Will Kit Kat shape monopoly last forever? Another Arnoldian reference for the CJEU

On 1 July last year, the IPKat carried a note, "When groovy fingers don't make for good trade marks", by young barrister Katherine Moggridge (a pupil at 3 New Square) on a decision of the United Kingdom's Trade Mark Registry, O-237-13 Société des Produuits Nestlé SA's application; opposition of Cadbury UK Ltd. This was a ruling on 20 June from Katfriend and seasoned hearing officer Allan James.  To recap:

Swiss-based food giant Nestlé sought to register as a three-dimensional UK trade mark a shape which, said  Nestlé, was for a chocolate wafer product that goes by the memorably feline name of ‘Kit Kat’. The shape mark applied for in the UK, portrayed on the right, covered various goods in Class 30 ranging from chocolate products and chocolate confectionery to pastries, cakes and biscuits.  Cadbury opposed the application on a number of grounds.

Allan James, a veteran of many a contested opposition before the Intellectual Property Office, considered two issues in particular:

(i) did this mark consist exclusively of the shape of the goods which was necessary to obtain a technical result (i.e. did the shape assist in the product’s manufacture and facilitate the division and consumption of the goods)?
(ii) was the mark devoid of distinctive character and, if it didn't have one in the first place, had it acquired it?

Having considered Cadbury's technical functionality objections at some length, he identified the essential features of the mark applied for as being the rectangular ‘slab’ shape (including the length, width and depth and their relative proportions); the breaking grooves along the length of the bar (including their presence, position and depth) which divide the bar into ‘fingers’ and the number of these grooves. Having completed this task he concluded thus:

 “The exclusion under s.3(2)(b) [of the UK's Trade Marks Act 1994, = Article 3(1)(e)(ii) of Directive 2008/95, the trade mark approximation directive] therefore applies where the essential features of the shape are attributable only to a technical result.  Other minor arbitrary features which make no real impact on consumers do not prevent the exclusion applying if the essential features of the shape are caught by the exclusion.”

Having had the benefit of cross-examination of witnesses from both parties who had given evidence about the functional aspects of the shape represented by the mark, the hearing officer concluded that:

What shoppers usually see

 “i) The basic rectangular ‘slab’ shape represented by the mark is a shape which results from the nature of moulded chocolate bars or moulded chocolate biscuits sold in bar form;
ii) The presence of breaking grooves is a feature which is necessary to achieve a technical result;
iii) An angle of more than 8-10 degrees for the sides of the product, and for the breaking grooves, results from the nature of moulded chocolate products and the depth of the grooves is necessary to achieve a technical result;
iv) The number of breaking grooves and fingers is determined by the desired portion size”.

In finding that the mark consisted of a functional shape, Allan James rejected the submission that the shape was an aesthetic design.  The goods sold which incorporate the shape are wrapped in such a way that the consumer does not see the shape until after they have purchased them.  The fact that the product is designed to be broken up and eaten accounts for the breakability of separate fingers (this breakability features prominently in Nestlé’s classic advertising slogan: “Have a break, have a Kit Kat”).  Thus Nestlé’s shape mark could not be registered for the goods applied for, with the exception of cakes and pastries.

The shape was also found to be devoid of distinctiveness, given that it was a shape commonly found for chocolate bars and biscuits (though not for pastries and cakes).  But had this mark acquired distinctiveness through use?  Nestlé adduced evidence from two surveys, although their own survey expert admitted that the first survey was so flawed that it would not stand up to serious perusal. Allan James took this as an opportunity to reiterate the purpose of trade marks:

“.. trade marks are intended to permit consumers to make informed choices between the competing goods of different undertakings in the course of trade.  Therefore showing that the public know who usually makes goods of a particular shape, without also showing that such recognition plays some part in the trade in such goods, does not show that the shape has become a trade mark for the goods.”

Plainly, it is not enough therefore to demonstrate that a significant proportion of the public recognises the shape in question without also showing that those consumers rely upon the shape to identify the origin of the goods.

The hearing officer’s final word on acquired distinctiveness was this:

“They [consumers] 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.”

Nestlé appealed. Last Friday, in Société Des Produits Nestlé SA v Cadbury UK Ltd [2014] EWHC 16 (Ch), in what for him is quite a short judgment, Mr Justice Arnold gave the plot away in the very first of his 77 paragraphs:

"In what circumstances can a trader secure a perpetual monopoly in the shape of a product by registering it as a trade mark? That is the question raised by this appeal by ... Nestlé... and cross-appeal by Cadbury .... The shape in issue is essentially that of the well-known Kit Kat four-finger chocolate-coated wafer bar. It is clear that in principle European trade mark law permits the shape of a product to be registered as a trade mark. Surprisingly, however, certain aspects of the relevant law remain unclear. ... I have concluded that it is necessary to seek clarification of the law from the Court of Justice of the European Union in order to determine the appeals".

What does the good judge himself think?  His position is revealed in his judgment (another masterly summary of the relevant law, it goes almost without saying) where he states:

1. ... I shall refer a question to the CJEU which I am provisionally minded to express as follows:

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

1. In case it assists the Court of Justice, it is my opinion that ... 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 which may also be present) as indicating the origin of the goods [a tough requirement, says Merpel: ask yourself whether, however much you love Kit-Kats, you have ever relied upon the shape in determining whether what you've bought is a Kit-Kat or some other specimen of confectionery].

1. I consider that it is necessary for the law to be clarified in order to determine whether the Trade Mark is precluded from registration by Article 3(1)(e)(i) and/or (ii) Accordingly I shall refer questions to the CJEU which I am provisionally minded to express as follows:

"2. Where a shape consists of three essential features, one of which results from the nature of the goods themselves and two of which are necessary to obtain a technical result, is registration of that shape as a trade mark precluded by Article 3(1)(e)(i) and/or (ii) of Directive 2008/95/EC?

3. Should Article 3(1)(e)(ii) of Directive 2008/95/EC be interpreted as precluding registration of shapes which are necessary to obtain a technical result with regard to the manner in which the goods are manufactured as opposed to the manner in which the goods function?"

1. In case it assists the Court, it is my opinion that both these questions should be answered in the affirmative for the reasons advanced by counsel for Cadbury

The IPKat would like to thank the various and several good souls -- both those who sought the protecting shade of anonymity and those who rather enjoy a bit of publicity but aren't going to get it this time around -- for tipping him off about this decision's publication and subsequent appearance on BAILII. They should all consider themselves duly katpatted. Further thanks go to those creative individuals who suggested Kat-related titles, puns and allusions for this post, even though none have been (yet) used.

Merpel wants to know the answer to two questions: (i) how many references has Mr Justice Arnold now made to the CJEU for preliminary rulings on intellectual property matters and (ii) has any trial judge in the European Union topped this tally by making more references?