. The CJEU held that in order for Kit Kat to register the shape as a trade mark, the shape on its own, without any reference to any other mark, such as the the mark KIT KAT or any other logo, must be what the average consumer recognizes as originating from the undertaking of Kit Kat. The CJEU implied that the average consumer must be able to perceive the shape to originate from Kit Kat.
2. The CJEU responded that it is only necessary for one of the grounds of refusal of registration to be applicable to the shape, in order for the application to be refused. No ‘mix or match’ of the exclusions to the separate elements of the shape is allowable.
3. The CJEU concluded that the method of manufacture is not decisive to the consumer and is not relevant to the test.

The above CJEU guidance will be applied in the High Court to rule on the registrability of Kit Kit’s shape registration application.

Why this matters:

It will be interesting to see how the High Court decides this. In particular, what evidence will be required in order to satisfy the point on acquired distinctiveness. Since the court has ruled on no ‘mix and match’ of the separate elements and because neither of the exclusions apply to all the elements, it is possible that Nestlé/Kit Kat will be successful at the High Court. However this remains to be seen.