Source: https://www.virtuosolegal.com/cjeu-kit-kat/
Timestamp: 2019-04-20 22:53:04+00:00

Document:
In intellectual property there are several high-profile cases which, having been back and forth in the courts for years, IP professionals have grown accustomed to hearing about.
As a young solicitor, cases such as the one involving the Kit Kat shape-mark have provided a backdrop to my legal education and practice.
The recent decision from the CJEU brings the contentious case closer to a conclusion. And, with this, some significant consequences have arisen.
To understand these, however, we must start from the very beginning.
The tale of the Kit Kat begins in 1935, where it first came to market as the “Rowntree’s Chocolate Crisp”. Two years later in Norway a similar chocolate treat the Kvikk Lunsj (“Quick Lunch”) came into the market – and became popular as a health snack.
For the best part of a century, Kit Kat and Kvikk Lunsj were able to happily coexist. But this peace, like so many others, wasn’t to last forever.
A decade-long legal battle began when Nestlé sought to register their well-known KitKat as a “shape-mark” across Europe in 2002 (alongside their name and logo at the time).
The shape they sought to register, “four trapezoidal bars aligned on a rectangular base”, was visibly similar to the shape of the Kvikk Lunsj chocolate bar and appeared in the registrations without its distinctive “Kit Kat” logo on each finger (see below).
After 4 years, the trade mark was granted by the EUIPO. But Nestlé’s celebrations were short-lived as Mondelēz, the owner of Kvikk Lunsj (and at the time, Cadbury) initiated proceedings to challenge the mark.
This led to 11 years of decisions by various courts and subsequent appeals wherein the finer details of the registrability of the shape mark were discussed at considerable length.
It is important to remember how this dispute arrived at this appeal. Particularly that (1) it has been decided that the Kit Kat shape was not inherently distinctive and as such it had to prove acquired distinctiveness and (2) that consumers merely recognising the shape and associating it with Kit Kat was not enough, the average consumer had to see the shape (and shape only) as a designation of origin.
The most recent decision by the CJEU therefore must be seen in the context of Kit Kat’s attempts to prove that the shape (and shape alone) has acquired distinctive character through use in the EU, and thereby is recognised by consumers as a designation of origin.
On the 25th of July 2018, the CJEU upheld the General Court’s judgment that the shape mark of the Kit Kat bar, whilst well known across many countries in the EU, was not well known “throughout” the EU to merit EUTM protection as a shape mark. This is in relation to a concept within trade mark law known as “acquired distinctiveness”.
This came off the back of the General Court’s decision that Nestlé had not demonstrated acquired distinctiveness throughout the EU. It was noted at the time that no evidence had been provided for Ireland, Belgium, Greece and Poland.
The recent decision comes because of an appeal to that 2016 ruling; made by Nestlé, Mondelēz and the EUIPO. The most pertinent issue was raised by Nestlé and the EUIPO (Mondelēz’s appeal was struck out) who argued that proving acquired distinctiveness across the entirety of the EU was too onerous a standard to meet, and that such a standard would conflict with the policy behind unitary trade marks and the single market.
Nestlé’s previously registered shape mark for Kit Kat.
The Attorney General did state that it would be unreasonable for proof to be provided for each, individual member state of the EU. What was required was evidence that the shape of Kit Kat had acquired distinctiveness throughout the EU. While the former and latter might sound like the same thing, the CJEU have qualified that it is all dependant on the evidence as submitted. It was said that it was possible to group certain member states in a distribution network together and prove that they have treated that network as one, particularly in a marketing sense.
As such the CJEU dismissed Nestlé’s (and the EUIPO’s) appeal and upheld the General Court’s decision.
Interestingly, whilst the outcome might be to Mondelēz’s tastes generally – their appeal that on the evidence provided the Kit Kat had not acquired “distinctive character” in any of the member did not convince the CJEU.
To Nestlé this provides a “silver lining” in that its shape mark has been seen to meet the standard of distinctiveness in many EU states. As such, an EUTM for the shape of the Kit Kat is possible; should a similar standard of distinctiveness be proven across the entire EU.
In the short term, it is likely that the EUIPO will now annul the trade mark, despite appealing the original decision alongside Nestlé.
Nestlé have stated that they believe this may not happen and that the EUIPO will maintain their trade mark – although this is broadly viewed as unlikely. Further conflict between Nestlé and Mondelēz or others with a vested interest, at a national registry or court level is also now plausible.
Regardless, Nestlé would be able to reapply for the trade mark and be successful – so long as they provide the requisite evidence (which is no mean feat).
There are several reasons why this judgment and the whole history of this dispute is both: 1) fascinating and 2) has incredible implications.
Nestlé’s registration was notable (above), in that it displayed its familiar shape without its distinctive visual identity on the snack’s fingers – as it appears in reality.
Designs, and other rights such as copyright are limited in time. The idea is that the holder is allowed a limited monopoly over (in this context) a novel and innovative product shape, which upon lapse will fall into the public domain and thereby be available for other traders to build upon and develop. This is generally argued to be in the best public interest.
Trade marks on the other hand, last in perpetuity as long as they are duly renewed, and not cancelled by the relevant registry. They are designed to protect designators of origin.
Given the above, it is only right that a much higher standard is expected from a trade mark applicant seeking to protect and enforce against other traders, the shape of a product in perpetuity – as Kit Kat are doing here.
Ultimately trade mark law is founded upon protecting signs that function as a designation of origin. It was not foreseen that this might hamper innovation or growth within markets. A shape mark such as Nestlé’s casts a shadow over a market, especially when it is considered that they might be able to enforce it against “similar marks”.
The scope of enforcement for non-conventional trade marks (e.g. shapes or colours) when compared to a conventional logo or name – threaten the ability for markets to operate without serious limitations.
This is to be balanced with a growing view that only recognising words and logos as trade marks is old fashioned, and that the reality of today’s market is that shapes, colours, sounds and even smells can function as brands.
This balance is a challenge for European courts and offices to maintain. The consequences of granting a shape mark, and the climate of litigation that surrounds them look set to determine the boundaries of registration and enforcement.
However, at least for now, it would seem that the CJEU has met both camps in the middle – while recognising that shapes can act as brands in a modern, more complex marketplace, whilst upholding a high standard for proving this through the avenue of acquired distinctiveness.
The consequences of this latest decision will be wide-ranging, and it will be exciting to see the developments that will follow.
The litigious maelstrom that looks set to follow such marks as the Kit Kat shape and the red Louboutin sole suggest a benefit in achieving greater definition when it comes to non-conventional marks – prior to them being granted.
For this young solicitor; the judgment, whilst an “end of an era” of appeals and cross-appeals, signals a new epoch in which non-conventional trade marks should be met with common sense, proportionality and with the greater public good in mind.
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