The Court of Justice of the European Union (CJEU) has issued its judgement in the long-running legal dispute between the two chocolate rivals, Mondelēz and Nestlé, which concerned the issue of whether the shape of Nestlé’s four-fingered Kit Kat chocolate bar constituted a trade mark that had acquired distinctive character in the EU.

In May 2017, we reported on a decision by the UK Court of Appeal in parallel proceedings, in which it was decided that the shape of the Kit Kat had not acquired distinctive character.  The position in the EU is explained below.

Background

Nestlé filed an EU trade mark application in March 2002 for the shape of its four-fingered Kit Kat chocolate bar.  Following registration of the trade mark, Cadbury (now Mondelēz) applied to cancel Nestlé’s trade mark registration on the basis that it lacked distinctive character.

Distinctive character is one of the requirements for registration of a trade mark.  It can either be inherent in the trade mark or it can be acquired as a result of sufficient use over a period of time such that consumers exclusively associate the trade mark with a particular commercial source of origin.

In 2012, the EU Intellectual Property Office (EUIPO) rejected Mondelēz’s application to cancel the trade mark and decided that the three-dimensional bar had acquired distinctive character as a result of Nestlé’s use of it in the EU.  As such, Nestlé’s trade mark was deemed to be valid.

Mondelēz appealed the decision to the General Court.  In 2016, the General Court overturned the EUIPO’s decision on the basis that the mark had only acquired a distinctive character in a part of the EU, not throughout the EU as required.

In reaching its decision, the General Court found that the three-dimensional bar had acquired distinctive character in Denmark, Germany, Spain, France, Italy, the Netherlands, Austria, Finland, Sweden, and the UK, but no decision was made as to whether a distinctive character had been acquired in Belgium, Ireland, Greece and Portugal.  It was noted that ‘a lack of recognition in one part of the territory could not be offset by a higher level of awareness in another’ and that the approach of the EUIPO in finding the mark valid without deciding on the above four countries was incorrect.

All parties appealed the decision to the CJEU.

The Decision

The CJEU upheld the position of the General Court.

The EUIPO and Nestle had argued that, by requiring that acquired distinctive character must be proved in each Member State separately, the General Court had set too high a bar for demonstrating that a mark had acquired distinctiveness in the EU.  It was argued that this would be in conflict with the unitary character of the EU.

However, the CJEU decided that, a trade mark that lacks inherent distinctive character can only be registered as an EU trade mark if it has acquired distinctive character in the part of the EU where it did not previously have such character.  Since Nestlé’s shape mark had been deemed to lack inherent distinctive character in all member states, it was necessary for Nestlé to prove that the shape had acquired distinctive character in all member states.

As a result, the General Court was right to overturn the EUIPO’s decision, since that decision had not taken into account whether the mark had acquired distinctive character in Belgium, Ireland, Greece and Portugal.  Consequently, Nestlé’s trade mark should not have been held valid.

Separately, the CJEU dismissed Mondelez’s appeal against the General Court’s decision that the mark had acquired a distinctive character in the ten EU member states noted above on the grounds that it did not relate to the operative part of the General Court’s judgement.

Analysis

The decision reinforces the difficulty in registering pure ‘shape’ or ‘3D’ trade marks in the EU, since such marks are not generally perceived as indicating the origin of product and, as such, are often found to lack inherent distinctive character.  A high bar has now been set for establishing that the mark has acquired distinctive character through use, as this will need to be established across the EU, i.e. in every member state.

It will be interesting to see how Nestlé proceeds in light of this decision.  We will continue to monitor this matter and report back with further developments.

If you have a trade mark that you need to protect or if you require further information regarding trade mark law, or the specific issue of demonstrating that a trade mark has acquired a distinctive character,  please get in touch to speak with one of our attorneys.