No Break for Nestle in Kit Kat Dispute

It's fair to say that Cadbury and Nestlé have a bit of history when it comes to trade mark disputes. First, Nestlé opposed Cadbury's application to register a particular shade of purple as a trade mark in the UK. The Intellectual Property Office and the High Court initially allowed the application. Nestlé then appealed to the Court of Appeal which overturned the High Court decision finding that the mark was not "a sign" within the meaning of Article 2 of the Trade Marks Directive and that the mark was not capable of graphical representation. Consequently the mark applied for could not qualify for registration.

Round one and first blood to Nestlé.

Cadbury hit back however when Nestlé applied to register the three dimensional, four fingered shape of its popular Kit Kat bar as a trade mark for snacks in the UK. Nestlé's application was initially allowed by the Intellectual Property Office for "cakes" and "pastries" on the grounds that, although the mark lacked inherent distinctiveness, Nestlé had shown that the mark had acquired distinctive character through prior use. Indeed, survey evidence demonstrated that 90% of people responded "Kit Kat" upon seeing the shape.

Cadbury opposed the application on the absolute grounds that the mark is

(i) devoid of distinctive character;

(ii) a shape which results from the nature of the goods themselves; and

(iii) a shape which is necessary to obtain a technical result.

Given the uncertainty of the law in this area, the High Court stayed proceedings between the parties to refer the following questions to the Court of Justice of the European Union ("CJEU"):

1. With regards to whether the mark had become distinctive of Nestlé's goods, was it necessary for the public to recognise and associate the mark as designating the origin of Nestlé's goods by itself, i.e. without any other features such as the Kit Kat name embossed on the bar?
2. If a shape consists of a number of essential features, two of which are necessary to obtain a technical result, is registration of that shape as a trade mark precluded?
3. If the shape of the goods is necessary to obtain a technical result with regard to the method of manufacture, is the shape precluded from registration?

On 11 June 2015, Advocate General Wathelet of CJEU provided his opinion on the questions submitted. In respect of question one above, the Advocate General stated that the mark in respect of which registration is sought must be able to indicate the exclusive origin of the goods or services concerned without any other features or marks and without confusion with a competitor's goods.

With regard to question two, the Advocate General asserted that the registration of a shape mark should be precluded where it consists of at least one essential feature necessary to obtain a technical result. On the third question, the Advocate General was of the opinion that registration of a shape mark should also be precluded where the shape is necessary to produce a technical result in the way the goods function as well as in the way they are manufactured.

Whilst CJEU is not bound by the Advocate General's opinion, it is followed in most cases and once CJEU has given its judgment, the High Court will be able to make a decision on the application. The Advocate General has set a high bar for proving distinctiveness in respect of the shape mark and, if followed, Nestlé is likely to face difficulties in proving that the public identify the shape mark with Kit Kat without the possibility of confusion with any third party products.

Even if Nestlé can overcome the first hurdle, it is likely that the mark will still be precluded from registration on the grounds that the shape consists of essential characteristics that are necessary to obtain a technical result.

It therefore looks as though Cadbury may be about to draw level on points after round two, although this is unlikely to be the end of the bout.

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.