Case C-215/14, Nestlé – getting into the groove with three-dimensional trade marks [judgment 2015, ECLI:EU:C:2015:604]

People in England have been able to buy a four-fingered, chocolate-coated, wafer-bar called a ‘Kit Kat’ since the 1930s. The fingers of chocolate are separated by grooves. In 2010, Kit Kat’s new commercial owners tried to trade mark a three dimensional shape with grooves in it. But the grooved shape applied for was not inherently distinctive so EU trade mark law would not allow it to be registered. Kit Kat’s only hope of securing trade mark protection rested on Article 3(3) of the EU’s trade mark Directive 2008/95/EC, which allows a mark to be registered where ‘a mark has acquired a distinctive character through use prior to the registration of the mark’. English law suggested that no protection should be given in this particular case. But was that right under EU trade mark law? Furthermore, was the mark still unable to be registered because almost all of the essential features of the chocolate bar were really just designed to ensure that there were chocolate ‘fingers’? If so, then this would again mean that there was no protection because the shape was necessary to obtain a technical result.

Facts
People in England have been able to buy a four-fingered, chocolate-coated, wafer-bar called a ‘Kit Kat’ since the 1935. Kit Kat chocolate bars were made by the Rowntree chocolate company. However, in 1988 Rowntrees were taken over by Nestlé. Twenty years later, in 2010, Nestlé applied to register a three-dimensional sign which looked something like the shape of a Kit Kat bar.

The Trade Marks Registry accepted the application but allowed other companies to oppose the registration of the shape mark. This was because the Trade Marks Registry was of the view that although the mark was devoid of inherent distinctive character, the Registry thought that Nestlé had shown that the mark had acquired a distinctive character from the use which had been made of it prior to the application date in 2010. An opposition was filed by one of Nestlé’s commercial rivals, the Cadbury chocolate company.

At the Trade Marks Registry
The hearing officer looked at the shape. In essence, he held that the shape applied for was:

within the norms and customs of the sector and/or is a mere variant on common shapes for chocolate bars and biscuits, i.e. rectangular bars with breaking grooves resulting in individual pieces or ‘fingers’. The shape is not such as to permit average consumers to distinguish the product concerned from those of other undertakings. The shape mark is therefore prima facie devoid of any distinctive character.

He also held that the trade mark had not acquired a distinctive character through use by the relevant date in respect of all of the goods specified in the application. That is to say: Nestlé had applied for Class 30, which covers: chocolate; chocolate confectionery; chocolate products; confectionery; chocolate-based preparations; bakery goods; pastries; biscuits; biscuits having a chocolate coating; chocolate coated wafer biscuits; cakes; cookies; wafers.

That said, and contrary to his decision in relation to chocolate bars and biscuits, he believed that when it came to cakes or pastries:

The shape does not look similar to any cake or pastry I have seen. There is no evidence to assist me one way or the other, but I find that the shape is outside the norms and customs of the sector and would be capable of distinguishing the trade origin of cakes or pastries, whether as the highly unusual shape of the goods or otherwise.

Consequently, he allowed the registration to proceed in respect of ‘cakes’ and ‘pastries’.

Cadbury’s objected to allowing the shape application in respect of cakes and pastries, and an appeal was launched. Nestlé too disagreed with the decision of the hearing officer and it too put in an appeal.

At the High Court of England and Wales
The dispute was brought before Mr Justice Arnold, a high court judge specialised in intellectual property law.

He identified that the issue was that of ‘acquired distinctive character’, a concept laid down in EU legislation and interpreted by the CJEU.

The relevant plank of EU legislation was Article 3 of the Directive 2008/95/EC to approximate the laws of the Member States relating to trade marks (codified version) which provides:

Grounds for refusal or invalidity
1. The following shall not be registered or, if registered, shall be liable to be declared invalid:
…
(b) trade marks which are devoid of any distinctive character;
…
(e) signs which consist exclusively of:
(i) the shape which results from the nature of the goods themselves;
(ii) the shape of goods which is necessary to obtain a technical result;
…
3. A trade mark shall not be refused registration or be declared invalid in accordance with paragraph 1(b), (c) or (d) if, before the date of application for registration and following the use which has been made of it, it has acquired a distinctive character. …

The problem was that although the concept of acquired distinctive character had been further interpreted through the CJEU’s case law, this case law did not provide an answer to the present case.

That is to say, if an applicant has been selling his goods, and those goods had the applicant’s other trade marks on it, then could the applicant claim that the trade mark he was applying for had acquired a distinctive character on the basis that, at the relevant date, a significant proportion of the relevant class of persons recognised the mark and associated it with the applicant’s goods?

Although the CJEU’s case law provided no answer to the question, English law did have an answer. And the approach of the English courts was that trade mark law would offer no protection in this situation. Under English law, an applicant needed to establish that a significant proportion of the relevant class of persons rely upon the mark as a trade mark to indicate the origin of the goods, and not any other trade marks which were present.

Yet despite the clarity of English law, it remained uncertain that that was the correct interpretation of EU law. The judge therefore decided to make a reference to the CJEU on the issue of acquired distinctive use.

But there were two other issues on which Judge Arnold needed guidance from the CJEU. These concerned the shape of the goods.

Now there were some essential features to the shape mark being applied for: 1 the position and angle of the grooves were to get the chocolate to break properly and arose from moulded chocolate products; 2 the angle of the grooves for this was necessary to obtain a technical result; and 3 the number of the grooves was necessary because there had to be three grooves in order for there to be four fingers, with each finger being of the desired portion size.

Under EU law, when the shape of the goods results either from the nature of the goods themselves, or where the shape is necessary to obtain a technical result, then this shape is not registrable as a trade mark by dint of the above-mentioned Articles 3(e)(i) and (ii) of the Directive.

Besides the wording of this EU legislation, there were two main judgments from the CJEU to be taken into account: ‘Lego’ and ‘Remington’ (respectively, Case C-48/09 P Lego Juris A/S v Office for Harmonisation in the Internal Market; and Case C-299/99 Koninklijke Philips Electronics NV v Remington Consumer Products Ltd).

The problem here was understanding what those two judgments meant. Nestlé understood them to mean that a sign would only be precluded from registration if all of the essential features of the sign were features of shape which were necessary to obtain a technical result. If that was understanding right, then that was not the case here because the hearing officer had found that one of the essential features in this shape application arose from the nature of the goods.

Nestlé also claimed that the hearing officer had been wrong when he had concluded that registration could not be allowed by dint of Article 3(1)(e)(ii), because that provision deals not with the nature of the goods but with shapes necessary to obtain a technical result.

Cadbury submitted that neither of Nestlé’s arguments could be right. Here was a shape where one of the essential features resulted from the nature of goods themselves (and would fall within the exception in Article 3(1)(e)(i)) but there were another two essential features and these were necessary to achieve a technical result (and thus fall within Article 3(1)(e)(ii)). Cadbury pointed out that it would be bizarre for EU trade mark law to allow a shape to be registered just because the three essential features to the shape did not fall squarely either under one exclusion or the other exclusion.

The judge was not totally convinced by Nestlé’s arguments, and he certainly favoured Cadbury’s submissions but he could not say for certain that this was the correct interpretation of the Directive; consequently, he would need to ask two further questions of the CJEU.

Questions Referred
According to the website of the UK IPO, the High Court of England and Wales has asked:

1. 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 200S/951EC, 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 trademarks which may also be present) as indicating the origin of the goods?

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 200S/951EC?

3. Should Article 3(1)(e)(ii) of Directive 200S/95IEC 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?