Société des Produits Nestlé SA v. Cadbury UK Ltd (Case C-215/14)
In a recent decision, the advocate general for the Court of Justice of the European Union issued his recommendation on the registrability of Société des Produits Nestlé SA’s (“Nestle”) three-dimensional mark, namely, the shape of its KIT KAT chocolate wafer bar. In doing so, he clarified the standard required to show that a three-dimensional product configuration has acquired sufficient distinctive character to warrant trademark protection.
Procedural background: On July 8, 2010, Nestle applied to register the following three-dimensional shape for its four-fingered chocolate-coated KIT KAT wafer bar (hereinafter “Chocolate Wafer Bar”) as a trademark in the UK covering, inter alia, “chocolate products; bakery goods; pastries; biscuits; biscuits having chocolate coating; chocolate coated wafer biscuits; cakes; cookies; wafers” and related goods in Class 30:
Nestle’s Chocolate Wafer Bar consists of a four-fingered chocolate-covered wafer that has remained nearly unchanged since it entered the market in 1935, though its size has been altered slightly since that time. Each of the “fingers” bears Nestle’s KIT KAT logo, and the entire four-fingered bar is stamped with a logo design.
Nestle’s competitor, Cadbury UK Ltd (“Cadbury”) opposed Nestle’s UK application on January 28, 2011, based, inter alia, on provisions of the UK Trademarks Act that transpose Article 3(1)(b), Article 3(1)(e)(i) and (ii), and Article 3(3) of the EU Trademarks Directive, which, inter alia, preclude registration of a mark that lacks distinctiveness or that consists exclusively of the shape that results from the nature of the goods themselves, or that is necessary to obtain a technical result.
On June 20, 2013, the UK Intellectual Property Office examiner found that the mark lacked inherent distinctive character, and that it had not acquired such character through use. According to the examiner, the mark consisted of the following three essential features:
a) a basic rectangular slab shape;
b) the presence, position, and depth of
the grooves running along the length of the bar; and
c) the number of grooves that, along with the width of the bar, determine the number of “fingers”.
The examiner found that the first essential feature—the basic rectangular slab shape—resulted from the nature of the Chocolate Wafer Bars themselves, and therefore that the mark could not be protected except with respect to “cakes” and “pastries.” He rejected the application for the remainder of the goods, finding that the other two essential features—the presence, position, and depth of the grooves and number of such grooves—were necessary to obtain a technical result.
Nestle appealed the decision on July 18, 2013 to the High Court of Justice of England & Wales, Chancery Division, Intellectual Property (UK), arguing against the examiner’s findings and also asserting that the mark had acquired distinctive character through its use. Cadbury cross appealed with respect to the registrability of the mark for pastries and cakes.
The High Court of Justice held that no distinction should have been made between “cakes and pastries” and the remainder of the Class 30 goods covered by the application, then referred the case to the European Court of Justice to clarify the following three questions:
1) Whether it is sufficient to establish that a trademark has acquired distinctiveness by showing that a portion of the relevant consumer class recognizes the trademark and associates it with the applicant’s goods or whether the applicant must instead prove that the portion of the relevant consumer class regards the trademark alone—and not any other marks that may be present—as indicating the origin of the goods;
2) Whether an application can only be refused if all of its essential elements consist of features of a shape necessary to obtain technical results (as Nestle asserts) or whether such an application could be refused if one element results from the nature of the goods and the other two elements are necessary to obtain a technical result (as asserted by Cadbury); and
3) Whether Article 3(1)(e)(ii), which precludes registration of a mark that consists of a shape necessary to obtain a technical result, applies only with respect to the function of the goods or also applies to the manner in which the goods are manufactured.
Relevant Statutory Law: Article 3 of the EU Trademarks Directive reads as follows:
“1. The following shall not be registered or, if registered, shall be liable to be declared invalid:
(b) trade-marks which are devoid of any distinctive character;
(e) signs which consist exclusively of:
i) the shape which results from the nature of the goods themselves,
ii) the shape of goods which is necessary to obtain a technical
iii) the shape which gives substantial value to the goods;
3. A trademark shall not be refused registration or be declared invalid in accordance with paragraph 1(b), (c) or (d) if, before the date of application for registration and following the use which has been made of it, it has acquired a distinctive character. Any Member State may in addition provide that this provision shall also apply where the distinctive character was acquired after the date of application for registration or after the date of registration.
ECJ Advocate General’s opinion: With respect to the first question, the Advocate General noted that case law made clear that it is insufficient to show that a relevant consumer recognizes the trademark and associates it with the applicant’s goods. Rather, the applicant must show that the relevant consumer believes the trademark indicates the “exclusive origin of goods concerned, without any possibility of confusion” (paragraph 38, citing Philips (C 299/99, EU:C:2002:377, paragraph 30). It rejected Nestle’s contention that the trademark need not have been used alone but could be considered in combination with or as a component of a registered trademark to achieve distinctiveness. The Advocate General reiterated that although the trademark may have acquired distinctive character when used with another mark, it must be capable of identifying the origin of the good by itself. In other words, the issue is whether the shape sought to be protected by Nestle, considered on its own without its packaging or the KIT KAT trademark, serves to identify the chocolate bar as being the Chocolate Wafer Bar sold by Nestle. The Advocate General further commented that, while he was not the competent authority to make this determination, it would be difficult to show that the average consumer of such chocolate products would be able to determine that they originated from Nestle and not from some other trader, such as Cadbury.
In answering the second question, the Advocate General agreed with Cadbury and found that if any one of the criteria listed in Article 3(1)(e) is satisfied, a sign cannot be registered as a trademark. The fact that the sign could be refused on a number of grounds is irrelevant so long as any one of the grounds fully applies to the sign, because each of the grounds mentioned in Article 3(1)(e) is meant to prevent grant of a monopoly on features connected in different ways to the shape of the goods themselves. Indeed, as the Advocate General explained, the rationale of Article 3(1)(e) is to avoid granting an applicant a monopoly on technical solutions or functional characteristics of a product that a user is likely to see in the products of competitors, so that competitors are not prevented from freely offering products incorporating such technical solutions or functional characteristics in competition with the trademark applicant.
Finally, the Advocate General addressed whether Article 3(1)(e)(ii), the provision that precludes registration for signs consisting of the shape of goods necessary to obtain a technical result, applies only to the manner in which the goods function or also to the manufacturing process of the goods. According to the Advocate General, the provision applies to both the function of the goods and the manufacturing process. Here, the presence of grooves in the Chocolate Wafer Bar gives the product its shape, which is necessary to achieve the desired technical result of allowing consumers to easily separate the wafer fingers. The angles of the grooves are determined by a specific chocolate mold used during the manufacture of the product.
The matter now awaits final judgement by the ECJ.
Conclusion: This decision underscores the difficulty of registering three-dimensional shape marks in the EU, as applicants of such marks must prove that the relevant consumer would view a shape, when standing alone, as indicative of the exclusive origin of the goods concerned, without any possibility of confusion. The opinion makes clear that it is not enough for the relevant consumer to simply recognize and associate the shape with the applicant.
Additionally, the Advocate General’s opinion clarifies that the technical result preclusion to registration found in Article 3(1)(e)(ii) applies not only to the way a shape functions for the end user, but also the way the shape functions during the manufacturing process. The decision also confirms that Article (3)(1)(e) applies when any one of the grounds fully pertains to the sign since the purpose of the provision is to avoid granting an applicant a monopoly on any technical solutions or functional characteristics of a product.
The EU is not the only jurisdiction where Nestle faces challenges in trying to protect its Chocolate Wafer Bar shape. Our March 2015 Information Letter reported a decision by the Singapore High Court revoking Nestle’s registrations for its two-finger and four-finger Chocolate Wafer Bar shapes. [March 2015 Newsletter Article] There, the court found, inter alia, that the Chocolate Wafer Bar shape consisted of elements that were functional. It found that the rectangular slab shape, allowed for production and packaging at a commercially desirable speed, was selected to be deep and wide enough to hold sufficient quantities of chocolate and wafer filling while maintaining structural integrity, and cooled and set within certain time frames dictated by machines, the rate of production, and the length of the production line. The Singapore court also found that the presence and angles of the grooves facilitated removal of the product from its chocolate molds and also allowed for easy separation of the fingers by consumers, and that the number of grooves was informed by considerations such as the size of conventional shop displays, consumer hand size, and desired portion size.