Kit case - Have a break and wait for CJEU to clarify law on shape trade marks

What should brand owners consider before attempting to register three-dimensional shape marks?

Societe Des Produits Nestle SA v Cadbury UK Ltd [2014] EWCH 16 (Ch)

In the course of a dispute concerning the claimant company's attempt to register a trade mark of similar shape to the Kit Kat bars sold by the claimant, the Chancery Division decided that three questions would be referred to the Court of Justice of the European Union (CJEU).

What is the background to this dispute?
This case is the latest development in an ongoing dispute between Nestlé and Cadbury concerning Nestlé's attempts to register a three-dimensional mark (representing a four fingered Kit Kat). The full judgment is available to Lexis Nexis subcribers here.

On 20 June 2013, the UK Intellectual Property Office (IPO) refused Nestlé's trade mark application in class 30 for various chocolate and chocolate confectionary products, including biscuits but allowed the application in relation to cakes and pastries.  

The IPO decided:

1. The mark consisted exclusively of the shape of the goods which was necessary to obtain a technical result and therefore not allowable under trade mark law. Specifically, the basic rectangular 'slab' shape results from the nature of moulded chocolate bars or biscuits bars—the breaking grooves are necessary to receive a technical result (the ability to break up the bar for easy consumption). None of the features of the Kit Kat shape were deemed decorative or arbitrary.

2. The basic grooved rectangle shape of the mark lacked inherent distinctiveness because it is common in the field of chocolate bars and biscuits (though the shape could be distinctive in respect of cakes and pastries).

3. The mark had not acquired distinctiveness as Nestlé claimed. The IPO found that it was not sufficient that consumers associate the shape mark with Kit Kat (as established by survey evidence in the IPO hearing). Instead Nestlé would need to prove that consumers perceived the shape as a badge of origin, a means of identifying the product. In this case, the IPO concluded that consumers relied on the word mark Kit Kat as a means of identifying the product (both on the packaging and embossed on the chocolate itself).
Nestlé appealed the IPO's decision. In the High Court, Arnold J concluded that certain aspects of trade mark law are in need of clarification before this case can be decided. Consequently, the High Court will refer questions to the CJEU.

Why is this case important?
Registering the shape of goods as a trade mark (as opposed to the shape of packaging, for example) is, in principle, allowable but in practice problematic. This case makes it clear that more guidance is needed in this area to establish in which circumstances a brand owner can secure a monopoly in the shape of a product by registering it as a mark. The Trade Mark Directive 2008/95/EC (TMD) as implemented by the Trade Marks Act 1994 (TMA 1994), prohibits registration of signs which consist exclusively of the shape which results from the nature of the goods themselves (TMD, art 3(1)(E)(i) and TMA 1994, s 3(2)(a)) and the shape of goods which is necessary to obtain a technical result (TMD, art 3(1)(ii) and TMA 1994, s 3(2)(b)).

These provisions are designed to prevent anti-competitive registrations which would give a trader the right to prevent its competitors using a functional shape or the inherent shape of the goods in question.

The CJEU has already made it clear that it is important, when considering the parameters of a registrable trade mark, to distinguish a property of the product from signs capable of distinguishing goods and services (Dyson Ltd v Registrar of Trade Marks Case C-321/03), [2007] All ER (D) 201 (Jan)).

This case also highlights an area of ambiguity around the test for acquired distinctiveness for shape marks—whether it is enough that the shape is linked with a brand or, if instead, that shape must be perceived by consumers as the embodiment of a brand—as its badge of origin.

What issues has the High Court asked the CJEU to address?
There are three issues to be clarified by the CJEU, and questions will be referred by the High Court along the lines of the following:

1. In order to establish that a trade mark has acquired a distinctive character following the use that had been made of it within the meaning of TMD, art 3(3) is it sufficient for the applicant to prove that at the relevant date a significant proportion of the relevant class of persons recognise the mark and associate it with the applicant's goods in the sense that, if they were to be asked who marketed the goods in question, they would identify the applicant. Alternatively, must the applicant prove that a significant proportion of the relevant class of persons rely on the mark (as opposed to any other trade marks which may also be present) as indicating the origin of the goods? (Note, Arnold J offered his view on the latter alternative as being correct)

2. Where a shape mark comprises three essential features, one resulting from the nature of the goods themselves and two of which are necessary to obtain a technical result, is registration of the shape as a trade mark precluded by TMD, art 3(e)(i) and/or (ii)?

3. Should TMD, art 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?
Arnold J indicated his own opinion was that questions 2 and 3 should be answered in the affirmative.

Following the progress of this matter to date, brand owners should consider that it is not enough to show that a significant proportion of consumers recognises the shape in question and associates it with the product. Instead, a brand owner would need to show that consumers rely on the shape of goods to identify the origin of the product. This may be a difficult hurdle to overcome because shape of goods do not normally convey trade mark significance in the way a brand name or logo would do.

Those wishing to register or challenge marks representing the shape of products will be keenly waiting for clarification from the CJEU.

Jessica Stretch, solicitor in the Lexis®PSL IP & IT team.