Time to have a Break? ECJ rules in KitKat Trade Mark Dispute

Nestlé has lost a 10-year-long battle against Cadbury to try and gain an EU-wide trade mark for the KitKat’s “four trapezoidal bars aligned on a rectangular base”. They will not be able to stop other companies from copying the shape, for now.

The Dispute

The KitKat is iconic as one of the most popular chocolate bars in the UK. Its shape has surely helped, which hasn’t taken a break since production began in 1935. However, European Union law provides that a sign or shape which is without inherent distinctive character can only be trade-marked once it has acquired distinctive character. Distinctive character simply means that a product can be recognised by its shape alone, without any other reference to its brand. Pringles and Toblerone fall into this category.

Nestlé applied to the EU’s Intellectual Property Office (EUIPO) to register the shape in 2002. This was granted in 2006 in respect of sweets, bakery products, pastries, biscuits, cakes and waffles. In 2007, Mondelez UK, the holding company who own Cadbury, applied to the EUIPO for a declaration of invalidity of the KitKat’s registration.

The EUIPO rejected the application, certain that the KitKat had acquired distinctive character. Mondelez proceeded to the EU’s General Court to annul the EUIPO’s decision, and won. The Court found that Nestlé had proved the KitKat had acquired its distinctive character for merely part of the EU, not the whole territory. The Court were not satisfied that the KitKat was so distinctive in four Member States in particular: Belgium; Ireland; Greece; and Portugal.

The Decision

This decision was appealed by all parties, victors and all. Nestlé and the EUIPO argued that Nestlé do not have to show that the KitKat has acquired a distinctive character in each and every one of the EU’s Member States. They reasoned that proving distinctiveness in a significant part of the EU is not just sufficient but essential to the preservation of the idea and existence of the single market.

Meanwhile, Mondelez argued that the General Court were wrong to find that Nestlé had proved distinctive character in the Member States that it did, including Denmark, Germany, Spain, France, Italy, the Netherlands, Austria, Finland, Sweden, and the UK.

In late July 2018, the ECJ decided to uphold the General Court’s annulment of the trade mark. In doing so, the ECJ rejected Mondelez’s arguments, as they were deemed peripheral to the issue of whether a company has to show distinctive character across all parts of the EU.

On that point, the ECJ found that a trade mark can not apply to the whole of the EU so long as there is a part of the EU in which the product has not acquired distinctive character. Given that a part can be a mere Member State, unless the product acquires distinctive character in that last remaining state, no EU-wide trade mark can be granted.

Conclusion

The decision will be welcomed by manufacturers and brands who want to shape chocolate into four trapezoidal bars and align them on a rectangular base. Indeed, the makers of Kvikk Lunsj (pronounced quick lunch), a Norwegian bar which entered the market in 1937, just two years after the KitKat, will no doubt be happy.

Nestlé say that this is “not the end of the case” and they believe the EUIPO will re-register the KitKat, once it hears more evidence that the shape is distinctive of KitKat in every part of the EU.

The court was keen to point out that despite the legal bar being set relatively high, the evidential bar may not be so. While a shape must be distinct in all of the EU to merit an EU-wide trade mark, the applicant need not extract evidence from each member state individually.

If more than one Member State is grouped together, say for advertisement or distribution purposes, so as to form one coherent part of the EU, then evidence of distinctive character from Paris to Perpignan and from Parma to Palermo may suffice to show distinctiveness in a part of the EU that is made up of France and Italy.

And there is the option of registering a trade mark at the National level– the KitKat is already trade-marked in France, Germany, Spain and Italy– however, this isn’t necessarily easier.

When Nestlé applied in the UK, Cadbury resisted and 16,000 words later, the Court of Appeal held that the bar had “no inherent distinctiveness” and had acquired none in the UK. Imitation bars can now be found on the shelves in UK supermarkets, which will surely bring Nestlé back to court.

Originally published at ipharbour.com on August 2, 2018.