Source: http://www.jakemp.com/en/knowledge-centre/briefings/topical-briefings-2/no-break-for-kitkat-at-court-of-appeal
Timestamp: 2017-08-22 09:15:21
Document Index: 5771934

Matched Legal Cases: ['CJEU ', 'CJEU ', 'CJEU ', 'CJEU ', 'CJEU ', 'CJEU ', 'CJEU ', 'CJEU ', 'CJEU ']

No Break for Kit Kat at Court of Appeal | J A Kemp
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No Break for Kit Kat at Court of Appeal
The lengthy saga of Nestlé’s attempt to secure a three dimensional trade mark for its Kit Kat shape has taken a further (and perhaps final?) turn, with the decision of the Court of Appeal dated 17 May 2017.
First, a little history. In 2010 Nestlé applied in the UK Intellectual Property Office (“IPO”) to register the shape of its famous four-fingered chocolate wafer bar (“Kit Kat”) as a trade mark for goods in class 30 including chocolate, confectionery and biscuits. The sign Nestlé sought to register consists only of the shape of the Kit Kat bar and does not include the words ‘Kit Kat’ which, in the case of the product itself, are embossed on each chocolate wafer finger.
Cadbury opposed Nestlé’s application on various grounds and the IPO hearing officer (Mr Allan James) upheld the opposition, rejecting Nestlé’s application. In the appeal to the High Court the Judge, Mr Justice Arnold (Arnold J), referred certain questions of law to the Court of Justice of the European Union (CJEU), including a question concerning the circumstances in which a product shape could be treated as having acquired distinctiveness.
Nestlé’s evidence had established that a significant proportion of the relevant class of persons had come to recognise the shape of the 4-finger Kit Kat bar and associate it with goods manufactured by Nestlé. However, on the traditional approach of the English courts, such evidence would not be enough: Nestlé would need to go further and show that a significant proportion of consumers relied upon the shape (as opposed to any other trade marks which might be present) as indicating the origin of the goods. Arnold J essentially asked the CJEU whether the traditional English approach was correct, as a matter of EU trade mark law:
"…is it sufficient for the applicant for registration to prove that at the relevant date a significant proportion of the relevant class of persons recognise the mark and associate it with the applicant's goods in the sense that, if they were to be asked who marketed goods bearing that mark, they would identify the applicant; or must the applicant prove that a significant proportion of the relevant class of persons rely upon the mark (as opposed to any other trade marks which may also be present) as indicating the origin of the goods?”
In its decision of 16 September 2015 (Case C-215/1), The CJEU first of all reformulated Arnold J’s first question as follows:
"By its first question the referring court asks, in essence, whether an applicant to register a trade mark which has acquired a distinctive character following the use which has been made of it within the meaning of Article 3(3) of Directive 2008/95 must prove that the relevant class of persons perceive the goods or services designated exclusively by that mark, as opposed to any other mark which might also be present, as originating from a particular company, or whether it is sufficient for that applicant to prove that a significant proportion of the relevant class of persons recognise that mark and associate it with the applicant’s goods."
Having referred with approval to the Advocate General’s interpretation of the case law, the CJEU went on to answer its reformulation of Arnold J’s question as follows:
"… in order to obtain registration of a trade mark which has acquired a distinctive character following the use which has been made of it within the meaning of Article 3(3) of Directive 2008/95, regardless of whether that use is as part of another registered trade mark or in conjunction with such a mark, the trade mark applicant must prove that the relevant class of persons perceive 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.”
When the case reverted to Arnold J for him to give judgment in the light of the CJEU’s guidance, in his second judgment (dated 20 January 2016) he regretted the fact that the CJEU had reformulated his question, which had been worded with precision. The court had been asked whether the answer was A or B (i.e. recognition/association or reliance), but had said that the answer was not A, but C (perception). In the result it was unclear whether C (perception) was different from B (reliance). Nonetheless what was clear was that one of Nestlé's previous arguments - that it was sufficient to show that a significant proportion of the relevant class of persons recognise the mark and associate it with the applicant's goods – was wrong. That being so, Nestlé focused on its further argument that its survey evidence nevertheless passed the CJEU test – i.e. it showed that a significant proportion of consumers did in fact perceive the goods designated by the mark as originating from a particular company, and thus the CJEU’s test was satisfied. The Judge, however, rejected this argument also. He observed that the exercise involved showing consumers the trade mark and asking them questions which were designed to prompt them into naming a source of products of the kind depicted. That a majority were able to name Kit Kat did not mean that they perceived the trade mark as exclusively designating the origin of such products.
Nestlé appealed.
Before the hearing of the appeal, the General Court gave judgment in Case T-112/13, Mondelez v EUIPO, a case concerning a parallel EUTM application for the same mark. Although the General Court in effect remitted the case to the EUIPO for further consideration of whether the evidence established acquired distinctiveness in every Member State of the EU, it held that Nestlé had shown acquired distinctiveness in a number of Member States. Importantly, these included the United Kingdom.
Whilst many no doubt anticipated that the Court of Appeal might follow the General Court and find for Nestlé, Nestlé’s appeal was in the event unanimously dismissed.
In the appeal, Nestlé argued that it was not necessary to show that consumers had in fact relied on the mark in selecting or purchasing the goods or that after purchase that they had used the mark to verify that they had got the right product. The notion of “reliance”, it argued, was different from “perception” and was one which had developed in English cases, but had not played any part in the jurisprudence of the CJEU.
The leading judgment was given by Lord Justice Kitchin (with whom the Chancellor of the High Court and Floyd L.J. agreed). Although he recognised that the CJEU had not used the term “reliance”, Kitchin L.J. pointed out that reliance was in fact a consequence of the perception stipulated by the CJEU:
“Perception by consumers that goods or services designated by the mark originate from a particular undertaking means they can rely upon the mark in making or confirming their transactional decisions. In this context, reliance is a behavioural consequence of perception.”
He therefore agreed with Arnold J that it was legitimate to consider whether, if the sign were used on its own, the public would rely upon it as denoting the origin of the goods or services. Further, if in any case it were shown that consumers had come to rely upon the mark as an indication of origin then this would establish that the mark had acquired distinctiveness.
In his judgment Kitchin L.J. gave important guidance on the sometimes elusive distinction between recognition and association of a mark on the one hand and, on the other, perception of a mark as a trade mark:
“The distinction is this. We are concerned here with a mark, the three-dimensional shape of a chocolate product, that has no inherent distinctiveness. A shape of this kind is not inherently such that members of the public are likely to take it as a badge of origin in the way they would a newly coined word or a fancy name. Now assume that products in that shape have been sold on a very large scale under and by reference to a brand name which is inherently highly distinctive. Assume too that the shape has in that way become very well-known. That does not necessarily mean that the public have come to perceive the shape as a badge of origin such that they would rely upon it alone to identify the product as coming from a particular source. They might simply regard the shape as a characteristic of products of that kind or they might find it brings to mind the product and brand name with which they have become familiar. These kinds of recognition and association do not amount to distinctiveness for trade mark purposes, as the CJEU has now confirmed in its decision in this case."
(In this context Floyd L.J. found it helpful to have in mind a basket of unwrapped and otherwise unmarked chocolate bars, in the shape of the mark applied for, available for selection in a shop or supermarket. For there to be acquired distinctiveness, the consumer must perceive these goods as being Kit Kats, or as originating from the people who make Kit Kats, and not from others. A perception that they looked like Kit Kats was not enough. Sir Geoffrey Vos gratefully endorsed this as an “illuminating example”.)
Kitchin L.J. rejected Nestlé’s criticisms of the Hearing Officer’s approach to the evidence. With regard to the survey evidence, the high point for Nestlé had been his finding that at least half the people surveyed thought that the picture shown to them was a Kit Kat. But in giving their responses they might have had in mind a product coming from the same source as Kit Kat or a product of the Kit Kat type or a product which looked like a Kit Kat. The Hearing Officer had therefore been entitled and indeed bound to consider the results in light of all of the other evidence before him. Kitchin L.J. was also satisfied that the Hearing Officer had been entitled to conclude as he did that Nestlé had shown recognition and association of the shape with Kit Kat but had failed to prove that the shape (and hence the trade mark) had acquired a distinctive character in light of the use which had been made of it.
It remained for Kitchin L.J. to deal with Nestlé’s reliance on the decision of the General Court in Mondelez v EUIPO. Nestlé contended that a decision of the General Court on a point of EU law was binding on the Court of Appeal and that it was now clear that 'reliance' had no part to play in assessing whether a mark had acquired a distinctive character as a result of the use which has been made of it. Further, the General Court had held that Nestlé had shown the mark to have acquired a distinctive character in the UK (minor differences in the specification of goods being immaterial for present purposes.)
Whilst he accepted for the purposes of the appeal that decisions of the General Court on points of EU law were binding upon the Court of Appeal, Kitchin L.J was satisfied that the General Court had not made any such decision which was relevant to this appeal. On the contrary, it had simply reiterated the principle established by the CJEU in Nestlé v Mars Case C-353/03, namely that, where a mark has been used as part of or in conjunction with a registered trade mark, it must be shown that the relevant class of persons perceive the product, designated exclusively by the mark in issue, as originating from a particular undertaking.
Secondly, Nestlé’s argument as to the relevance of 'reliance' went too far. Kitchin L.J. accepted that it was not necessary to show the public had relied upon the mark. But that did not mean to say that evidence of reliance had no part to play. If an applicant for registration of an inherently non-distinctive mark established that, as a result of the use which had been made of it, consumers had come to rely upon it as denoting the origin of the goods to which is had been applied, that would show it had become distinctive.
Thirdly, there could be no doubt in light of the decision of the CJEU that it was not sufficient for an applicant for registration of an inherently non-distinctive mark to show that, as a result of the use which had been made of it, consumers merely recognised it and associated it with the applicant's goods.
Lastly, the finding that the mark had acquired a distinctive character in the U.K. was not binding on the Court of Appeal. It did not cause Kitchin L.J. to doubt the correctness of the Hearing Officer’s decision for two reasons. First, the General Court took into account the results of surveys having questions in the form of the first survey which the hearing officer had found to be so seriously flawed as to render it wholly unreliable. Secondly, there were many passages in the decision of the General Court which suggested that, contrary to the decision of the CJEU, it regarded recognition and association of the mark with Kit Kat as being sufficient to establish distinctiveness.
Many will be surprised by the Judgment of the Court of Appeal, especially in the light of the recent finding of the General Court. However, it can be seen as an application of the traditional English approach to acquired distinctiveness in cases such as these, but carefully and clearly expressed so as to be consistent with the case law of the CJEU. At the same time, the Court of Appeal has, pretty clearly, spelt out that the General Court has simply misunderstood the distinction being drawn by the CJEU.
For owners of non-traditional marks, who need to establish acquired distinctiveness, this decision is undoubtedly a setback, as it will pave the way for the IPO to continue to regard survey evidence of the kind adduced by Nestlé – evidence which is already difficult and expensive to obtain - as unpersuasive, or at least insufficient. Such brand owners will be well-advised to ensure that the product shape or feature is visible at the point of sale, and to teach the consumer that it is a trade mark by whatever means they can, including for example making use of it in promotions for a significant period of time prior to the application date.
Though unrelated to Brexit, the decision is perhaps an indication of how easy it may turn out to be, for English and EU trade mark law to drift apart, in practice, if not in absolute principle, post-Brexit.
Of course it is open to Nestlé to seek permission to appeal to the Supreme Court, though whether any such application will be made, or will if made succeed, remains to be seen.