Bittersweet ruling for Nestlé on “Kit Kat” case

On 16 September 2015, the Court of Justice of the European Union (CJEU) issued its judgment in the Kit Kat chocolate bar trade mark dispute between the companies Société des Produits Nestlé SA (Nestlé) and Cadbury UK Ltd. (Cadbury) (C-215/14).

Concerning opposition proceedings regarding Nestlé’s trade mark application of a 3D-sign representing the shape of a four finger chocolate-coated wafer in the UK, the High Court of Justice (England & Wales) had referred three questions for a preliminary ruling, related to the interpretation of Art. 3(1)(e)(i) and (ii) of the Directive 2008/95/EC (Directive) and the issue of proving acquired distinctiveness within the meaning of Art. 3(3) of the Directive.

As to the question whether or not the grounds for refusal of Art. 3(1)(e) of the Directive could be applied cumulatively, the CJEU held that the public interest underlying Art. 3 of the Directive is to prevent granting the trade mark owner a monopoly on technical solutions or functional characteristics of goods which a user is likely to seek in those of competitors. In light of this, it held that the three grounds for refusal of registration operate independently of one another. It coincided with the Advocate General that cumulative application was possible, as long as any one of those grounds is fully applicable to the shape at issue.

With regard to whether Art. 3(1)(e)(ii) of the Directive (“shape which is necessary to obtain a technical result”) refers only to the manner in which the goods function or if it also applies to the manner in which they are manufactured, the CJEU stated, contrary to what the Advocate General had interpreted, that the provision applies only to the manner in which the goods function.

Finally, on the issue of the burden of proving acquired distinctiveness for the purposes of Art. 3(3) of the Directive, the CJEU recalled that a trade mark must serve to identify the goods and services covered as originating from a particular undertaking through its distinctive character. It agreed with the Advocate General when concluding that, to prove distinctiveness acquired through use, the trade mark applicant must prove that the relevant public perceives the origin of the goods or services from the mark applied for alone, as opposed to any other mark which might also be present (such as, in this case, the mark “Kit Kat” or distinctive packaging).

The CJEU had already, in its Hauck judgment of 18 September 2014, confirmed that it is irrelevant if several of the grounds of Art. 3(1)(e) of the Directive apply to the same sign, so long as any one of those grounds fully applies to that sign, so its ruling of this point is no surprise. Its ruling on the issue of distinctiveness acquired through use is also logical: the trade mark as applied for, if it is to be granted the monopoly of registration, should be proven to be distinctive, in and of itself, of the relevant goods or services. However, the question of the referring court went further than this. The referring court asked whether the trade mark owner needed to prove that the mark was relied upon by the relevant public to indicate the origin, which is evidently a much stricter test than simply indicating the origin. This concept of reliance has arisen in a number of UK cases and the referring judge himself indicated that he thought it the preferable test. The CJEU has seemingly chosen, however, not to endorse the concept, leaving the door for non-traditional trade marks still firmly open.