Société des Produits Nestlé SA v. Cadbury UK Ltd (Case C-215/14)
In a recent decision, the Court of Justice of the European Union answered three questions concerning the registrability of three-dimensional shape marks, referred by the UK High Court in connection with a case involving Société des Produits Nestlé SA’s (“Nestle”) UK application to register its three-dimensional mark, namely, the shape of its KIT KAT chocolate wafer bar. The questions were:
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 rely upon 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.
We reported the factual and procedural background to this case and the recommendation of the Advocate General for the Court of Justice of the European Union in September 2015. See September 2015 Newsletter
On June 26, 2015, Nestle applied to reopen the oral part of the procedure, which had been closed following the Advocate General’s opinion, arguing that the Advocate General did not adequately answer the first question. Nestle also asserted that the Adequate General’s opinion was based on a misinterpretation of Nestle’s written observations. The ECJ dismissed Nestle’s motion to reopen the proceedings and delivered its decision on September 16, 2015.
For our readers’ ease of reference, the relevant statutory law is set forth below:
Relevant Statutory Law: Article 3 of the EU Trade Marks 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
i) the shape which results from the nature of the goods themselves,
ii) the shape of goods which is necessary to obtain a technical result,
iii) the shape which gives substantial value to the goods.
3. A trade mark 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’s decision and comments:
(a) The ECJ addressed the second question first, namely whether Article 3(1)(e)(i) precludes registration of a shape as a trademark when that shape consists of three essential features, one resulting from the nature of the goods themselves and the other two being necessary to obtain a technical result. It concluded that Article 3(1)(e) must be interpreted as precluding registration of such a shape, provided that at least one of the grounds of refusal is fully applicable to the shape at issue.
This decision is largely in line with the Advocate General’s opinion, which 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.
It will be interesting to see how this standard is applied to the facts of the case, as it is not clear that any of the sections of Article 3(1)(e) “fully apply” to the shape at issue. Rather, the UK Examiner found that the first essential feature (the basic rectangular slab shape) results from the nature of the Chocolate Wafer Bars themselves, whereas the other two essential elements-the presence, position, and depth of the grooves and number of such grooves—are necessary to obtain a technical result.
(b) The ECJ then addressed the third question, determining that the provision in Article 3(1)(e)(ii), which precludes registration of signs consisting exclusively of the shape of goods necessary to obtain a technical result, refers only to the manner in which the goods at issue function and not to the manner in which the goods are manufactured. This conclusion, explained the ECJ, is consistent with the rationale of Article 3(1)(e) 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.
This decision departs from the Advocate General’s opinion, which had found the provision to apply to both the function of the goods and the manufacturing process, noting that 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. Notably, the Advocate General also explained that the UK examiner found that the angles of the grooves are determined by a specific chocolate mold used during the manufacture of the product, which, according to the subject ECJ decision, is no longer a valid basis for applying Article 3(1)(e)(ii).
(The ECJ’s decision also departs from the decision by the Singapore High Court reported in our March 2015 Newsletter Article that found that a similar Singapore Law provision would apply to both the manufacturing process, as well as the way the goods function for the end user.)
(c) Finally, the ECJ answered the UK High Court’s first question and clarified that the standard required to show acquired distinctiveness is whether, as a consequence of use (and regardless of whether the sign is used alone or as part of another registered trade mark) “the relevant class of persons perceives the goods or services designated exclusively by the mark applied for, as opposed to any other mark which might also be present, as originating from a particular company.” ¶ 67.
In answering this question, the ECJ did not adopt the language of either of the standards set out by the UK High Court in the question it posed (i.e., whether consumers recognize and associate a mark as originating from a particular source versus whether a significant portion of consumers rely upon the trademark alone as indicating the origin of goods), and the ECJ’s opinion can be read as establishing a somewhat softer standard for showing acquired distinctiveness by declining to require consumer’s reliance on a sign as indicating the origin of the goods.
We now await the UK High Court’s application of the EJC’s rulings to the facts of the case and will report further developments.