Four Fingers, Zero Trademarks: KitKat's Legal Saga Explained

Case Name: Société des Produits Nestlé SA v. Cadbury UK Ltd. Jurisdiction: ENGLAND AND WALES HIGH COURT (CHANCERY DIVISION) Date of Decision: 20.01.2016

The legal saga between Nestlé and Cadbury over the trademark of the KitKat bar's shape is a fascinating case study in the world of intellectual property law. This blog post delves deeper into the judgment, focusing on the pivotal questions, arguments, and the court's reasoning that led to the decision.

Facts of the Case

Nestlé sought to register the three-dimensional shape of its four-finger KitKat product as a United Kingdom trade mark. The application was opposed by Cadbury on various grounds, notably arguing that the shape lacked inherent distinctive character and had not acquired a distinctive character except in relation to "cakes" and "pastries" where it was considered inherently distinctive.

The Crucial Question to CJEU

The heart of the dispute lay in a question referred to the Court of Justice of the European Union (CJEU):

"In order to establish that a trade mark has acquired distinctive character following the use that had been made of it within the meaning of Article 3(3) of Directive 2008/95, 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 consider 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?"

Initial Thoughts from the High Court

Justice Arnold shared his perspective, suggesting the necessity of reliance over mere recognition:

"In my first judgment, I said at [55]: 'In case it assists the Court of Justice, it is my opinion that, for the reasons I explained in Vibe, the correct answer to the question is that the applicant must prove that a significant proportion of the relevant class of persons rely upon the trade mark (as opposed to any other trade marks...)"

CJEU's Response

The CJEU's answer provided a nuanced view on the matter, emphasizing the importance of the trade mark's role in indicating the origin of goods exclusively:

"the referring court, after reviewing the relevant case-law, seeks to ascertain whether, in order to establish that a trade mark has acquired distinctive character, it is sufficient that, at the relevant date, a significant proportion of the relevant class of persons recognise the trade mark and associate it with the trade mark applicant's goods..."

"Therefore, regardless of whether the sign is used as part of a registered trade mark or in conjunction with the registered trade mark, the fundamental condition is that, as a consequence of that use, the sign for which registration as a trade mark is sought may serve to identify, in the minds of the relevant class of persons, the goods to which it relates as originating from a particular undertaking"

High Court's Analysis of CJEU's Answer

Justice Arnold expressed regret over the CJEU's reformulation of the original question, highlighting the clarity issue this introduced:

"In my view it is regrettable that, as it so often does, the Court of Justice reformulated the question which I referred to it... The problem in the present case is that the Court has said that the answer is not A, but C. Since the Court has not explicitly addressed B, however, it is not clear whether C is different from B."

Yet, the court found a way to interpret this guidance:

"Since the Court has not, at least in terms, agreed with the second alternative posed in question 1, it cannot be assumed that this test is the same as a test of reliance."

Application to the Present Case

Justice Arnold provided a succinct summary of why Nestlé's claim did not meet the required standard:

In my view, the applicant has shown recognition of the mark amongst a significant proportion of the relevant public for chocolate confectionery (only), but not that consumers have come to rely on the shape to identify the origin of the goods... Therefore, if it is necessary to show that consumers have come to rely on the shape mark in order to distinguish the trade source of the goods at issue, the claim of acquired distinctiveness fails.

"In my view, the applicant has shown recognition of the mark amongst a significant proportion of the relevant public for chocolate confectionery (only), but not that consumers have come to rely on the shape to identify the origin of the goods. This is because:

i ) There is no evidence that the shape of the product has featured in the applicant's promotions for the goods for many years prior to the date of the application;

ii) The product is sold in an opaque wrapper and (until a few months before the filing of the application - and then only for a subset of the goods placed on the market), the wrapper did not show the shape of the goods;

iii) There is no evidence - and it does not seem likely - that consumers use the shape of the goods post purchase in order to check that they have chosen the product from their intended trade source.

In these circumstances it seems likely that consumers rely only on the word mark KIT KAT and the other word and the pictorial marks used in relation to the goods in order to identify the trade origin of the products. They associate the shape with KIT KAT (and therefore with Nestlé), but no more than that. Therefore, if it is necessary to show that consumers have come to rely on the shape mark in order to distinguish the trade source of the goods at issue, the claim of acquired distinctiveness fails."

Conclusion

The final decision was clear-cut:

"For the reasons given above, Nestlé's appeal is dismissed and Cadbury's cross-appeal is allowed."

Through this case, the courts have illustrated the intricate balance between recognition and reliance in trademark law, setting a precedent that will undoubtedly influence future intellectual property disputes. This judgment not only impacts the confectionery industry but also serves as a critical reference point for trademark law's application in a broader context.