It is common knowledge the long running confrontation between Nestlé vs. Cadbury Schweppes (nowadays Mondelez UK Holdings & Services) for more than 10 years.
In 2006, EUIPO registered the 3-D European Union Trade Mark (EUTM) for the shape of the ‘4 Finger KitKat’ product which Nestlé markets and in 2007, Cadbury (now Mondelez) filed a declaration of invalidity of the registration before the EUIPO. Mondelez commercialises the Norwegian bar Kvikk Lunsj:
In 2012, the EUIPO’s Second Board of Appeal annulled the decision of the Cancellation Division which had held that the 3-D EUTM was devoid of distinctive character and rejected that application. On the contrary, it took the view that Nestlé had proved that the shape had acquired distinctive character in a substantial part of the EU where the shape had been initially non-distinctive [Case R 513/2011-2 Société des Produits Nestlé SA v Cadbury Holdings Ltd].
Regarding the inherent distinctiveness of the Kit Kat shape, consisting of four trapezoidal bars aligned on a rectangular base, the Board commented that a mere variant of a common product shape will not be distinctive, even if original; such a shape must depart substantially from the norms of the relevant trade in order to function as a trademark. The mark at issue would not be perceived as a business identifier by the public, which would see the bars just as portions of the product.
Nestlé submitted abundant evidence to prove the acquired distinctiveness of its mark, most notably consumer surveys conducted by specialist market research companies in EU countries including France, Germany, Italy, Spain and the UK, where consumers were asked what the product shape brought to mind. The Board agreed that the population of the five countries together made up 79.2% of the total relevant EU population as composed by the fifteen member states of the EU at the time of registration.
Mondelez brought an Action before the General Court for the annulment of EUIPO’s decision and on 15 December 2016, the General Court annulled EUIPO’s decision.
It considered that EUIPO had erred in law in finding that the mark at issue had acquired distinctive character through use in the EU, when such acquisition had been proved only for part of the territory of the EU: ten countries (Denmark, Germany, Spain, France, Italy, the Netherlands, Austria, Finland, Sweden, and the UK). This left Belgium, Ireland, Greece, Luxembourg and Portugal.
The controversial question here is the geographical extension of the evidence and if the General Court’s interpretation could be incompatible with the unitary character of the European trade mark.
According to the case-law, a sign without inherent distinctive character can be registered as a EU trade mark only if it is proved that it has acquired distinctive character in the part of the EU in which it did not previously have such character. Where appropriate, that part may be comprised of a single Member State.
Consequently, it followed that a mark which was, ab initio, devoid of distinctive character across all Member States, could only be registered if it were proved that it has acquired distinctive character throughout the territory of the European Union.
In this case, the Court upholds the General Court’s judgment and concludes that the acquisition of distinctive character by a mark that was initially devoid of inherent distinctive character must be shown throughout the EU, and not only in a substantial part of the territory of the EU.
Therefore, it follows from the above that EUIPO erred in law when in its decision concludes that distinctive character had been acquired through use of the mark at issue without adjudicating on whether that mark had acquired such distinctive character in Belgium, Ireland, Greece and Portugal.
This judgement will have clear implications for future shape mark cases and possibly, applicants may give greater consideration to applying for national trademarks and/or filing for a registered European design right.
However, it is not clear that this is the end of the road for Nestlé’s Kit-Kat trademark registration. It is just a… “have a break”!